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Overruling its prior decision, the Texas Supreme Court held that newly enacted legislation did not waive governmental immunity for suits based on a political subdivision's alleged retaliation against an employee filing a workers compensation claim. See Travis Century Appraisal Dist. v. Norman, 2011 Tex. LEXIS 324 (Tex. April 29, 2011).
Ms. Norman started work for the Travis Central Appraisal District (TCAD) as a probationary employee in January 2006. She was terminated six months later, shortly after filing a workers compensation claim. Ms. Norman claimed she was terminated for seeking workers compensation benefits and sued TCAD for retaliatory discharge under the Texas Anti-Retaliation Law. The trial court and court of appeals agreed with Ms. Norman that governmental immunity had been waived for the retaliatory discharge claim.
In City of LaPorte v. Barfield, 898 S.W. 2d 288 (Tex. 1995), the Texas Supreme Court analyzed two provisions of the Texas Labor Code, the Anti-Retaliation Law and the Political Subdivisions Law. The court determined that the Political Subdivisions Law effectively waive governmental immunity for retaliation claims under the Anti-Retaliation Law. The Anti-Retaliation Law created a cause of action against a "person" who discharged or discriminated against an employee for filing a workers compensation claim in good faith. The statute did not define the word "person." Although there was no clear and unambiguous waive of immunity in the Anti-Retaliation Law itself, Barfield held that the Political Subdivisions Law waived governmental immunity for retaliation claims.
Subsequent to Barfield, however, a 2005 amendment to the Political Subdivisions Law broadly provided, "nothing in this chapter waives sovereign immunity or creates a new cause of action." This current version of the Political Subdivisions Law was too internally inconsistent to be a clear and unambiguous waiver of governmental immunity. Therefore, the Political Subdivisions Law no longer waived immunity for retaliatory discharge claims.
Because a retaliatory discharge claim could not be brought against the government without its consent and the Political Subdivisions Law no longer provided such consent by waiving the government's immunity, Ms. Norman's claim had to be dismissed.
The insured employer adequately pled its claims against the California State Compensation Insurance Fund (SCIF), allowing it to survive a demurrer. Edward Carey Constr. Co. v. State Compensation Insurance Fund, 2011 Cal. App. LEXIS 457 (Cal. Ct. App. March 25, 2011, certified for publication April 20, 2011).
Edward Carey Construction Co. (CCC) had a workers compensation policy from SCIF. During the policy period, CCC's employee, Edward Carey, suffered a work-related injury. When notified of the injury, SCIF respond that the policy had been cancelled. As a result, CCC was required to pay for Carey's medical treatment not covered by his health insurance. CCC also had to hire counsel to obtain benefits under the policy.
CCC was successful in obtaining a ruling in arbitration that its policy with SCIF was in full force and effect at the time of Carey's injury. When SCIF refused to reimburse CCC's attorney fees for the arbitration and the full amount of benefits owed under the policy, CCC filed suit.
SCIF filed a demurrer, arguing that the Workers Compensation Appeals Board had exclusive jurisdiction over the claims alleged in the complaint. The trial court granted the demurrer.
The Court of Appeals reversed. The court relied on a host of cases addressing similar issues, including Courtesy Ambulance Serv. v. Superior Court, 8 Cal. App. 4th 1504 (1992), Sec. Officers Service, Inc. v. State Compensation Ins. Fund, 17 Cal. App. 4th 887 (1993), and Maxon Indus., Inc. v. State Compensation Ins. Fund, 16 Cal. App. 4th 1387 (1993). These cases established that the insured employer had different and distinct rights against its workers' compensation carrier than an employee claimant. Moreover, as a party to the insurance contract, the employer could sue for breach of contract if the insurer failed to perform. This included suing under"bad faith" principles for tortuous breach of the implied covenant of good faith and fair dealing. Legal fees incurred in enforcing its rights under the policy were also recoverable by CCC.
An upcoming article in the Pace Law Review will address the use of social networking in insurance and worker's compensation litigation. The abstract and draft article are here. The article addresses the intersection of professional responsibility, discovery, privacy, and evidence with social networking in state workers’ compensation systems.
Thanks to the authors, Gregory M. Duhl, Associate Professor of Law at William Mitchell College of Law in St. Paul, Minnesota, and Jaclyn Miller of Fitch, Johnson, Larsen, & Held P.A. for sending us the link to the abstract and draft article to post on our blog.
Valuing an insured's "net worth" for determining eligibility for benefits under the Hawai`i Insurance Guaranty Association Act was before the court in C. Brewer and Company, Ltd. v. Hawaii Insurance Guaranty Assoc., 2010 Haw. App. LEXIS 200 (Haw. Ct. App. April 28, 2010).
C. Brewer bought excess workers' compensation insurance coverage from The Home Insurance Company. In 2003, Home was declared insolvent by a New Hampshire court. By December 31, 2004, C. Brewer had paid out $322,000 in excess workers' compensation claims, which would have been covered under the Home policy. C. Brewer applied for reimbursement from Hawai`i Insurance Guaranty Association (HIGA).
