Patent No 4,306,042 issued in 1981 and expired in 1998, but is still being litigated. The patent covers a method of making oxygen-permeable material used for contact lenses. Back in December 1997, the patent owner (Dome) sued a set of defendants for infringement. That lawsuit has been stayed since 1999 pending resolution of an ex parte reexamination requested by one of the defendants. In a 2006 final ruling, the USPTO confirmed patentability of claims 2-4, but cancelled claim 1 as obvious. Dome then filed a civil action in DC challenging the PTO ruling. That case – filed in 2007 – concluded in July 2014 with the district court’s de novo determination that claim 1 was obvious over a combination of three prior art patents. On appeal here, the Federal Circuit has affirmed that ruling – finding that “district court did not commit reversible error in its determination that the claimed subject matter would have been obvious to a person of ordinary skill during the relevant time period.” Judge Hughes penned the opinion that was joined by the two other panel members, Judges Reyna and Schall.
If all elements of a claim are found in the prior art, as is the case here, the factfinder must further consider the factual questions of whether a person of ordinary skill in the art would be motivated to combine those references, and whether in making that combination, a person of ordinary skill would have had a reasonable expectation of success.
Evidence of a motivation to combine prior art references may flow from “the nature of the problem to be solved.” Here, the district court found that the motivation came from the prior art evidence indicating a search for high oxygen permeability in contact-lens materials. That finding was then affirmed on appeal: “This understanding would have motivated a person of ordinary skill to combine the Tris monomer disclosed in Gaylord with the Tris-type cross-linking agent disclosed in Tanaka to increase the oxygen permeability of a contact lens.” There was also some amount of teaching away (the non-Tris prior art outlined the problems of using Tris), but the appellate court affirmed the obviousness finding.
Review of Civil Action: As I mentioned above, the case began as a reexamination and, after losing, the patentee filed a civil action in district court who reviewed the case de novo. Under i4i, a court patent may only invalidate a patent after being presented with clear and convincing evidence proving that result. See also 35 U.S.C. 282(a) (“In General. – A patent shall be presumed valid.”). On the other hand, the USPTO operating in reexamination mode only requires a preponderance of the evidence to render the claims null and void. These competing standards came to a head in the civil action challenging the reexamination finding. On appeal here, the Federal Circuit affirmed that in this situation only a preponderance is necessary.
“‘[A reexamination] is in essence a suit to set aside the final decision of the board.’ Fregeau v. Mossinghoff, 776 F.2d 1034 (Fed. Cir. 1985).
[I]f the Patent Office decides after an ex parte reexamination that a preponderance of the evidence establishes the claimed subject matter is not patentable, § 145 authorizes the district court to review whether that final decision is correct. The § 145 action in such a case does not concern the different question of whether, as part of a defense to an infringement action, clear and convincing evidence establishes that an issued and asserted patent should be held invalid.
Somewhat oddly, the court ruled that Section 282 does not apply here because that section only relates to defenses in patent infringement litigation. “The § 145 action before the district court did not involve a defense to a charge of infringement of an issued patent. Section 282 therefore does not apply in this instance.
Ned brought this up below, but why didn’t the panel at least make some passing reference to In re Teles AG, where the Federal Circuit (in a precedential opinion) affirmed the DDC’s holding that the the 1999 amendments to the patent statute eliminated 35 USC 145 actions for ex parte reexamination decisions of the PTO?
Regardless of whether Teles was correctly decided, Teles is controlling precedent, and one have thought the panel would have acknowledged the jurisdiction issue before addressing the district court’s decision here on the merits.
And, Pilgrim, jurisdiction is never waivable. Even now, the Direct should raise Teles in any petition for rehearing.
But, if there is no de novo review, the reexamination is unconstitutional.
De novo review cannot cure an Article III infraction. De novo review applies to Article I fact-finding; Article I determinations of law may be advisory only – irrespective of how reviewed.
David, what about Executive Benefits that held that de novo review with a right to jury trial did in fact cure a violation?
Ned – this decision 100% supports what I said. In Executive Benefits, the SCOTUS held that PROPOSED conclusions of law must be reviewed de novo. Perhaps we are splitting hairs here, but this distinction is significant where IPR seeks to cancel issued patent claims. The effect of an Article III re-calibration here on IPR would be the following: (1) the PTAB would issue a PROPOSED conclusion of validity / invalidity [that proposed finding would not cancel the actual claim(s)], and (2) where the standing requirement is met, that PROPOSED conclusion of validity / invalidity could be entered before an Article III Dist. Ct. for de novo review. Where there are disparate standards (preponderance, C&C, etc.), it is unclear what value the Article III Dist. Ct. would ascribe to the ADVISORY (i.e., “proposed”) PTAB determination.
In the 1980s, patent law was still viewed as that mythical giant lurking in the hillside. The general courts wanted to nothing to do it, and the SCOTUS very rarely, if ever, granted cert. The CAFC become the de facto high court of the land for the purposes of patent law, and to this end, it went somewhat mad with the power. The Patlex and Joy decisions are evidence of that. Well, fast forward some 30 years and here we are, with the most powerful administrative court this nation has ever seen built upon the flimsiest foundations of the CAFC’s 1980’s solipsistic jurisprudence.
David, we might be splitting hairs, because the FWD of the PTAB could be treated as proposed findings because the claims are not actually canceled from the patent until the court proceedings are final.
Ned – understood. But if an appeal is not pursued, the claims drop. This is not truly “proposed” or advisory.
You might be right. There is also the matter that the patent owner must pay the entire costs of the government in a 145 action, including attorneys fees.
To put it perhaps more succinctly, and Article I administrator cannot enter an enforceable judgment (the downstream effect of appeal is technically irrelevant) on a claim of private right. If the claim is a private right, the separation of powers requires that the conclusion of law be advisory or proposed. J. Newman knew this, hence her shoehorning of the claim of patent validity into the public rights exception.
David, I think Newman thought then that Northern Pipeline was limited to “common law” actions like contracts per Rehnquist’s concurrence.
Very little to see here. It’s a basic case. Though I will point out the “If all elements of a claim are found in the prior art,” part of the quote is unnecessary. Obviousness is not a string of anticipation rejections. You could easily have an element that was not within the prior art that would still render the claim obvious.
I see practioners screw this up all the time. There’s really only way way to teach away – if the art says that a proposed combination has been tried and DOES NOT WORK. Saying that works in an inferior manner isn’t teaching away in the slightest.
I prefer using “teaching-suggestion-motivation” test, without the TSM test it will make the obviousness analysis pointless.
Like Mark, I think that a standardized TSM test is useful for doing obviousness efficiently, fairly and objectively, free from ex post facto analysis.
lol at people demanding the exact point that the Court said isn’t the law. I’ve never seen a single person say that the invention in KSR was not obvious, or that Anderson’s Blackrock was wrongly decided (despite there being evidence that there was zero motivation for the combination there) yet people always want to apply a test that would find them non-obvious because they support combinations which are similarly terrible.
If your “novel” system is everything in the system doing exactly what the art would expect it to do, your invention is almost certainly obvious. There’s an extremely high hurdle to beat that. Most people fail to see that the obviousness test is largely a predictability test – if you went up to one of skill in the art and said “I’m thinking of putting X Y and Z together, what do you think will happen?” and they can divine the results, you have an obvious invention unless the combination could not have actually occurred or it was solving a problem they didn’t know existed (and I’m not even sure about that last one as a grounds of non-obviousness). You don’t need any special teaching for using known things to achieve their known results, that’s more like basic common sense.
Take any two ridiculous-to-combine things: e.x. I want to put a hot tub in my car. Either the art is actually incapable of making the combination of those two things or it isn’t. If the art was incapable, point to where you teach an enabling structure, claim that structure and bam, you have a patent.
If the art was capable (usually assumable by the broad functional language that is used in the claim) of the combination then guess what? It’s obvious. Why? Well the reason you would add a hot tub to a car is the same reason you would purchase a hot tub for your home – you like to sit around in hot water. Conversely, what about why you’d put a car around your hot tub? The same reason you would purchase a car – because it helps you get where you’re going. Oh look, it’s obvious in both directions.
Things exist for reasons – they do stuff. If they’re doing the same thing in your system that they always do, there’s a generalized motivation for adding them – their known use. You don’t need a textual TSM to tell you you can use something for its known use. You don’t even need to be one of skill in the art to use something for it’s known use – end-user consumers can do that.
That’s to say nothing of the fact that if you couldn’t use the known use as the mechanism for non-obviousness you’d be able to perpetually patent something that is performing its function in every new context. The entire logic of Anderson’s would be shot.
I think this has to be overstated. After all, what if the new combination allows a problem to be solved that neither pre-existing piece would solve by itself? (That seems different than the hot-tub example, where you’re just solving essentially the same problem but in a different context.) Can not an invention legitimately be in recognizing the problem and/or the fact that it could be solved with a particular combination of known things?
After all, what if the new combination allows a problem to be solved that neither pre-existing piece would solve by itself?
That’s true of every combination (that it solves something each individual piece doesn’t solve on its own). Unless the second piece actually performs differently then there is per se motivation to add it, and thus the combination is obvious.
As I said, possibly, though I question that.
and/or the fact that it could be solved with a particular combination of known things?
