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JUSTICE DAVIS delivered the Opinion of the Court.
1. Passive appreciation of separate property of either of the parties to a marriage, or that increase 'which is due to inflation or to a change in market value resulting from conditions outside the control of the parties,' is separate property which is not subject to equitable distribution. Syl. Pt. 1, Shank v. Shank, 182 W. Va. 271, 387 S.E.2d 325 (1989).
2. Active appreciation of separate property of either of the parties to a marriage, or that increase which 'results from (A) an expenditure of funds which are marital property, including an expenditure of such funds which reduces indebtedness against separate property, extinguishes liens, or otherwise increases the net value of separate property, or (B) work performed by either or both of the parties during the marriage' is marital property which is subject to equitable distribution. Syl. Pt. 2, Shank v. Shank, 182 W. Va. 271, 387 S.E.2d 325 (1989).
3. To the extent Syllabus point 9 of Mayhew v. Mayhew, 197 W.Va. 290, 475 S.E.2d 382 (1996), imposes a dual burden of persuasion to determine to what extent the increase in value of the separate, nonmarital property is active appreciation or passive appreciation, it is expressly overruled.
4. The party seeking to exclude property from the marital estate that is presumptively marital property, has the burden of persuasion on that issue. The party seeking to have the increase in value, if any, of the separate, nonmarital property deemed to be marital as a result of active appreciation, has the burden of persuasion on that issue.
5. The formula for an active or passive appreciation analysis requires a determination of the following five-step test: (1) whether the property, in general, is either separate or marital property; (2) placing a value on the nonmarital property at the commencement of the action; (3) the value of the nonmarital property, before it became subject to the active and passive appreciation analysis; (4) the circuit court calculation of the property's value at the commencement of the action, in relation to its value on the date(s) gifted; and (5) a determination as to what extent the increase in the value of the nonmarital property is active appreciation or passive appreciation. The resulting amount due to active appreciation is marital property and subject to equitable distribution.
For a second time, this case is before the Court. Nancy H. Mayhew, appellant/plaintiff below, (hereinafter referred to as Ms. Mayhew) challenges the ruling of the Circuit Court of Hampshire County as the same relates to the disposition of 24 shares of corporate stock.See footnote 1 Specifically, Ms. Mayhew seeks reversal of the circuit court's apportionment and calculation regarding the active and passive appreciation in value of the 24 shares of stock of Mayhew Chevrolet-Oldsmobile, Inc. The stock in question was gifted to Robert E. Mayhew, appellee/defendant below (hereinafter referred to as Mr. Mayhew) by his father. Simply put, Ms. Mayhew asserts that all appreciation in value of Mr. Mayhew's 24 shares of stock was the direct result of active appreciation and therefore any increase in its value is marital property. In contrast, Mr. Mayhew argues that any increase in the stocks's value was the result of passive appreciation and therefore remains his separate property. Accordingly, Mr. Mayhew presents as a cross-assignment of error the lower court's ruling that the sum of $60,525.00 represents the active appreciation of Mr. Mayhew's separate property and, as such, is marital property subject to equitable distribution. Finally, Mr. Mayhew assigns as error the circuit court's ruling that there be no adjustment to the amount and duration of alimony awarded to Ms. Mayhew.See footnote 2 We conclude that the lower court erred in its analysis regarding the active appreciation of the 24 shares of stock in Mayhew Chevrolet-Oldsmobile, Inc. and further conclude that the circuit court abused its discretion by determining that the active appreciation was determined to be $60,525.00. Moreover, we conclude that as a result of Mr. Mayhew's failure to preserve at the trial court level his appeal of an alimony award to Ms. Mayhew, we now decline to address the issue.
In Mayhew v. Mayhew, 197 W. Va. 290, 475 S.E.2d 382 (1996), (hereinafter referred to as Mayhew I), we affirmed the divorce granted to the parties and resolved other matters. In Mayhew I, the Court ruled that Mr. Mayhew had received 24 shares of stock during his marriage, as a gift from his father.See footnote 3 As a result of the stock being gifted to Mr. Mayhew, this Court appropriately ruled in Mayhew I that the 24 shares of stock were the separate property of Mr. Mayhew. Further, in Mayhew I, the Court valued the stock at $457,826.00.See footnote 4 However, in Mayhew I, we reversed and remanded two specific issues to the circuit court.See footnote 5 We instructed the circuit court to make an evidentiary determination as to the monetary value to be assigned to any active and passive appreciation of the 24 shares of corporate stock of Mayhew Chevrolet-Oldsmobile, Inc. held by Mr. Mayhew. Additionally, Mayhew I instructed the circuit court to revisit the issue of rehabilitative alimony.
Specifically, Mayhew I further directed the circuit court on remand to make two analytical determinations regarding any appreciation in the stock's value. First, a determination of the stock's value had to be made for each date on which the stock was gifted to Mr. Mayhew.See footnote 6 Once having determined the stock's value on each gifted date, that value had to be deducted from the stocks' overall valuation of $457,826.00 and awarded to Mr. Mayhew as his separate property. The first analytical step established the grossSee footnote 7 appreciated value without regard to the appreciation being active or passive. Next, the circuit court was directed to separate the stock's gross appreciated value into passive appreciation or active appreciation. Ms. Mayhew would then be entitled to one-half of the stock's active appreciation based upon the second analytical step.
In the instant proceeding the circuit court adopted the recommended decision of the family law master. We have held that [i]n reviewing challenges to findings made by a family law master that also were adopted by a circuit court, a three-pronged standard of review is applied. Under these circumstances, a final equitable distribution order is reviewed under an abuse of discretion standard; the underlying factual findings are reviewed under a clearly erroneous standard; and questions of law and statutory interpretations are subject to a de novo review. Syl. Pt. 1, Burnside v. Burnside, 194 W. Va. 263, 460 S.E.2d 264 (1995).
When a spouse receives stock of a closely-held corporation as a gift and that spouse devotes all of his time and effort to the operation and management of the closely-held corporation and also derives most or all of the family income from said business, and when the non-titled spouse provides all the domestic and homemaker services for the family so the titled spouse can devote all his time to the operation of the closely-held corporation, then one hundred percent (100%) of the increase of the value of the stock during the years of marriage will be active appreciation subject to equitable distribution.
The formula suggested by Ms. Mayhew is both pragmatic and efficient. However, as we endeavor to explain, the doctrine of active and passive appreciation in West Virginia is defined and controlled by statute. It is because of such statutory constraints that we cannot and do not adopt Ms. Mayhew's bright line test.
In general, the doctrine of active and passive appreciation provides that any increase in the value of separate, nonmarital property acquired before or during marriage may be classified as either active, passive, or both. Any increase in the value of nonmarital property caused by marital contributions is deemed to be active appreciation and constitutes marital property. Any increase in the value of nonmarital property caused by nonmarital factors is deemed passive appreciation and constitutes separate property. See Brett R. Turner, Equitable Distribution of Property � 5.22, at 233 (1994).
The active and passive appreciation rule accurately reflects the marital partnership theory that supports our equitable distribution principles. That is, increased value resulting from spousal efforts becomes the property of the marital partnership. Whereas, increased value attributable to other sources remains separate property. See Deborah H. Bell, Equitable Distribution: Implementing the Marital Partnership Theory Through the Dual Classification System, 67 Miss. L.J. 115, 147-149 (1997). Professor Bell noted in her article that one of the most troubling issues involving the active and passive appreciation doctrine is finding a viable method or formula for determining the portion of appreciation attributable to spousal efforts and the portion that resulted from third party or market forces. Id., 67 Miss. L.J. at 149.
Although a formula-based approach may be the most efficient method of performing an active and passive appreciation analysis, such a formula must be articulated by the legislature. The statutory definitions for active and passive appreciation require a fact-based analysis when determining causation in an active and passive appreciation analysis. Indeed, Ms. Mayhew's suggested closely-held corporation formula nullifies the legislative requirement that any increase which is due to inflation or to a change in market value resulting from conditions outside the control of the parties, is nonmarital property and therefore is not subject to equitable distribution.
The burden of persuasion is on the party asserting a right to the property, that is to say that the burden of persuasion with respect to characterizing the property as separate property is on the one claiming the property to be separate and the burden of persuasion with respect to characterizing the property as marital is on the party claiming the benefit of that result.
The burden of persuasion standard set out in Mayhew I was an extension of our holding in syllabus point 3 of Roig v. Roig, 178 W. Va. 781, 364 S.E.2d 794 (1987), wherein we held that [w]hen the issue in a divorce proceeding is the equitable distribution of marital property, both parties have the burden of presenting competent evidence to the trial court concerning the value of such property.See footnote 16 The obvious difference in Mayhew I and Roig, is that Roig addresses, in general terms, the burden of presenting evidence,See footnote 17 while Mayhew I imposes a dual burden of persuasion. Moreover, the most compelling distinction between the two decisions is that Mayhew I discussed the issue of valuing nonmarital property as active and passive appreciation, whereas the decision in Roig discussed the issue of correctly valuing pension assets.
In a divorce proceeding a noninjured spouse who claims money from a tort settlement or verdict award as loss of consortium, must prove the same by a preponderance of the evidence. The injured spouse who claims money for noneconomic loss and post-divorce economic loss must prove the same by a preponderance of evidence. If either or both parties carry their burdens of proof, the money proven under such burdens shall be deemed separate property. To the extent that the parties do not provide sufficient evidence to make a reasonable allocation of all of the tort settlement or verdict award under their respective burdens, such balance shall be classified as marital property and divided accordingly.
In Huber is was necessary and pragmatic to allocate a burden of persuasion on both parties for several reasons. First, Huber's analysis involved quantifiable property that both spouses claimed to own as separate property. Second, both spouses had bona fide theories that, if proven, could allocate the property as separate property. Finally, to the extent that one or both spouses failed to meet their burden of persuasion, or if they met their burdens but property remained, the remaining property became marital property-- subject to equitable distribution. Thus, Huber presented a factual setting that made it logically appropriate to have a shifting burden of persuasion.
