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Many thanks to Cristian Oró Martínez, Senior Research Fellow at the MPI Luxembourg.
The Commercial Court (Juzgado de lo Mercantil) nº 5 of Madrid delivered on 30 September 2013 a judgment in an action brought by the Spanish consumer association Organización de Consumidores y Usuarios (OCU) against the Irish airline Ryanair. OCU asked the Commercial Court to declare that 20 of the general terms and conditions used by the airline are unfair, and hence should not be binding on consumers, as provided by the Spanish Law on the protection of consumers and users (which transposed Directive 93/13, on unfair terms in consumer contracts). OCU also sought an injunction to prevent Ryanair from continuing to use these allegedly unfair terms and conditions.
In its judgment, the Commercial Court held that 8 of the general terms issued by Ryanair are unfair, and hence void. These terms deal with a variety of issues relating to the contract of carriage concluded between the airline and its customers: (i) the choice of Irish law and the submission to Irish courts (Art. 2.4); (ii) the limitation of accepted travel documents (Art. 3.1.1 and annex on travel documentation); (iii) the 40 € fee for the re-issue of a boarding card at the airport (annex with table of optional fees); (iv) the possibility for the airline to refuse to carry passengers or their baggage (Art. 7.1.1); (v) the prohibition to carry in the checked baggage certain items, including money, jewels, cameras, computers, medicines, glasses, mobile phones, tobacco or passports (Arts. 8.3.2 and 8.3.3); (vi) the possibility for the airline to charge a storage fee for luggage not collected within a reasonable time (Art. 8.8.1); (vii) the possibility for the company to change the flight timing without having to justify it, and without giving the passenger the option to terminate the contract (Arts. 9.1.1 and 9.1.2); and (viii) the prohibition to pay in cash any fee or tax charged at the airport (Art. 18). According to the judgment, Ryanair should refrain from using these terms in future contracts.
To date, all these clauses continue to appear on the airline’s website. The judgment of the Commercial Court of Madrid can of course be appealed – and it is highly likely this has been the case. Its effective impact, therefore, remains to be seen. However, it may constitute a first step for the protection of consumers against alleged abuses by low-cost airlines.
Nevertheless, from a PIL perspective, the question which arises is whether the Spanish court was right in assessing the compatibility of the contract with Spanish consumer legislation. Ryanair claimed that the choice of Irish legislation was valid under Art. 5(2) of the Rome I Regulation, which allows parties to choose, among others, the law of the country where the carrier has its habitual residence. The court fails to address this allegation, and simply states that the choice of court and choice of law clause is invalid under Art. 90.3 of the Law on the protection of consumers and users. The reason would be that it causes a significant imbalance in the parties’ rights and obligations and hinders the consumer’s right to take legal action, insofar as it forces this weak party to litigate in a foreign country and under a foreign law, thus increasing the costs of the suit.
The Commercial Court bases its reasoning not only on the Spanish Law on consumer protection, but also on the provisions of Directive 93/13 and on some judgments in which the ECJ has interpreted it. It is arguable that, under Art. 23 of the Rome I Regulation, the Directive on unfair terms could trump the conflictual solution of Art. 5(2) of the Rome I Regulation. However, even in such scenario, the Commercial Court should have justified the reason why the Spanish transposition of the Directive on unfair terms should prevail over the Irish transposition. The problem stems from the Spanish Law on the protection of consumers and users, which purports to apply when the contract is closely connected with the territory of a State party to the EEA, irrespective of the law chosen by the parties (Art. 67.1). It is arguable that this provision should be read in light of Art. 6(2) of Directive 93/13, which states that “Member States shall take the necessary measures to ensure that the consumer does not lose the protection granted by this Directive by virtue of the choice of the law of a non-Member country”. Thus, the Spanish legislation should only prevail over the parties’ choice of a third-State law, but not over the choice of the law of a Member State. Indeed, in the latter case the protection granted by the Directive is in principle guaranteed – at least as long as the ECJ does not declare that that particular Member State failed to correctly transpose it.
Therefore, the assessment of all the allegedly unfair terms should have probably been carried out under Irish law. The ensuing question is: would they be held unfair under Irish law? Or even: should they be considered unfair under the Directive itself? If so, the ECJ may end up having its say in the issue. We shall keep an eye on future developments – just as low-cost airlines will surely also do.
Dear Cristian, thanks for this interesting note.
1) why should, from a PIL perspective, Spanish courts interpret Ryanair’s terms under Irish law? Can’t we easily state that consumer law, especially that targeting unfair terms, has a mandatory nature?
2) what is the relation between the Directive and national implementing law on the protection of consumers? Is the Directive a plateau, a minimum standard that can be “improved” (not a neutral term, by the way: read “improve” as “pro consumer”) by the States, or is it a floor and a ceiling, setting the rules once and for all?
1) Indeed, unfair terms law has a mandatory nature. But in my view this nature derives not from the provisions of national law, but from the Directive itself. Art. 6(2) states this clearly. Therefore the choice of a Member State law (e.g. Irish law), insofar as it guarantees the level of protection of consumers foreseen by the Directive, should be respected. Although the issue has been debated, since the Directive is not crystal clear in this respect, my view is that the protection granted by the implementing laws would be mandatory in an absolute sense only when parties choose the law of a third State, but not when they choose the law of a Member State, which in principle has to be deemed to protect consumers under the requirements of the Directive. That is why I consider that a choice of a Member State law which is valid under Art. 5(2) of the Rome I Regulation cannot be disregarded, as in this case, by raising a vague “consumer law defence” – at least unless it is demonstrated that the chosen law (Irish law) does not sufficiently protect consumers against unfair terms (something which was not done in this case). On top of that, the validity of the choice of law clause should be checked against the designated law, by virtue of Art. 10(1) of the Rome I Regulation.
2) The level of protection of the Directive can of course be “improved” by national legislators (see Art. 8). But again, I do not see why this potentially enhanced protection should mean that the choice of the law of another Member State should automatically be invalidated, as long as it respects the Directive’s minimum standard.
With due respect, I do not agree, Cristian.
1. It is true that according to Art. 5 (2) Rome I, the parties may choose Irish law as the law governing the contract. Hence, if the choice of law clause between Ryanair and the passenger were individually negotiated, the clause would be valid and effective.
2. However, since that is not the case, i.e. the clause is included in a pre-formulated standard contract, such clause is subject to the “test of unfairness” laid down by Directive 93/13. I do not see any convincing reason why a choice of law clause in a transport of passenger contract should be excluded from such “test of unfairness”.
3. Having said that, it seems clear that the selection of Irish Law to govern such contract is unfair. The Spanish consumer is subject to a foreign law, precisely the law of the place of incorporation of the professional, and this causes an imbalance between the rights and obligation between the parties (it imposes on the consumer the information costs on the content of the applicable, i.e. the contract is governed by a law which is familiar to the professional but completely un-familiar to the consumer) and therefore hinders the consumer´s right to take legal action.
4. Note that traditionally, the “test of unfairness” is linked to the default rules. A clause is unfair when -in prejudice to the consumer- it significantly departs from the rules applicable by default. If we project this parameter to our case, the conclusion is very clear. According to Article 5.2 Rome I, the law applicable by default is Spanish law (habitual residence of the passenger + place of departure). Therefore, the designation in a choice of law clause of another law, within the standard terms of a contract, is unfair. It is not a question of the content of Irish law, nor on Art. 10 (1) (the unfair terms Directive prevails).
Thank you very much for your comment. Maybe I did not make myself clear, but what I was trying to convey was not whether the clause has to be deemed unfair or not, but rather which is the national legal framework under which such assessment should be carried out. If the clause is to be held unfair under the Directive, which I essentially agree with, then this analysis may just as well be carried out under Irish law, and the result reached should be the same – if this is a matter of interpretation of the Directive, then even potentially with the help of the ECJ.
Ok. Then I think we all basically agree (and the Spanish judge is right). The “standards” to assess the unfairness of the clause are determined by the Directive (=”EU standards”) and it should be essentially the same in Ireland and in Spain. What I think is important to underline is the idea that as regards transport of passengers (consumers), the designation of a law different from the law applicable by default is unfair, unless individually negotiated. Altough I think so, I guess this is not the dominant view among EU scholars.
I am not sure whether I agree. I think that the framework for assessing the validity of the clause is essentially given by Spanish, and European, PIL rules (which, as far as mandatory rules are concerned, will point to Spanish law), rather than “the Directive” which is not directly binding. That is why I put forward the question of whether Spanish law could be more rigid than the Directive, and I think that the answer is positive.
I agree with Paco that “the designation of a law different from the law applicable by default is unfair, unless individually negotiated”.
Did we get kind of an authoritative answer to our doubts?
Articles 3 and 7(2) of the Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980 must be interpreted as meaning that the law of a Member State of the European Union which meets the minimum protection requirements laid down by Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents and which has been chosen by the parties to a commercial agency contract may be rejected by the court of another Member State before which the case has been brought in favour of the law of the forum, owing to the mandatory nature, in the legal order of that Member State, of the rules governing the situation of self-employed commercial agents, only if the court before which the case has been brought finds, on the basis of a detailed assessment, that, in the course of that transposition, the legislature of the State of the forum held it to be crucial, in the legal order concerned, to grant the commercial agent protection going beyond that provided for by that directive, taking account in that regard of the nature and of the objective of such mandatory provisions.

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What do Nome, Alaska and San Juan, Puerto Rico have in common? For one thing, they are both home to a federal courthouse where, ostensibly, under the recent Acorda Therapeutics holding and subsequent court decisions, a generic pharmaceutical company will be subject to personal jurisdiction if they file an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration (FDA). In Acorda Therapeutics, Inc. v. Mylan Pharmaceuticals, Inc., 817 F.3d 755 (Fed. Cir. 2016), the Federal Circuit held that an ANDA filer opens themselves up to nationwide personal jurisdiction merely by virtue of filing an ANDA application. This is a broad holding that, in effect, subjects a generic company to personal jurisdiction in any forum that has a district court.