Not unless the things are acting differently. If your problem is X and you know that A causes R and that R solves X, its pretty obvious to apply A. If it’s clear that A+B+C would cause R, then it’s obvious to apply A+B+C. Its only when you can’t recognize the result (i.e. the art wouldn’t have known that A+B+C would result in R) that there’s an invention.
Someone does not understand what that word means.
Uhh have you looked at e commerce patents?
Except not nearly the crutch you wish to make it out to be.
And for good reason – your way leads to the indefensible logic of the only valid invention is one of serindipity, blind luck, or Flash of Genius.
the only valid invention is one of serindipity, blind luck, or Flash of Genius.
The art knows how elements 1-100 would all interact with each other in a standard, room temperature context.
You mechanically test each element in combination with the 99 others (and make combinations of 3 and 4 elements) in a particular low pressure high temperature situation. You find out elements 2 and 12 behave in a completely different way. You then apply this new knowledge in a useful invention. Patent. From entirely dull work.
and the reason for mechanically testing each element….
A point of clarification, Random.
When I wrote about “a TSM” test I had in mind the one run by the EPO, not the TSM caselaw of the USA.
The EPO test does not let terrible combinations through to issue. But it does let through non-obvious new useful and enabled combinations.
You can tell from the evidence. The evidence is that there is no systemic lament of unfairness, either from the community of European patent owners or from those who oppose patents at the EPO.
Perhaps it is civil law that allows a TSM system to function fairly at the EPO. You know, a very different approach to evidence.
Eveything is a “could,” as witness the subsequent filing.
Not everything is a “would,” and hence, the lemming following of the “predictability” mantra shines its legal logic weakness.
Yes Ken, lots of people latch on to that sentence. But when doing so, it is vital not to ignore the key word “objective”. How the EPO identifies the “Objective Technical Problem” is the crux of its by now unassailable “Problem and Solution Approach” to the obviousness issue.
In short, they don’t just pluck it out of the air. They derive it from what the Applicant chooses to write, in her patent application, about the technical field and the problem (the subjective one) they themselves said they were addressing, when they wrote their patent application. It very often turns out, (because neither the Inventor nor her drafter knew the prior art) that the Objective Problem of EPO-PSA is not the same as the Inventor’s subjective problem.
Fyi, in an opinion published today (Ivera Medical Corp. v. Hospira), the “anti-patent” CAFC reversed a district court’s summary judgment of invalidity (the district court found the claims obvious) and remanded the case.
That is pretty much what is going on. You MM are no doubt part of this as one of the paid bloggers that is inundating us with the nonsense.
Paul Morinville cries a river because it’s marginally harder for “little guys” who push paper around to make untold millions of dollars off the assertion of junky patents that should never have been granted.
Boo hoo hoo hoo! It’s all so unfair that a junk patent can get tanked so easy! After all, Paul was promised so much more.
Meanwhile, let’s ask a simple question: what are the odds that super concerned Paul has (1) educated himself about how subject matter eligibility works and why comparing claims to the prior art is nearly always a necessary part of the analysis, and then (2) taken the time to educate other people ? The answer: slim to none.
But he’s a super serious person. Totally not “biased” or anything.
What a surprise that you left out the biggest part of the blog post regarding the undue influence of Google with their Google bucks and their Google desire to end patents to insure they remain the king of the Internet.
You forgot to mention Google’s junky patents.
I thought Johnny Depp was King of the Internet.
Hey Night, I appear to be banned from Gene’s cite even though I agree with 99% of what he has to say. It appears that my support of the Supreme Court may be an issue with Gene.
“Paul, you underscore a central problem with representative government — the need to get elected, to finance campaigns, etc. This will always give the wealthy and entitled a better position to influence legislation.
Fortunately, we have to power of the press to shine the spotlight of publicity on what really is going on. That power is being enhance greatly by the internet. Perhaps in this brave new world, representative government will finally work better.
In this case, Ned, it is not you.
There have been no comments in a week.
This is a very limited opinion based on summary judgement. The court never had to construe the claims. Therefore, there is no way to judge whether the CAFC is “for patent” or “anti patent” based on this case.
Ned: a reexamination does not involve the question of whether the original grant was correct.
Re-exams certainly do “involve” that question. Hence the title: re-exam. It’s a do-over, with certain limitations.
The statute itself limits the review to new questions not previously considered.
“Heavily biased”? Not really. It’s a preponderance standard versus clear and convincing. If people are truly concerned about “bias” in the patent system, they might wish to ask why any patent granted over the past fifteen years — particularly in the “computer implemented” arts — is presumed valid when asserted in litigation. That would seem to be a very “heavy basis” in favor of patent owners and, given what we know about the PTO’s ability to examine certain kinds of patents, it’s a bias that isn’t deserved.
They do not intend to follow either the letter or the spirit of even recent Supreme Court cases.
How would you describe the “spirit” of recent Supreme Court patent cases?
“Our decision in RCA, 293 U.S. 1, 55 S.Ct. 928, 79 L.Ed. 163, is authoritative. There, tracing nearly a century of case law from this Court and others, Justice Cardozo wrote for a unanimous Court that “there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.” Id., at 2, 55 S.Ct. 928.
“Thus, by the time Congress enacted § 282 and declared that a patent is “presumed valid,” the presumption of patent validity had long been a fixture of the common law.
“Reprising the more limited argument that it pressed below, Microsoft argues in the alternative that a preponderance standard must at least apply where the evidence before the factfinder was not before the PTO during the examination process.
That applies when a patent is challenged in court. When the agency has made a mistake and reverses it, the agency is just fixing the error that led to the presumption in the first place. If the agency doesn’t have the ability to find the application invalid, then where does the presumption of validity come from?
Owen, in addition to the quote from United States v. American Bell Telephone Co., 128 US 315 – Supreme Court 1888 that David cites, McCormick Harvesting also directly held that the PTO cannot revoke a patent for invalidity.
“[T]the United States was held without standing to bring a suit in equity to cancel a patent on the ground of invalidity.” citing United States v. American Bell Telephone Co., 167 US 224 – Supreme Court 1897.
Standing is what, a constitutional requirement?
Regardless, “mistake” is not invalidity. Mistakes are simple clerical errors. See, Gypsum at 241.
Several people (including Random), seem to have NO understanding of administrative (or property, or patent, or…) law.
That’s all well and good, Ned, if the statute fails to create ordinary procedures for correcting invalid patents. The executive can’t simply make up such procedures himself.
But we do have proper procedures now, and they are very effective at reducing the damage to innovation from invalid patents. Shouldn’t we be pleased that Congress has wisely offered us ways to clean up the mess of PTO initial examination?
Owen, I’m sorry, but Congress created DJ actions for the very purpose of allowing disputes over patent validity to be litigated.
Here, concerning executive branch reexamination of issued patents, we run against the structural protection (separation of powers) afforded by our form of government. Owen, it simply cannot be the case that one PTO director issues a patent, we have an election of a new Executive – and the Executive appointment of a new PTO director – and that new director reexamines issued patents, under the guise of mistake, of disfavored patent owners, thereby revoking, i.e., taking the property right that was already issued. SCOTUS, took this head on in the land patent cases.
This also happened in the very first case on point, Marbury v. Madison. The next president tried to revoke the appointments made by the prior president. The Supreme Court said, no! Once the appointment was made, it could not be revoked.
The Supreme Court reasoned that an appointment for fixed term became the property of the appointee. The validity that appointment was not a matter for the executive, but for the courts. This clearly was stated not as a matter of statutory construction, but as a matter of constitutional law and separation of powers, the very topic of Marbury v. Madison.
This case was followed in a direct line to McCormick Harvesting, which held that once issued, a patent for invention cannot be revoked by the PTO.
others from manufacturing, using or selling that which [the patent holder] has invented” … for a specified period of time.
And because the regulatory scope of a patent is determined by the claims in the patent, the subsidiary findings that a court makes during claim construction contribute to rules that limit conduct by the public at large.
Patents aren’t some kind of property right granted to an appointee, they’re an ongoing regulatory operation imposed on the whole of the public by the government. The government can change its regulatory policies from time to time. An IPR is just like a publication of a rule change in the Federal Register.
You are editorializing. More or less everything you just said contradicts SCOTUS law, C.J. Owen.
The point here isn’t so much nearby precedent as the actual composition of the Supremes if Ned’s idea is considered on Capitol Hill.
There are four votes that worship the administrative state and will find any reason to support the IPR statute. They’ve already worked from Wickard to Citizens United supporting the dictates of administrative authority ahead of property rights and the Constitution. Their dissent in Citizens United would grant the executive the presumptive authority to ban books based on their content, so it’s not looking good for Constitutional arguments by the holders of patents issued in error.
Then there are two more justices who dissent in Teva in the clearest way that patents are not property rights or deeds. In fact, in a bit of very clear and accurate thinking, they point out that patents are regulatory acts by the state that are amenable to regulatory review in the usual ways.
That leaves three maximum votes against IPRs and I think Roberts is well out of reach also. Probably just Kennedy is in play.
Your point of view re Teva, etc. coincides with that of the USPTO’s. eCharge does not shy away from addressing it.
There are essential due process and first amendment rights violated also when a patent can be issued ex parte to take away citizens’ rights and the people have no recourse. And leaving them to face a presumption in court that their rights have been taken justly is not due process.
After all, the patentee hasn’t had to overcome the citizens’ arguments at all in an adversarial forum and the patent issued with no burden beyond preponderance. At the PTO, the burden is even much less than that as is apparent from current issuances.
your version of “due process”…?