One can readily see that a dual burden of persuasion to prove active and passive appreciation is simply not functionable.See footnote 20 To the extent Syllabus point 9 of Mayhew I imposes a dual burden of persuasion to determine to what extent the increase in value of the separate, nonmarital property is active appreciation or passive appreciation, it is expressly overruled. We make this ruling mindful of the doctrine of stare decisis. Stare decisis is the policy of the court to stand by precedent. Banker v. Banker, 196 W. Va. 535, 546 n.13, 474 S.E.2d 465, 476 n.13 (1996). However, as a practical matter, a precedent-creating opinion that contains no extrinsic analysis of an important issue is more vulnerable to being overruled[.] State v. Guthrie, 194 W. Va. 657, 679 n.28, 461 S.E.2d 163, 185 n.28 (1995). Mayhew I simply does not provide a logical analysis to support its formulation of a dual burden of persuasion standard.See footnote 21 Remaining true to an 'intrinsically sounder' doctrine ... better serves the values of stare decisis than would following a more recently decided case inconsistent with the decisions that came before it; the latter course would simply compound the recent error. . . In such a situation 'special justification' exists to depart from the recently decided case. Adarand Constr., Inc. v. Pena, ___ U.S. ___, ___, 115 S.Ct. 2097, 2115, 132 L.Ed.2d 158 (1995).
We simply cannot find any persuasive reasoning to continue with the precedent established in Mayhew I.
We must assign the burden of persuasion to one of the parties, having rejected a shifting burden of persuasion standard when segregating separate property into active and passive appreciation. To do so, we must first establish the general analytical framework within which the active and passive appreciation analysis occurs. This requires a five step test.
The first step involves determining whether the property, in general, is either separate See footnote 22 or marital property.See footnote 23 This initial step requires no independent determination of active or passive appreciation. The burden of persuasion at the first step rests with the party claiming the property as separate, nonmarital property.See footnote 24 The second step in the analysis requires placing a value on the nonmarital property at the commencement of the action.See footnote 25 The burden of persuasion at the second step rests with the owner of the nonmarital property. The third step involves placing a value on the nonmarital property, before it became subject to any active or passive appreciation analysis.See footnote 26 The burden of persuasion at the third step rests with the owner of the nonmarital property.See footnote 27 The fourth step requires that the circuit court calculate the property's value at the commencement of the action, in relation to its value on the dates gifted.See footnote 28 That is, the court must make two distinct calculations to determine whether there was, in fact, any increase in value of the nonmarital property.See footnote 29 The fifth step in the analysis requires a determination as to what extent the increase in value of the nonmarital property is active appreciation or passive appreciation. The burden of persuasion at the fifth step is discussed separately below.
The fifth step in the active and passive appreciation analysis requires the actual segregation of separate, nonmarital property into active and passive appreciation.
We have already determined Mayhew I's shifting burden of persuasion standard to be unworkable. Thus, the burden of persuasion must rest on the party claiming active appreciation or on the party claiming passive appreciation, but not on both parties. An examination of other equitable distribution jurisdictions that have addressed the burden of persuasion issue, in the context of the active and passive appreciation analysis, reveal several distinct approaches. A few jurisdictions hold that the party claiming passive appreciation has the burden of persuasion. See In re Marriage of Weiler, 629 N.E.2d 1216, 1221(Ill.App. 1994). Adkins v. Adkins, 650 So.2d 61, 68 (Fla.App. 1994); Williams v. Williams, 645 A.2d 1118, 1121 (Me. 1994); Berenberg v. Berenberg, 474 N.W.2d 843, 846 (Minn.App. 1991). One jurisdiction requires, by statute, that the spouse claiming active appreciation show that contributions of marital property or personal effort were made to the separate property, before the burden of persuasion shifts to the party claiming passive appreciation. Decker v. Decker, 435 S.E.2d 407, 410-411 (Va.App. 1993). By statute in another jurisdiction the burden of persuasion is placed on both parties. Under the statute, if both parties meet their burdens any increase in the value of the property is deemed separate. Ciobanu v. Ciobanu, 409 S.E.2d 749, 752 (N.C.App. 1991). A majority of jurisdictions place the burden of persuasion on the party claiming active appreciation. See Connealy v. Connealy, 578 N.W.2d 912, 915 (Neb.App. 1998); Garfinkel v. Garfinkel, 945 S.W.2d 744, 746 (Tenn.App. 1996); Thielenhaus v. Thielenhaus, 890 P.2d 925, 931 (Okl. 1995); Elmaleh v. Elmaleh, 584 N.Y.S.2d 857, 858 (1992); Schneider v. Schneider, 824 S.W.2d 942, 946 (Mo.App. 1992); Popp v. Popp, 432 N.W.2d 600, 605 n.3 (Wis.App. 1988); Brooks v. Brooks, 733 P.2d 1044, 1054 (Alaska 1987).
One commentator, reviewing West Virginia's equitable distribution laws, has suggested that all increase in separate property should be classed as marital unless the separate property owner sustains the burden of showing that the increase is due to market conditions beyond the control of the parties. Joan M. Krauskopf, Classifying Marital and Separate Property--Combinations and Increase in Value of Separate Property, 89 W. Va. L. Rev. 997, 1022 (1987). In other words, Professor Krauskopf argues that in West Virginia the burden of persuasion should be placed on the party claiming passive appreciation. We disagree.
Based upon the foregoing discussion, we hold the party seeking to exclude property from the marital estate that is presumptively marital property, has the burden of persuasion on that issue. The party seeking to have the increase in value, if any, of the separate, nonmarital property deemed to be marital as a result of active appreciation, has the burden of persuasion on that issue.
We further hold that the formula for an active or passive appreciation analysis requires a determination of the following five-step test: (1) whether the property, in general, is either separate or marital property; (2) placing a value on the nonmarital property at the commencement of the action; (3) the value of the nonmarital property, before it became subject to the active and passive appreciation analysis; (4) the circuit court calculation of the property's value at the commencement of the action, in relation to its value on the date(s) gifted; and (5) a determination as to what extent the increase in the value of the nonmarital property is active appreciation or passive appreciation. The resulting amount due to active appreciation is marital property and subject to equitable distribution.
Our task now is to review the circuit court's order by utilizing the active and passive appreciation framework heretofore outlined. Application of this new burden of persuasion to the instant proceeding is not prejudicial, because both parties had previously been given the burden of persuasion on each of the relevant elements of the test. See Kornberg v. Kornberg, 542 N.W.2d 379, 387 n. 3 (Minn.1996) (holding that application of an incorrect standard of proof by the lower court only requires reversal if the error prejudices the other party).
The third step of our active and passive appreciation analysis involves placing a value on the 24 shares of stock at the various dates on which they were gifted to Mr. Mayhew. The burden of persuasion at step three rests with Mr. Mayhew.
The fourth step requires calculating the stock's value at the commencement of the action,See footnote 36 in relation to its value on the dates gifted. This step requires the circuit court to subtract $113,045.00 (value on dates gifted) from $457,826.00 (value at commencement of action). The circuit court performed the calculation and concluded that the stock had appreciated in value by the amount of $344,779.00.See footnote 37 We find no basis to disturb the circuit court's finding that the 24 shares of stock had, in fact, appreciated in value in the amount of $344,799.00.
The fifth step involves determining what portion of the increase should be allocated as active and/or passive appreciation. The burden of persuasion is on Ms. Mayhew. The evidence presented by Ms. Mayhew may be divided into three parts: (a) additional compensation, (b) dividends, and (c) extraordinary work efforts.See footnote 38 We review the evidence below.
(a) Additional compensation. Ms. Mayhew presented evidence of additional compensation that Mr. Mayhew should have received for approximately a two year period after he obtained control of the corporation. The compensation argument and evidence presented by Ms. Mayhew involved his earned, but unpaid salary. As is set out in W. Va. Code � 48-2-1(e)(1), marital property means earnings acquired by either spouse during a marriage[.]See footnote 39 Ms. Mayhew argues that retention by the corporation of Mr. Mayhew's salary constituted the active appreciation of separate property. Courts have held that retained salary or dividends may be deemed active appreciation of nonmarital stock where evidence shows that the corporate owner-spouse had the power to influence the compensation paid and that the owner-spouse received inadequate compensation. Watkins v. Watkins, 924 S.W.2d 542, 545 (Mo.App. 1996) (citation omitted).
Ms. Mayhew's evidence revealed that Mr. Mayhew had unearned income of $147,000.00 for the two year period after he obtained control of the corporation. The circuit court accepted Ms. Mayhew's evidence on this issue. However, the circuit court reduced the unearned income amount by one-half to reflect the tax consequences and the anticipated consumption of the proceeds by the parties[.] Ms. Mayhew contends on appeal that there was no justification for such a reduction, and the circuit court took this action sua sponte.See footnote 40 Moreover, it appears that the decision to reduce the figure by one-half was arbitrary and void of any findings to support the reduction. We believe that the evidence supported the circuit court's finding that Mr. Mayhew could have paid himself an additional $147,000.00. We further conclude that the circuit court was clearly erroneous in reducing the additional compensation evidence by one-half.
(b) Dividends. Ms. Mayhew argued that Mr. Mayhew earned $62,076.00 as dividends for the period 1985 through 1993. It has been correctly held that [d]ividends from non-marital property received during the coverture are marital property. In re Marriage of Perkel, 963 S.W.2d 445, 450 (Mo.App. 1998).See footnote 41 It has also been held that reinvestment of dividend income does not terminate its status as marital property.See footnote 42 See Harriman v. Harriman, 710 A.2d 923, 925 (Me. 1998); Fowler v. Fowler, 463 N.W.2d 370, 373 (Wis.App. 1990). Moreover, as we have previously indicated, courts have held that retained dividends may be deemed active appreciation. In order for Ms. Mayhew to establish her right to share in the retained dividends she had to prove that Mr. Mayhew had the power to influence the payment of earned dividends. See Watkins v. Watkins, supra.
The circuit court found that Ms. Mayhew's evidence established that Mr. Mayhew had the power to pay earned dividends only for the years 1992 and 1993. The dividends earned for the years 1992 and 1993 totaled $29,603.00. Ms. Mayhew contends on appeal that the circuit court erred by failing to conclude that Mr. Mayhew was entitled to receive dividends for the full period covering 1985 through 1993. We disagree. Ms. Mayhew's evidence did not establish that Mr. Mayhew had the power to pay himself dividends for the period 1985 through 1991. Mr. Mayhew became the principal owner and controller of Mayhew Chevrolet-Oldsmobile, Inc. during the period 1992-93. Therefore, only during the years 1992 and 1993, did Mr. Mayhew have the authority to influence the payment of those dividends.