The Hawai`i Insurance Guaranty Association Act created HIGA to provide claims coverage to insureds if their insurers became insolvent. An insured was eligible for reimbursement from HIGA if its net worth was less than $25 million. To prove its net worth as of December 31, 2002, C. Brewer submitted statements for fiscal years ending June 30, 2002 and 2003. Although these statements indicated that C. Brewer's total equity interest on December 31, 2002 was approximately $16 million, HIGA treated a $116 million debt owed C. Brewer as an asset and concluded that C. Brewer's "new worth" exceeded $25 million.
The parties disagreed on the meaning and method of valuing "net worth." C. Brewer argued that "net worth" referred to a company's shareholder's equity and was "book" or "balance sheet" net worth, as indicated on financial statements prepared in accordance with generally accepted accounting principles (GAAP). HIGA, on the other hand, argued that "net worth" should be calculated according to a common sense and universally accepted definition, which would mean C. Brewer's net worth exceeded the $25 million threshold. Therefore, the disagreement was not whether "net worth" was assets minus liabilities, but on the "assets" part of the equation, i.e., what value to assign a company's assets and whether an amount of money owed to a company should be considered an asset.
The trial court held that GAAP should be used to determine net worth and awarded damages to C. Brewer in the amount of $106,150. The ICA affirmed. For purposes of the statute, "net worth" was "book" or "balance sheet" net worth as governed by GAAP. This interpretation was consistent with the purpose of the Act, i.e., "to avoid excessive delay in payment and to minimize financial loss to claimants or policyholders because of the insolvency of an insurer." HRS 431:16-105.
Thanks to my Damon Key colleague and fellow blogger, Mark Murakami, (http://www.hawaiioceanlaw.com) for circulating this recent decision.
The liability of an insurance agent for failure to include coverage for workers compensation in the insured's policy was the issue in Williams v. HILB, Rogal and Hobbs Ins. Serv. of California, Inc., B203691, 2009 Cal. App. LEXIS 1496 (Cal. Ct. App. Sept. 9, 2009).
John Williams and Steve Simon obtained a dealership from Rhino USA to operate in California. Rhino installed spray-on linings onto the beds of pickup trucks. Rhino USA referred Williams to Robyn Thaw, an insurance agent who held herself out as the expert on the insurance needed for Rhino dealerships. Williams did not request any specific type of insurance, but asked Thaw for whatever insurance was needed to operate the business. Thaw was aware that sprayers had a dangerous job and it would be important for an employer to know if it had no coverage for a sprayer's on-the-job injuries. She also knew that workers compensation insurance was mandatory in California.
A policy with Travelers was sent to Williams, who scanned it briefly and assumed it contained all the insurance he needed to operate the business. No workers compensation was included, however. A year later, the policy was renewed with Hartford Casualty Insurance Company, but again it did not contain workers compensation coverage.
Subsequently, employee Kendall Mann suffered severe burn injuries in a fire at the Rhino dealership. When Williams called Thaw to report the accident, he learned for the first time that his Rhino dealership did not have workers compensation coverage. Mann sued and secured a judgment for $11 million, $6.8 of which the Rhino dealership was responsible. Hartford paid $1 million in partial satisfaction, leaving $5.8 million outstanding on the judgment.
Williams and Simon sued Thaw's employer, HRH, for negligence. Thaw testified that she discussed workers compensation coverage with Williams and told him the premium would be $6,204. Thaw wrote no memorandum to the file, however, to indicate that workers compensation coverage had been offered and declined. Her employer had a form entitled "telephone discussion record" which was to be completed for every call, but it was not used to memorialize Thaw's conversation with Williams. The trial court found William's testimony that he was never advised about workers compensation coverage more credible than that of Thaw. The trial court determined that That was negligent "as she failed to use the skill and care that a reasonably careful insurance professionals would have used in similar circumstances." Judgment was entered against HRH for $5.8 million.
The Court of Appeal affirmed. Thaw's failure to advise Williams of the necessity for workers compensation insurance, which was mandatory in California, and not include such coverage in the policy breached the duty she assumed by holding herself out as the expert to satisfy Rhino's insurance needs.
Whether the insured was acting within the course and scope of his employment contract was at issue when the Eighth Circuit Circuit reversed the District Court's determination of no workers' compensation coverage in Merriam v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, No. 08-3547, 2009 U.S. App. LEXIS 15698 (8th Cir. July 17, 2009).
In 2004, the insured contracted to become a truck driver and independent contractor for Landstar Ranger, an interstate trucking company. The contract required the insured be covered under a workers' compensation policy. Accordingly, the insured secured a Contractor Protection Plan (CPP) from National Union. The policy allowed recovery for occupational accident benefits at $1,000,000 per accident and nonoccupational accident benefits at only $7,500. "Occupational" accident was defined as one which "occurs or arises out of or in the course of the Insured Person performing services within the course and scope of contractual obligations to the Contractee (Landstar)."
The insured was performing a run from Sparks, Nevada to Cedar Rapids, Iowa, when he stopped at his home in Boone, Iowa for a mandatory federal Department of Transportation break. He noticed his gravel driveway had a sinkhole, making it impossible to park his truck. The insured used his own dump truck to lower gravel into the sinkhole. When he was unable to put the bed of the dump truck into neutral, he reached under the truck bed to see whether a cable had caught. The truck bed fell on him, causing serious injury.