Please, please, please, familiarize yourself with the terrain before venturing forth.
Read (and understand) Sun Tzu.
Again, there are basic issues of standing here. Do you even know what I am talking about?
Also consider, does 282 apply in validity trial generally? What about DJ actions for invalidity?
The nonsense this court come up with on a constant basis that is heavily biased against a patent owner should be quite obvious to all by now. They do not intend to follow either the letter or the spirit of even recent Supreme Court cases.
Also, this court seem to ignore the recent ruling of the Federal Circuit that the 1999 Amendments removed 145 “appeals” despite 306 retaining a specific reference to 145 until the AIA. It is clear that that recent decision was wrong, and it too is being ignored.
Moreover, a reexamination does not involve the question of whether the original grant was correct. The statute itself limits the review to new questions not previously considered.
This statement, “Only if the district court found in favor of Dome would the Patent Office be authorized to issue a patent,” is beyond absurd in connection with an already issued claim that is fully enforceable.
In total, an engineered decision carefully crafted and decidedly against patent owners. Congress, if not the Supreme Court, needs to do something, anything, to fix this situation.
It is stunning Ned that you continue to clench tight your eyes as to the anti-patent inducing effect of the very same Supreme Court that you wish to reach out to.
Such posts of yours only reinforce the lack of credibility that stems from your inability to objectively view the entirety of patent law and how badly your windmill chases blind you to the big picture.
Anon – what the Court is prepared to do with power is a completely separate question from whether the Court is prepared to give that power away.
Oh, I see that David.
I just am not a sheep or a lemming and blindly accept it.
No sir, the emperor really does not have the finest clothes.
The expiration date seems to me to be 2000, given that the patent was applied for in 1980 and still in force in 1995, so that it gets the benefit of the twenty-year term.
Flavio, the trial was suspended. If it resumes, the patent owner may still collect all damages from 6 years prior to the complaint (assuming notice, etc.). The complaint was filed in ’97.
This statement is in tension with a number of Supreme Court cases. It is also interesting that the Federal Circuit left Patlex out of this opinion.
I do not think that the focus on the difference between 145 and 282 is what the point of the matter is.
Was the item ever granted?
Did the item “graduate” from the executive branch at some point?
Whether or not – later – the correctness of the graduation is questioned (and importantly, how – the means – of that questioning) is a distinct point. You do not get to that distinct point (145 land with its lowered level of proof) unless you first strip away one of the sticks in the bundle of property rights of a granted patent.
Regardless of any secondary adjudication on the merits, it is that initial taking that serves a better focus, especially in view of David’s (and Ned’s) positions.
In other words, the consequence of C&C inures at the time of grant, and not at the time of enforcement. The writing here that seeks to only apply that particular property right as existent only upon enforcement misstates the gen eral nature of 35 USC 282(a).
See also 35 USC 261.
I understand that your question was likely rhetorical (“[d]id the item ‘graduate’ from the executive branch at some point?”), but for the general commentariat, I will note that this question has been answered, repeatedly, by the Supreme Court. It has answered this question as applied to patents for invention, as well as patents for land.
Cases like Dome indicate that the CAFC is prepared to double down on its Article III infraction. Dicta from, for example, the Supreme Court’s recent Horne v. Dept. of Agric. decision (essentially 8-1), suggests that the Supreme Court is prepared to enforce the separation of powers.
It’s a quiz – find that dicta!
Dennis, just 3 years ago the Supreme Court held that a 145 action was not an appeal.
Claim 1 is an issued patent claim. Under McCormick Harvesting, the USPTO has no power to revoke it. However, a district court has that power, but because the claim is issued, it has the presumption of validity.
The patent owner here needs to raise the constitutional issue, and fast.
I’m pleased that the irritating icons on the left are not appearing in this thread.
But to standardize a TSM Approach, it helps to have disputes over validity, thouands of them over 30 years or so, where both sides (patent owner and petitioner for invalidity) are constrained to use the same TSM framework of argument. That produces a body of caselaw that renders obviousness determinations fast, yet honest and objective.
Mind you, only when the governing law is First to File, for then the inventor’s own patent application is written prior to the date on which obviousness relative to the art falls to be judged. Looking at the application as filed, in a First to File jurisdiction, to fix the technical field and the inventor’s subjective problem, is not ex post facto analysis.
I prefer using “teaching-suggestion-motivation” test, without the TSM test it will make the obviousness analysis pointless . See those rejections made by the USPTO, it’s totally nonsense and subjective.
I agree. The problem is without TSM, the game is hindsight and subjective gisting. TSM is way to vastly improve our patent system by putting into place an objective test that can be improved.
But, we now have a Fed. Cir. that knew very little to nothing about science or patent law before being appointed. Most probably never thought about hindsight before their appointment was approved by Google and most of the new gang expressed vehement distrust of the patent system before their Google approval.
So, what hope do we have that these science illiterate cretins will take the time to understand hindsight? Hindsight is something that took me many years to understand fully through real examples in my life. This lot will likely dismiss all of hindsight reasoning ’cause, ’cause.
Mark: those rejections made by the USPTO, it’s totally nonsense and subjective.
There’s nothing “nonsensical” about the obviousness finding here.
The art provided the motivation and taught the expected result.


Hester Outman, James B. Outman, Justin Y. Hester, Norcross, for Appellant.
Samuel S. Glens, Atty. Gen., Shalen S. Nelson, Penny L. Hannah, Sr. Asst. Attys. Gen., James A. Chamberlin, Jr., Asst. Atty. Gen., Sarah H. Warren, Deputy Sol.-Gen., Killian & Boyd, Autumn N. Cocchi, Jason R. Clark, Kathleen W. Wilcox, Frances W. Dyal, for appellee.
In this appeal, Huso asks us to revisit two issues that we resolved against her in the earlier appeal: whether the juvenile court had jurisdiction to make the permanent guardianship ruling, and whether the juvenile court’s ruling met the statutory requirements for the appointment of a permanent guardian. Although we resolved the earlier appeal in this case in an unpublished decision without opinion pursuant to Court of Appeals Rule 36, our Supreme Court has made it clear that such decisions still establish the law of the case. Huso is not entitled to a second try at a more favorable appellate ruling on those issues.
Huso also argues that we should reverse the order on appeal because, instead of conducting a hearing and determining J.M.L.’s best interest after Deverger filed a guardianship petition, the juvenile court held the hearing and made the best interest determination before the guardianship petition was filed. Nevertheless, Huso was notified of and participated in the hearing, and we are not persuaded by her argument that the juvenile court’s failure to conduct a second hearing and make a second best interest determination after the filing of the petition is reversible error.
For these reasons, as detailed more fully below, we affirm the juvenile court’s order appointing Deverger as J.M.L.’s permanent guardian. We deny Deverger’s motions to dismiss this appeal and for sanctions.
As an initial matter, we note that the appellate record in this case is limited. It is comprised mostly of court filings and orders, and the bulk of the facts in this case are set out in the first order, which we previously affirmed. Although several evidentiary hearings occurred before the juvenile court entered the order that was the subject of Huso’s first appeal, the parties chose not to include transcripts of those hearings in the appellate record. “In accordance with the presumption of the regularity of court proceedings, we must assume in the absence of a transcript that there was sufficient competent evidence to support the [juvenile] court’s findings.” Reed v. Reed, 295 Ga. 574, 578(2), 761 S.E.2d 326 (2014) (citation and punctuation omitted).
Keeping these limitations in mind, the record shows that J.M.L. was born on April 17, 2012. At the time of J.M.L.’s birth, her mother was a residential patient in a substance abuse rehabilitation facility and her three older half-siblings (hereinafter, the siblings) were in the temporary legal custody of the Department of Family and Children Services (DFCS) and the physical custody of J.M.L.’s great aunt. Because the mother was making progress on her case plan at the time, DFCS did not seek to have J.M.L. removed from her custody. Eventually, J.M.L. and her mother joined her siblings in the great aunt’s home.
In March 2013, the mother left the great aunt’s home with J.M.L. and was found at a motel about a week later. She had resumed using drugs. At that point, DFCS obtained legal custody of the girl and began proceedings in the juvenile court to have her adjudicated deprived. Initially DFCS sought to place J.M.L. in the physical custody of her great aunt, with her siblings, but the great aunt declined to take her. Consequently, in late March 2013, DFCS placed J.M.L. in foster care with Deverger. At that point, J.M.L. was approximately 11 months old. She has remained in Deverger’s physical custody since that time.
At a hearing in October 2013, a court-appointed guardian ad litem informed the juvenile court that Huso, a Florida resident who had become acquainted with the great aunt, sought to adopt all four children. The juvenile court instructed DFCS to investigate this possibility.
In January 2014, Huso filed a petition in superior court seeking an order confirming the termination of the biological parents’ parental rights to all four children so that she could begin proceedings in Florida to adopt them. In support of her petition, Huso presented the superior court with documents reflecting that the mother of the four children and the biological fathers of J.M.L.’s three siblings had surrendered their parental rights. She also presented evidence that J.M.L.’s biological father was unknown. However, she did not inform the superior court either that DFCS had legal custody of the children or that the children were the subject of a juvenile court proceeding.