The reasoning behind the court’s decision in Acorda was that the ANDA filer is demonstrating intent to sell the drug nationwide by filing the ANDA due to the “economic realities of preparing an ANDA.” Id. at 761. Specifically, the “magnitude and costs of the work required before the ANDA is filed soundly link the ANDA filing to the filer’s entry in to the market to compete with the brand-name manufacturer if approval is obtained.” Id. In the months since Acorda, a handful of ANDA cases have addressed the issue of personal jurisdiction over the ANDA filer and all of them followed Acorda and found personal jurisdiction over the generic pharmaceutical company on the basis of filing an ANDA alone.[i] Further, none of these cases were able to defeat personal jurisdiction by arguing that the exercise of personal jurisdiction was “unreasonable” or unfair. It seems that Acorda has thrown open the door for brand name pharmaceutical companies to engage in gamesmanship when selecting the forum for their lawsuit—particularly if they are facing a small generic company.
So, is Nome getting ready for big pharma to come to town? Perhaps not. In the months since Acorda, there have been no paragraph 4 ANDA lawsuits filed in Nome or any other far-flung district courts. Rather, the paragraph 4 ANDA cases that addressed personal jurisdiction were filed in the usual districts: Delaware, the Eastern District of Texas, and New Jersey. Although there may be an advantage in driving up the cost of litigation by bringing it in a forum that is obviously inconvenient to the defendant, no brand company has taken that advantage yet. There are a multitude of possible reasons for this: the expertise of the courts, trusted local counsel, perceived home turf advantage. Further, the defendant is not totally without tools with which to push back—for example, it may still succeed on a motion to transfer.
A cursory review of the private factors reveals that, if a defendant generic company truly is hauled into a district to which it has no material connection (other than the filing of an ANDA), then the defendant should prevail on those factors. The private factors are generally given more weight in the transfer analysis. See, e.g. Neil Bros. Ltd. v. World Wide Lines, Inc., 425 F.Supp.2d 325, 329 (E.D.N.Y.2006) (“The convenience of the witnesses is probably the single most important factor in transfer analysis.”). Further, if a brand plaintiff chooses a district court that appears to have no connection to either party, but for its inconvenience to the defendant, the court is likely to give little deference to the plaintiff’s choice. Courts are sensitive to forum shopping.
In the end, it seems unlikely that Nome is going to become a new hot (or should I say cold!) bed of paragraph 4 ANDA litigation. Brand plaintiffs seem to be sticking with the districts they know and generic defendants have an opportunity to skip town with a motion to transfer. Too bad – I have always wanted to see the Iditarod.
[i] Pfizer Inc. v. Mylan Inc., No. CV 15-960-SLR, 2016 WL 4362115 (D. Del. Aug. 12, 2016) (finding personal jurisdiction based on ANDA filing); Millennium Pharm., Inc. v. Pharmascience Inc., No. CV 15-702-GMS, 2016 WL 3382131, at *3 (D. Del. June 10, 2016) (“Based upon the Acorda decision, the court concludes that there is specific personal jurisdiction over PSI, even though PSI claims it does not have additional contacts with Delaware besides the filing of its ANDA.”); Allergan, Inc. v. Teva Pharm. USA, Inc., No. 2:15-CV-1455-WCB, 2016 WL 1572193, at *3 (E.D. Tex. Apr. 19, 2016) (“The Court has specific personal jurisdiction over the Mylan entities because the purpose of their ANDA submission is to market a generic drug nationwide, including in Texas. Allergan has made plausible allegations that if the Mylan entities were to receive FDA approval, they would sell a generic cyclosporine ophthalmic emulsion product in Texas and in this district.”); Helsinn Healthcare S.A. v. Hospira, Inc., No. CV 15-2077 (MLC), 2016 WL 1338601, at *6 (D.N.J. Apr. 5, 2016) (finding personal jurisdiction due to pending ANDA litigation and defendant’s self-identification as a “leading provider of injectable drugs and infusion technologies.”); Pfizer Inc. v. Mylan Inc., No. CV 15-26-SLR-SRF, 2016 WL 1319700, at *5 (D. Del. Apr. 4, 2016) (“This court has specific jurisdiction over Agila because Agila filed the ANDA and plans to market and sell its generic product throughout the United States, including in Delaware.”).
Jennifer Mauri is an associate in Michelman & Robinson’s (M&R’s) Intellectual Property Practice. Ms. Mauri handles patent, trademark, copyright, trade secret, and antitrust matters. She has significant experience in complex intellectual property litigation and, in particular, disputes related to pharmaceuticals.
I would certainly hope that ANY Federal court ANYWHERE is capable of handling ANY action that may rightfully be brought in a Federal court.
The premise of your article is a bit suspect.
Great write up, although I must point out that PR is relatively easy to get to when compared to Guam (can the case be brought at the Guam Federal Courthouse?).
In addition, a disadvantage for PR in a pharma case may be that you will get a lot more friends/relatives of people who worked at Pharma and were laid off during the past decade.

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What Are A Creditor's Rights And Remedies When A Debtor Fraudulently Transfers Property Or Assets To Avoid Payment Of A Debt Or Collection Of A Judgment?
In some instances a desperate or devious defendant or debtor will attempt to fraudulently conceal his, her or its assets by transferring them to a friend, relative, a related company or other cooperating third party, to try to look impecunious or judgement-proof, and avoid paying what is owed.
What should a creditor do in those circumstances?
In California, and in many other States, the Uniform Fraudulent Transfer Act may provide a remedy and protection for both business and personal creditors to set aside those fraudulent transfers and recover the property to pay the debt.
This can be done before, during and after a legal proceeding is started to collect the debt, whenever fraudulent transfers are discovered or reasonably suspected.
Those state statutes are very similar to the Fraudulent Transfer provisions of the U.S. Bankruptcy Code, 11 U.S.C. § 548, but the state remedies can be preferable to the Bankruptcy provisions because, if a creditor can recover assets under the State law, that recovery can be used to pay the debts of that creditor, whereas a recovery by a Bankruptcy trustee under the Federal law is used to pay all unsecured creditors equally.
Thus, there may possibly be a potential benefit in proceeding promptly under the State law to collect the debt, hopefully well before any Bankruptcy proceeding might be filed by the debtor.
The California Uniform Fraudulent Transfer Act allows a “creditor” to cancel a transfer of property by a “debtor”, where the transfer was made (a) to escape monetary “claims” of the “creditor” and (b) the transfer was made for consideration that was less than the “reasonably equivalent value” of that property at the time.
Filip v. Bucurenciu (2005) 129 Cal. App. 4th 825, 827-830.
(1) With actual intent to hinder, delay, or defraud any creditor of the debtor.
(A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.
(B) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due. . . .”(Emphasis added).
Such a fraudulent transfer, if the above elements are proven, can be set aside - or reversed or cancelled - by a “creditor” with a “claim”.
(b) "Claim" means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(c) "Creditor" means a person who has a claim, . . .
(d) "Debt" means liability on a claim.
(e) "Debtor" means a person who is liable on a claim.. . .”(Emphasis added) Civil Code § 3439.01.
(1) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim....” (Emphasis added) Civil Code § 3439.07.
The other factors in Civil Code §3934.04(a)(2)(A) have been alleged and proven.
See , 2-4200 CACI 4203; Fisher v. Las Vegas Hilton Corp. (9th Cir. 2002) 47 Fed. Appx. 824, 828.
Brandt v. nVidia Corp. (In re 3dfx Interactive, Inc.) (Bankr. N.D. Cal. 2008) 389 B.R. 842, 862.
Filip v. Bucurenciu (2005)129 Cal. App. 4th 825, 834.
Still v. Arakelyan (In re Still) (Bankr. C.D. Cal. 2008) 393 B.R. 896, 917.
What constitutes “reasonably equivalent value” for a transfer depends on the circumstances surrounding the transfer or transaction and the amount of consideration or “value” received in exchange for the transfer of the property.
Decker v. Tramiel (In re JTS Corp.) (9th Cir. Cal. 2010) 617 F.3d 1102, 1109.
Brandt v. nVidia Corp. (In re 3dfx Interactive, Inc.) (Bankr. N.D. Cal. 2008) 389 B.R. 842, 862-863.
Mishkin v. Ensminger (In re Adler, Coleman Clearing) (Bankr. S.D.N.Y. 1999) 247 B.R. 51, 111.
Brandt v. nVidia Corp. (In re 3dfx Interactive, Inc.) (Bankr. N.D. Cal. 2008) 389 B.R. 842, 864-865.
The determination of what constitutes “reasonably equivalent value” thus depends greatly on the circumstances of the transfer, and equal value is NOT necessarily required.
Kendall v. Carbatt (In re Carbatt) (Bankr. N.D. Cal. 2006) 357 B.R. 553, 560.
“The term "reasonably equivalent value" is not defined in the Bankruptcy Code. That function has been left to the courts. McCanna v. Burke, 197 B.R. 333, 338-39 (D.N.M. 1996). It is clear that "reasonably equivalent value" is not just another term for "fair market value." As the U.S. Supreme Court stated in BFP v. Resolution Trust Corp., 511 U.S. at 531, "fair market value is not necessarily the benchmark against which determination of reasonably equivalent value is to be measured. It may be presumed that Congress acted intentionally when it used the term 'fair market value' elsewhere in the Bankruptcy Code but not in § 548, particularly when the omission entails replacing standard legal terminology with a neologism."
“There is no hard and fast rule in the Ninth Circuit as to what constitutes "reasonably equivalent value." The concept of "reasonable equivalence" is not wholly synonymous with "market value" even though market value is an extremely important factor to be considered in the court's analysis. In re Morris Communications NC, Inc., 914 F.2d 458, 466 (4th Cir. 1990).
“Whether the transfer is for "reasonably equivalent value" in every case is largely a question of fact, to which considerable latitude must be given to the trier of fact. In re Ozark Restaurant Equip. Co., 850 F.2d 342, 344 (8th Cir. 1988). In order to determine whether a fair economic exchange has occurred, the court must analyze all the circumstances surrounding the transfer in question. 5 Collier on Bankruptcy, (15th Ed. Revised, 2007), P 548.05[b] at 548-36. The transferee's "good faith" is a relevant factor. In re Smith, 24 B.R. 19, 23 (Bankr. W.D.N.C. 1982).