After the circuit court found that Ms. Mayhew had established that Mr. Mayhew increased the value of his nonmarital stock by retaining dividends in the amount of $29,603.00, the circuit court again reduced the amount by one-half to reflect the tax consequences and the anticipated consumption of the proceeds by the parties[.] Ms. Mayhew contends on appeal that there was no justification for such a reduction. For the reasons set fourth in Section III, Part C, � 4(a)., supra, we agree with Ms. Mayhew and find that the circuit court's reduction of the proven retained dividends, was clearly erroneous.
(c) Extraordinary work efforts. Finally, Ms. Mayhew contends that the circuit court erred by refusing to rule that the stock increased in value because of the extraordinary time and effort spent at the corporation by Mr. Mayhew. Ms. Mayhew also contended that she assisted in increasing the stock's value due to her work efforts both at home and in the community, as well as the sacrifices she made because of the time Mr. Mayhew was away from home. Ms. Mayhew presented evidence that the extraordinary work efforts increased the stock's value by $90,000.00 and thus constituted active appreciation.
Participation as an officer or director of a corporation together with significant stock ownership by a spouse constitutes sufficient participation to qualify, at least to some degree, as active appreciation for purposes of equitable distribution. When these factors are coupled with full-time work activity by the spouse for the corporation, some degree of active participation must be assessed.
The circuit court rejected the evidence on this issue as mere speculation not justified by any accounting principles as testified by the witnesses. We find that the circuit court committed error in rejecting evidence concerning extraordinary work efforts.See footnote 43 We understand the circuit court's rejection of this evidence to be based upon its speculative nature. However, implicit in this Court's recognition of extraordinary work effort is the determination to permit expert testimony as to the likely value to be attached to extraordinary work effort. Ms. Mayhew presented such expert testimony. Ms. Mayhew's expert calculated that the extraordinary work effort in this case amounted to $90,000.00. We discern no basis to reject or reduce that amount. In addressing the issue of expert testimony under Rule 702 of the West Virginia Rules of Evidence in Gentry v. Mangum, 195 W.Va. 512, 524, 466 S.E.2d 171, 183 (1995), this Court noted that Rule 702 has three major requirements: (1) the witness must be an expert; (2) the expert must testify to scientific, technical or specialized knowledge; and (3) the expert testimony must assist the trier of fact. We find Gentry's criteria to have been met by Ms. Mayhew's expert.
The circuit court committed error in reducing, by one-half, Mr. Mayhew's retained earning of $147,000.00 and dividends in the amount of $29,603.00. There was also error committed by the circuit court in rejecting Ms. Mayhew's expert evidence that the value of the stock increased by $90,000.00 due to the extraordinary work efforts of Mr. and Mrs. Mayhew. We find that the total active appreciation was proven to be $266,603.00. Based upon the analysis set forth in this opinion, Ms. Mayhew is entitled to one-half of $266,603.00 or $133,301.50, as her equitable distribution of the stock's active appreciation.
The decision in Mayhew I remanded the issue of rehabilitative alimony to the circuit court. Unfortunately, Mayhew I did not provide guidance as to what the circuit court should reconsider regarding rehabilitative alimony. The family law master's recommended order stated [t]hat there shall be no adjustment to the amount of alimony awarded to the Plaintiff, but the alimony shall extend beyond the death of the Defendant. The circuit court's final order stated that [n]either party argued that alimony should not extend beyond the death of the Payor, so the Court will not address that issue. Thus, the record is clear that the issue of rehabilitative alimony was not argued before the circuit court. Mr. Mayhew attempts now to resurrect the issue before this Court. We decline to address the issue. Our law is clear in holding that, as a general rule, we will not pass upon an issue raised for the first time on appeal. See Koffler v. City of Huntington, 196 W. Va. 202, 207 n.6, 469 S.E.2d 645, 649-650 n.6 (1996).
For the reasons set forth herein, we find that Ms. Mayhew proved the active appreciation of Mr. Mayhew's stock to be $266,603.00. She is therefore entitled to $133,301.50 as her portion of the marital property.See footnote 44 We further conclude that the issue of rehabilitative alimony was not argued before the circuit court. Therefore, we decline to address the issue on appeal.
Footnote: 1 The circuit court's order adopted, in whole, the recommendations of the family law master. Therefore, unless otherwise indicated, this opinion will refer to the circuit court's order without an independent reference to the family law master's recommendations.
Footnote: 2 Ms. Mayhew's reply brief challenges Mr. Mayhew's right to make cross- assignments of error. Under Rule 10(f), of the Rules of Appellate Procedure, an appellee has the right to make cross-assignments of error. See Stump v. Ashland, Inc., 201 W. Va. 541, 499 S.E.2d 41 (1997); Petruska v. Petruska, 200 W. Va. 79, 488 S.E.2d 354 (1996); Marlin v. Bill Rich Const., Inc., 198 W. Va. 635, 482 S.E.2d 620 (1996).
Footnote: 3 Mr. Mayhew became the principal owner of the car dealership approximately 17 months before the divorce action was filed in this case.
Footnote: 4 During the parties' marriage, the Mayhews purchased an additional 10 shares of stock from the car dealership. In Mayhew I, we determined that the additional 10 shares of stock which were purchased during the parties' marriage was marital property with a value of $190,760.00. Those 10 shares of stock are not at issue in this appeal.
Footnote: 5 The relevant facts of the marital history and divorce of the Mayhew family is succinctly set forth in Mayhew I. We will not repeat those facts in this opinion. See Green v. Mullins, 146 W. Va. 958, 962, 124 S.E.2d 244, 247 (1962) (Reference is made to the two previous opinions of the Court for detailed statements of pertinent facts); Earl T. Browder, Inc. v. County Court of Webster County, 145 W. Va. 696, 699, 116 S.E.2d 867, 869 (1960) (Because of the detailed statement of pertinent facts in the previous opinion, the facts will be stated herein to a limited extent only).
Footnote: 6 The stock was gifted on four different occasions: 8 shares were gifted on January 2, 1985; 2 shares were gifted on May 19, 1988; 7 shares were gifted January 4, 1989; and 7 shares were gifted on January 3, 1990.
Footnote: 7 The term gross is being used to refer to the appreciation in value of the 24 shares of stock without identifying whether the appreciation was active or passive.
Footnote: 8 As previously indicated, in Mayhew I, this Court held that the 24 shares of stock had a total value of $457,826.00. The circuit court, without explanation, used the figure $457,824.00 as the total value of the stocks. In footnote 43 of this opinion we have made the appropriate adjustment for the erroneous deduction of $2.00 by the circuit court. The parties and lower court were bound by the figure set out in Mayhew I. That figure could only be altered upon a rehearing of Mayhew I by this Court. A rehearing of Mayhew I did not occur. The determination of an issue by an appellate court will be regarded as the law of the case upon a subsequent review unless there has been a material change in the record justifying a different ruling. Syl., Reynolds v. Virginian Ry. Co., 117 W. Va. 359, 185 S.E. 568 (1936).
Footnote: 9 See infra Section III. D. for discussion of the issue of rehabilitative alimony.
Footnote: 10 Community property jurisdictions determine causation, in the context of active and passive appreciation analysis, utilizing rigid formulas. Turner, Equitable Distribution of Property � 5.22, at 244- 247.
The portion of the increase in value that is marital property . . . is the difference between the actual amount by which the property has increased in value, and the amount by which capital of the same value would have increased over the same time period if invested in assets of relative safety requiring little management.
Quoted in, Bell, Equitable Distribution, 67 Miss. L.J. at 154. The proposal by the ALI is simplistically seducing. Yet, there is one readily apparent problem with the formula: How do courts fairly determine an investment vehicle that requires little management? Resolving this question would no doubt require the creation of yet another formula.
Footnote: 12 Indeed, Ms. Mayhew's desire for this Court to adopt her proposed formula is recognition of the difficulties involved with the fact-based approach determining causation in an active and passive appreciation analysis.
Footnote: 13 See also, W. Va. Code � 48-2-1(f)(6) (1992).
Footnote: 14 See also, W. Va. Code � 48-2-1(e)(2) (1992).
Footnote: 15 As a general matter, the burden of proof consists of two components: burden of production and burden of persuasion. The burden of persuasion requires the party upon whom it is placed, to convince the trier of fact by a preponderance of the evidence on a given issue. When a party has the burden of persuasion on an issue, that burden does not shift. The burden of production merely requires a party to present some evidence to rebut evidence proffered by the party having the burden of persuasion. The term burden of production is also used to refer to either party presenting some evidence on a matter. See e.g., Syl. Pt. 3, in part, Williams v. Precision Coil, Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995) (If the moving party makes a properly supported motion for summary judgment and can show by affirmative evidence that there is no genuine issue of a material fact, the burden of production shifts to the nonmoving party); Crain v. Lightner, 178 W.Va. 765, 769 n. 2, 364 S.E.2d 778, 782 n. 2 (1987)([A]n initial burden of production, which may shift to the nonmovant, and an ultimate burden of persuasion as to the nonexistence of a 'genuine issue,' which burden always remains on the movant).
Footnote: 16 The decision in Mayhew I actually relied upon Miller v. Miller, 189 W. Va. 126, 428 S.E.2d 547 (1993) (per curiam), wherein this Court quoted syllabus point 3 of Roig.
Footnote: 17 The burden of presenting evidence in Roig referred to the production of evidence. Roig did not create or imply a dual burden of persuasion standard. In fact, Roig clearly and unequivocally ruled that [i]n all instances, the burden of proof is upon the spouse who would claim the gift. Roig, 178 W. Va. at 785, 364 S.E.2d at 798.