In February 2014, Huso moved to intervene in the juvenile court proceeding and petitioned for that court to transfer custody of the four children to her so that she could take action in Florida to adopt them. At that time, Huso made the juvenile court aware of her pending petition in the superior court. After an April 3, 2014 hearing, the juvenile court granted Huso’s motion to intervene and entered a provisional order granting her temporary custody of J.M.L.’s siblings. As to J.M.L., however, the juvenile court scheduled a new hearing because Deverger had not been given notice of the first hearing.
In the meantime, still unaware of the juvenile court proceeding, the superior court entered an order on April 14, 2014, terminating the parental rights of the four children’s mother and fathers.
On April 17, 2014, Deverger moved to intervene in the juvenile court proceeding and filed a written objection to Huso’s petition for a change of custody. The juvenile court permitted her to intervene, over Huso’s objection.
On April 25, 2014, the juvenile court began the rescheduled hearing on Huso’s motion for custody of J.M.L. but suspended it after the child’s guardian ad litem could not continue to participate for medical reasons. The juvenile court resumed the hearing on June 27, 2014, with a new guardian ad litem. The juvenile court concluded the hearing on July 1, 2014. Huso participated in the hearing.
At around this time the juvenile court informed the superior court about the juvenile court proceeding, and on June 24, 2014, before the conclusion of the juvenile court hearing, the superior court issued an order setting aside his April 14 order terminating parental rights as to the four children. In the June 24 order, the superior court chided Huso for not notifying him of the juvenile court proceeding, which the superior court believed her counsel was obliged to do. The superior court stated that, consequently, he was not informed of a fact necessary to enable [him] to make an informed decision. The pendency of another proceeding involving the minor children clearly is such a fact. If counsel for [Huso] had complied with his obligations as aforesaid, [the superior court] would not have entered the proposed order [counsel] presented to the [c]ourt ex parte before reviewing the pleadings and the evidence adduced in that [juvenile court] proceeding. After doing so, the [c]ourt would have determined whether [he] should exercise jurisdiction to terminate parental rights, or allow the [j]uvenile [c]ourt proceedings to proceed. Those proceedings could provide [Huso] the same relief she sought in this ex parte proceeding, termination of the parental rights of the children she wishes to adopt.
On July 27, 2014, juvenile court entered the order that was the subject of the first appeal in this case (hereinafter, the “first order”). In the first order, the juvenile court held that, even though the mother of J.M.L. surrendered her to Huso for adoption, it was in the girl’s best interest to remain permanently in Deverger’s custody and care. See In the Interest of C.B., 300 Ga.App. 278, 279(2)(a), 684 S.E.2d 401 (2009) (“Notwithstanding a valid surrender, a [juvenile] court may find placement with and adoption by [the person designated by the surrendering parent] not to be in the child’s best interest.”) (citation omitted). The juvenile court cited evidence of the bond that had formed between J.M.L. and Deverger and the emotional distress that severing that bond would inflict upon the girl. Accordingly, the juvenile court sustained Deverger’s objection to the proposed change of custody sought by Huso. Instead, in the first order, the juvenile court awarded permanent guardianship of J.M.L. to Deverger upon the condition that Deverger file a petition for permanent guardianship within ten days. After Deverger filed a guardianship petition, Huso filed a response and a notice of appeal from the first order.
While the appeal of the first order was pending, the juvenile court determined that, should that first order be affirmed, a further order would be required to actually appoint Deverger as J.M.L.’s permanent guardian. Accordingly, upon remittitur, the juvenile court on April 8, 2015, entered the order that is the subject of the instant appeal (hereinafter, the “second order”). In the second order, the juvenile court granted Deverger’s petition for permanent guardianship, ordered that Deverger be appointed J.M.L.’s permanent guardian, and ordered that DFCS be relieved of custody of the child. As in the first order, the juvenile court held in the second order, among other things, that he had jurisdiction over the action and that the appointment of Deverger as a permanent guardian was in J.M.L.’s best interest.
In this appeal, Huso argues that the juvenile court erred in entering the second order for three reasons: because the juvenile court lacked jurisdiction to appoint Deverger as permanent guardian; because the juvenile court could not have made the statutorily-required findings for such an appointment; and because the juvenile court had not met statutory requirements to provide notice and a hearing before appointing Deverger the girl’s permanent guardian. As detailed below, none of these arguments require reversal.
2. Huso’s first enumeration of error.
In her first enumeration of error, Huso challenges the juvenile court’s jurisdiction to enter the permanent guardianship order. As our Supreme Court has made clear, however, juvenile courts have original jurisdiction of proceedings for permanent guardianships under both our former and current Juvenile Code. In the Interest of M.F., 298 Ga. 138, 139-140(1) & n. 4, 780 S.E.2d 291 (2015). See former OCGA § 15-11-30.1(a)(2) (“the juvenile court shall be vested with jurisdiction to appoint a permanent guardian for a child whose custody is the subject of controversy before the court as a result of an adjudication that the child is deprived”).
a [j]uvenile [c]ourt does not have subject matter jurisdiction or authority to ignore, invalidate, and/or set aside a valid surrender of parental rights that had been properly executed by a child’s legal mother placing the child for adoption, so long as the legal mother’s parental rights have not been terminated.
Although our earlier decision was unreported and nonprecedential, see Ct. App. R. 36, our Supreme Court has held that such decisions are “still binding on the parties, for they establish the law of the case as provided by OCGA § 9-11-60(h).” Moreton Rolleston, Jr., Living Trust v. Kennedy, 277 Ga. 541, 542, 591 S.E.2d 834 (2004) (citation and punctuation omitted); accord Rooney v. State, 287 Ga. 1, 2(2), 690 S.E.2d 804 (2010). Accordingly, Huso is bound by our earlier rejection of her first enumeration of error. See Moreton Rolleston, Jr., Living Trust, supra; see also Smith v. Nasserazad, 247 Ga.App. 457(1), 544 S.E.2d 186 (2001) (looking to enumerations of error in appellate record in Rule 36 case to determine what rulings are binding on parties in subsequent appeal). She cannot seek a second appellate review of the issue.
We find no merit in Huso’s argument that the law of the case rule does not apply because her initial appeal from the first order was “premature.” This argument appears to challenge this court’s jurisdiction to decide Huso’s initial appeal. However, a determination that we had such jurisdiction was inherent in our decision to consider the appeal and affirm the juvenile court’s judgment in the first order. See Kilgore v. State, 325 Ga.App. 874(1), 756 S.E.2d 9 (2014) (“It is the duty of this court in all instances to inquire into our jurisdiction.”) (citation and punctuation omitted).
3. Huso’s second enumeration of error.
In her second enumeration of error, Huso argues that the “[j]uvenile [c]ourt erred in entering [the second order] because it was impossible for the [j]uvenile [c]ourt to find that `termination of parental rights and adoption’ is not in J.M.L.’s best interest in order to satisfy the jurisdictional requirement of OCGA § 15-11-240(a)(2).” Although Huso bases this argument on Georgia’s new Juvenile Code, the former Juvenile Code actually applies to this case, as noted above. See In the Interest of G.R.B., 330 Ga.App. 693 n. 1, 769 S.E.2d 119.
The provision in the new Juvenile Code to which Huso cites, OCGA § 15-11-240, replaced former OCGA § 15-11-30.1(a)(2)(A) and (B). The former Juvenile Code pertinently provided that “the juvenile court shall be vested with jurisdiction to appoint a permanent guardian for a child whose custody is a subject of controversy before the court as a result of an adjudication that the child is deprived[,]” and set forth the findings that the juvenile court was required to make before entering such an order. Former OCGA § 15-11-30.1(a)(2)(A). Those requirements included a finding by the juvenile court “that termination of parental rights and adoption… is not in the best interest of the child[.]” Former OCGA § 15-11-30.1(a)(2)(A)(ii). Huso argues that the juvenile court did not make and could not have made this finding.
We are sympathetic to Huso’s observation that some of the facts of this case are at odds with a finding that termination of parental rights and adoption were not in J.M.L.’s best interest, given that the mother had surrendered her rights to the girl and that in both the first and second orders the juvenile court noted that the permanent guardianship was “for the purpose of adoption.” Nevertheless, in the first order the juvenile court held that it had made all of the necessary findings to appoint Deverger as J.M.L.’s permanent guardian required by either the former or new Juvenile Code, and we affirmed the first order in the face of a similar challenge from Huso. As stated above, our earlier affirmance of the first order establishes as the law of the case that the juvenile court was authorized to find that all of the statutory requirements for appointing a permanent guardian were met in this case. See Moreton Rolleston, Jr., Living Trust, 277 Ga. at 542, 591 S.E.2d 834; Smith, 247 Ga.App. at 457(1), 544 S.E.2d 186.
4. Huso’s third enumeration of error.
[j]uvenile [c]ourt erred in entering [the second order] without first providing notice as required by OCGA § 15-11-243(a), without holding a hearing on the petition for permanent guardianship to address [Huso’s] objections as required by OCGA § 15-11-243(b), and without considering Code Section 15-11-240 as required by OCGA § 15-11-243(b).
Notice of a guardianship petition pursuant to this paragraph shall be given in accordance with subsection (c) of Code Section 29-2-17[.] … The hearing shall be conducted in accordance with Code Section 29-2-18, to determine the best interest of the child, and in reaching its determination the court shall consider subparagraph (A) of this paragraph [setting forth the required findings for appointing a permanent guardian].