Salven v. Miller (In re Noon) (Bankr. E.D. Cal. Jan. 22, 2009) 2009 Bankr. LEXIS 390, 8-10, 2009 WL 197919; Barber v. Golden Seed Co. (7th Cir. Ill. 1997) 129 F.3d 382, 387, 1997 U.S. App. LEXIS 30232, 10-11 Congrove v. McDonald's Corp. (In re Congrove) (6th Cir. 2007) 222 Fed. Appx. 450, 454.
In re Richardson (Bankr. D. Utah 1982) 23 B.R. 434, 448.
The concept of "reasonable equivalence" is not wholly synonymous with "market value" even though market value is an extremely important factor to be used in the court's analysis. In re Morris Communications NC, Inc., 914 F.2d 458, 466 (4th Cir. 1990). The transferee's "good faith" is also a relevant factor. In re Smith, 24 B.R. 19, 23 (Bankr. W.D.N.C. 1982).
Salven v. Munday (In re Kemmer) (Bankr. E.D. Cal. 2001) 265 B.R. 224, 232.
Bfp v. Resolution Trust Corp. (1994) 511 U.S. 531, 537-538, 114 S. Ct. 1757, 1760, 128 L. Ed. 2d 556, 564-565.
Payment of a prior or pre-existing debt is legal “value” given for the property transferred.
In re Prejean (9th Cir. Cal. 1993) 994 F.2d 706, 708-709.
Lewis v. Superior Court (1994) 30 Cal. App. 4th 1850, 1874.
Thus, in considering what constitutes “reasonably equivalent value” the Court can also consider whether the property was exchanged in whole or in part as payment of an antecedent or pre-existing debt, as well as the particular circumstances leading to the transfer.
Whether or not a “fraudulent transfer” has actually occurred thus may require some investigation and the use of appraisers etc.
Some of that investigation can be done using court “discovery” processes and procedures, after the action is filed, but some of the initial pre-filing investigation should include a review of public property and other public records, and the use some additional basic investigative skills and footwork from the parties and their attorneys or consultants.
As noted above, because a fraudulent transfer proceeding in a Bankruptcy case may offer little benefit for a particular debtor, and because a Bankruptcy may foreclose or stay a state fraudulent transfer action, in many cases it may be advisable to proceed with the state action to recover the assets much sooner rather than later, before any Bankruptcy is even contemplated or filed by the debtor.
The contents of this Article do not constitute legal advice or create an attorney-client relationship, and you may not rely on it without seeking legal advice regarding your particular situation and contract from a competent business litigation attorney.
Please also note that statutes and case law are frequently changing and these materials may become outdated.
For further information on this topic and how the current law may apply to your particular situation and issues, Contact Us via email, phone (415)788-1881 or visit our website at www.wolfflaw.com for other contract information.
© George W. Wolff (2015), all rights reserved.


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In State v. Pradubsri, decided May 1, 2013, the S.C. Court of Appeals re-affirmed that a defendant must be permitted to cross-examine a cooperating witness on the length of any potential sentence of the witness’ charges, even though it may inform the jury as to the potential sentence that the defendant faces. In this case, the co-defendant’s charges were reduced from trafficking in crack cocaine 28-100 grams, which had a mandatory minimum sentence of 7 years and carried up to 30 years, and she was permitted to plead guilty to a lesser included offense and a sentence of 18 months.
The Court held that it was not harmless error, and the defendant’s convictions for (1) trafficking crack cocaine in an amount of twenty-eight grams or more but less than one hundred grams, (2) possession with intent to distribute (PWID) crack cocaine within proximity of a school, and (3) unlawful carrying of a pistol were reversed.
Pradubsri maintains the restriction on cross-examination regarding Martin’s exact potential legal exposure prior to her acceptance of the State’s plea offer violated his Sixth Amendment right to confrontation and was in contravention of our supreme court’s decision in State v. Mizzell, 349 S.C. 326, 563 S.E.2d 315 (2002). We agree.
“The jury is, generally, not entitled to learn the possible sentence of a defendant because the sentence is irrelevant to finding guilt or innocence.” Id. at 331, 563 S.E.2d at 318. “However, other constitutional concerns, such as the Confrontation Clause, limit the applicability of this rule in circumstances where the defendant’s right to effectively cross-examine a co-conspirator witness of possible bias outweighs the need to exclude the evidence.” Id. at 331-32, 563 S.E.2d at 318. . . .
“A defendant has the right to cross-examine a witness concerning bias under the Confrontation Clause.” Id. at 331, 563 S.E.2d at 317. “On cross-examination, any fact may be elicited which tends to show interest, bias, or partiality of the witness.” Id. (internal quotation marks omitted).
South Carolina and federal appellate courts have consistently held that a defendant has the right to cross-examine a cooperating witness on the mandatory minimum and maximum sentences that the witness faces, whether they have already pled and were sentenced or if the charges are still pending, whether there is a “plea agreement” or not, or even when the cooperating witness could have been charged but was not.
In State v. Brown, 303 S.C. 169, 399 S.E.2d 593, (1991), the S.C. Supreme Court held it was reversible error not to permit the defendant to cross examine a co-defendant whose charges had been reduced from trafficking in cocaine to conspiracy, on the potential penalties the co-defendant faced on the original trafficking charges – the defendant’s right to meaningful cross-examination outweighs the State’s interest in excluding the evidence.
In State v. Elijah Smith, 315 S.C. 547, 446 S.E.2d 411 (S.C. 1994), the S.C. Supreme Court held it was error not to permit cross-examination of an eyewitness about his pending but unrelated charges; in this case it was harmless error because there were multiple witnesses and because the jury heard the question anyway before it was objected to.
In State v. Mizzell, 349 S.C. 326, 563 S.E.2d 315 (2002), the co-defendant had the same charges that the defendant had, the charges were still pending, the co-defendant had no “plea agreement” with the state, and the S.C. Supreme Court held it was reversible error not to permit the defendant to cross-examine the co-defendant on the potential sentence that they faced.
In State v. Gracely, 399 S.C. 363, 731 S.E.2d 880 (2012), the S.C. Supreme Court held that the defendant must be permitted to question the co-defendants not only as to the potential maximum sentence but also as to the mandatory minimum sentences that they faced. “The fact that a cooperating witness avoided a mandatory minimum sentence is critical information that a defendant must be allowed to present to the jury.” Id. at 374-75, 731 S.E.2d at 886.
The State objected to this testimony as being irrelevant, but Pradubsri argued that pursuant to his right to confrontation under the Sixth Amendment, he was allowed to elicit this testimony from Martin. Further, Pradubsri contended case law supported his argument.
“Contended case law supported his argument,” is not quite as compelling as “citing numerous cases that supported his argument” would have been, assuming that the prosecutor and judge did not already know that the cross-examination was proper.
South Carolina DUI – are we moving to a .05 BAC limit?

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1.	The Complaint, proposed Final Judgment ("Judgment"), and Hold Separate Stipulation and Order ("Hold Separate Order"), by which the parties have agreed to the Court's entry of the Final Judgment following compliance with the APPA, were filed on September 29, 2003. The United States filed its Competitive Impact Statement on November 14, 2003.
2.	Pursuant to 15 U.S.C. § 16(b), the proposed Judgment, Hold Separate Order, and Competitive Impact Statement were published in the Federal Register on December 17, 2003 (68 Fed. Reg. 70287). A copy of the Federal Register notice is attached hereto as Exhibit 1.
3.	Pursuant to 15 U.S.C. §16(b), the United States furnished copies of the Complaint, Hold Separate Order, proposed Judgment, and Competitive Impact Statement to anyone requesting them.
4.	Pursuant to 15 U.S.C. § 16(c), a summary of the terms of the proposed Judgment, Hold Separate Stipulation and Order, and Competitive Impact Statement was published in The Washington Post, a newspaper of general circulation in the District of Columbia, during a seven-day period in December 2003 (December 13th - December 19th). A copy of the Proof of Publication from The Washington Post is attached hereto as Exhibit 2.
5.	On March 15, 2004, defendants served on the United States, and attempted to file with this Court, declarations that describe their communications with employees of the United States concerning the proposed Judgment, as required by 15 U.S.C. § 16(g). See Exhibit 16.
6.	The sixty-day public comment period specified in 15 U.S.C. § 16(b) began on December 17, 2003, and ended on February 17, 2003. During that period, the United States received a total of eleven comments on the proposed settlement. The United States evaluated and responded to each comment, and has arranged to publish the comments and its responses in the Federal Register, pursuant to 15 U.S.C. §§ 16 (b) and (d). Copies of the comments and the United States's responses are attached hereto as Exhibits 3 through 15; they are summarized below.
These comments raise three broad concerns about the proposed Judgment and the scope of the ordered divestiture. First, these commenters assert that the proposed Judgment is unnecessary because, in their view, Alcan's acquisition of Pechiney would not substantially diminish competition. Second, they contend that even if the acquisition was unlawful, requiring the parties to sell the Ravenswood facility is excessive because brazing sheet accounts for only a fraction of the facility's production. And finally, they contended that, by requiring defendants to divest the Ravenswood facility, the proposed Judgment would jeopardize jobs and retirement benefits of the facility's current and retired workers. The commenters reasoned that a purchaser of the Ravenswood facility would not be a vigorous and viable competitor  and thus, would be significantly more likely to fail  if it does not have the technical expertise to develop, produce, and sell brazing sheet and other rolled aluminum products and begins its operations saddled with the "legacy costs" (i.e., retiree pension, life, health care insurance benefits) of its former owners, Alcan and Pechiney.