Aware the insured was injured while using a personal vehicle, National Union determined the accident was nonoccupational-related and issued benefits of only $7,500. The insured sued for breach of contract and bad faith. The District Court granted summary judgment to National Union. The District Court reasoned that Landstar could not have reasonably foreseen that plaintiff's act of fixing a personal vehicle would fall "within the course and scope" of his contractual duties to haul cargo for Landstar.
The Eighth Circuit disagreed. The insured's decision to take his mandatory break at his home and to fill the sinkhole with gravel so he could park in his driveway could be viewed as attempting to fulfill specific contractual obligations to Landstar. These acts helped ensure the load was delivered with diligence, speed, and care. The insured's actions, therefore, fell within "the course and scope" of his obligations to Landstar under the independent contractor agreement. If the accident occurred as the insured claimed, it was "occupational" as defined by the policy. Therefore, summary judgment was premature.
The Eighth Circuit affirmed dismissal of the bad faith claim, however. National Union engaged in more than a cursory investigation into the claim. The claim was fairly debatable and National Union had an objectively reasonable basis for its denial.
If attorney fees based on a percentage of damages are unreasonably low, should the court depart from the statutory percentage and award reasonable fees? The court did so in Murray v. Mariner Health and Ace USA, No. SC07-244, 2008 Fla. LEXIS 2011 (Fla. Oct. 23, 2008).
Petitioner, a nurse, sought workers compensation benefits, including attorney fees, after suffering injury. The employer and its insurer denied benefits. At an administrative hearing, $3,244.21 in benefits were awarded. The Florida fee statute provided fees equal to 20 percent of the first $5000 of benefits secured. Elsewhere, the statute granted the successful claimant "reasonable attorney fees" from the employer and insurer. At a hearing on fees, evidence was presented that the prevailing rate in workers' compensation cases was established at $200 per hour. Nevertheless, the hearing officer award fees of $684.84, or $8.11 per hour, under the statutory formula.
On appeal, the Florida Supreme Court found an ambiguity because the statute called for "reasonable" attorney fees while simultaneously requiring use of a formula that could produce an unreasonable result. The Court turned to rules of statutory construction. Where two statutory provisions were in conflict, the specific provision controlled the general provision. The provision awarding "reasonable attorney fees" was more specific and controlling. Further, if the formula provision controlled, the reasonable fee provision would be rendered meaningless because the formula could result in adequate fees in some cases and excessive fees in other cases.
Hawai`i has a fee shifting statute allowing the prevailing party in assumpsit cases to receive fees up to 25% of the judgment. Haw. Rev. Stat. 607-14. An insured, however, would likely seek fees under the fee statute provided in the Insurance Code, Haw. Rev. Stat. 431:242, which allows reasonable attorney's fees when the insurer contests coverage and is ordered by a court to pay benefits under the policy.

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Personal data is any information relating to an identified or identifiable natural person (hereinafter the „data subject“). A natural person is considered to be identifiable who directly or indirectly, in particular by means of assignment to an identifier such as a name, to an identification number, to location data, to an online identifier or to one or more special features,which are the expression of the physical, physiological, genetic, mental, economic, cultural or social identity of this natural person, can be identified.
Third is a natural or legal person, public authority, body or body other than the data subject, the controller, the processor and the persons under the immediate jurisdiction Responsibility of the controller or the processor are authorized to process the personal data.
The website of Edjowa Holding Ltd collects a series of general data and information each time the website is accessed by an affected person or an automated system. This general data and information is stored in the log files of the server. The (1) browser types and versions used, (2) the operating system used by the accessing system, (3) the website from which an accessing system accesses our website (so-called referrers), (4) the sub-web pages, which can be accessed via (5) the date and time of access to the website, (6) an Internet Protocol address (IP address), (7) the Internet service provider of the accessing system and (8) other similar data and information used in the event of attacks on our information technology systems. In using this general data and information, Edjowa Holding Ltd does not draw any conclusions about the data subject. Rather, this information is required to (1) correctly deliver the contents of our website, (2) to optimize the content of our website and to advertise it, (3) to ensure the continued functioning of our information technology systems and the technology of our website, and ( 4) to provide law enforcement authorities with the information necessary for law enforcement in the event of a cyberattack. This anonymously collected data and information is evaluated by Edjowa Holding Ltd on the one hand statistically and also with the aim to increase the data protection and data security in our company, in order to ensure an optimal level of protection for the personal data processed by us. The anonymous data of the server log files are stored separately from all personal data provided by an affected person.