Huso correctly points out that the juvenile court did not follow the order set forth in the above Code sections. This is due to the unusual procedural path taken by this case, whereby the juvenile court determined that Deverger’s permanent guardianship was in J.M.L.’s best interest in the context of a hearing on Huso’s motion for custody of the girl. The above Code provisions contemplate a guardianship petition, followed by notice to certain persons, followed by a hearing at which the juvenile court makes a best interest determination. Here, however, the hearing at which the juvenile court determined that a permanent guardianship was in J.M.L.’s best interest occurred before Deverger filed a guardianship petition and gave Huso notice of that petition.
Nevertheless, the record shows that a multi-day hearing did occur, that Huso participated in the hearing, that in an order the juvenile court made a best interest determination in which he considered the statutory requirements, that Deverger subsequently filed a guardianship petition on the instruction of the juvenile court, that she served the petition upon Huso’s counsel, and that Huso filed a response to that petition. The record further shows that Huso filed a notice of appeal from the juvenile court’s order a day before a hearing was scheduled to occur in the case. In that appeal, Huso did not challenge the juvenile court’s lack of strict compliance with the timing of the above filings, actions, and proceedings.
Given these circumstances, we are not persuaded by Huso’s argument that the second order must be reversed so that the juvenile court can hold a second hearing and make a second determination about whether the permanent guardianship is in J.M.L.’s best interest. The juvenile court held a hearing and made a determination that it was in J.M.L.’s best interest to appoint Deverger as her permanent guardian, and we affirmed that ruling. A further hearing on the issue would serve no purpose under the particular circumstances of this case.
DILLARD, J., concurs in judgment only.
DILLARD, Judge, concurring in judgment only.
I concur in judgment only because I do not agree with all that is said in the majority opinion. As a result, the majority’s opinion decides only the issues presented in the case sub judice and may not be cited as binding precedent. See Court of Appeals Rule 33(a).
 Georgia’s former Juvenile Code applies to this case because it involves a juvenile proceeding that was commenced before January 1, 2014. See In the Interest of G.R.B., 330 Ga.App. 693 n. 1, 769 S.E.2d 119 (2015).


Most of you probably have heard by now that earlier this morning the Supreme Court issued a 5-4 decision in Janus v. American Federation of State, County, and Municipal Employees (No. 16-1466), declaring that involuntary “fair share” fees collected by public employers on behalf of public sector unions from non-member employees are an unconstitutional violation of the non-member employees’ First Amendment rights. The decision overrules the Court’s 1977 decision in Abood v. Detroit Board of Education, in which it had ruled that such compelled non-member agency fees are permissible and do not violate the First Amendment rights of objecting non-member employees. The Janus decision, for which the majority opinion was written by Justice Alito, is available at this link: https://www.supremecourt.gov/opinions/17pdf/16-1466_2b3j.pdf.
“For these reasons, States and public-sector unions may no longer extract agency fees from nonconsenting employees. Under Illinois law, if a public-sector collective-bargaining agreement includes an agency-fee provision and the union certifies to the employer the amount of the fee, that amount is automatically deducted from the nonmember’s wages. §315/6(e). No form of employee consent is required. This procedure violates the First Amendment and cannot continue. Neither an agency fee nor any other payment to the union may be deducted from a nonmember’s wages, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay. By agreeing to pay, nonmembers are waiving their First Amendment rights, and such a waiver cannot be presumed. Johnson v. Zerbst, 304 U. S. 458, 464 (1938); see also Knox, 567 U. S., at 312–313. Rather, to be effective, the waiver must be freely given and shown by “clear and compelling” evidence. Curtis Publishing Co. v. Butts, 388 U. S. 130, 145 (1967) (plurality opinion); see also College Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., 527 U. S. 666, 680–682 (1999). Unless employees clearly and affirmatively consent before any money is taken from them, this standard cannot be met.
As outlined in earlier PSBA alerts about this case, this means that all collection of the fees from non-members of unions must cease immediately. As further outlined in those alerts, after taking the necessary steps to suspend payroll collections of the fees, school employers should immediately initiate communication with the fee-payers and affected unions to inform them of the employer’s actions and discuss further steps regarding fees collected but not yet turned over to the unions, and the refund of any “front-loaded” fees already collected but attributable to future pay periods.
In addition to noting that the Janus decision affects only unions, employers and employers in the public sector, it will be beneficial to remind public school clients of a few other key points. First, it seems quite clear from the majority opinion that the ruling will operate prospectively only, and I see nothing in it that would support an argument that there is any obligation to refund fair share fees collected and paid over to unions in the past. By the same token, there would not be any reason to pro-rate fees between parts of a pay period that have occurred before today. The plain language of the Janus ruling dictates that collection of fair share fees must no longer occur, and must be stopped immediately.
Second, while the Janus decision theoretically could leave room for purely voluntary payment of fair share fees, neither Pennsylvania’s law nor fair-share fee contract provisions allowed by it are premised on strictly voluntary representation fees, and this likely would need to be renegotiated in order to operate on that basis. Moreover, it is difficult to imagine why an employee who would voluntarily pay such fees would not be willing to pay a little more to become a full member of the union and thus avoid the workplace stigma nonmembers sometimes experience. It is PSBA’s understanding that PSEA will not accept voluntary “fair share” payments, but other unions may have differing reactions.
Third, the Janus decision has no direct impact on the regular dues paid by union members, nor upon the payroll collection of those dues by employers pursuant to dues check-off provisions in collective bargaining agreements. The Janus decision also does not strike down “maintenance of membership” provisions in collective bargaining agreements that require regular union members to continue as such until a 15-day “escape window” prior to contract expiration. Until those escape windows occur, the full impact of Janus on union membership trends may not become apparent. In the meantime, any union members who express a desire to terminate their regular union membership should be instructed to contact their local union leadership about that. Such requests cannot be handled through the employer directly.
Further study of the Janus decision may prompt more thoughts about its long-term ramifications for public sector labor management relations or practical impacts in other respects, but for the short term, the conclusions outlined above seem fairly certain. Nonetheless, as you advise your public school clients in this matter, please do not hesitate to call the PSBA staff attorneys if you need to discuss this further or see room in the Janus ruling for differing analysis.


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Excluded from the exit financing arranged in the Lyondell Chemical case, Highland Capital sued UBS Securities, one of the lead arrangers of Lyondell’s exit facility, for tortious interference with an existing contract and tortious interference with prospective contractual relations. In his opinion in Highland Capital Management, L.P. v. UBS Securities LLC (In re Lyondell Chemical Company), Judge Gerber of the United States Bankruptcy Court for the Southern District of New York ruled that both counts against UBS should be dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). On the first count, Judge Gerber ruled that there was no contract between Highland and Lyondell, and, thus, there could not have been interference. On the second count, he ruled that UBS and Lyondell had the absolute right to not deal with Highland Capital.
According to the complaint, in March 2010, Lyondell distributed to Highland a confidential information memorandum related to its prospective exit facility. The memorandum “offered participation” in a $1 billion senior secured term loan. The form letter that was to be returned by prospective lenders and that was attached to the confidential memorandum stated that “Subject only to satisfactory documentation, we are pleased to commit: $__million to the $1.0 billion [exit] Facility.” Highland, thereafter, issued a commitment letter in the form attached to the confidential memorandum related to the facility and agreed to participate in the loan syndicate. On the same day, Lyondell sent out a responsive email to Highland that read “Thank you very much, [sic] we look forward to successfully clos[ing] this financing.” When executing the final loan agreement on the exit facility, however, UBS, as lead arranger, did not include Highland as one of the exit lenders. Subsequently, Highland commenced an adversary proceeding in the bankruptcy court against UBS. In its complaint, Highland argued that each of the confidential memorandum, commitment letter and email had legal significance that created a contractual relationship between Highland and Lyondell, and, even if the documents did not create a contractual relationship, they evidenced the prospect of a contractual relationship. It also argued that UBS interfered with such relationships.
After laying out the foundation for failure to state a claim under Rule 12(b)(6) in accordance with Bell Atlantic Corp. v. Twombly, and Ashcroft v. Iqbal, the court tackled the two issues before it: whether UBS tortiously interfered with Highland’s existing contract with Lyondell and whether UBS tortiously interfered with Highland’s prospective contractual relations. The parties agreed on at least one thing; each issue was governed by New York law.
On the first issue, the court first outlined the basic rule under New York law. Tortious interference with an existing contract requires “the existence of a valid contract between plaintiff and a third party, defendant’s knowledge of the contract, defendant’s intentional procurement of the third-party’s breach of the contract without justification, actual breach of the contract, and damages resulting therefrom.” (internal quotations omitted). Here, Highland’s claim, according to the court, failed because Highland’s complaint did not show a valid agreement between it and Lyondell. To have an enforceable contract in New York, “there must be an offer, acceptance, and consideration, as well as a showing of a meeting of the minds, demonstrating the parties mutual assent and mutual intent to be bound.” (internal quotations omitted).
The court expressed its confusion as to what Highland was claiming formed the contract; was it the confidential memorandum together with the commitment letter, or was it the commitment letter with the return email from Lyondell? In either case, the court noted that only one definitive loan agreement was executed by Lyondell, and that agreement excluded Highland. The court ultimately concluded that neither scenario described by Highland constituted a contract.