Footnote: 18 As a general matter, our cases have permitted the burden of persuasion to shift to the defendant when the defendant alleges an affirmative defense. See, e.g., Skaggs v. Elk Run Coal Co., Inc., 198 W. Va. 51, 479 S.E.2d 561 (1996) (undue hardship is an affirmative defense, upon which the defendant bears the burden of persuasion);Voorhees v. Guyan Machinery Co., 191 W. Va. 450, 446 S.E.2d 672 (1994) (the defense of mitigation of damages is an affirmative defense in which the burden of persuasion lies upon the defendant); State v. Daniel, 182 W. Va. 643, 391 S.E.2d 90 (1990) (burden of persuasion may be imposed on a defendant asserting the affirmative defense of self-defense or accidental killing); Addair v. Bryant, 168 W. Va. 306, 284 S.E.2d 374 (1981) (burden of proof shifts to defendant on issue of contributory negligence).
Footnote: 19 In the instant case, the circuit court overcame the situation presented by our hypothetical by utilizing an ad hoc and unacceptable methodology involving the arbitrary adding and averaging of both parties' evidence.
Footnote: 20 The rejection of a dual burden of persuasion must be clearly understood as applying only to Mayhew I's requirement that the nonproperty owner carry the burden of proof in establishing active appreciation and the property owner carry the burden of proof in establishing passive appreciation. This is the extent of our rejection of a dual burden of persuasion. As we illustrate later in this opinion, dual burdens of proof are imposed on the parties in active and passive appreciation analysis.
Footnote: 21 In Moragne v. States Marine Lines, Inc., 398 U.S. 375, 403, 90 S.Ct. 1772, 1789, 26 L.Ed.2d 339 (1970), the United States Supreme Court enunciated three factors in stare decisis analysis which should be weighed prior to rejection of a longstanding rule. These factors are: (1) the desirability that the law furnish a clear guide for the conduct of individuals, to enable them to plan their affairs with assurance against untoward surprise; (2) the importance of furthering fair and expeditious adjudication by eliminating the need to relitigate every relevant proposition in every case; and (3) the necessity of maintaining public faith in the judiciary as a source of impersonal and reasoned judgments. Although the rule of law overruled in Mayhew I is not longstanding, we are confident that Moragne's principles are satisfied by our deviation from this short-lived precedent.
(6) Any increase in the value of separate property as defined in subdivision (1), (2), (3), (4) or (5) of this subsection which is due to inflation or to a change in market value resulting from conditions outside the control of the parties.
(2) The amount of any increase in value in the separate property of either of the parties to a marriage, which increase results from (A) an expenditure of funds which are marital property, including an expenditure of such funds which reduces indebtedness against separate property, extinguishes liens, or otherwise increases the net value of separate property, or (B) work performed by either or both of the parties during the marriage.
[I]n keeping with the spirit of Code, 48-3-10 , in order for property that is transferred from one spouse to the other during marriage to be excluded from the marital property pool, there must be proof that the property was intended as an irrevocable gift . . . In all instances, the burden of proof is upon the spouse who would claim the gift.
Roig, 178 W. Va. at 785, 364 S.E.2d at 798. See Barkley v. Barkley, 694 N.E.2d 989, 998 (Ohio App. 1997) (party seeking to have property deemed nonmarital bears the burden of persuasion); Troffo v. Troffo, 951 P.2d 197, 200 (Or.App. 1997) (party claiming property as nonmarital has burden of persuasion); In re Marriage of Hegge, 674 N.E.2d 124,126 (Ill.App. 1996) (party claiming that the property is nonmarital has the burden of persuasion); Stevenson v. Stevenson, 612 A.2d 852, 854 (Me.1992) (the party claiming that a piece of property is nonmarital bears the burden of persuasion on that issue); Frost v. Frost, 418 N.W.2d 220, 225 (Neb. 1988) (burden of persuasion to show the property is nonmarital property is on the person making the claim).
Footnote: 25 We have previously held that the value of . . . marital property, ordinarily [is] the date of the commencement of the action. Whiting v. Whiting, 183 W. Va. 451, 455, 396 S.E.2d 413, 417 (1990).
Footnote: 26 The critical determination that must be made at this step involves the date for valuing the property as separate property. If the separate property was acquired during the marriage, the date of such acquisition is the valuation date. If the separate property was acquired before the marriage, the parties' wedding date becomes the valuation date.
Footnote: 27 See Williams v. Williams, 645 A.2d 1118, 1121 (Me. 1994). But see, Pulice v. Pulice, 661 N.Y.S.2d 675 (1997) (placing the burden on the non-owning spouse).
Footnote: 28 No burden of persuasion is involved in the actual calculation process of the fourth step of our test.
Footnote: 29 If there was no increase in value the analysis terminates. See Nowik v. Nowik, 643 N.Y.S.2d 223 (1996) (no evidence of appreciation in value of separate stock shown); Garfinkel v. Garfinkel, 945 S.W.2d 744 (Tenn.App. 1996) (property actually decreased in value); Reich v. Reich, 652 So.2d 1200 (Fla.App. 1995) (holding that it was error to find active appreciation without first making a finding that property actually appreciated in value); Knapp v. Knapp, 874 S.W.2d 520 (Mo.App. 1994) (no increase in value of property); In re Marriage of Hulse, 727 P.2d 876 (Colo.App. 1986) (no increase in value shown).
Footnote: 30 The party claiming active appreciation in nonmarital property may carry his or her burden of persuasion by presenting evidence on the issue of active appreciation. There is no obligation on such party to present independent evidence of passive appreciation. The obvious reason for this is that whatever amount the party fails to prove is active appreciation is axiomatically passive appreciation. The opposing party may present independent evidence of passive appreciation or merely challenge the reliability of the evidence presented to prove active appreciation.
In reviewing the evidence relating to the ownership of the twenty-four shares of Mayhew Chevrolet-Oldsmobile, Inc., stock in issue under this assignment of error, the Court notes that Robert E. Mayhew adduced evidence showing that those twenty-four shares were gifts from his father. Nancy E. Mayhew took issue with this and claimed that, although they outwardly appeared to be gifts, Robert E. Mayhew received a low salary while working for his father and that the salary was actually reduced shortly after he received his last gift of shares. Robert E. Mayhew countered this by introducing evidence suggesting that his brother had received gifts of other property at the same time he received gifts of stock. He also introduced evidence indicating that his salary was reduced, as was his father's salary at the same time, due to the fact that the corporation had suffered severe losses from a devastating fire and needed to restore its financial standing. Mayhew I, 197 W. Va. at 298, 475 S.E.2d at 390.
It appears that there was extensive evidence on the value of the shares presented by expert evaluators of such property, that such expert evaluators used appropriate methods for valuing the property, and that the family law master resolved the conflict in the evidence in that regard properly and valued the shares in a manner consistent with the evidence of value advanced by the evaluators. This Court cannot conclude that the findings of fact made by the family law master and the circuit court as to the value of the shares were clearly wrong. Accordingly, . . . the circuit court's ruling is affirmed. Mayhew I, 197 W. Va. at 298, 475 S.E.2d at 390.
Footnote: 33 This Court actually determined the dates on which the stock was gifted in Mayhew I. See Mayhew I, 197 W. Va. at 294-295, 475 S.E.2d at 386-387.
Footnote: 34 When a lower court undertakes active and passive appreciation analysis it should only resort to averaging, when the methodologies used by both parties in arriving at their respective results are significantly flawed. The order of a lower court must specifically set out the significant flaws found by the lower court.
Footnote: 35 Mr. Mayhew's brief does pick up this issue, but it does so in the context of arguing a specific enumerated assignment of error. In State, Dept. Of Health v. Robert Morris N., 195 W. Va. 759, 765, 466 S.E.2d 827, 833 (1995), we pointed out that [a] skeletal 'argument', really nothing more than an assertion, does not preserve a claim . . . Judges are not like pigs, hunting for truffles buried in briefs. (Citation omitted).
Footnote: 36 The opinion in Mayhew I established the total value of the 24 shares of stock. It does not appear that Mayhew I used the commencement date of this action, as the point at which to calculate the total value of the 24 shares of stock. The opinion fails to state the basis for departing from the commencement date of the action. However, we are bound by the date affirmed in that opinion, since no rehearing was granted to reconsider the valuation date.
Footnote: 37 The increase in value is actually $344,781.00. As we pointed out elsewhere in this opinion, the circuit court erroneously used the figure of $457,824.00. We will continue to use the figures relied upon by the circuit court until we definitively determine the active and passive appreciation calculation.
Footnote: 38 Ms. Mayhew also presented evidence below concerning the assumption of debt by Mr. Mayhew that should have been assumed by the corporation, and valuation of the 24 shares of stock based upon General Motors' stock. The circuit court rejected the evidence on both issues and Ms. Mayhew does not raise them on appeal. The brief of Mr. Mayhew points out that Ms. Mayhew's expert was wrong in comparing General Motors' stock with his closely-held corporation. We agree with Mr. Mayhew and the circuit court agreed with Mr. Mayhew. This Court held in Mayhew I that evidence can be developed regarding the performance of this business relative to others of similar size, character and circumstances which will aid the court. Mayhew, 197 W. Va at 303, 475 S.E.2d at 395. Clearly, the stock in Mr. Mayhew's closely-held corporation cannot be compared to that of the publicly traded stock of General Motors. In the final analysis, however, this issue is moot insofar as the evidence was rejected by the circuit court as it did not impact in anyway upon the other arguments and evidence presented by Ms. Mayhew.
Footnote: 40 For reasons not explained in Mr. Mayhew's brief, it appears that his expert decided to present evidence on the issue of active and passive appreciation by challenging numbers affirmed in Mayhew I and proceeding therefrom. In Mayhew I this Court determined that the parties owned 10 shares of the corporation's stock as marital property. The 10 shares were valued at $190,760.00. We also determined in Mayhew I that Mr. Mayhew owned 24 shares of the corporation's stock as separate property--subject to active and passive appreciation analysis. The 24 shares were valued at 457,826.00. The total value of the 34 shares was established in Mayhew I as $648,586.00. On remand, Mr. Mayhew's expert challenged the total valuation of the 34 shares of stock. Mr. Mayhew's expert concluded that the total value of the 34 shares of stock was $601,960.05. The expert then proceeded to present mathematical evidence based upon the figure of $601,960.05. Obviously, this Court's determination in Mayhew I that the 34 shares of stock had a value of $648,586.00 could not be challenged on remand. It was a conclusive fact. Accordingly, the circuit court disregarded much of the evidence presented by Mr. Mayhew's expert, but managed to utilize some figures to challenge and reduce numbers posited by Ms. Mayhew's expert. We believe that it was error for the circuit court to utilize any of the numbers or formulas tendered by Mr. Mayhew's expert as they were generated on an incorrect foundation, i.e., the figure of $601,960.05.