On the website of Edjowa Holding Ltd, users are given the opportunity to subscribe to the newsletter of our company. Which personal data are transmitted to the data controller when the newsletter is ordered results from the input mask used for this purpose. Edjowa Holding Ltd informs its customers and business partners at regular intervals by means of a newsletter about offers of the company. The newsletter of our company can only be received by the data subject if (1) the data subject has a valid email address and (2) the data subject registers for the newsletter. For legal reasons, a confirmation e-mail will be sent to the e-mail address entered by an affected person for the first time for the newsletter dispatch in the double-opt-in procedure. This confirmation email is used to check whether the owner of the e-mail address as the person concerned authorized the receipt of the newsletter. When subscribing to the newsletter, we also store the IP address of the computer system used by the person concerned at the time of registration, as well as the date and time of registration, as assigned by the Internet Service Provider (ISP). The collection of this data is necessary in order to understand the (possible) misuse of an affected person’s e-mail address at a later date and therefore serves as legal safeguards for the controller. The personal data collected in the context of registering for the newsletter will be used exclusively to send our newsletter. Subscribers to the newsletter may also be notified by e-mail if this is necessary for the operation of the newsletter service or registration, as might be the case in the event of changes to the newsletter or technical changes. There will be no transfer of the personal data collected as part of the newsletter service to third parties. Subscription to our newsletter may be terminated by the person concerned at any time. The consent to the storage of personal data that the data subject has given us for the newsletter dispatch can be revoked at any time. For the purpose of revoking the consent, there is a corresponding link in each newsletter. It is also possible to unsubscribe from the newsletter at any time directly on the controller’s website, or to inform the controller in a different way.
The newsletters of Edjowa Holding Ltd contain so-called counting pixels. A counting pixel is a miniature graphic that is embedded in such emails that are sent in HTML format to enable log file recording and log file analysis. This allows a statistical evaluation of the success or failure of online marketing campaigns. Based on the embedded pixel, Edjowa Holding Ltd can detect if and when an e-mail was opened by an affected person and which links in the e-mail were accessed by the person concerned. Such personal data collected via the counting pixels contained in the newsletters are stored and evaluated by the controller in order to optimize the delivery of the newsletter and to better adapt the content of future newsletters to the interests of the data subject. This personal data will not be disclosed to third parties. Affected persons are at any time entitled to revoke the separate declaration of consent issued via the double-opt-in procedure. After revocation, this personal data will be deleted by the controller. A deregistration from the receipt of the newsletter, the Edjowa Holding Ltd automatically interpreted as a revocation.
Due to legal regulations, the website of Edjowa Holding Ltd contains information that enables us to contact our company quickly and communicate directly with us, which also includes a general address of the so-called electronic mail (e-mail address). If an affected person contacts the data controller by e-mail or through a contact form, the personal data provided by the data subject will be automatically saved. Such personal data, voluntarily transmitted by an individual to the controller, is stored for the purpose of processing or contacting the data subject. There is no disclosure of this personal data to third parties.
The controller shall process and store the personal data of the data subject only for the period necessary to achieve the purpose of the storage or, as the case may be, by the European directives or regulations or by any other legislator in laws or regulations which the controller was provided for. If the storage purpose is omitted or if a storage period prescribed by the European directives and regulations or any other relevant legislator expires, the personal data will be routinely blocked or deleted in accordance with the statutory provisions.
Each data subject has the right, as granted by the European Regulators and Regulators, to require the controller to confirm whether personal data relating to him / her are being processed. If an affected person wishes to make use of this right of confirmation, they can contact an employee of the controller at any time.
Any person affected by the processing of personal data shall have the right granted by the European Di- rective and Regulatory Authority to obtain at any time, free of charge, from the controller any personal data stored about him or her and a copy of that information. Furthermore, the European legislator and regulator has provided the data subject with the following information: o the processing purposes o the categories of personal data being processed o the recipients or categories of recipients to whom the personal data have been disclosed or are still being disclosed, in particular to recipients in third countries or to international organizations o if possible, the planned duration for which the personal data will be stored or, if that is not possible, the criteria for determining that duration o the right of rectification or erasure of the personal data concerning them or restriction of processing by the controller or a right to object to such processing o the existence of a right of appeal to a supervisory authority o if the personal data are not collected from the data subject: all available information on the source of the data o the existence of automated decision-making, including profiling, in accordance with Article 22 (1) and (4) of the GDPR and – at least in these cases – meaningful information about the logic involved and the scope and intended impact of such processing on the data subject In addition, the data subject has a right of access as to whether personal data has been transmitted to a third country or to an international organization. If that is the case, then the data subject has the right to obtain information about the appropriate guarantees in connection with the transfer. If an interested party wishes to exercise this right to information, they may at any time contact an employee of the controller.
Any person affected by the processing of personal data has the right granted by the European legislator to demand the immediate correction of inaccurate personal data concerning him. Furthermore, the data subject has the right to request the completion of incomplete personal data, including by means of a supplementary declaration, taking into account the purposes of the processing. If an affected person wishes to exercise this right of rectification, they may, at any time, contact an employee of the controller.
• d) Right to cancellation (right to be forgotten) Any person affected by the processing of personal data shall have the right granted by the European Directives and Regulators to require the controller to immediately delete the personal data concerning him, provided that one of the following reasons is satisfied and the processing is not required: o The personal data has been collected or otherwise processed for such purposes for which they are no longer necessary. o The person concerned revokes the consent on which the processing was based on Article 6 (1) (a) of the GDPR or Article 9 (2) (a) of the GDPR and lacks any other legal basis for the processing. o The data subject submits an objection to the processing pursuant to Art. 21 (1) DS-GVO, and there are no legitimate reasons for the processing, or the data subject appeals in accordance with Art. 21 (2) DS-GVO the processing.
o The personal data were processed unlawfully. o The deletion of personal data is required to fulfill a legal obligation under Union or national law to which the controller is subject. o The personal data were collected in relation to information society services offered pursuant to Art. 8 para. 1 DS-GVO. If one of the above reasons is correct and an interested party wishes to arrange for the deletion of personal data held by Edjowa Holding Ltd, it may, at any time, contact an employee of the controller. The employee of Edjowa Holding Ltd will arrange for the extinguishing request to be fulfilled immediately. If the personal data have been made public by Edjowa Holding Ltd and our company is responsible for the deletion of personal data as the person responsible pursuant to Art. 17 (1) DS-GVO, Edjowa Holding Ltd will take appropriate measures, taking into account the available technology and the implementation costs also of a technical nature, to inform other data controllers processing the personal data published that the data subject of these other data controllers shall delete any links to such personal data or copies or replications thereof personal data unless the processing is required. The employee of Edjowa Holding Ltd will arrange the necessary in individual cases.