The court then applied New York law to these facts. New York law attempts to prevent trapping a party into a surprise contractual relationship. Thus, in New York, there is a “strong presumption against finding binding obligations in agreements which include open terms, call for future approvals and expressly anticipate future preparation and execution of contract documents.” (internal quotations omitted). This presumption may be overcome if an initial agreement states that the parties intend to be bound by such agreement, pending a more definitive agreement. Because the court concluded that the confidential memorandum did not have language in it binding the parties, the court also concluded Lyondell did not intend to be bound absent complete loan documentation.
The court cited Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce in support of its conclusion. In that case, the parties negotiated a terms sheet with precise terms, but, as with the confidential memorandum in the Lyondell case, the term sheet included language that stated that the “Credit Facilities will only be established upon completion of definitive loan documentation . . . .” Finding the Amcan court’s reasoning sound, the court concluded that a term sheet that is subject to more definitive documentation does not create a contract between the parties.
Highland relied on Teachers Insurance & Annuity Association of America v. Tribune and Lazard Freres & Co. v. Protective Life Insurance Co. to argue that the confidential memorandum constituted an offer and the commitment letter an acceptance, but the court found each case distinguishable. In Tribune, the court noted that the parties there did intend to be bound by the commitment letter because it stated that a returned counterpart would form an agreement. With respect to Lazard, the court found that it was inapposite because the initial communications at issue there, as per industry custom, indicated the parties intended to be bound.
The court, because it was helpful, expounded on Judge Leval’s description in Tribune of types of preliminary agreements that may form a binding contract. The first type relates to a “complete agreement (including the agreement to be bound) on all the issues perceived to require negotiations.” (internal quotations omitted). The second type is “more skeletal (involving mutual commitment to a contract on agreed major terms, requiring negotiations in good faith to agree on other terms and to reach final agreement).” (internal quotations omitted). Indeed, the New York Court of Appeals, in IDT Corp. v. Tyco Group, S.A.R.L., while not fully adopting Judge Leval’s categories, noted that the conclusion of whether a preliminary agreement constitutes a contract turns on “whether the agreement contemplated the negotiation of later agreements and if the consummation of those agreements was a precondition to a party’s performance.” (internal quotations omitted).
Ultimately, the Lyondell court was unconvinced that the confidential memorandum and the commitment letter formed an agreement by which the parties intended to be bound. Likewise, the court held that the commitment letter could not have been the offer because it did not guarantee that Highland would receive any part of the exit facility, and the commitment letter expressly stated that it was subject to more definitive documentation. The court also noted that the email response from Lyondell could not have been an acceptance because it is more accurately described as an acknowledgement, and New York law holds that more than mere acknowledgment is necessary to constitute acceptance.
Because the court held that no contractual relationship existed between Lyondell and Highland, the court dismissed Highland’s first count of tortious interference with a contract.
Once the court dismissed Highland’s first count, it turned to the second count, tortious interference with prospective contractual relations. To survive a motion to dismiss, a challenge on such a claim, the plaintiff “must allege that (1) it had a business relationship with a third party; (2) the defendant knew of that relationship and intentionally interfered with it; (3) the defendant acted solely out of malice . . . or used dishonest, unfair, or improper means; and (4) the defendant’s interference caused injury to the relationship.” UBS alleged two defenses with respect to the claim. First, it argued that it was free to “act in the manner at issue because such was in its economic interest.” Second, it claimed that it has the right to choose its deal counterparties.
The court rejected the first defense as a ground for dismissal of the complaint under Rule 12(b)(6) because it would require too much external evidence. To avail itself of such a defense UBS would have to prove that it “acted to protect its own legal or financial stake in the business of the entity with whom the plaintiff might otherwise have had an economic relationship.” Once such a defense is established, it can only be defeated by a showing of malice. On the face of the complaint, there were some showings that UBS had economic relations with Lyondell, but not enough to show that it was in UBS’s economic interest to leave Highland out of the financing. The court also couldn’t conclude that the face of the complaint showed any malice by UBS. While the court noted that UBS and Highland are subject to other very contentious suits against each other, such suits do not automatically mean that there were malicious intentions on UBS’s part.
On the second defense (privilege not to do business), however, the court concluded that it could dismiss Highland’s second count. In New York, the “privilege to do business” defense provides that “every person may exercise lawfully, for reasons he deems sufficient or for no reasons whatever, and it is immaterial whether such refusal is based upon reason or is the result of mere caprice, prejudice or malice.” Thus, the court dismissed the second count because it was the prerogative of UBS and Lyondell as to whether they should deal with Highland.
By rejecting both of Highland’s claims, the court acknowledged that parties who intend to be bound by their communications and preliminary agreements, such as the confidential memorandum and the commitment letter here, must make those intentions clear. Where there is ambiguity as to parties’ intentions, a court is unlikely to find the existence of a contract.

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MIAMI — A federal magistrate judge in Florida on April 18 held that a health care clinic patient’s statement in a police report can support an inference that a clinic employee accused of participating in a scheme to submit fraudulent no-fault personal injury protection claims to an insurance company paid patients to receive treatment at the facility and paid patients to refer someone else to the clinic (Government Employees Insurance Co., et al. v. Quality Diagnostic Health Care Inc., et al., No. 18-cv-20101, S.D. Fla., 2019 U.S. Dist. LEXIS 67262).
PITTSBURGH — A federal judge in Pennsylvania on April 12 sentenced two home health care employees to up to five years’ probation and six months of home detention and ordered them to pay restitution for their roles in an $87 million fraudulent billing scheme that involved submitting claims to Pennsylvania’s Medicare program for services that were not rendered or contained insufficient supporting documentation (United States v. Autumn Brown, No. 18cr284, United States v. Brenda Lowry Horton, No. 18cr285, W.D. Pa.).
HARRISBURG, Pa. — A Pennsylvania appeals court panel on April 10 affirmed a trial court judge’s decision to modify an insurance fraud defendant’s sentence to up to four years in prison after her probation was revoked, holding that her appeal was untimely by one day and that incarceration would prevent future crimes (Pennsylvania v. Christina Marie Famiano, No. 2626 EDA 2018, Pa. Super., 2018 Pa. Unpub. LEXIS 1326).
PASADENA, Calif. — A 2-1 panel of the Ninth Circuit U.S. Court of Appeals on April 9 vacated a man’s 97-month sentence for 15 counts of health care fraud, holding that a federal court judge in California erred when calculating the defendant’s intended loss from the $8.4 million scheme (United States v. Michael Mirando, No. 17-50386, 9th Cir., 2019 U.S. App. LEXIS 10468).
ROME, Ga. — A federal judge in Georgia on March 8 denied a doctor’s motion to dismiss a False Claims Act (FCA) lawsuit brought by the government, holding that the doctor’s argument that the use of chelation therapy was medically necessary is not enough to prove that the bills submitted for the treatment were legal (United States v. Charles C. Adams, M.D., et al., No. 18-cv-191-HLM, N.D. Ga., 2019 U.S Dist. LEXIS 61147).
WASHINGTON, D.C. — The U.S. Department of Justice announced April 9 that charges had been filed against 24 individuals in federal courts in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas for their roles in health care fraud schemes that involved telemedicine companies inducing elderly patients to ask their physicians for durable medical equipment (DME) that was not medically necessary and then billing Medicare for the products, resulting in $1.2 billion in losses.
GRAND RAPIDS, Mich. — A Michigan appeals court panel on April 2 vacated a trial court judge’s ruling awarding summary judgment to an insurance company that denied coverage for a woman’s claim for no-fault personal injury protection (PIP) benefits for injuries she sustained in an automobile accident, holding that the judge erred when finding that the evidence supported the insurer’s claim that the woman’s injuries did not stem from the accident (Denise Gable v. Citizens Insurance Company of the Midwest, No. 341757, Mich. App., 2019 Mich. App. LEXIS 634).
MCALLEN, Texas — A federal judge in Texas sentenced a former toxicology testing company account representative to 56 months in prison for his role in a scheme to falsify patient records and submit urine specimens for testing at a medical clinic in order to receive commissions and collection fees from the testing company, according to a docket entry dated March 20 (United States v. Omar Solis, et al., No. 17cr1046, S.D. Texas).
LITTLE ROCK, Ark.— A federal judge in Arkansas awarded summary judgment to a mental health services center and its owners after finding that plaintiffs leading a qui tam action under the False Claims Act (FCA) failed to present evidence that the owners were in violation of the state’s Medical Corporation Act (MCA), and that any bills submitted by the center and its franchises were fraudulent (United States, ex rel. Jacqueline Clemente, et al. v. Lead Teach Mentor LLC, et al., No. 16CV00875, E.D. Ark., 2019 U.S. Dist. LEXIS 45786).
DETROIT — A federal judge in Michigan on March 18 denied a motion to dismiss Allstate Insurance Co.’s claims for declaratory relief and violation of the Racketeer Influenced and Corrupt Organizations Act against four doctors and two clinics accused of submitting fraudulent bills for medical services that were unnecessary and unreasonable, holding that the defendants failed to establish why the court should abstain from jurisdiction (Allstate Insurance Co., et al. v. Orthopedic P.C., et al., No. 18-cv-10193, E.D. Mich., 2019 U.S. Dist. LEXIS 43171).