Mr. Mayhew's brief in this appeal has attempted to both, distance itself from his expert's misguided calculations and selectively embrace some of his expert's calculations. The result of such efforts culminated in legal arguments and recalculations that were not presented to nor ruled upon by the circuit court or family law master. This Court has consistently held that we will not, as general rule, pass upon issues raised for the first time on appeal. See Koffler v. City of Huntington, 196 W. Va. 202, 207 n.6, 469 S.E.2d 645, 649-650 n.6 (1996). We apply this rule to Mr. Mayhew's assignments of error on the issue of active and passive appreciation of the 24 shares of stock.
Footnote: 41 Additionally, interest earned on nonmarital property has been held to constitute marital property. Reed v. Reed, 749 S.W.2d 335, 338 (Ark.App. 1988).
Footnote: 42 In Smith, 197 W. Va. at 512-513, 475 S.E.2d at 888-889 we declined to address this issue.
In order to fully appreciate the extent of [Ms. Mayhew's] marital efforts in aiding [Mr. Mayhew] in his work at the dealership, it is helpful to examine these facts: During the parties' marriage, [Mr. Mayhew] worked at the car dealership every day from early in the morning until 7:00 p.m. or 8:00 p.m. at night. In addition, he worked every Saturday until at least 3:00 p.m. or 4:00 p.m. [Ms. Mayhew] would often prepare [Mr. Mayhew's] dinner and take it, together with their two daughters, to the dealership so they would have an opportunity to visit with their father for a short period of time during the weekdays, and so that he (as well as other employees on some occasions) could have dinner without interrupting their work. [Mr. Mayhew] also was very active in community organizations as an aid to his business and [Ms. Mayhew] assisted in that respect as well. [Ms. Mayhew] helped her husband directly in many ways in the business, including actually working there without compensation before the children were born. On weekends, the family participated in social or civic activities for the purpose of becoming more visible in the community to increase the sale of new and used cars from the dealership. The wife did virtually all the household/child care duties, including mowing six-plus acres and tending to sheep, cattle, chickens and other farm animals. It is impossible not to conclude that the wife's efforts doing virtually all of the domestic work in this marriage, as well as the other efforts she made not only to work directly for the business but also to free her husband up to work in the business, helped this business appreciate.
Mayhew I, 197 W.Va. at 309-310, 475 S.E.2d at 401-401 (Workman, J., dissenting).
Footnote: 44 We indicated elsewhere in this opinion that the circuit court erroneously found that the total value of the 24 shares of stock was $457,824.00, when Mayhew I identified the figure at $457,826.00. On remand the circuit court's order should reflect that from the total value of the stock in the amount of $457,826.00, Ms. Mayhew is entitled to $133,301.50 and Mr. Mayhew is entitled to $324,524.50.

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1. Purpose. The Office of Workers' Compensation Programs (OWCP), Division of Federal Employees' Compensation (DFEC) administers a Nurse Intervention Program to utilize nurse case managers to assist with the medical recovery and return to work (RTW) efforts of the Injured Worker (IW). This effort involves a collaborative process between the IW, Claims Examiner (CE), Field Nurse (FN), treating physician/medical provider(s) and the employing agency (EA).Assignment of a FN typically occurs during the early disability phase of a work injury, but may occur at later stages as well.
This handbook is intended is to be used by all OWCP/DFEC contracted FNs certified with the Nurse Intervention Program handling cases in connection with the Federal Employees' Compensation Act (FECA), 5 U.S.C. 8101 et seq; 20 CFR Part 10. Its purpose is to provide FNs with information necessary to understand and adhere to performance expectations in assigned cases.
a. Nurse Case Management is a specialty within the nursing profession which provides a process for the delivery of health care services via assessment, planning, facilitation and advocacy to meet health care needs of the clients being served. This process promotes quality of care and cost effective delivery of health care services. Case management roles vary among the different health care delivery systems and organizations, however, the goals of nurse case management remain consistent across all practice settings: promote client health and wellness and appropriate use of service resources.
For the nurse working in the field of workers' compensation, the nurse case management process may offer unique challenges. The nurse may encounter issues and circumstances that may seem to compete with the nurse case management process utilized in other practice settings. For instance, when providing services within a workers' compensation arena, the nurse needs to be cognizant of other involved participants. While the IW is the focus for services, the nurse case management process needs to work within the structure of the workers' compensation programs' regulations as well as its policies and procedures.
(1) A nurse providing nurse case management services for the OWCP Nurse Intervention Program serves as a representative for the OWCP/DFEC, which administers the provisions of the FECA. When implementing policies and procedures, the OWCP/DFEC must approach the provision of services in a non–adversarial, unbiased manner. The nurse is expected to deliver nurse case management services in the same manner.
(2) As a contractor of the OWCP/DFEC, the nurse is required to follow the policies of the OWCP/DFEC while providing support to the IW. OWCP expects expeditious handling of injury cases assigned at every stage of the nurse intervention process. There may be instances where the FN feels an IW would benefit from ongoing nurse services but from a program standpoint, the case needs to be moved on to the next stage of the disability management process (e.g. vocational rehabilitation). It is expected that the nurse will support program decisions and provide assistance with transitioning the case to the next stage of the disability management process.
(3) A FN may not use his/her association with the Government, including business contacts obtained through any work with the Government, to try to obtain personal benefits or favors for his/herself, friends, relatives, or business associates.
A FN may not use any Government affiliation for personal gain or for that of others, or use that affiliation in any manner to endorse a product service or enterprise.
(4) A FN is a contractor for OWCP/DFEC, but the Department of Labor's Office of the Solicitor cannot provide legal advice to a FN. Because the United States cannot defend or indemnify a contractor such as a FN in a lawsuit arising out of FN activities in connection with the FECA program, the FN may wish to consider obtaining liability insurance.
c. Structure. This handbook begins with a brief overview of the OWCP/DFEC program and structure and relevant portions of the FECA. The remainder of the handbook is devoted to the OWCP Nurse Intervention Program structure, policies and guidelines.
a. Exclusive Remedy. Benefits provided under the FECA constitute a sole remedy against the United States for work-related injury or death. A Federal employee covered under the statute is not entitled to sue the United States or recover tort damages for such injury under any other law. Proceedings under the FECA are non- adversarial.
The IW is entitled under the FECA to select a physician of his/her choice to provide treatment. The provider must meet the definition of "physician" under the FECA (which includes certain services provided by chiropractors and clinical psychologists) and must not have been excluded from payment under the program. Physicians employed by, or under contract to, the employing agency (EA) may examine the IW at the EA's facility, however, the IW's choice of physician must be honored and treatment by the IW's physician must not be delayed for the purpose of obtaining an EA directed medical examination.
20 C.F.R. §10.505 explains that the employer should make all reasonable efforts to place the employee in his or her former or an equivalent position in accordance with 5 U.S.C. 8151 if the employee has fully recovered after one year. 20 C.F.R §353.301 provides an overview of restoration rights for fully recovered and partially recovered employees. The Office of Personnel Management (OPM) has jurisdiction and is responsible for enforcing this section. If an IW has issues pertaining to restoration rights he/she should contact the EA or OPM.
medical provider(s) use all available tools to ensure medical recovery (to the extent possible) and facilitate a sustainable return to work (RTW). This includes, but is not limited to, utilizing services of contracted FNs and RCs.
c. When the medical evidence shows that total disability has ended, DFEC will make every reasonable effort to arrange for re-employment of the IW. These efforts always start initially with the EA. In the event that the EA is unable to offer suitable re-employment, however, DFEC attempts to place the IW with a new employer.
d. To assist with the RTW efforts, DFEC uses nurse intervention and vocational rehabilitation as the primary avenues to pursue re-employment of the IW.
a. 20 CFR §10.310 outlines the basic rules for obtaining medical care and references FNs specifically.
b. 20 CFR §10.500 provides the basic rules governing continuing receipt of compensation benefits and return to work.
(2) Each disabled employee is obligated to perform such work as he or she can. OWCP's goal is to return each disabled employee to work as soon as he or she is medically able. In determining what work qualifies under 5 U.S.C. 8115 for determining the wage-earning capacity for a particular disabled employee, OWCP considers all relevant factors, including the employee's current physical limitations, whether the work is available within the employee's demonstrated commuting area and the employee's qualifications to perform such work.
(3) A disabled employee who refuses to seek or accept suitable employment within the meaning of 5 U.S.C. 8106(c)(2) is not entitled to compensation.
(4) Payment of medical benefits is available for all treatment necessary due to a work-related medical condition.
c. 20 CFR §10.517 outlines the penalties for refusing to accept a suitable job offer.
(1) 5 U.S.C. 8106(c) provides that a partially disabled employee who refuses to seek suitable work, or refuses to or neglects to work after suitable work is offered to or arranged for him or her, is not entitled to compensation. An employee who refuses or neglects to work after suitable work has been offered or secured for him or her has the burden to show that this refusal or failure to work was reasonable or justified.
(2) After providing the two notices described in §10.516, OWCP will terminate the employee's entitlement to further compensation under 5 U.S.C. 8105, 8106, and 8107 on all claims where the injury occurred prior to the termination decision, as provided by 5 U.S.C. 8106(c)(2). However, the employee remains entitled to medical benefits as provided by 5 U.S.C. 8103.
d. 20 CFR §10.518 outlines the services OWCP provides to help employees return to work.
e. 20 CFR §10.519 describes what actions OWCP will take if an employee refuses to undergo vocational rehabilitation.
(1) Where a suitable job has been identified, OWCP will reduce the employee's future monetary compensation based on the amount which would likely have been his or her wage-earning capacity had he or she undergone vocational rehabilitation. OWCP will determine this amount in accordance with the job identified through the vocational rehabilitation planning process, which includes meetings with the OWCP nurse and the employer. The reduction will remain in effect until such time as the employee acts in good faith to comply with the direction of OWCP.