Any person affected by the processing of personal data has the right, granted by the European directive and regulatory authority, to require the controller to restrict the processing if one of the following conditions applies: o The accuracy of the personal data is contested by the data subject for a period of time that enables the person responsible to verify the accuracy of the personal data. o The processing is unlawful, the data subject refuses to delete the personal data and instead requests the restriction of the use of personal data. o The data controller no longer needs the personal data for processing purposes, but the data subject requires them to assert, exercise or defend their rights. o The person concerned has objection to the processing acc. Art. 21 para. 1 DS-GVO and it is not yet clear whether the legitimate reasons of the person responsible outweigh those of the person concerned. If one of the above conditions is met and a data subject wishes to request the restriction of personal data held by Edjowa Holding Ltd, he may, at any time, contact an employee of the controller. The employee of Edjowa Holding Ltd will initiate the restriction of processing.
Any person affected by the processing of personal data shall have the right conferred by the European Directives and Regulations to obtain the personal data concerning him / her provided to a controller by the data subject in a structured, common and machine-readable format. It also has the right to transfer this data to another person responsible without hindrance by the controller to whom the personal data was provided, provided that the processing is based on the consent pursuant to Art. 6 (1) (a) GDPR or Art. 9 Abs 2 letter a of the GDPR or on a contract pursuant to Article 6 (1) (b) of the GDPR and processing by means of automated procedures, provided that the Processing is not necessary for the performance of a task in the public interest or in the exercise of official authority which has been entrusted to the controller. Furthermore, in exercising their right to data portability under Article 20 (1) of the GDPR, the data subject has the right to obtain that the personal data are transmitted directly from one controller to another, insofar as this is technically feasible and provided that this does not affect the rights and freedoms of others. In order to assert the right to data portability, the data subject may, at any time, contact an employee of Edjowa Holding Ltd.
Any person concerned by the processing of personal data shall have the right conferred by the European directive and regulatory authority at any time, for reasons arising from its particular situation, against the processing of personal data relating to it pursuant to Article 6 (1) (e) or f DS-GVO takes an objection. This also applies to profiling based on these provisions. Edjowa Holding Ltd no longer processes the personal data in the event of an objection, unless we can prove compelling legitimate reasons for the processing that outweigh the interests, rights and freedoms of the data subject, or the processing serves the purpose of asserting, exercising or Defense of legal claims. If Edjowa Holding Ltd processes personal data in order to operate direct mail, the data subject has the right to object at any time to the processing of personal data for the purposes of such advertising. This also applies to the profiling, as far as it is associated with such direct mail. If the data subject objects to Edjowa Holding Ltd for direct marketing purposes, Edjowa Holding Ltd will no longer process the personal data for these purposes. In addition, the data subject has the right, for reasons arising from his / her particular situation, against the processing of personal data relating to him or her at Edjowa Holding Ltd for scientific or historical research purposes or for statistical purposes under Article 89 (1) of the DS GMOs to object, unless such processing is necessary to fulfill a task of public interest. In order to exercise the right to object, the data subject may directly contact any employee of Edjowa Holding Ltd or any other employee. The data subject is also free, in the context of the use of information society services, notwithstanding Directive 2002/58 / EC, to exercise its right of objection by means of automated procedures using technical specifications.
Any person concerned by the processing of personal data shall have the right, as granted by the European legislature and the legislature, not to be subject to a decision based solely on automated processing, including profiling, which has a legal effect on it or, in a similar manner, significantly affects it; unless the decision (1) is necessary for the conclusion or performance of a contract between the data subject and the controller; or (2) permitted by Union or Member State legislation to which the controller is subject, and that legislation provides for appropriate measures to safeguard the rights and freedoms as well as the legitimate interests of the data subject; or (3) with the express consent of the data subject. If the decision (1) is necessary for the conclusion or performance of a contract between the data subject and the controller or (2) it is done with the express consent of the data subject, Edjowa Holding Ltd shall take appropriate measures to safeguard the rights and freedoms and the rights of legitimate interests of the data subject, including at least the right to obtain the intervention of a person by the controller, to express his / her own position and to contest the decision.If the data subject wishes to exercise his rights with respect to automated decisions, he may, at any time, contact an employee of the controller.
Any person affected by the processing of personal data has the right, granted by the European directive and regulatory authority, to revoke consent to the processing of personal data at any time. If the data subject wishes to assert their right to withdraw consent, they may, at any time, contact an employee of the controller.