In its responses, the United States generally explained that the appropriate legal standard for assessing the proposed Judgment is whether its entry would be in the "public interest." To make that determination the Court, inter alia, must carefully review the relationship between the relief in the proposed Judgment and the allegations of the government's Complaint. A Tunney Act proceeding is not an open forum for commenters  or a court  to second-guess the United States's exercise of its broad discretion to file a civil complaint to enforce the nation's antitrust laws. "The Tunney Act cannot be interpreted as an authorization for a district court to assume the role of Attorney General," United States v. Microsoft Inc., 56 F.3d 1448, 1462 (D.C. Cir. 1995). "[T]he court is only authorized to review the decree itself" and has no authority to "effectively redraft the complaint" to inquire into matters that the government might have but did not pursue, Microsoft Corp., 56 F.3d at 1459-60. In the context of a Tunney Act proceeding, a court cannot, as several commenters urged, reject the proposed settlement simply because it provides relief that is "not necessary" or "to which the government might not be strictly entitled," United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981). See United Sates v. Alex Brown & Sons, Inc., 169 F.R.D. 532, 541 (S.D.N.Y. 1996) (purpose of Tunney Act is to ascertain whether proposed relief is in public interest, "not to evaluate the strength of the [g]overnment's case"). Thus, the United States is not required to prove the allegations of its antitrust complaint before the Court can evaluate the appropriateness of the parties' agreed-upon relief. Imposing such a requirement on the United States would effectively turn every government antitrust case into a full-blown trial on the merits of the parties' claims, and seriously undermine the effectiveness of antitrust enforcement by use of consent decrees. Microsoft Inc., 56 F.3d at 1459; Alex Brown & Sons, Inc., 169 F.R.D. at 541.
Applying those legal principles to this case, the Court's entry of the proposed Judgment surely would be "within the reaches" of the public interest (United States v. Bechtel Corp., Inc., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 (1981)). The proposed Judgment would alleviate the serious competitive concerns regarding defendants' proposal to combine two of North America's three major producers of brazing sheet by requiring defendants promptly to divest Pechiney's Ravenswood rolling mill, which produces all of the brazing sheet made and sold by Pechiney in North America. The sale of the Ravenswood facility to a viable purchaser would create a new competitor in brazing sheet, and thus leave competition in the North American brazing sheet market no worse off after Alcan's acquisition of Pechiney than before it.
The United States also received comments from customers and suppliers of the Ravenswood facility (Exhibits 9 through 11). The comments emphasized that the Ravenswood facility must be sold to a purchaser with the financial, technical, and marketing resources to continue operating Pechiney's brazing sheet business (and the Ravenswood facility) as part of a competitively vigorous, viable, ongoing enterprise. Like the state and government officials, these commenters doubted whether a new purchaser could manage that responsibility if it is burdened with the legacy costs of the Ravenswood facility's former owners, Alcan and Pechiney.
In response, the United States noted that the ordered divestiture should provide the new purchaser with the means to continue successfully competing against Alcan and others in the development, production, and sale of brazing sheet and other rolled aluminum products. For instance, the proposed Judgment requires defendants to sell any tangible and intangible assets used in the production and sale of brazing sheet, including the entire Ravenswood facility and any research, development, or engineering facilities, wherever located, used to develop and produce any product  not just brazing sheet  currently rolled at the Ravenswood facility, including R&D for aluminum plate used in military and aerospace applications. (See Judgment §§ II(E), IV(J).) As to their contention that there may not be an acceptable purchaser, the United States reiterated its view that it would be premature to rule out the existence of such a purchaser, since neither defendants  nor for that matter, the trustee  have exhausted all efforts to find one.
7.	The public comments did not persuade the United States to withdraw its consent to entry of the proposed Judgment. At this stage, with the United States having published its proposed settlement and its responses to public comments, and defendants having certified their pre-settlement contacts with government officials, the parties have fulfilled their obligations under the APPA. Pursuant to the Hold Separate Stipulation and Order the Court entered on September 30, 2003, and 15 U.S.C. §16(e), this Court may now enter the Final Judgment, if it determines that the entry of the Final Judgment is in the public interest.
8.	For the reasons set forth in the Competitive Impact Statement and its Motion for Entry of Final Judgment, the United States strongly believes that the Final Judgment is in the public interest and urges the Court to enter the Final Judgment without further proceeding.
1. The United States received Tunney Act comments from two members of the public (Exhibits 12 and 14), whose concerns generally echoed those voiced by state and local officials and labor leaders.
2. Two individuals sent comments not only to the Department of Justice, but also to their Congressional representatives. The United States promptly responded to those comments (Exhibits 15 and 13), and submitted more expansive replies (Exhibits 3 and 7) after it had received and reviewed all other public comments received during the sixty-day comment period. The United States also considered and responded to another public comment that had been sent to Congressional representatives (Exhibit 14), but which was never submitted directly to the Department of Justice.
3. In fact, defendants recently notified the United States that they soon will request, pursuant to the terms of the Judgment (§IV(A)), an extension of the ordered deadline for their efforts to find an acceptable purchaser.
4. Obviously, an "acceptable purchaser" of Pechiney's brazing sheet business would not be a firm so burdened by its former owners' legacy costs that it is unviable. See Judgment, §IV(J): divestiture terms must not give defendants "the ability unreasonably to raise the [new firm's] costs, to lower [its] . . . efficiency, or otherwise to interfere in . . . [its] ability . . . to compete effectively."


Dear Littler: An employee was diagnosed with the measles. What do we do now?
Dear Littler: I just learned that one of our employees has the measles. He works on a floor with 20 coworkers in an open office seating arrangement. Can I tell the other employees why he’s out so they can get tested or monitor their own health? Can I require them to receive the measles vaccine?
The 2nd Circuit Court of Appeals has ruled that an employee can assert a hostile work environment claim under the Americans with Disabilities Act (ADA). The court - which covers Connecticut, New York and Vermont - noted that it was persuaded by the reasoning of the 4th, 5th, 8th and 10th Circuit Courts, all of which hold that "hostile work environment claims are cognizable under the ADA."
As of midnight December 21, 2018, 380,000 federal employees were placed on furlough. An additional 420,000 are considered “excepted” and have continued working without pay. Federal employers and employees should be aware of how the government shutdown impacts both paid time off requests as well as approved FMLA leaves.
Employers can now apply online for permission to employ workers with disabilities at subminimum wages instead of mailing in a paper application.
KFC Franchisee Pays $30,000 For Disability Discrimination Claim But It Could Have Been Worse!
A KFC Franchisee in Dublin, Georgia recently settled a disability discrimination case with a former manager who had bipolar disorder for $30,000. According to the Equal Employment Opportunity Commission (“EEOC”), the federal watch dog for anti-discrimination employment laws, the owner/operator found out the store manager was taking prescription medicine for her bipolar disorder. He then made her flush her medicine down the restaurant toilet. The store manager later told the owner she was going to continue taking the medication per her doctor’s orders, and the owner fired her. The store manager asserted a disability discrimination claim and the franchisee settled for $30,000.
The Americans With Disabilities Act (ADA) requires covered entities to make "reasonable modifications" in their policies, practices, or procedures when necessary to accommodate people with disabilities. Many individuals with disabilities use a service animal to conduct their daily life activities. Thus, businesses that have a "no pets" policy generally must modify the policy to allow “service animals” into their facilities.
An issue frequently raised in “drive-by” Americans with Disabilities Act (ADA) lawsuits is the claim that a company’s website is not accessible to users with disabilities. Some websites can pose significant barriers for people with disabilities including those who (a) are blind or have low vision, (b) are deaf or hard of hearing, (c) have mobility-related disabilities, (d) have some type of learning or cognitive disabilities. In addition to having physically accessible facilities, the ADA requires businesses to have compliant websites, although the ADA and the case law interpreting it are unclear regarding what standards must be met for compliance.
As law students learn early in first year contracts, not every statement is an enforceable promise. That point formed the basis of a recent decision from the United States District Court for the District of Vermont. See Noel v. Walmart. The case concerned the termination of a pharmacist who suffered from trypan phobia (a fear of needles that causes nausea, dizziness and fainting at the sight of a needle) because he could not administer immunizations for Walmart customers—something that Walmart had determined to be an essential job function.
In an effort to curb the onslaught of Americans with Disabilities Act (ADA)Title III lawsuits, which have increased dramatically over the past few years, the House of Representatives passed H.R. 620. The bill requires potential plaintiffs intending to bring lawsuits under Title III (for failure to remove architectural barriers to access from public accommodations) first to provide written notice to owners and operators along with an opportunity to make improvements or repair.
The House of Representatives passed a bill on February 15, 2018, that requires Americans with Disabilities Act (ADA) Title III plaintiffs to provide businesses with notice and an opportunity to cure any barriers before filing suit. The Senate must also pass a version of the bill before it can be sent to the White House for signing. Senate passage is reported as uncertain.
Sharing an employee’s EEOC charge with other employees may violate the ADA.
The right to communicate with the Equal Employment Opportunity Commission (EEOC) is protected by federal law. In fact, the EEOC’s Strategic Enforcement Plan identifies, as one of its six enforcement priorities, “preserving access to the legal system.” Recently, one employer learned that a letter from its in-house attorney to its workforce may be viewed as violating federal law by “chilling” employees’ willingness to file discrimination claims.
Employers rely upon employees to get the job done. Usually, the “job” requires the employee’s physical presence at work. But injuries and medical conditions throw a wrench in the works. Most employers are at least generally aware of the implications of various federal and state laws governing treatment of employees with medical conditions and injuries. Yet, there is plenty of gray area where employers may be subject to liability. Take for example the recent decision in Severson v. Heartland Woodcraft, Inc. where the Seventh Circuit decided whether an employer could terminate an employee who requested a multi-month leave of absence from employment.
Today’s employers must run their businesses within the competitive environment in which they operate while affording employees an ever-increasing array of leaves. Yet, running a business without a full complement of employees is difficult.
This morning, the Trump administration announced the end of Deferred Action for Childhood Arrivals (“DACA”), the Obama Administration’s immigration program designed to shield undocumented immigrants brought to the United States as children from deportation. DACA gave roughly 800,000 people an Employment Authorization Document (a/k/a EAD card) or the right to work in the United States.
Are maximum leave policies legal?
An employer has agreed to pay 2M to resolve a disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), according to the EEOC and court records.
What do a parrot named “Sadie," a Shih Tzu/poodle mix named “Jazz,” and a miniature horse have in common? SC Lawyer called on Nexsen Pruet employment and labor law attorney William Floyd to answer this question.
In a first, a federal court in Florida ruled recently that a grocery store must make its website accessible to the disabled. The plaintiff in the case, a blind man who uses screen-reading technology to access and view websites, obtained injunctive relief, as well as his attorneys’ fees and costs.
Over the past 18 months, the number of claims being filed over website accessibility has increased dramatically.1 Although courts continue to differ as to whether websites are places of public accommodation covered by Title III of the Americans with Disabilities Act (“ADA”), and if so, whether all websites are covered or whether there must be a nexus between a physical location and a website for the website to be a place of public accommodation, litigation over website accessibility continues to proliferate. In recent months, there have been two notable district court opinions in this area.