(2) Where a suitable job has not been identified, because the failure or refusal occurred in the early but necessary stages of a vocational rehabilitation effort (that is, interviews, testing, counseling, functional capacity evaluations, and work evaluations), OWCP cannot determine what would have been the employee's wage-earning capacity.
(3) Under the circumstances identified in paragraph (b) of this section, in the absence of evidence to the contrary, OWCP will assume that the vocational rehabilitation effort would have resulted in a return to work with no loss of wage-earning capacity, and OWCP will reduce the employee's monetary compensation accordingly (that is, to zero). This reduction will remain in effect until such time as the employee acts in good faith to comply with the direction of OWCP.
f. 20 CFR §10.521 outlines the effect an election of retirement benefits will have on benefits if such election is made during a vocational rehabilitation effort.


Suspicious that marijuana was being grown in petitioner Kyllo's home in a triplex, agents used a thermal-imaging device to scan the triplex to determine if the amount of heat emanating from it was consistent with the high-intensity lamps typically used for indoor marijuana growth. The scan showed that Kyllo's garage roof and a side wall were relatively hot compared to the rest of his home and substantially warmer than the neighboring units. Based in part on the thermal imaging, a Federal Magistrate Judge issued a warrant to search Kyllo's home, where the agents found marijuana growing. Mter Kyllo was indicted on a federal drug charge, he unsuccessfully moved to suppress the evidence seized from his home and then entered a conditional guilty plea. The Ninth Circuit ultimately affirmed, upholding the thermal imaging on the ground that Kyllo had shown no subjective expectation of privacy because he had made no attempt to conceal the heat escaping from his home. Even if he had, ruled the court, there was no objectively reasonable expectation of privacy because the thermal imager did not expose any intimate details of Kyllo's life, only amorphous hot spots on his home's exterior.
expectation of privacy in the searched object, and society is willing to recognize that expectation as reasonable, see, e. g., California v. Ciraolo, supra, at 211. Pp. 31-33.
(b) While it may be difficult to refine the Katz test in some instances, in the case of the search of a home's interior-the prototypical and hence most commonly litigated area of protected privacy-there is a ready criterion, with roots deep in the common law, of the minimal expectation of privacy that exists, and that is acknowledged to be reasonable. To withdraw protection of this minimum expectation would be to permit police technology to erode the privacy guaranteed by the Fourth Amendment. Thus, obtaining by sense-enhancing technology any information regarding the home's interior that could not otherwise have been obtained without physical "intrusion into a constitutionally protected area," Silverman v. United States, 365 U. S. 505, 512, constitutes a search-at least where (as here) the technology in question is not in general public use. This assures preservation of that degree of privacy against government that existed when the Fourth Amendment was adopted. Pp. 33-35.
(c) Based on this criterion, the information obtained by the thermal imager in this case was the product of a search. The Court rejects the Government's argument that the thermal imaging must be upheld because it detected only heat radiating from the home's external surface. Such a mechanical interpretation of the Fourth Amendment was rejected in Katz, where the eavesdropping device in question picked up only sound waves that reached the exterior of the phone booth to which it was attached. Reversing that approach would leave the homeowner at the mercy of advancing technology-including imaging technology that could discern all human activity in the home. Also rejected is the Government's contention that the thermal imaging was constitutional because it did not detect "intimate details." Such an approach would be wrong in principle because, in the sanctity of the home, all details are intimate details. See, e. g., United States v. Karo, 468 U. S. 705; Dow Chemical, supra, at 238, distinguished. It would also be impractical in application, failing to provide a workable accommodation between law enforcement needs and Fourth Amendment interests. See Oliver v. United States, 466 U. S. 170, 181. Pp. 35-40.
(d) Since the imaging in this case was an unlawful search, it will remain for the District Court to determine whether, without the evidence it provided, the search warrant was supported by probable cause-and if not, whether there is any other basis for supporting admission of that evidence. P. 40.
SCALIA, J., delivered the opinion of the Court, in which SOUTER, THOMAS, GINSBURG, and BREYER, JJ., joined. STEVENS, J., filed a dissenting opinion, in which REHNQUIST, C. J., and O'CONNOR and KENNEDY, JJ., joined, post, p. 41.
Kenneth Lerner, by appointment of the Court, 531 U. S. 955, argued the cause and filed briefs for petitioner.
*Briefs of amici curiae urging reversal were filed for the Liberty Project by Julie M. Carpenter; and for the National Association of Criminal Defense Lawyers et al. by James J. Tomkovicz, Lisa B. Kemler, and Steven R. Shapiro.
is cool, white is hot, shades of gray connote relative differences; in that respect, it operates somewhat like a video camera showing heat images. The scan of Kyllo's home took only a few minutes and was performed from the passenger seat of Agent Elliott's vehicle across the street from the front of the house and also from the street in back of the house. The scan showed that the roof over the garage and a side wall of petitioner's home were relatively hot compared to the rest of the home and substantially warmer than neighboring homes in the triplex. Agent Elliott concluded that petitioner was using halide lights to grow marijuana in his house, which indeed he was. Based on tips from informants, utility bills, and the thermal imaging, a Federal Magistrate Judge issued a warrant authorizing a search of petitioner's home, and the agents found an indoor growing operation involving more than 100 plants. Petitioner was indicted on one count of manufacturing marijuana, in violation of 21 U. s. C. § 841(a)(1). He unsuccessfully moved to suppress the evidence seized from his home and then entered a conditional guilty plea.
opinion was withdrawn and the panel (after a change in composition) affirmed, 190 F.3d 1041 (1999), with Judge Noonan dissenting. The court held that petitioner had shown no subjective expectation of privacy because he had made no attempt to conceal the heat escaping from his home, id., at 1046, and even if he had, there was no objectively reasonable expectation of privacy because the imager "did not expose any intimate details of Kyllo's life," only "amorphous 'hot spots' on the roof and exterior wall," id., at 1047. We granted certiorari. 530 U. S. 1305 (2000).
eye cannot by the laws of England be guilty of a trespass.'" Boyd v. United States, 116 U. S. 616, 628 (1886) (quoting Entick v. Carrington, 19 How. St. Tr. 1029, 95 Eng. Rep. 807 (K. B. 1765)). We have since decoupled violation of a person's Fourth Amendment rights from trespassory violation of his property, see Rakas v. III inois, 439 U. S. 128, 143 (1978), but the lawfulness of warrantless visual surveillance of a home has still been preserved. As we observed in California v. Ciraolo, 476 U. S. 207, 213 (1986), "[t]he Fourth Amendment protection of the home has never been extended to require law enforcement officers to shield their eyes when passing by a home on public thoroughfares."
1 When the Fourth Amendment was adopted, as now, to "search" meant "[tJo look over or through for the purpose of finding something; to explore; to examine by inspection; as, to search the house for a book; to search the wood for a thief." N. Webster, An American Dictionary of the English Language 66 (1828) (reprint 6th ed. 1989).
Fourth Amendment nonetheless protected Katz from the warrantless eavesdropping because he "justifiably relied" upon the privacy of the telephone booth. Id., at 353. As Justice Harlan's oft-quoted concurrence described it, a Fourth Amendment search occurs when the government violates a subjective expectation of privacy that society recognizes as reasonable. See id., at 361. We have subsequently applied this principle to hold that a Fourth Amendment search does not occur-even when the explicitly protected location of a house is concerned-unless "the individual manifested a subjective expectation of privacy in the object of the challenged search," and "society [is] willing to recognize that expectation as reasonable." Ciraolo, supra, at 211. We have applied this test in holding that it is not a search for the police to use a pen register at the phone company to determine what numbers were dialed in a private home, Smith v. Maryland, 442 U. S. 735, 743744 (1979), and we have applied the test on two different occasions in holding that aerial surveillance of private homes and surrounding areas does not constitute a search, Ciraolo, supra; Florida v. Riley, 488 U. S. 445 (1989).
entirely unaffected by the advance of technology. For example, as the cases discussed above make clear, the technology enabling human flight has exposed to public view (and hence, we have said, to official observation) uncovered portions of the house and its curtilage that once were private. See Ciraolo, supra, at 215. The question we confront today is what limits there are upon this power of technology to shrink the realm of guaranteed privacy.
2 The dissent's repeated assertion that the thermal imaging did not obtain information regarding the interior of the home, post, at 43, 44 (opinion of STEVENS, J.), is simply inaccurate. A thermal imager reveals the relative heat of various rooms in the home. The dissent may not find that information particularly private or important, see post, at 43-44, 45, 4950, but there is no basis for saying it is not information regarding the interior of the home. The dissent's comparison of the thermal imaging to various circumstances in which outside observers might be able to perceive, without technology, the heat of the home-for example, by observing snowmelt on the roof, post, at 43-is quite irrelevant. The fact that equivalent information could sometimes be obtained by other means does not make lawful the use of means that violate the Fourth Amendment. The police might, for example, learn how many people are in a particular house by setting up year-round surveillance; but that does not make breaking and entering to find out the same information lawful. In any event, on the night of January 16, 1992, no outside observer could have discerned the relative heat of Kyllo's home without thermal imaging.
3 The ability to "see" through walls and other opaque barriers is a clear, and scientifically feasible, goal of law enforcement research and development. The National Law Enforcement and Corrections Technology Center, a program within the United States Department of Justice, features on its Internet Website projects that include a "RadarBased Through-the-Wall Surveillance System," "Handheld Ultrasound Through the Wall Surveillance," and a "Radar Flashlight" that "will enable law enforcement officers to detect individuals through interior building walls." www.nlectc.org/techproj/ (visited May 3, 2001). Some devices may emit low levels of radiation that travel "through-the-wall," but others, such as more sophisticated thermal-imaging devices, are entirely passive, or "off-the-wall" as the dissent puts it.