The controller has integrated components of the company Facebook on this website. Facebook is a social network. A social network is an Internet-based social meeting place, an online community that typically allows users to communicate with each other and interact in virtual space. A social network can serve as a platform to exchange views and experiences, or allows the Internet community to provide personal or business information. Facebook allows social network users to create private profiles, upload photos and socialize via friend requests. The operating company of Facebook is Facebook, Inc., 1 Hacker Way, Menlo Park, CA 94025, USA. Persons responsible for the processing of personal data, if an affected person lives outside the US or Canada, are Facebook Ireland Ltd., 4 Grand Canal Square, Grand Canal Harbor, Dublin 2, Ireland. Each visit to one of the individual pages of this website, which is operated by the controller and on which a Facebook component (Facebook plug-in) was integrated, the Internet browser on the information technology system of the person concerned automatically by the respective Facebook Component causes a representation of the corresponding Facebook component of Facebook to download. An overview of all Facebook plug-ins can be found at https://developers.facebook.com/docs/plugins/?locale=en_US. As part of this technical process, Facebook receives information about which specific underside of our website is visited by the person concerned. If the data subject is simultaneously logged into Facebook, Facebook recognizes with each visit to our website by the data subject and during the entire duration of the respective stay on our website, which specific underside of our website the data subject visits. This information is collected through the Facebook component and assigned by Facebook to the respective Facebook account of the data subject. If the person concerned activates one of the Facebook buttons integrated on our website, for example the „Like“ button, or if the person concerned makes a comment, Facebook assigns this information to the personal Facebook user account of the person concerned and saves this personal data , Facebook always receives information via the Facebook component that the data subject has visited our website if the data subject is logged in to Facebook at the same time as accessing our website; this happens regardless of whether the person clicks on the Facebook component or not. If such a transfer of this information to Facebook is not wanted by the data subject, it can prevent the transfer by logging out of their Facebook account before calling our website. The data policy published by Facebook, which is available at https://de-de.facebook.com/about/privacy/, provides information on the collection, processing and use of personal data by Facebook. It also explains which options Facebook offers to protect the privacy of the data subject. In addition, different applications are available, which make it possible to suppress data transmission to Facebook. Such applications can be used by the data subject to suppress data transmission to Facebook.
The controller has integrated Twitter components on this website. Twitter is a multilingual publicly available microblogging service where users can post and distribute tweets, which are limited to 140 characters. These short messages are available to anyone, including non-Twitter subscribers. The tweets are also displayed to the so-called followers of the respective user. Followers are other Twitter users who follow a user’s tweets. Twitter also allows you to address a broad audience via hashtags, links or retweets. The operating company of Twitter is Twitter, Inc., 1355 Market Street, Suite 900, San Francisco, CA 94103, USA. Each time one of the individual pages of this website, which is operated by the controller and on which a Twitter component (Twitter button) has been integrated, the Internet browser on the information technology system of the person concerned is automatically activated by the respective Twitter component causes to download a presentation of the corresponding Twitter component of Twitter. Further information on the Twitter buttons is available at https://about.twitter.com/en/resources/buttons. As part of this technical process, Twitter receives information about which specific subpage of our website is visited by the person concerned. The purpose of the integration of the Twitter component is to allow our users to redistribute the contents of this website, to promote this website in the digital world and to increase our visitor numbers. If the data subject is simultaneously logged in to Twitter, Twitter recognizes with each visit to our website by the data subject and during the entire duration of the respective stay on our website, which specific underside of our website visits the data subject. This information is collected through the Twitter component and assigned through Twitter to the affected person’s Twitter account. If the person concerned activates one of the Twitter buttons integrated on our website, the data and information transmitted with it are assigned to the personal Twitter user account of the person concerned and stored and processed by Twitter. Twitter always receives information via the Twitter component that the data subject has visited our website if the data subject is simultaneously logged in to Twitter at the time of access to our website; this happens regardless of whether or not the subject clicks on the Twitter component. If such a transfer of this information to Twitter is not wanted by the person concerned, it can prevent the transfer by logging out of their Twitter account before calling our website. The applicable privacy policies of Twitter are available at https://twitter.com/privacy?lang=en.
Art. 6 I lit. A DS-GMO serves our company as the legal basis for processing operations where we obtain consent for a particular processing purpose. If the processing of personal data is necessary to fulfill a contract of which the data subject is a party, as is the case, for example, in processing operations necessary for the supply of goods or the provision of any other service or consideration, processing shall be based on Art. 6 I lit. b DS-GMO. The same applies to processing operations that are necessary to carry out pre-contractual measures, for example in cases of inquiries regarding our products or services. If our company is subject to a legal obligation which requires the processing of personal data, such as the fulfillment of tax obligations, the processing is based on Art. 6 I lit. c DS-GMO. In rare cases, the processing of personal data may be required to protect the vital interests of the data subject or another natural person. This would be the case, for example, if a visitor to our premises were injured and his or her name, age, health insurance or other vital information would have to be passed on to a doctor, hospital or other third party. Then the processing would be based on Art. 6 I lit. d DS-GMO are based. Ultimately, processing operations could be based on Art. 6 I lit. f DS-GMOs are based. On this legal basis, processing operations that are not covered by any of the above legal bases are required if processing is necessary to safeguard the legitimate interests of our company or a third party, unless the interests, fundamental rights and fundamental freedoms of the person concerned prevail. Such processing operations are particularly permitted because they have been specifically mentioned by the European legislator. In that regard, it considered that a legitimate interest could be assumed if the data subject is a customer of the controller (recital 47, second sentence, DS-BER).