In a recent Q&A on the “Ask a Manager” blog, an individual wrote in to say that she had a genetic disorder requiring the use of a cane for walking and ring braces for finger stability. Although she had been public about her condition with friends and family, both in person and through social media, she was concerned that a job interviewer might view her ring braces as a form of costume jewelry inappropriate for an interview setting and, presumably, hold that against her. She did not believe that removing the ring braces for the interview was the best approach, both because they would be necessary in the performance of the job(s) for which she would be applying and because she felt that doing so “erased” her disability when she otherwise had embraced it as part of her life.
In a victory for owners of facilities covered by the Americans with Disabilities Act (ADA), the U.S. Court of Appeals for the Ninth Circuit has upheld a property owner’s right to seek contribution from third parties who fail to perform their obligations to the owner to design or build a facility that complies with the ADA. Many property owners rely on architects, designers, builders, and even ADA compliance experts to help them ensure that their facilities comply with the ADA. This decision restores the power of owners to enforce their agreements with those third parties.
Executive Summary: On May 18, 2017, in the first decision of its kind, the Eastern District of Pennsylvania held that transgender people are not categorically barred from protection by the Americans with Disabilities Act (ADA) if they suffer from gender dysphoria. While it remains true that being transgender is not in and of itself a disability under the ADA, in ruling on the employer’s motion to dismiss in Blatt v. Cabela’s Retail, Inc., the court held that the plain language of the ADA’s exclusion of “gender identity disorders” from the definition of “disability” in 42 U.S.C. § 12211(b)(1) (“the GID exclusion”) must be read narrowly. In so doing, the court held that transgender individuals who experience gender dysphoria are protected by the ADA and, therefore, Blatt could proceed on her ADA discrimination, failure to accommodate and retaliation claims.
Many states and localities have their own distinct accessibility laws and regulations for businesses. Often these are not analogous to the ADA.
Employers frequently struggle with enforcement of call-in and job abandonment policies when there has been a lack of communication by a disabled employee. In Alejandro v. ST Micro Electronics (N.D. Cal.) 178 F.Supp.3d 850, the court offers a favorable ruling for employers seeking to enforce such a policy respective to a disabled employee who had been non-communicative about his whereabouts in violation of company policy.
Just over two decades ago, when the ADA was in its infancy and this blogger was a summer associate heading into his final year of law school, I attended a hearing in federal court where the judge was considering a motion to dismiss the ADA claims of a plaintiff-employee.
The Equal Employment Opportunity Commission (“EEOC”) has filed suit in Florida federal court against a trucking company who allegedly failed to accommodate, refused to hire and retaliated against a veteran for his use of an emotional support dog for his post-traumatic stress disorder and mood disorder. The petition, filed in the Middle District of Florida, alleges that the defendant, CRST International Inc./CRST Expedited, Inc. (“CRST”) intentionally deprived Leon Laferriere of employment opportunities due to his disability.
On March 20, 2017, a federal district judge in Los Angeles granted Domino’s Pizza’s motion to dismiss a website accessibility lawsuit in a ruling that raises hopes for those battling the massive wave of web accessibility litigation and arguably makes it more difficult for businesses to decide between fight or flight. Robles v. Domino’s Pizza LLC, No. CV 16-6599 SJO (SPx), U.S. District Court for the Central District of California.
A federal jury in Florida has awarded $4.5 million against an auto dealer for claims of disability discrimination under the Florida Civil Rights Act (FCRA). Axel v. Fields Motorcars of Florida, Inc., No. 8:15-cv-893-17JSS (M.D. Fla. Feb. 22, 2017).
Last week, the U.S. Equal Employment Opportunity Commission filed a lawsuit against freight company CRST Expedited Inc. on behalf of a truck driver trainee who is a veteran. According to the Commission, the employer violated the Americans with Disabilities Act by refusing to hire the trainee because he uses an emotional support dog to manage post-traumatic stress disorder. The EEOC also claims the employer failed to discuss other potential job accommodations with the trainee and retaliated against him by dismissing him from a new driver orientation program for requesting help with his PTSD.
An Arizona judge dismissed more than 1,100 lawsuits against Arizona businesses alleging that their parking lots are not accessible to persons with disabilities. Judge David M. Talamante rejected the plaintiffs’ argument that the Arizonans with Disabilities Act (AzDA) permits any person who believes a place of public accommodation has violated the act to bring a civil action.
As some of you may have noticed, the current OMB approval for the required disability self-identification form expired January 31, 2017. On the eve of its expiration, OMB approved the form for another three years – until January 31, 2020.
The U.S. Architectural and Transportation Barriers Compliance Board (Access Board) finalized a regulation this week that will make the Web Content Accessibility Guidelines 2.0 (WCAG 2.0) Level AA the design standard when interpreting and implementing Section 508 of the Rehabilitation Act of 1973, which requires federal agencies and contractors to make their websites accessible to disabled individuals. Affected federal agencies and contractors will have one year from the publication of the final rule to comply with the revised 508 standards, which would place the compliance deadline sometime in early 2018.
Saying Goodbye to 2016 – It’s Been Quite the Year!
2016 has come to an end and it’s been busy year for disability leave management issues. The year has seen a variety of new developments, including issuance of additional guidance from administrative agencies, new leave and benefit related laws, and a slew of court opinions.
The Court of Appeals for the Eleventh Circuit recently held that businesses do not have to reassign their disabled workers into open positions ahead of more qualified, nondisabled employees, therefore rejecting the EEOC’s position that competition is not permissible under the Americans with Disabilities Act ("ADA").
In case you missed it, on December 4, 2016, the popular news program 60 Minutes aired a story on the alarming growing number of ADA drive-by lawsuits filed against businesses. A transcript of the story is provided here. Title III of the ADA requires places of public accommodation, such as restaurants, banks, movie theaters and just about any business that sells goods and services to the public, to make their premises accessible to disabled people through a comprehensive and detailed design code called the ADA Standards for Accessible Design.
Are public accommodations required to admit personal care providers for free? That’s the question that the lawyers in our Disability Access Practice Group have been hearing with increasing frequency since the U.S. District Court for the Eastern District of Pennsylvania issued a decision in May of 2016 holding that The Franklin Institute, a nonprofit museum, was required to offer complimentary admission to the personal care attendant of a severely disabled individual. Below we provide a brief overview of the case and its currently narrow reach, an even shorter critique of the decision, and finally a summary of what your public accommodation may want to consider in the wake of the decision. Anderson v. The Franklin Institute, No. 13-5374 (May 6, 2016).
The Ninth Circuit Court of Appeals recently ruled against a failure-to accommodate claim brought by a customer service employee who was fired for poor performance. According to the court, the former employee, who suffered from endometriosis and headaches, was not able to show that she was qualified to perform the essential functions of a customer service job. Kelley v. Amazon.com, Inc., No. 13-36114, United State Court of Appeals for the Ninth Circuit.
Half a Loaf: Court Rejects ADA "Safe Harbor" But Approves Pre-Regulations Wellness Program as "Voluntary"
The EEOC’s attack on employee wellness programs as unlawful under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) that began in 2014 with three lawsuits, and continued with more recent regulations under these laws, has taken another turn. On September 19, 2016, a federal court in Wisconsin denied the EEOC’s summary judgment motion in one of the three cases that directly challenged an employer’s wellness program requiring employees who sought health plan coverage with a wellness component to undergo a medical examination or pay higher premiums. EEOC v. Orion Energy Systems, Inc., Civil Action 1:14:-cv-01019 (E.D. Wis., Sept. 19, 2016).
The Affordable Care Act’s (ACA) electronic reporting requirements for larger companies may inadvertently notify employers of employees using incorrect Social Security numbers. The ACA requires certain large employers with 50 or more employees to offer qualified healthcare plans to employees or risk paying fines. Employers can report employee insurance coverage with Form 1095-C. In the 2015 tax year, it became mandatory for employers that submit 250 or more Forms 1095-C to do so electronically. The electronic reporting system also automatically checks the employee’s name and Taxpayer Identification Number (TIN), which is almost always his or her Social Security number, against government databases, flagging any mismatches. A mismatch will then generate a notification for the employer. Employers should prepare for mismatch notifications and take care not to run afoul of discrimination laws. Importantly, employers should not automatically assume that the employees whose information generates mismatches are not authorized to work in the United States.
Over the past 20 years, the number of individuals with disabilities in the workforce has increased due in part to the Americans with Disabilities Act (ADA). Contemporary technological developments could help increase this number to an even greater extent over the next several years. A growing number of phone and computer apps, available for purchase with a simple tap, are specifically designed with access needs in mind.
The Americans with Disabilities Act (ADA) became law over 20 years ago. But until last month, the Fourth Circuit Court of Appeals, which includes North and South Carolina, had never specified a plaintiff’s burden of proving a claim for discrimination under the act. Indeed, lower courts are split over whether a plaintiff must show that his or her disability was a “motivating factor” in the employment decision at issue or that “but for” the disability, the personnel action would not have occurred. In a recent case, however, the Fourth Circuit determined that a plaintiff must meet the more demanding standard and show that “but for” the disability, the employer would not have taken action. Gentry v. East West Partners Management Co., Inc., et al., No. 14-2382, 2016 WL 851673 (4th Cir. 2016).
An increasing number of plaintiffs’ attorneys are targeting restaurants, bars, and retail establishments in urban areas for “drive-by” lawsuits under Title III of the Americans with Disabilities Act (ADA). Despite its commendable purposes, the ADA has been increasingly abused by individuals, organizations, and plaintiffs’ attorneys for monetary gain.
Long after the Department of Justice’s (DOJ) Statements of Interest (SOI) were filed in June of 2015 in the cases involving Harvard University and the Massachusetts Institute of Technology (MIT), touching off a flood of litigation and threatened litigation, the magistrate judge has issued her report and recommendation to the district judge that the defendants’ motions to dismiss be denied. While subject to objections and the district judge’s determination, the decision is a setback for those who do not currently have websites that are accessible to persons with disabilities.
Are Hidden Title III Claims Lurking in Your Business?