4 The dissent asserts, post, at 44-45, n. 3, that we have misunderstood its point, which is not that inference insulates a search, but that inference alone is not a search. If we misunderstood the point, it was only in a good-faith effort to render the point germane to the case at hand. The issue in this case is not the police's allegedly unlawful inferencing, but their allegedly unlawful thermal-imaging measurement of the emanations from a house. We say such measurement is a search; the dissent says it is not, because an inference is not a search. We took that to mean that, since the technologically enhanced emanations had to be the basis of inferences before anything inside the house could be known, the use of the emanations could not be a search. But the dissent certainly knows better than we what it intends. And if it means only that an inference is not a search, we certainly agree. That has no bearing, however, upon whether hi-tech measurement of emanations from a house is a search.
5The Government cites our statement in California v. Ciraolo, 476 U. S. 207 (1986), noting apparent agreement with the State of California that aerial surveillance of a house's curtilage could become "'invasive'" if "'modern technology'" revealed "'those intimate associations, objects or activities otherwise imperceptible to police or fellow citizens.'" Id., at 215, n. 3 (quoting Brief for State of California 14-15). We think the Court's focus in this secondhand dictum was not upon intimacy but upon otherwise-imperceptibility, which is precisely the principle we vindicate today.
home activities are "intimate" and which are not. And even when (if ever) that jurisprudence were fully developed, no police officer would be able to know in advance whether his through-the-wall surveillance picks up "intimate" detailsand thus would be unable to know in advance whether it is constitutional.
We have said that the Fourth Amendment draws "a firm line at the entrance to the house," Payton, 445 U. S., at 590. That line, we think, must be not only firm but also brightwhich requires clear specification of those methods of surveillance that require a warrant. While it is certainly possible to conclude from the videotape of the thermal imaging that occurred in this case that no "significant" compromise of the homeowner's privacy has occurred, we must take the long view, from the original meaning of the Fourth Amendment forward.
however, is not with us but with this Court's precedent. See Ciraolo, supra, at 215 ("In an age where private and commercial flight in the public airways is routine, it is unreasonable for respondent to expect that his marijuana plants were constitutionally protected from being observed with the naked eye from an altitude of 1,000 feet"). Given that we can quite confidently say that thermal imaging is not "routine," we decline in this case to reexamine that factor.
JUSTICE STEVENS, with whom THE CHIEF JUSTICE, JusTICE O'CONNOR, and JUSTICE KENNEDY join, dissenting.
There is, in my judgment, a distinction of constitutional magnitude between "through-the-wall surveillance" that gives the observer or listener direct access to information in a private area, on the one hand, and the thought processes used to draw inferences from information in the public domain, on the other hand. The Court has crafted a rule that purports to deal with direct observations of the inside of the home, but the case before us merely involves indirect deductions from "off-the-wall" surveillance, that is, observations of the exterior of the home. Those observations were made with a fairly primitive thermal imager that gathered data exposed on the outside of petitioner's home but did not invade any constitutionally protected interest in privacy.l Moreover, I believe that the supposedly "bright-line" rule the Court has created in response to its concerns about future technological developments is unnecessary, unwise, and inconsistent with the Fourth Amendment.
our Fourth Amendment jurisprudence. One of those core principles, of course, is that "searches and seizures inside a home without a warrant are presumptively unreasonable." Payton v. New York, 445 U. S. 573, 586 (1980) (emphasis added). But it is equally well settled that searches and seizures of property in plain view are presumptively reasonable. See id., at 586-587.2 Whether that property is residential or commercial, the basic principle is the same: "'What a person knowingly exposes to the public, even in his own home or office, is not a subject of Fourth Amendment protection.'" California v. Ciraolo, 476 U. S. 207, 213 (1986) (quoting Katz v. United States, 389 U. S. 347, 351 (1967)); see Florida v. Riley, 488 U. S. 445, 449-450 (1989); California v. Greenwood, 486 U. S. 35, 40-41 (1988); Dow Chemical Co. v. United States, 476 U. S. 227, 235-236 (1986); Air Pollution Variance Bd. of Colo. v. Western Alfalfa Corp., 416 U. S. 861, 865 (1974). That is the principle implicated here.
2 Thus, for example, we have found consistent with the Fourth Amendment, even absent a warrant, the search and seizure of garbage left for collection outside the curtilage of a home, California v. Greenwood, 486 U. S. 35 (1988); the aerial surveillance of a fenced-in backyard from an altitude of 1,000 feet, California v. Ciraolo, 476 U. S. 207 (1986); the aerial observation of a partially exposed interior of a residential greenhouse from 400 feet above, Florida v. Riley, 488 U. S. 445 (1989); the aerial photography of an industrial complex from several thousand feet above, Dow Chemical Co. v. United States, 476 U. S. 227 (1986); and the observation of smoke emanating from chimney stacks, Air Pollution Variance Bd. of Colo. v. Western Alfalfa Corp., 416 U. S. 861 (1974).
from the exterior surfaces of petitioner's home; all that those measurements showed were relative differences in emission levels, vaguely indicating that some areas of the roof and outside walls were warmer than others. As still images from the infrared scans show, see Appendix, infra, no details regarding the interior of petitioner's home were revealed. Unlike an x-ray scan, or other possible "throughthe-wall" techniques, the detection of infrared radiation emanating from the home did not accomplish "an unauthorized physical penetration into the premises," Silverman v. United States, 365 U. S. 505, 509 (1961), nor did it "obtain information that it could not have obtained by observation from outside the curtilage of the house," United States v. Karo, 468 U. S. 705, 715 (1984).
in a laboratory or opium den, enter the public domain if and when they leave a building. A subjective expectation that they would remain private is not only implausible but also surely not "one that society is prepared to recognize as 'reasonable.'" Katz, 389 U. S., at 361 (Harlan, J., concurring).
Notwithstanding the implications of today's decision, there is a strong public interest in avoiding constitutional litigation over the monitoring of emissions from homes, and over the inferences drawn from such monitoring. Just as "the police cannot reasonably be expected to avert their eyes from evidence of criminal activity that could have been observed by any member of the public," Greenwood, 486 U. S., at 41, so too public officials should not have to avert their senses or their equipment from detecting emissions in the public domain such as excessive heat, traces of smoke, suspicious odors, odorless gases, airborne particulates, or radioactive emissions, any of which could identify hazards to the community. In my judgment, monitoring such emissions with "sense-enhancing technology," ante, at 34, and drawing useful conclusions from such monitoring, is an entirely reasonable public service.
(1984), to refute a point we do not make underscores the fact that the Court has no real answer (either in logic or in law) to the point we do make. Of course, Karo itself does not provide any support for the Court's view that inferences can amount to unconstitutional searches. The illegality in that case was "the monitoring of a beeper in a private residence" to obtain information that "could not have [been] obtained by observation from outside," id., at 714-715, rather than any thought processes that flowed from such monitoring.
justified, that certain facts will not come to the attention of the authorities"). The interest in concealing the heat escaping from one's house pales in significance to "the chief evil against which the wording of the Fourth Amendment is directed," the "physical entry of the home," United States v. United States Dist. Court for Eastern Dist. of Mich., 407 U. S. 297, 313 (1972), and it is hard to believe that it is an interest the Framers sought to protect in our Constitution.
4 This view comports with that of all the Courts of Appeals that have resolved the issue. See 190 F.3d 1041 (CA9 1999); United States v. Robinson, 62 F.3d 1325 (CAll 1995) (upholding warrantless use of thermal imager); United States v. Myers, 46 F.3d 668 (CA7 1995) (same); United States v. Ishmael, 48 F.3d 850 (CA5 1995) (same); United States v. Pinson, 24 F.3d 1056 (CA8 1994) (same). But see United States v. Cusumano, 67 F.3d 1497 (CAW 1995) (warrantless use of thermal imager violated Fourth Amendment), vacated and decided on other grounds, 83 F.3d 1247 (CAW 1996) (en bane).
Court's new rule is at once too broad and too narrow, and is not justified by the Court's explanation for its adoption. As I have suggested, I would not erect a constitutional impediment to the use of sense-enhancing technology unless it provides its user with the functional equivalent of actual presence in the area being searched.
Despite the Court's attempt to draw a line that is "not only firm but also bright," ante, at 40, the contours of its new rule are uncertain because its protection apparently dissipates as soon as the relevant technology is "in general public use," ante, at 34. Yet how much use is general public use is not even hinted at by the Court's opinion, which makes the somewhat doubtful assumption that the thermal imager used in this case does not satisfy that criterion.5 In any event, putting aside its lack of clarity, this criterion is somewhat perverse because it seems likely that the threat to privacy will grow, rather than recede, as the use of intrusive equipment becomes more readily available.
5 The record describes a device that numbers close to a thousand manufactured units; that has a predecessor numbering in the neighborhood of 4,000 to 5,000 units; that competes with a similar product numbering from 5,000 to 6,000 units; and that is "readily available to the public" for commercial, personal, or law enforcement purposes, and is just an 800number away from being rented from "half a dozen national companies" by anyone who wants one. App. 18. Since, by virtue of the Court's new rule, the issue is one of first impression, perhaps it should order an evidentiary hearing to determine whether these facts suffice to establish "general public use."
activity is not a search either. Nevertheless, the use of such a device would be unconstitutional under the Court's rule, as would the use of other new devices that might detect the odor of deadly bacteria or chemicals for making a new type of high explosive, even if the devices (like the dog sniffs) are "so limited both in the manner in which" they obtain information and "in the content of the information" they reveal. Ibid. If nothing more than that sort of information could be obtained by using the devices in a public place to monitor emissions from a house, then their use would be no more objectionable than the use of the thermal imager in this case.
The application of the Court's new rule to "any information regarding the interior of the home," ante, at 34, is also unnecessarily broad. If it takes sensitive equipment to detect an odor that identifies criminal conduct and nothing else, the fact that the odor emanates from the interior of a home should not provide it with constitutional protection. See supra, at 47 and this page. The criterion, moreover, is too sweeping in that information "regarding" the interior of a home apparently is not just information obtained through its walls, but also information concerning the outside of the building that could lead to (however many) inferences "regarding" what might be inside. Under that expansive view, I suppose, an officer using an infrared camera to observe a man silently entering the side door of a house at night carrying a pizza might conclude that its interior is now occupied by someone who likes pizza, and by doing so the officer would be guilty of conducting an unconstitutional "search" of the home.
did provide its user with the functional equivalent of access to a private place-such as, for example, the telephone booth involved in Katz, or an office building-then the rule should apply to such an area as well as to a home. See Katz, 389 U. S., at 351 ("[T]he Fourth Amendment protects people, not places").