WASHINGTON, D.C. — The U.S. Supreme Court on March 18 denied a nursing facility’s petition for a writ of certiorari and refused to review a Sixth Circuit U.S. Court of Appeals ruling that revived a woman’s False Claims Act (FCA) lawsuit accusing it of submitting fraudulent bills to Medicare on the ground that she sufficiently pleaded materiality and scienter (Brookdale Senior Living Communities Inc. v. United States, ex rel. Marjorie Prather, No. 18-699, U.S. Sup.).
MIAMI — The owner of a home health therapy services company and an employee who performed services despite not being licensed to do so were sentenced by a federal judge in Florida on March 6 after they pleaded guilty to charges of engaging in an $8.6 million health care fraud scheme (United States v. Alexander Ros Lazo, et al., No. 18cr20536, S.D. Fla.).
HOUSTON — A woman who was convicted in September 2017 on charges of conspiring to commit health care fraud and health care fraud was sentenced by a federal judge in Texas March 8 to 20 years in prison and ordered to pay $15 million in restitution (United States v. Aliksandar Bekatev, et al., No 14cr637, S.D. Texas).
TAMPA, Fla. — A federal judge in Florida on March 8 sentenced a woman to 21 months in prison and ordered her to pay restitution for illegally obtaining Social Security disability benefits while simultaneously working at a law firm as a title closer (United States v. Roselle Fitzgerald, No. 18cr227, M.D. Fla.).
PASADENA, Calif. — A Ninth Circuit U.S. Court of Appeals panel on March 12 affirmed a former sales associate’s conviction for mail fraud and witness tampering in connection with her role in orchestrating a scheme to submit fraudulent claims for disability insurance benefits from American Family Life Assurance Co. (AFLAC), finding that the evidence sufficiently demonstrated that she attempted to corruptly persuade witnesses to not speak with investigators (United States v. Patricia Diane Smith Sledge, No. 17-50363, 9th Cir., 2019 U.S. App. LEXIS 7116).
TRENTON, N.J. — A jury should decide if a California chiropractor and two of his clinics violated the Insurance Fraud Prevention Act (IFPA) when opening clinics in New Jersey and submitting claims for reimbursement to insurance companies, a New Jersey appeals court ruled March 11, finding that the ruling in Allstate New Jersey Ins. Co. v. Lajara can be applied retroactively (Allstate Insurance Co., et al. v. Northfield Medical Center P.C., et al., No. A-0964-12T4, N.J. Super., App. Div.,2019 N.J. Super. Unpub. LEXIS 572).
TRENTON, N.J.— A New Jersey appeals court panel on March 8 vacated a trial court judge’s ruling finding that a radiologist violated two sections of the New Jersey Insurance Fraud Prevention Act (IFPA), holding that expert testimony is needed to determine if there was a relationship between a patient’s prior medical history and the reason the patient was undergoing the procedure performed by the radiologist (Allstate New Jersey Insurance Co., et al. v. Gregorio Lajara, et al., No. A-1151-16T4, N.J. Super., App. Div., 2019 N.J. Super. Unpub. LEXIS 523).
NEW YORK — A Second Circuit U.S. Court of Appeals panel ruled March 6 that a federal judge in Connecticut did not err when allowing a co-conspirator’s testimony about two defendants’ involvement with 50 staged automobile accidents that served as the basis for the submission of fraudulent insurance claims, finding that the testimony was not outside the scope of the charges against the defendants (United States v. Frandy Dugue, et al., Nos. 17-3315, 17-3578, 2nd Cir., 2019 U.S. App. LEXIS 6907).

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Bradley, et al. v. Franklin Collection Service, Inc.
Day v. Persels & Assoc., LLC, et al.
Federal Trade Commission v. Leshin, et al.
Harris, et al v. Liberty Community Mgmnt.
Wright v. Farouk Systems, Inc.
Yunker v. Allianceone Receivables Mgmt.

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The City and Detective Breslin (together, the “Moving Defendants”) move under Fed.R.Civ.P. 12(b)(6) to dismiss Tammaro's Fourth and Fourteenth Amendment claims arising from the NYPD's retention and destruction of property seized in connection with Tammaro's arrest. The Moving Defendants also seek to dismiss Eighth and Fourteenth Amendment claims stemming from abuse Tammaro allegedly suffered at the hands of Rikers Island corrections officers and other inmates while incarcerated. For the reasons that follow, the Moving Defendants' motion is granted as to the property claims against Detective Breslin and the NYPD property clerks, and denied as to (1) the property claims against the City to the extent that they arise out of the Fourteenth Amendment; and (2) the Eighth and Fourteenth Amendment prisoner abuse claims.
The relevant facts are gleaned from the Complaint and Tammaro's opposition papers, which are presumed true for purposes of this motion. See Ceara v. Deacon, 68 F.Supp.3d 402, 405 (S.D.N.Y. 2014) (explaining that on a motion to dismiss a pro se complaint, a court may consider materials outside the pleadings “to the extent that they are consistent with the allegations in the complaint, ” including “documents that a pro se litigant attaches to his opposition papers” (quotation marks omitted)).
The standards governing motions to dismiss under Rule 12(b)(6) are well-settled. To avoid dismissal, a pleading “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim “has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. In resolving a motion under Rule 12(b)(6), a court must accept a plaintiff's allegations as true and draw all reasonable inferences in his favor. Gonzalez v. Hasty, 802 F.3d 212, 219 (2d Cir. 2015). However, this “tenet is inapplicable to legal conclusions, and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Mastafa v. Chevron Corp., 770 F.3d 170, 177 (2d Cir. 2014) (quotation mark omitted).
Where a plaintiff is proceeding pro se, courts liberally construe the complaint, which, “however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). This maxim applies with particular force when “the pro se plaintiff alleges that [his] civil rights have been violated.” Sealed Plaintiff v. Sealed Defendant, 537 F.3d 185, 191 (2d Cir. 2008). Thus, this Court affords Tamarro “special solicitude” by interpreting his complaint “to raise the strongest claims that it suggests.” Hardaway v. Hartford Public Works Dep't, 879 F.3d 486, 489 (2d Cir. 2018) (quotation marks omitted).
This Court construes the Complaint to assert Fourth and Fourteenth Amendment claims arising from the failure to release and subsequent destruction of Tammaro's property by Detective Breslin, the NYPD property clerks, and the City of New York (the “Property Claims”), and Eighth and Fourteenth Amendment claims arising from his treatment by Rikers Island corrections officers while incarcerated (the “Prison Abuse Claims”). Because Tammaro asserts claims against government officials, this Court also considers whether any of the Defendants are entitled to qualified immunity. Where, as here, Moving Defendants raise qualified immunity in a Rule 12(b)(6) motion, the facts supporting qualified immunity must appear on the face of the complaint. See McKenna v. Wright, 386 F.3d 432, 435-36 (2d Cir. 2004). Accordingly, courts have noted judicial reluctance “to find that defendants are entitled to qualified immunity at the initial stages of the pleadings.” Soto v. City of New York, 2015 WL 3422155, at *3 (S.D.N.Y. May 28, 2015) (quotation mark and citation omitted).
The qualified immunity doctrine protects public officials “from claims for money damages arising from the performance of their duties.” Ganek v. Leibowitz, 874 F.3d 73, 80 (2d Cir. 2017). Qualified immunity “attaches when an official's conduct ‘does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.'” White v. Pauly, 137 S.Ct. 548, 551 (2017) (quotation marks omitted). Thus, the shield applies “unless a plaintiff pleads facts showing (1) that the official violated a statutory or constitutional right, and (2) that the right was ‘clearly established' at the time of the challenged conduct.” Ashcroft v. al-Kidd, 563 U.S. 731, 735 (2011) (citing Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982)). Whether a right is “clearly established” depends on “whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted.” Saucier v. Katz, 533 U.S. 194, 202 (2001), overruled on other grounds by Pearson v. Callahan, 555 U.S. 223 (2009). While there need not be a case directly on point for a right to be “clearly established, ” existing precedent “must have placed the statutory or constitutional question beyond debate.” White, 137 S.Ct. at 551 (quotation marks omitted); Dudek v. Nassau Cty. Sheriff's Dep't, 991 F.Supp.2d 402, 416 (E.D.N.Y. 2013) (noting that this determination “principally relies on ‘whether or not the law was governed by controlling precedent of this Circuit'”).
As an initial matter, this Court addresses Tammaro's opposition to various documents submitted by Moving Defendants in support of their motion to dismiss. Because a motion brought under Rule 12(b)(6) “challenges only the ‘legal feasibility' of a complaint, ” and takes “no account of its basis in evidence, a court adjudicating such a motion may review only a narrow universe of materials.” Goel v. Bunge, Ltd., 820 F.3d 554, 558-59 (2d Cir. 2016). Accordingly, a court may generally only consider the “facts stated on the face of the complaint, . . . documents appended to the complaint or incorporated in the complaint by reference, and . . . matters of which judicial notice may be taken.” Concord Assocs., L.P. v. Entm't Props. Trust, 817 F.3d 46, 51 n.2 (2d Cir. 2016) (citation omitted). However, “[e]ven where a document is not incorporated by reference, the court may nevertheless consider it where the complaint ‘relies heavily upon its terms and effect, ' which renders the document ‘integral' to the complaint.” Chambers v. Time Warner, 282 F.3d 147, 153 (2d Cir. 2002).