We clarify that the provision of personal information is in part required by law (such as tax regulations) or may result from contractual arrangements (such as details of the contractor). Occasionally it may be necessary for a contract to be concluded that an affected person provides us with personal data that must subsequently be processed by us. For example, the data subject is required to provide us with personal information when our company enters into a contract with her. Failure to provide the personal data would mean that the contract with the person concerned could not be closed. Prior to any personal data being provided by the person concerned, the person concerned must contact one of our employees. Our employee will inform the individual on a case-by-case basis whether the provision of the personal data is required by law or contract or required for the conclusion of the contract, whether there is an obligation to provide the personal data, and what would be the consequence of the non-provision of the personal data.

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Fisher v. Biozone Pharms., Inc.
DANIEL FISHER, Plaintiff, v. BIOZONE PHARMACEUTICALS, INC., et al., Defendants.
Before the court are two crossing motions to enforce the parties' 2013 settlement agreement. The plaintiff's motion (ECF No. 95) seeks to enjoin the defendant from foreclosing on the plaintiff's commercial property. It also asks the court to release the plaintiff and his wife as guarantors on the property's mortgage note. This motion centers factually on the defendant's earlier assignment of a lease on the property.
Record citations are to material in the Electronic Case File ("ECF"); pinpoint citations are to the ECF-generated page numbers at the top of documents.
The defendants' motion (ECF No. 96) asks the court to bar the plaintiff from making further disparaging statements about them; the defendants would also compel the plaintiff to withdraw grievances that he has filed with government agencies. This motion centers factually on the plaintiff's continuing to tell third parties, after the settlement, that the defendants were engaged in, and were being investigated for, unsavory business practices, including securities fraud.
The undersigned retained jurisdiction to enforce the settlement. The court held a hearing on these motions on March 2, 2017.
For the reasons given below, the court denies the plaintiff's motion insofar as it seeks to release the plaintiff and his wife from then guaranties. Insofar as the plaintiff seeks to enjoin the imminent foreclosure, the court directs the parties to provide additional briefing on whether foreclosing on an underwater commercial property can constitute "irreparable injury" for purposes of an injunction. The court giants the defendants' motion. The court prohibits the plaintiff from making any further disparaging comments about the defendants. The plaintiff is ordered to fully comply with the settlement agreement's non-disparagement term. Finally, the court fines both Mr. Fisher and Mr. Brauser (not their lawyers) for violating the settlement agreement's non-disparagement clause. The parties must remit the fines to one of the legal-aid programs listed on the State Bar of California's website.
There is no need to revisit the parties' underlying dispute. For present purposes the story can start with the 2013 settlement agreement that was meant to put that dispute to rest. Only some basic facts are necessary to understanding that agreement, the parties' later dealings, and thus the present motions.
The parties' settlement agreement has an effective date of September 5, 2013. When they signed that agreement, plaintiff Daniel Fisher and defendant CoCrystal were in the following relationship. Mr. Fisher and his wife were (and still are) the sole owners of 580 Garcia LLC, which in turn owns a commercial property located at 580 Garcia Avenue in Pittsburg, California. CoCrystal leased that property from the LLC. The LLC was the debtor on a mortgage note on the 580 Garcia property. The Fishers are personal guarantors of that note.
CoCrystal is, by its own admission, the successor to the original defendant, and party to the settlement, BioZone Pharmaceuticals, Inc. For simplicity, this discussion refers only to CoCrystal.
Under § 3 of the settlement agreement, CoCrystal agreed to "timely perform all [its] future obligations" under the 580 Garcia lease. One term of that lease provided that the lease could be assigned only with the LLC's consent. The related deed of trust on the property in turn provided that the bank could accelerate the note if the lease were assigned without its consent. Assigning the lease thus required both the LLC's and (as a practical matter) the bank's consent.
Settlement Agreement - ECF No. 95-6 at 3 (§ 3).
Lease - ECF No. 95-2 at 10 (§ 18).
See Deed of Trust - ECF No. 95-4 at 3 (due-on-sale clause).
Mr. Fisher now claims that, in violation of both the lease and the settlement agreement, CoCrystal assigned the lease on 580 Garcia without the LLC's or the bank's consent. This appears to be correct. In November 2013, a third company (MusclePharm) agreed to acquire CoCrystal. Mr. Fisher and CoCrystal both tried to get the mortgagee bank to agree that CoCrystal could assign the lease to MusclePharm. It appears to be undisputed that Mr. Fisher wanted the bank to approve the assignment. The LLC was behind in paying the note; and Mr. Fisher himself testified that MusclePharm presented a more creditworthy tenant. The bank, however, would not approve the assignment.
Nevertheless, as part of an acquisition and asset sale, CoCrystal assigned the lease to MusclePharm. The bank then declared an incurable default and accelerated the loan. For the next three months — April through June 2014 — Mr. Fisher stopped paying the bank; he claims to have put the money into an escrow account.