The final requirement of the Court's new rule, that the information "could not otherwise have been obtained without physical intrusion into a constitutionally protected area," ante, at 34 (internal quotation marks omitted), also extends too far as the Court applies it. As noted, the Court effectively treats the mental process of analyzing data obtained from external sources as the equivalent of a physical intrusion into the home. See supra, at 44. As I have explained, however, the process of drawing inferences from data in the public domain should not be characterized as a search.
tive volume of sound leaving the booth, which presumably was discernible in the public domain.6 Surely, there is a significant difference between the general and well-settled expectation that strangers will not have direct access to the contents of private communications, on the one hand, and the rather theoretical expectation that an occasional homeowner would even care if anybody noticed the relative amounts of heat emanating from the walls of his house, on the other. It is pure hyperbole for the Court to suggest that refusing to extend the holding of Katz to this case would leave the homeowner at the mercy of "technology that could discern all human activity in the home." Ante, at 35-36.
6 The use of the latter device would be constitutional given Smith v.
Maryland, 442 U. S. 735, 741 (1979), which upheld the use of pen registers to record numbers dialed on a phone because, unlike "the listening device employed in Katz ... pen registers do not acquire the contents of communications."
outside of his house. Defendant's Exh. 107, p. 4. But even if the device could reliably show extraordinary differences in the amounts of heat leaving his home, drawing the inference that there was something suspicious occurring inside the residence-a conclusion that officers far less gifted than Sherlock Holmes would readily draw-does not qualify as "through-the-wall surveillance," much less a Fourth Amendment violation.
APPENDIX TO OPINION OF STEVENS, J. (Images and text reproduced from defendant's exhibit 107) Top left: Infrared image of a video frame from the videotape submitted as evidence in this case. The thermogram indicates the suspect house as it appeared with the Gain and contrast in its default setting. Only the outline of the house is visible. The camera used was the Thermovision 210. Top Right: Infrared image of a subsequent videoframe taken from the videotape. The gain and contrast settings have been increased in order to make the walls and roof of the structure appear hotter than what it actually is.
Bottom Right: The same image, but with the gain and contrast increased. This change in camera settings cause any object to appear hotter than what it actually is. The arrow indicates the overloading of an area immediately around a hot object in this case the electrical transformer and the streetlight. This overloading of the image is an inherent design flaw in the camera itself.


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Newdorf Legal creates individualized solutions for complex disputes. Here's how David Newdorf has helped other clients.
Airis SFO LLC v. City and County of San Francisco.
Houston-based developer Airis Holdings LLC sued San Francisco International Airport after the San Francisco Board of Supervisors exercised its option not to proceed with a $250 million air cargo project at the Airport. The developer brought on a major international law firm to press claims for lost profits, breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel and unjust enrichment. The developer sought $40 million and was motivated to take the case to trial.
Facing numerous legal and factual theories, Mr. Newdorf mapped out a legal strategy to eliminate the developer’s claims one by one. Working with top officials of the Airport and the City, David Newdorf headed a litigation and trial team of two other lawyers and two paralegals. Client executives were closely involved at every stage of litigation and trial. After two years of hard-fought discovery, pre-trial motions, trial and post-trial motions, San Francisco prevailed against the developer on all of its claims. Mr. Newdorf is now working with the City to recover its costs and fees of the litigation from plaintiffs.
Read the latest news about Newdorf Legal's $3.4 million attorneys' fee award in this case.
Nishihama v. City and County of San Francisco.
In this case, as in many others, the trial court permitted plaintiff and her contingency fee lawyer to obtain a windfall damage award for her personal injury cases.
David Newdorf was lead appellate counsel in this case that resulted in a published decision that is one of the most frequently cited cases in California litigation. Nishihama v. City and County of San Francisco, 93 Cal. App. 4th 298 (2001). This seminal decision on medical damages for personal injuries established a cap on jury awards so that plaintiffs and their lawyers cannot recover more in medical damages than the actual cost of their treatment.
Mr. Newdorf’s work resulted in an ongoing reduction of his client’s legal liability by millions of dollars a year and moved California law toward a more equitable balance between business and industry, on the one hand, and fair compensation for injured parties.
The plaintiffs’ bar lobby has been attempting to undo — so far unsuccessfully — this and similar judicial decisions through legislation in Sacramento. Mr. Newdorf has published commentaries explaining this area of law for lawyers and lawmakers.
Snyder and Santoro v. City and County of San Francisco.
This high-profile lawsuit - dubbed "fajitagate" by the press --stemmed from an early-morning altercation between three off-duty San Francisco police officers and two men outside a bar. The case garnered headlines because one of the officers was the son of a high-ranking police official. The plaintiffs sued San Francisco on the theory that the City should be liable for police officer's off-duty conduct if the police department failed to enforce its policies concerning the use of reasonable force to make arrests while on-duty.
Plaintiffs told a compelling story, but the law did not support the claims. Mr. Newdorf’s motion for summary judgment persuaded the U.S. District Court for the Northern District of California to reject plaintiffs’ legal theory and dismiss the case. Agreeing with Mr. Newdorf’s argument, Judge Jeffrey S. White stated that “Defendants persuasively argued at oral argument” that the factual record before the court was more favorable for the City than similar cases discussed in other published decisions.
On appeal, Mr. Newdorf wrote the briefs defending the district court judgment and argued it in front of a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit. This case was one of four selected to be argued in February 2008 before a large audience of law students and professors at the U.C. Berkeley School of Law, where the Ninth Circuit conducts a special sitting each year. For more information on this case, visit the Newdorf Legal blog.
Blessed Marvelous Herve v. City and County of San Francisco.
Mr. Herve sued San Francisco and several police officers for alleged civil rights violations in U.S. District Court for the Northern District of California. Plaintiff claimed that a police officer choked him, squeezed his testicles and forced him to sit in human feces at the Central Police station. Plaintiff produced physical evidence and a supposed eyewitness to the abuse, a fellow detainee at the police station. Plaintiff obtained representation from a well-known trial lawyer (selected for membership in the prestigious American Board of Trial Advocates and the American College of Trial Lawyers) who .conducted numerous depositions and spent hundreds of thousands of dollars to take the case through trial.
Despite supposedly independent eyewitness testimony, the officers and the City were committed to demonstrating the defendants’ innocence to a jury. Defendants employed investigators to conduct thorough background checks on the supposedly independent witnesses. The investigation laid the foundation for effective cross-examination at trial.
Blessed Herve’s story was stomach-turning. Early last month, a federal jury listened as his lawyer described how a San Francisco police officer allegedly led a handcuffed Herve into a holding cell and forced him — by punching him in the stomach, slamming his head into the wall, and grabbing his testicles —to take a seat on a bench “covered in human feces.” The civil rights lawsuit accused another officer of looking on, laughing.
In the officers’ defense, Deputy City Attorney David Newdorf was the picture of incredulity. Depicting Herve’s witnesses as untrustworthy and his story preposterous, Newdorf challenged the credibility of one plaintiff witness who had described encountering Herve after the incident. “When’s the last time you walked up to someone who smelled like feces and said hi?” he asked. “Real people don’t behave like that.” When the jury sided with the defense two days later, it fit into a pattern that has emerged in civil rights cases against San Francisco police: The city attorney’s office is either settling the cases or winning them at trial.
Read the entire Recorder article here.
Rosnow v. City and County of San Francisco.
In this lawsuit a widow sought damages for the death of her husband, who accidentally drove himself and his wife into San Francisco Bay. The tragedy occurred while the wife was teaching her husband how to drive. The husband was in the driver seat, the wife the passenger. They were stopped in a parking lot facing the San Francisco Bay. From a stop, the car drove over a six-inch curb, a 15-foot sidewalk, another six-inch curb and into the water. The husband died. A passerby rescued the wife. In her lawsuit, she claimed that the lack of a more effective barrier made the lot dangerous.
The law states that municipalities have no duty to prevent all possible accidents on public property. As lead appellate counsel, Mr. Newdorf persuaded the Court of Appeal that San Francisco was not liable for the incident because the risk of injury was remote when the lot was used with due care. To read the Court of Appeal’s decision, visit the Newdorf Legal blog.
Outside auditors allegedly turned a blind eye to wrongdoing by their client, an escrow company that improperly retained unclaimed consumer funds from escrow accounts.
San Francisco brought novel consumer-protection claims against one of the "Big Four" accounting firms under the False Claims Act and the Unfair Competition Law. The San Francisco Superior Court dismissed all claims against the accountants. As appellate counsel for the City, David Newdorf persuaded the court of appeal to reverse the pre-trial dismissal against the auditors. The Court of Appeal held that public prosecutors could pursue claims under the state False Claims Act and the Unfair Competition Law against auditors who knowingly conceal their clients' wrongdoing.
To read an excerpt of the full opinion in State of California v. PricewaterhouseCoopers, go to the Newdorf Legal blog.
A business or public entity faces a lawsuit brought as a class action.
Solution: Early Focus on Defeating Class Action Status.
The assertion of class claims makes discovery and trial preparation more costly and can vastly increases the settlement value of a case. David Newdorf was lead defense counsel in two class actions against the City and County of San Francisco and a litigation associate representing Ford Motor Co. in a nationwide consumer class action alleging losses due to defective ignition modules.
In Doe v. City and County of San Francisco, plaintiff challenged San Francisco’s Juvenile Hall strip search policy. Working with another deputy city attorney, David Newdorf defeated the plaintiff’s motion for class certification. Following this procedural victory, the individual plaintiff’s claim settled on terms that were considerably more favorable than a class-wide settlement.
David Newdorf was also lead defense counsel on a class action challenging the strip search policy at the San Francisco County Jail. Mr. Newdorf briefed and argued the adult strip search class action in the Ninth Circuit Court of Appeals. For more information on these cases, visit the “Court Decisions” and “Articles & Commentaries” pages of the Newdorf Legal Blog.
Read the Section 1983 Civil Rights Law Reporter, edited by Mr. Newdorf, for the latest news and analysis in this evolving area of law.

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