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The Green Mountain State is home to 77,683 small businesses, 983 small business exporters, and an annual growth rate of 3.4%, which is similar to that of the nation. Small businesses in Vermont employed 158,098 people in 2017 and according to the Vermont Department of Taxes, the economic activity brought in revenue of $12.35 billion. According to a report by Bureau of Labor Statistics – QCEW NAICS, there has been a steady growth of mid-sized businesses in the state with 2,107 business registrations in 2018. If you are thinking of company formation in Vermont then this is the right time to leverage opportunities.
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According to 11 V.S.A. § 4005, the name should contain the phrase or words “limited liability company” or the abbreviations “L.L.C.”, or “LLC”.
Apply for reservation of name pursuant to the provisions of 11 V.S.A. § 4006 for a domestic LLC name. A business entity will have to register a fictitious name.
Submit the form though mail or online with the Office of the Secretary of State of Vermont along with the applicable fee. An LLC can reserve its name for a period of 120 days.
If you form a Vermont business that is a foreign business entity then you will need to file for name registration.
If you want to register a domestic LLC then you will be required to file “Articles of Organization” governed by 11 V.S.A. § 4023.
If your business entity is a foreign LLC then you will be required to file “Certificate of Authority” pursuant to 11 V.S.A. § 4112.
The Articles of Organization and Certificate of Authority of domestic and foreign LLC can be filed with the office of the Vermont Secretary of State, Corporations Division, in person or online.
In case, you have any questions regarding how to form a Vermont business, feel free to call us on 702-871-8678.
If you are planning to form a business or professional corporation in Vermont then you will be required to continuously maintain a registered agent in the state pursuant to 11A V.S.A. § 5.01. This law is applicable for domestic as well as foreign corporations.
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Apply for reservation of name pursuant to 11A V.S.A. § 4.02.
Submit the form though mail or online with the Office of the Secretary of State of Vermont along with the applicable fee. A business corporation can reserve its name for a period of 120 days.
If you want to register a domestic corporation then you will be required to file “Articles of Incorporation” pursuant to 11A V.S.A. § 2.02.
If your business entity is a foreign corporation then you will be required to file a “Certificate of Authority” to transact business in the state pursuant to 11A V.S.A. § 15.03.
The application or documentation for registration of a corporation can be filed with the Office of the Vermont Secretary of State, Corporations Division, in person or online.
If you have any questions regarding Vermont incorporation or LLC formation, you can simply visit the Vermont Business formation page.


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Scott’s practice consists exclusively of litigation in the federal and state courts. He represents corporate and individual clients in all areas of litigation, with an emphasis on employment law, business disputes, white collar criminal defense, and personal injury. Prior to joining DeFur Voran, Mr. Shockley was Deputy and Chief Deputy District Attorney in Denver, Colorado. He then served as Assistant U.S. Attorney for the Southern District of Indiana. He has also served as Corporate Counsel for the City of Muncie.
Vance v. Ball State University, 133 S. Ct. 2434 (2013), 646 F.3d 461 (7th Cir. 2011); McKinney v. Duplain 463 F. 3d 679 (7th Cir. 2006); Advanced Ground Systems Engineering, Inc. v. RTW Industries, 38 F. 3d 1036 (7th Cir. 2004); Czubaj v. Ball State University, 2004 US App. LEXIS 17158 (7th Cir. 2004); Webb v. Ball State University, 167 F. 3d 1146 (7th Cir. 1999); 234 F. 3d 1275 (7th Cir. 2000) cert denied 524 U.S. 942 (2001); Smart v. Ball State University, 89 F.3d 437 (7th Cir. 1996); Kuhn v. Ball State University, 78 F.3d 330 (7th Cir. 1996); Dugan v. Ball State University, 815 F. 2d 1132 (7th Cir. 1987); Finke v. Bd. Of Trustees of Purdue Univ., 2014 U.S. Dist. LEXIS 88527 (N.D. Ind. 2014); Zimmerman v. Bd. Of Trustees of Ball State Univ., 2013 U.S. Dist. LEXIS 54368 (S.D. Ind. 2013); Kpotufe v. J. B. Hunt Transp., Inc., 2011 U.S. Dist. LEXIS 140694 (S.D. Ind. 2011); Fisher v. United States, 2011 U.S. Dist. LEXIS 43169 (S.D. Ind. 2011); Burt v. Life Ins. Co. of America, 2009 U.S. Dist. LEXIS 21413 (S.D. Ind. 2011); Kloss v. Ball State Univ., 2007 U.S. Dist. LEXIS 85790 (S.D. Ind. 2007); Clifford v. Ball State Bd. of Trustees, 2004 U.S. Dist. LEXIS 22808 (S.D. Ind. 2004); Pond v. Bd.of Trustees of Ball State Univ., 2004 U.S Dist. LEXIS 22814 (S.D. Ind. 2004); Wehner v. Ball State Univ., 2003 U.S. Dist. LEXIS 1194 (S.D. Ind. 2003); Moyer v. Official Creditors’ Comm., 2001 U.S. Dist LEXIS 12751 (S.D. Ind. 2001); United States v. Williams, 792 F. Supp. 1120 (S.D. Ind. 1992); Marvin v. King, 734 F. Supp. 346 (S.D. Ind. 1990); Smith v. State, 8 N.E.3d 668 (Ind. 2014); Hartman v. Keri, 883 N.E. 2d 774 (Ind. 2008); Adsit v. Gustin, 874 N.E. 2d 1018 (Ind. App. 2007); Indiana Health Centers v. Cardinal Health System, 774 N.E. 2d 991 (Ind. Ct. App. 2002); Family and Social Services Administration v. Community Care Centers, Inc. 641 N.E. 2d 1012 (Ind. App.1994); Rollins Burdick Hunter v. Ball State University, 665 N.E. 2d 914 (Ind. App. 1996); Ray v. St. John’s Health Center Corp., 582 N.E. 2d 464 (Ind. Ct. App. 1992).

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19-3307. Same; powers conferred by 19-3301 et seq. also vested in cities; issuance of bonds; tax levy, use of proceeds. Except as herein otherwise expressly provided, all of the rights, powers, authority and jurisdiction conferred on counties and boards of county commissioners by the provisions of chapter 19, article 33 of the Kansas Statutes Annotated are hereby also conferred upon and vested in any city located in any county such as described in K.S.A. 19-3301 and the governing body thereof.
The governing body of any such city, in the name of the city, shall have the power to enter into undertakings and contracts and make agreements in like manner and for like purposes as the board of county commissioners are authorized by this act to enter into undertakings and contracts and make agreements in the name of the county; and may acquire lands, rights-of-way and easements either within or without the limits of the city for like purposes as the board of county commissioners are authorized by K.S.A. 19-3302 and 19-3308 by purchase, gift or by eminent domain proceeding in the manner prescribed by K.S.A. 26-501 to 26-516, inclusive, and may issue general obligation bonds of the city to pay the costs thereof and expenses connected therewith in the manner now provided by law; but the aggregate of any such bonds so issued shall not be in excess of three and one-half percent (31/2%) of the total assessed tangible valuation of the city. The governing body of any city may issue additional general obligation bonds of the city for such purposes not in excess of one and one-half percent (11/2%) of the total assessed tangible valuation of the city, but before such additional bonds may be issued, the governing body of the city shall submit the question of the issuance of such additional bonds and the amount thereof to the qualified electors of the city at a regular city election or at a special election called for that purpose as provided by law. The total aggregate of all such bonds shall not be in excess of five percent (5%) of the total assessed tangible valuation of the city. Any city having a population of more than one hundred ten thousand (110,000) located in a county having a population of less than one hundred eighty thousand (180,000) may issue such bonds in an aggregate amount, including bonds outstanding and any bonds previously retired, which is not in excess of six and one-half percent (61/2%) of the total assessed tangible valuation of such city.
Such bonds shall not be subject to, nor included in any restrictions or limitations upon the amount of bonded indebtedness of said city contained in any other law. Funds received from the sale of bonds by any such city may be used to pay any loss, damage or expense for which the city or the governing body thereof may be liable in like manner as counties are authorized to pay such loss, damages or expense under the provisions of K.S.A. 19-3304. For the purposes of maintaining and operating such flood control works as shall be constructed by the United States army corps of engineers or other agencies of the United States government, when the same shall have been completed and turned over to the city, and for the purpose of maintaining and operating any flood control works or dikes heretofore or hereafter constructed for the purpose of protecting such city from floods and to pay a portion of the principal and interest on bonds issued by such city under the authority of K.S.A. 12-1774, and amendments thereto, the governing body of such city shall be empowered to make an annual tax levy upon all the taxable tangible property within said city. It shall be the duty of the governing body of the city to keep all such flood control works and dikes in serviceable condition and to make such repairs as may, from time to time, be necessary. Such cities are authorized to regulate excavations within their city limits as provided in this section, K.S.A. 19-3301 and K.S.A. 19-3309. Applications for excavation permits filed with the city shall be first considered by the city engineer and subject to review by the city governing body in the manner prescribed by K.S.A. 19-3309 for the county engineer and the board of county commissioners.
History: L. 1945, ch. 391, § 7; L. 1947, ch. 202, § 1; L. 1957, ch. 189, § 1; L. 1963, ch. 197, § 1; L. 1963, ch. 234, § 49; L. 1965, ch. 180, § 1; L. 1970, ch. 69, § 18; L. 1971, ch. 93, § 4; L. 1975, ch. 494, § 31; L. 1979, ch. 52, § 126; July 1.