With the extraordinary volume of Americans with Disabilities (ADA) Title III claims clogging the courts, and an increase in the number of plaintiffs’ lawyers litigating ADA issues, we can expect to see another flood of Title III cases in 2016. After defending countless “drive-by” lawsuits through the years, we have learned that, for the most part, these suits lack creativity in identifying barriers presented by public accommodations. Put another way, the same types of barriers are routinely alleged in complaints. While few Title III plaintiffs visit retail stores with tape measure in hand, nearly anyone with minimal training can detect a host of technical violations very quickly. The following is a breakdown of the most commonly alleged violations that we see in the disability access cases involving the retailers that we defend.
Earlier this year, we reported on a spike in the number of ADA public accommodation lawsuits being filed against businesses in Illinois. (FR Alert: Wave of ADA Public Accommodation Lawsuits Continues to Spread, Hits Illinois.) Barely a week into the new year, it is clear that this trend is not going away in 2016. On January 5 and 6, a single “tester” plaintiff filed at least eleven new lawsuits against retailers and restaurants in the Chicago metro area. It is a safe bet that there will be more to follow from this plaintiff and others.
In a surprise announcement with major repercussions for businesses and their websites, on November 19, the Department of Justice (DOJ) announced in its Fall 2015 Statement of Regulatory Priorities that it is delaying—by at least three years—its proposed regulations on the standards for creating websites that are accessible to the disabled. This is the latest of many delays in the regulatory process that started when the DOJ issued an Advanced Notice of Proposed Rulemaking on web accessibility in July of 2010. 75 Fed. Reg. 43460 (July 26, 2010), The new target date for the website regulations is for some time in 2018.
October marks National Disability Employment Awareness Month. In the 25 years since the passage of the Americans with Disabilities Act (ADA), there has been substantial progress in making the workplace more accessible.
A plaintiff may not salvage her untimely ADA demotion claim by alleging that the statute of limitations began anew with each paycheck pursuant to the Lilly Ledbetter Fair Pay Act, according to the Second Circuit Court of Appeals. Davis v. Bombardier Transportation Holdings (USA) Inc. (Second Circuit, July 25, 2015).
In recent weeks, we have seen a surge in Illinois of private plaintiff lawsuits filed under the public accommodation provisions of the Americans with Disabilities Act of 1990 (ADA). Public accommodation lawsuits have been common for nearly a decade in some states, such as California and Florida, but these cases have been filed with increasing frequency in Illinois and other states.
Qualified individuals, reasonable accommodations, undue hardship, fundamental alteration – these terms associated with the Americans with Disabilities Act (ADA) are a far cry from the simplicity of the ABCs, and cause much confusion for schools tasked with complying with the statute. But there can be no question that compliance with the ADA is the subject of increased interest to federal and state governmental agencies nationwide, and that more and more individuals are exercising their rights under the ADA, particularly when it comes to seeking reasonable accommodations.
Myra Creighton’s article “Jerk Isn’t Disabled: However, Can They be Lawfully Terminated?” was featured in Legal and Compliance Excellence Magazine on December 9, 2014.
We are again running a Biggest Loser Contest among our 31 offices and will award prizes, beginning at $1,000, to individuals who lose the most weight.
In an article published recently in The Wall Street Journal (“Disability Lawsuits Against Small Businesses Soar,” October 15, 2014), staff writer Angus Loten reported that accessibility lawsuits brought under the Americans with Disabilities Act (ADA) against public accommodations increased by nearly 55 percent in the first six months of 2014 as compared to the number of filings in the same period in 2013. This increase follows a reported 9 percent increase in disability access lawsuits from 2012 to 2013. The article also reported that many of the lawsuits were brought in California, New York, and Florida.
Earlier this month, the U.S. District Court for the Northern District of Illinois denied a motion to dismiss a claim filed by the Equal Employment Opportunity Commission (EEOC) on behalf of a class of individuals challenging United Parcel Service, Inc.’s leave policy. The EEOC claimed that the challenged policy, under which employees will be “administratively separated” from employment after 12 months of medical leave, violates the Americans with Disabilities Act (ADA). EEOC v. United Parcel Service, Inc., No. 09C5291 (February 11, 2014).
Participation in a rehabilitation program does not always trigger the ADA's "safe harbor" provision for prior addictions.
The Equal Employment Opportunity Commission ("EEOC") recently issued publications providing guidance for employers and veterans with a focus on disabled veterans' rights under the Americans With Disabilities Act ("ADA") and the Uniformed Services Employment and Reemployment Rights Act ("USERRA"). With approximately one million veterans scheduled to return home from duty within the next five years, this guidance is useful to both employers and veterans in understanding the expanded scope of the ADA after the ADA Amendments Act of 2008 ("ADAAA"), and how to handle certain service-related disabilities.
Jon Hyman, at Ohio Employer's Law Blog who does a great job of keeping up with developments in the Buckeye state and beyond, has an interesting post about the differences of the definition of disability under the ADA and the Ohio state version. Because of that difference, it's hard not to agree with his conclusion, Disability discrimination law in Ohio is a mess.
EEOC has issued final regulations implementing the ADAAA.
The ADA Amendments Act (ADAAA) was signed into law by President George W. Bush on September 25, 2008. On March 25, 2011, and after review of over 600 public comments, the Equal Employment Opportunity Commission (EEOC) issued final regulations implementing the enforcement of that Act. Check the EEOCâ€™s website at www.eeoc.gov for a summary of the provisions of those regs (Fact Sheet on the EEOCâ€™s Final Regulations).
After a lengthy wait, the Equal Employment Opportunity Commission (EEOC) has issued final regulations and interpretive guidance for the Americans With Disabilities Amendments Act (ADAAA), the new disability law which was passed in 2008. Many employers were prepared for the worst after the agency first proposed dramatic and game-changing regulations in 2009 which would have tilted the playing field even further in favor of employees. Although the final regulations published on March 24, 2011 strongly emphasize that the law's coverage is to be quite broad, the EEOC pulled back from its original position and published regulations that are fairly consistent with the statute.
Yesterday, the Equal Employment Opportunity Commission (EEOC) released the much-anticipated final regulations (PDF) for the ADA Amendments Act of 2008. The EEOC will publish the regulations in the Federal Register today, and they will become effective in 60 days, on May 24, 2011. The EEOC has issued a press release highlighting the release of the new regulations. It also has drafted a "Questions and Answers" guidance sheet and a fact sheet to better aid employers in understanding the final regulations.
Hospitality Industry: Changes In ADA Accessibility Standards Are On The Way.
On July 26, 1990, President George H. W. Bush signed into law the Americans with Disabilities Act (ADA). The ADA provided broad anti-discrimination prohibitions against disabled individuals in several areas, including employment, state and local government services and facilities, public accommodations, and telecommunications.
Regulations issued in 1991 following the enactment of the Americans with Disabilities Act (ADA) required that public accommodations (which include restaurants, hotels, retail establishments, theaters and concert halls) modify their policies, practices, or procedures to permit the use of a service animal by an individual with a disability. Essentially this means that service animals accompanying persons with disabilities have to be admitted to establishments with policies otherwise excluding pets or other animals.
On July 26, 1990, President George H.W. Bush signed into law the Americans with Disabilities Act (ADA). The ADA provided broad anti-discrimination prohibitions against disabled individuals in several areas, including employment, state and local government services and facilities, public accommodations and telecommunications.
President Obama declared October as "National Disability Employment Awareness Month 2010." To that end, the Office of Disability and Employment Policy (ODEP) recently released an online return-to-work toolkit for employers and employees. According to the ODEP, this toolkit is intended to offer insight into the return-to-work process and apprise employers and employees about their rights and responsibilities following an employee’s disability-related leave of absence.
Cautionary Comments as the ADA Nears Adulthood.
Turning 21 is a much bigger deal than turning 20 if you are one who is looking forward to consuming adult beverages legally. But if you are a statute, twenty years is a nice point for others to weigh in on your success.
One of the most common questions I hear from clients is: "We have an employee with a medical marijuana card; what do we do?" Employers often are unsure about their rights and responsibilities when it comes to dealing with employees who hold the legal right to smoke marijuana in the state of Oregon. Many are concerned that such employees are immune from discipline, and have the legal right to smoke pot in the workplace without consequences. Others believe firmly that they can terminate any such employee without a second thought, but want confirmation before they pull the trigger.
EEOC Issues Long-Awaited ADA Guidelines.
Approximately one year after former President Bush signed the ADA Amendments Act (ADAAA), the EEOC has finally issued proposed regulations and an Interpretive Guidance for public comment. As expected, the new regulations make significant changes in how certain terms under the ADA are defined, which certainly will give rise to more disability claims. Here is a summary of the most significant changes and guidance to the regulations.
Start Out 2009 Right With This Employment Law.
As you plan for 2009, every employer should take steps to address the amendments to the Americans with Disabilities Act (ADA), the new Family and Medical Leave Act (FMLA) regulations, and the anticipated passage of the Employee Free Choice Act (EFCA). The following is a suggested "to do" list.
President Signs Major Overhaul Of The ADA.
President George W. Bush has signed into law a measure (S. 3406) that significantly amends the Americans with Disabilities Act (ADA). Ironically, the original ADA was signed in 1991 by his father, former President George H.W. Bush. The ADA Amendments Act of 2008, which was negotiated by business groups and the disability and civil rights communities (together with its principal congressional sponsors), passed the Senate by unanimous consent on September 11, and it was approved by voice vote in the House on September 17.
Education Labor Letter: Don't Be Handicapped By The "New" ADA.
Schools already receive a number of requests for accommodation based on students' or employees' mental or physical impairments. They can now expect to see more requests and potentially will have to provide more accommodations. On January 1, 2009, the amendments to the Americans With Disabilities Act (ADA) become effective.
THE ADA AMENDMENTS ACT: COMING SOON TO A WORKPLACE NEAR YOU (pdf).
Following a summer of blockbuster releases in movie theaters across the country, Congress is delivering its own big-budget thriller to America’s employers. The ADA Amendments Act of 2008 (ADAAA) was passed by Congress on September 17, 2008, and is expected to be signed by President Bush in the near future. Once it becomes law, the ADAAA will go into effect January 1, 2009.
Meet the New ADA: Massive Changes Ahead for Nation's Employers.
In perhaps the most sweeping change to the face of employment law in over 10 years, the recent passage of the "ADA Amendments Act" will mean a massive change for most of the country's employers. These changes, which will go into effect on January 1, 2009, will not only have a tremendous impact on the defense of employment litigation claims, they will require almost all human resource professionals, managers, and business owners to adopt new policies and procedures in dealing with accommodation requests.
Hospitality Labor Letter: BYOGC Policy Doesn’t Cut It Under ADA.
Most golf courses that allow golf carts provide them to players; most of the time players aren't told they can bring their own. Three patrons with serious mobility impairments, who wanted to play golf at a course managed by Marriott International, didn't like being told to bring their own specialized carts. They filed a lawsuit alleging violations of Title III of the ADA and of California state law.
Hospitality Labor Letter: Don't Put Litigation on the Menu.
In light of a recent federal court decision, restaurateurs should reevaluate how their employees handle requests by disabled patrons.
The Latest Litigation Rage: Public Accessibility Lawsuits Against Retail Establishments.
Title III of the Americans with Disabilities Act (ADA) requires retail stores and other public accommodations to accommodate disabled patrons, guests, and members of the public, to the greatest extent possible. Title III specifies that no individual with a disability may be discriminated against or denied the full use of "goods, services, facilities, privileges, advantages or accommodations" offered by a "public accommodation."
Smells Like A Lawsuit: Sensitivity to Fragrances as a Disability.
Supervisors and managers have to handle all sorts of problems arising from people's interactions in the workplace, and some of these tasks are more thankless than others. For example, a complaint about a co-worker's terrible body odor may require an uncomfortable chat about showering regularly and using deodorant. But what about when the complaint is that an employee is wearing too much perfume or cologne?


Before CALABRESI, LYNCH, and LOHIER, Circuit Judges. Jasper G. Taylor III (Richard L. Hunn, Katherine D. Mackillop, Felice B. Galant, on the brief), Norton Rose Fulbright U.S. LLP, Houston, TX and New York, NY, for Petitioner–Appellant. Dominika Tarczynska (Benjamin H. Torrance, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Respondent–Appellee United States of America.
In this case, we consider a number of challenges raised by the petitioner-appellant, James Haber, to an administrative summons issued by the Internal Revenue Service (“IRS”). The district court (Laura Taylor Swain, Judge ) granted the government's motion to dismiss Haber's petition for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), and denied Haber's request for jurisdictional discovery. For the reasons set forth below, we AFFIRM the decision of the district court.
The IRS issued an approximately $25 million penalty against Haber and his company, The Diversified Group Incorporated (“DGI”), pursuant to 26 U.S.C. § 6707,1 in connection with their alleged failure to register tax shelters in violation of 26 U.S.C. § 6111.2 Haber and DGI paid $18,370 and $15,500, respectively, toward that assessment, and concurrently filed refund claims with the IRS. The IRS denied their refund claims and filed a federal tax lien against Haber for the unpaid balance of the penalty. In response, Haber contested the penalty by requesting a Collection Due Process (“CDP”) hearing pursuant to 26 U.S.C. § 6320, which has been stayed pending Haber's ongoing litigation.
Haber and DGI then filed suit in the Court of Federal Claims, arguing that the penalty was erroneously assessed, seeking injunctive relief against the IRS's collection efforts, and requesting a refund of the partial payment. The court dismissed the suit for lack of subject matter jurisdiction because Haber and DGI had failed to pay the full penalty before commencing the suit and did not fall into any of the exceptions to the full payment rule. Diversified Grp., Inc. v. United States, 123 Fed.Cl. 442 (2015). An appeal of that decision is pending before the United States Court of Appeals for the Federal Circuit. Diversified Grp., Inc. v. United States, No. 16–1014 (Fed.Cir. Oct. 6, 2015).
Concurrently with that ongoing litigation, an IRS Revenue Officer began conducting an investigation to locate assets to satisfy the unpaid penalty. According to the Revenue Officer, her investigation “suggest[ed] that [Haber] may have access to, and use of, a bank account or bank accounts held in the name of Jill Haber [Haber's wife] at Signature Bank, and that such account or accounts may be held in the name of Jill Haber to shield them from the IRS.” J.A. 33 ¶ 6. She further asserted that assets held by Jill Haber “as the nominee or alter-ego or transferee of [Haber]” may be used “to satisfy the 26 U.S.C. § 6707 penalty liability of [Haber].” J.A. 34 ¶ 7. The Revenue Officer confirmed with the IRS Criminal Investigation Division that it had closed its investigation of Haber and that there were no other pending criminal investigations of Haber, and informed Haber's representative of this information.
The Revenue Officer then served the administrative summons at issue in this case on Signature Bank Corporation. That summons was captioned “[i]n the matter of James Haber,” and sought testimony and documents “for any and all accounts that Jill Haber ha[d] signatory [authority] for” from January 1, 2013 to the date of the summons. J.A. 23. No penalties had been assessed against Jill Haber. The summons stated that the IRS sought “data relating to the tax liability or the collection of the tax liability or for the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws concerning [James Haber].” J.A. 23.
Haber petitioned the district court to quash the summons, arguing among other things that the IRS was precluded from issuing the summons by an outstanding criminal referral in his case. The government moved to dismiss the petition for lack of subject matter jurisdiction on the ground that this summons falls into a category for which the United States has not waived its sovereign immunity, specifically, a summons “issued in aid of the collection of ․ an assessment.” 26 U.S.C. § 7609(c)(2)(D). In a declaration attached to the government's motion to dismiss, the Revenue Officer declared that the summons was to “aid in the collection of [Haber's] ․ liability for a penalty” and that “[t]he IRS has already made an assessment against [Haber] for this liability, which currently is approximately $25,000,000.” J.A. 32–33 ¶ 3. Further, the Revenue Officer attested that “[t]he sole purpose of [her] investigation is to locate assets to satisfy [Haber's] existing assessed federal tax liability, and not to determine additional federal tax liabilities of [Haber] or any other person or entity.” J.A. 33 ¶ 4.
Haber sought jurisdictional discovery to establish that the summons did not fall within the exception to the United States's waiver of sovereign immunity for proceedings to quash third-party summonses. 26 U.S.C. § 7609(b), (c)(2). Haber served the government with a request for production of documents and noticed the deposition of the Revenue Officer who was conducting the investigation into Haber's assets and who had served the summons.
the United States Attorney's Office for the Southern District of New York and the Internal Revenue Service's New York Field Office have closed their respective criminal investigations of Mr. Haber and his companies [including the 1099 issue]․ In addition, based on my discussions with representatives of the Department of Justice's Tax Division ․, there are no other criminal investigations pending with respect to Mr. Haber.
J.A. 45. After providing those documents, the government moved for a protective order with respect to Haber's discovery requests.
The district court granted the government's motions to dismiss Haber's petition to quash the IRS summons for lack of subject matter jurisdiction and for a protective order barring jurisdictional discovery. This appeal followed.
We agree with the district court that it lacked jurisdiction because the United States has not waived sovereign immunity to allow suits to quash summonses that are “issued in aid of the collection of ․ an assessment,” 26 U.S.C. § 7609(c)(2)(D), and that the challenged summons was issued in aid of collection. Moreover, the IRS had authority to issue the summons, as there was not an outstanding criminal referral at the time the summons was issued. We also hold that the district court did not abuse its discretion in denying jurisdictional discovery because Haber did not meet his burden of showing that the requested discovery is likely to produce the facts needed to establish jurisdiction.
Generally a person identified as the target of an IRS summons served on a third party, like a bank, is entitled to notice of the summons. The United States has waived its sovereign immunity to allow a person “entitled to notice” to bring suit against it to quash a summons. Id. § 7609(a), (b)(2)(A). But the right to notice and to bring a proceeding to quash, “shall not apply to any summons ․ issued in aid of the collection of ․ an assessment made ․ against the person with respect to whose liability the summons is issued.” Id. § 7609(c)(2).3 Therefore, if a summons is “issued in aid of the collection” of a taxpayer's liability, the United States has not waived its sovereign immunity.
We review a district court's dismissal for lack of subject matter jurisdiction de novo. Upton v. I.R.S., 104 F.3d 543, 545 (2d Cir.1997). A plaintiff bears the burden on demonstrating that sovereign immunity has been waived. Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). We conclude that the challenged summons was issued in aid of collection of an assessment. Accordingly, the United States has not waived its sovereign immunity, and the district court lacked jurisdiction over the motion to quash.
To determine whether the United States has waived sovereign immunity, we engage in a preliminary review of the IRS's contention that it issued the challenged summons in aid of collection. Cf. Upton, 104 F.3d at 547 (holding that the United States had not waived sovereign immunity after a preliminary assessment of the summons); United States v. Clarke, ––– U.S. ––––, ––––, 134 S.Ct. 2361, 2367, 189 L.Ed.2d 330 (2014) (explaining that Congress's recognition that “power vested in tax collectors may be abused” led it to make “enforcement of an IRS summons contingent on a court's approval” (internal quotation marks omitted)).
In my capacity as a Revenue Officer, I am conducting an investigation to aid in the collection of Petitioner James Haber's (“Petitioner's”) liability for a penalty pursuant to 26 U.S.C. § 6707 for the year [that]ended on December 31, 1999. The IRS has already made an assessment against Petitioner for this liability, which currently is approximately $25,000,000. The IRS assessed the penalty because Petitioner failed to register tax shelters in the proper manner.
J.A. 32–33. Haber argues that despite this attestation, we should conclude that the summons was not issued to aid in the collection of the assessment against Haber because, due to Haber's various pending legal challenges to the assessment, the IRS cannot begin actual collection of the assessment. We are unpersuaded.
Congress has exempted the IRS from the requirements of notice and judicial review, and thus from its waiver of sovereign immunity, where a summons is “issued in aid of the collection of ․ an assessment made ․ against the person with respect to whose liability the summons is issued.” 26 U.S.C. § 7609(c)(2)(D). The statute requires only that the IRS has made an “assessment,” which is “the official recording of liability that triggers levy and collection efforts.” Hibbs v. Winn, 542 U.S. 88, 101, 124 S.Ct. 2276, 159 L.Ed.2d 172 (2004); see also 26 U.S.C. § 6203 (“The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary.”). The district court found, and Haber does not contest, that the IRS has made an assessment against Haber.
Nothing in the statute provides that a summons may be issued in aid of collection, as Haber contends, only where the IRS has the present authority to collect on the assessment or the actual collection is “imminent.” Appellant's Br. 10. We decline to read those words into the statute. The text of the exception includes all summonses “issued in aid of the collection of ․ an assessment.” 26 U.S.C. § 7609(c)(2)(D) (emphasis added). “[I]n aid of” is broad general language, and that language is not limited by a requirement that actual collection must be imminent or immediately possible.
Haber asserts that due to his litigation options for contesting the penalty, his “liability for the penalty, if any, will not be established for years, and it is undisputed that meanwhile the IRS may not collect any part of the Assessment.” Appellant's Br. 7. Whether or not the government can currently pursue any avenues of collection of the assessment is immaterial because the statute requires only that the IRS has issued an “assessment,” not that it is able immediately to collect on it. The policy rationale for such an exception is apparent. Even if the IRS is not immediately able to collect on an assessment, it has a strong interest in locating potential assets that may be used for collection if and when the taxpayer's legal challenges are exhausted and the assessment is enforced. Taxpayers are not entitled to a head start in hiding assets while they challenge an IRS assessment in court. Congress could, of course, decide to limit the category of summonses in aid of collection that are exempt from the notice provisions of the Internal Revenue Code, but there is no reason to assume that it has done so in the absence of any statutory language suggesting such a limitation.
Moreover, Haber alleges no facts that support an inference that the IRS summons was issued for any other purpose than in aid of collection. Haber offers no affirmative reason to believe that there was any ulterior purpose to the summons. Rather, he argues that because the IRS cannot currently collect on the assessment, “the IRS can have no logical reason to look for assets now,” Appellant's Br. 15, and therefore “[o]ne can infer that it must be true that [the] Summons was issued for some other purpose,” id. 16 (emphasis original). We disagree. As noted above, it is perfectly reasonable that once the IRS has made an assessment it would start tracking the taxpayer's assets to identify assets it can collect from in the future and to ensure that the resources are not dissipated. We therefore see nothing in the record that casts doubt on the Revenue Officer's declaration, or any basis from which we could infer that the IRS acted with some alternative purpose, and not in aid of collection, in issuing the summons.
The IRS is not permitted to issue an administrative summons when a “Justice Department referral is in effect,” 26 U.S.C. § 7602(d)(1), as when the IRS recommends to the Attorney General that a grand jury investigation or criminal prosecution be instituted with respect to an offense connected with the internal revenue laws. Id. § 7602(d)(2)(A)(i). Haber argues that the prior referral for a criminal investigation of Haber had not been effectively terminated when the challenged summons was issued. That contention lacks merit.
Section 7602(d)(2)(B) provides that “[a] Justice Department referral shall cease to be in effect with respect to a person when ․ the Attorney General notifies the Secretary, in writing, that ․ he will discontinue such a grand jury investigation.” Id. § 7602(d)(2)(B).4 Haber argues that the government cannot terminate a referral unless it tracks the precise language from the statute and states in writing that the Attorney General “ ‘will discontinue such a grand jury investigation,’ ” Appellant's Br. 19 (emphasis original), and not any “elegant variation” of those words, Appellant's Reply Br. 17. But there is no magic to the word “discontinue” such that a written declaration that the referral has been terminated is ineffective unless that precise word is used.
The 2009 letter from the DOJ to the IRS states that “[t]he referral of this matter is terminated as to James Haber ․ within the meaning of Section 7602(d) of the Internal Revenue Code.” J.A. 41 (emphasis added). The letter effectively accomplished exactly what it purported to do—it terminated the referral. Nothing in the statutory text suggests that § 7602(d)(2)(B) specifies a particular formula to be used in discontinuing a referral. There is no logical reason to think that stating that the referral is “terminated” within the meaning of the very statute at issue is any less effective than stating that the referral is “discontinued.” It is fanciful to suggest that the government crafted the letter to create the appearance of discontinuing the referral without actually doing so. Apart from the fact that Haber suggests no plausible motive for such a maneuver, it is evident that any such effort would fail—the government would be laughed out of court if it ever suggested that the 2009 letter had not discontinued the referral, or that the referral somehow remained in effect after the letter had been sent. The letter thus was sufficient to meet the requirements in § 7602(d)(2)(B) to terminate the DOJ referral. Moreover, a second letter from the United States Attorney in charge of the investigation to Haber's lawyer confirmed not only that the referral had been terminated, but that all criminal investigations of Haber had been closed, as of 2011, well before the challenged summons was issued in 2014.
Because Haber has not alleged any facts making it plausible that a DOJ criminal referral was in effect when the Revenue Officer served the challenged summons in 2014, we need not decide whether a summons that was issued in aid of collection could be quashed because of the existence of a criminal referral at the time it was issued.
In general, a plaintiff may obtain discovery in connection with issues related to the court's jurisdiction. “[A] court should take care to give the plaintiff ample opportunity to secure and present evidence relevant to the existence of jurisdiction.” Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 149 (2d Cir.2011) (internal quotation marks omitted); see All. of Am. Insurers v. Cuomo, 854 F.2d 591, 597 (2d Cir.1988) (“Before dismissing a case for want of jurisdiction, a court should permit the party seeking the court's intervention to engage in discovery of facts supporting jurisdiction.”).
But a district court does not abuse its discretion if it denies jurisdictional discovery where a plaintiff “failed to show how the information [she] hoped to obtain from this discovery would bear on the critical issue” for jurisdiction. Gualandi v. Adams, 385 F.3d 236, 245 (2d Cir.2004); see Amidax, 671 F.3d at 149; see also Freeman v. United States, 556 F.3d 326, 342 (5th Cir.2009) (“[A] party is not entitled to jurisdictional discovery if the record shows that the requested discovery is not likely to produce the facts needed to withstand a Rule 12(b)(1) motion.”).
taxpayer is entitled to examine an IRS agent when he can point to specific facts or circumstances plausibly raising an inference of bad faith. Naked allegations of improper purpose are not enough: The taxpayer must offer some credible evidence supporting his charge․ And although bare assertion or conjecture is not enough, neither is a fleshed out case demanded: The taxpayer need only make a showing of facts that give rise to a plausible inference of improper motive. That standard will ensure inquiry where the facts and circumstances make inquiry appropriate, without turning every summons dispute into a fishing expedition for official wrongdoing.
Clarke, 134 S.Ct. at 2367–68 (emphasis added); see also United States v. Millman, 765 F.2d 27, 29 (2d Cir.1985) (“Where a taxpayer has made a substantial preliminary showing of such abuse, he is entitled to an opportunity to substantiate his allegations by way of an evidentiary hearing.” (internal quotation marks omitted)).
The district court granted the government's motion for a protective order, thereby denying Haber's motion for jurisdictional discovery, on the ground that Haber “set forth no facts supporting a colorable claim that the Summons was issued for a purpose other than to aid in collecting his tax assessment.” J.A. 119. We review a district court's denial of jurisdictional discovery for abuse of discretion. Carpenter v. Republic of Chile, 610 F.3d 776, 780 (2d Cir.2010). Because Haber's request for jurisdictional discovery is based entirely on conclusory and implausible allegations, the district court did not abuse its discretion in deciding that Haber did not meet his burden of showing he was entitled to jurisdictional discovery generally, or the deposition of the Revenue Officer specifically.
The Revenue Officer declared under penalty of perjury that she is “conducting an investigation to aid in the collection of Petitioner James Haber's ․ liability for a penalty” and the “sole purpose of [her] investigation is to locate assets to satisfy Petitioner's existing assessed federal tax liability.” J.A. 32–33 ¶ 3–4. Further, the Revenue Officer attested that the “information and documents gathered from the [challenged] summons may assist the IRS in locating assets that are held by Jill Haber, as the nominee or alter-ego or transferee of Petitioner.” J.A. 33–34 ¶ 7.
Haber argues that he has met his burden for jurisdictional discovery and to depose the Revenue Officer for three reasons: “ there is circumstantial evidence ‘giving rise to a plausible inference’ that the Declaration is false in that there is no reason for the Summons to be ‘in aid of collection’;  the Summons is internally contradictory and contradicts the Declaration; and  substantial evidence exists that the ․ revenue officer declarant ․ is simply not credible.” Appellant's Br. 32. The district court did not abuse its discretion in holding that such entirely conclusory allegations did not give rise to a plausible inference that discovery would allow Haber to establish that the summons was not issued in aid of collection or was issued without authority, which may allow Haber to establish jurisdiction.
First, for the same reasons we concluded that Haber's argument that the challenged summons was not in aid of collection was meritless, we reject Haber's conclusory allegation that “the IRS could not possibly be employing its limited resources to identify assets for” the purpose of collection because “[i]t would not make any sense.” Id. 32. As discussed above, it is perfectly logical that the IRS would investigate the assets of someone against whom it has already issued an assessment before it begins, or can begin, collection.
Second, Haber's contention that there are “technical” inconsistencies within the Revenue Officer's declaration and between the declaration and the summons, Appellant's Br. 34, is also unpersuasive. Haber argues that if “Jill Haber is liable as a transferee or alter ego she would be personally liable for the penalty,” which “technically contradicts” the statement in the Revenue Officer's declaration that her investigation is “not to determine additional federal tax liabilities of any other person” besides Haber. Id. 33 (alterations and italics omitted). Even if Jill Haber would become personally liable for her husband's tax liability, that fact does not transform a summons to locate assets of Haber's held in Jill Haber's name into one to investigate Jill Haber's tax liability. Thus the declaration is not internally inconsistent.
Haber's assertion that the declaration contradicts language in the summons is a somewhat closer call. The summons states that Signature Bank is summoned to give documents and testimony “relating to the tax liability or the collection of the tax liability or for the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws concerning [Haber].” J.A. 14 (emphasis added). In contrast to the three reasons stated in the summons, the Revenue Officer's declaration states that the “sole purpose of [her] investigation is to locate assets to satisfy Petitioner's existing assessed federal tax liability.” J.A. 33 ¶ 4.
We have considered all of Haber's other arguments and find them to be without merit. The opinion of the district court is AFFIRMED.