Months later, after negotiating with the bank, CoCrystal itself bought the note. CoCrystal complains that it has received none of the money that Mr. Fisher says is in escrow. Nor has it received any of the interest that is owed on the April-June 2014 payments. The record suggests — CoCrystal's own filings suggest — that the LLC made at least some payments for subsequent months. There is no dispute, however, that at least some of the payments owed to CoCrystal have not been made, so that the loan is in default. Eventually, CoCrystal decided to foreclose on 580 Garcia. It scheduled a foreclosure sale for January 27, 2017. Mr. Fisher moved to enforce the settlement agreement and sought a TRO to block the foreclosure. (ECF No. 95.) The defendants then filed their own settlement-enforcement motion. (ECF No. 96.) After a telephonic hearing with this court, just two days before the scheduled foreclosure, CoCrystal agreed to postpone the foreclosure. See (ECF No. 102.) The court denied Mr. Fisher's TRO application as moot, and the parties finished briefing the present motions.
See Wilcox Decl. - ECF No. 99 at 5 (¶ 14).
Non-Disparagement. Plaintiff agrees that he will not, directly or indirectly, in any communication with any person or entity, including . . . any third-party media outlet, make any derogatory, disparaging or critical negative statements, orally, written or otherwise, against any Defendant or any Defendant's managers, directors, officers and employees, as [sic] . . . aiding or participating in any way with any third party . . . in the publication of any such derogatory, disparaging or critical negative statements against any Defendant . . . . Each Defendant agrees that it will not, directly or indirectly, in any communication . . . make any derogatory, disparaging or critical negative statements, orally, written or otherwise, against Plaintiff or aiding or participating [sic] in any way with any third party . . . in the publication of any such . . . negative statements against Plaintiff. Nothing herein shall prevent any Party from testifying truthfully in connection with any litigation, arbitration or administrative proceeding when compelled by subpoena, regulation or court order to do so.
The defendants challenge four items (discussed below) as breaching this clause. There appears to be no real dispute that the content of all the challenged communications falls within the sweep of the non-disparagement clause. That is to say, unless there is some extrinsic excuse for making the challenged comments, the non-disparagement clause covers and prohibits such communications.
Settlement Agreement - ECF No. 95-6 at 9 (§ 24).
At the hearing on these motions, the defendants added that, under the settlement, Mr. Fisher was supposed to withdraw grievances that he filed with the SEC and FBI concerning the defendants — but that he has not done so. Mr. Fisher did not deny this.
The first item consists of allegations in a lawsuit. In June 2014, nine months after the settlement agreement in this case, 580 Garcia LLC filed a new lawsuit in California state court. The Second Amended Complaint in that case named as defendants several of the parties to the settlement agreement: specifically, Biozone Pharmaceuticals; CoCrystal Pharma, Inc.; Elliot Maza; Phillip Frost; Roberto Prego-Novo; and Brian Keller. Neither Mr. Honig nor Mr. Brauser is a defendant in that complaint, though allegations within the pleading implicate both men by name. The Second Amended Complaint alleged that the defendants "orchestrated" a "series of interrelated frauds, wrongful acts and potential white-collar crimes," and that these included a scheme of "pump and dump securities fraud." The complaint both refers to the 2013 settlement agreement in this case and states that the plaintiff "began suspecting that the defendants were engaged in "inappropriate and illegal activity" in "early 2011." The plaintiff eventually withdrew this pleading.
Compare 2nd Am. Compl. - ECF No. 96-3 at 1 with Settlement Agreement - ECF No. 95-6 at 2.
2nd Am. Compl. - ECF No. 96-3 at 6, 18 (¶¶ 24, 58).
Id. at 6 (¶¶ 24-25).
Id. at 12 (¶ 39).
Id. at 18 (¶ 58).
Varnavides Decl. Ex. B - ECF No. 96-4 at 2.
The defendants thus seem correct in arguing that this Second Amended Complaint advanced, if not "the very same allegations that [were] dismissed in this action," at least charges that were covered by the settlement agreement in this case.
On June 26, 2016 — so, again, well after the settlement agreement in this case — Mr. Fisher emailed journalist Christopher Drose. Mr. Fisher congratulated Mr. Drose on a recent article (whose contents, according to the defendants, "parroted many of the allegations made by [Mr. Fisher] in this action and in the withdrawn" Second Amended Complaint, discussed above). More to the present point, in this email Mr. Fisher identified himself as a "long time [sic] judicial adversary" of Mr. Honig and Mr. Brauser (among other people); he accused these men of "breach[ing] almost every agreement and every regulation that confronted them"; and he told Mr. Drose that he had filed an SEC whistleblower complaint and "multiple Federal and State lawsuits against them." Mr. Fisher suggested that the defendants' "strategy is to bankrupt . . . their adversaries (me)." He ended by accusing the defendants of employing "unscrupulous" lawyers who themselves "may be indicted."
ECF No. 96-6 at 1.
I am going to report on on [sic] Daniel Fisher being interviewed by the FBI in Northern California and being told he is a victim in a securities fraud case related to The Frost Group (which documents show equals Honig, Frost, Brauser). A check in the FBI victims identification database yesterday show[s] the investigation is still active.
Let me know if Barry [Honig] wants to comment.
ECF No. 96-7 at 1.
According to the defendants, Ms. Buhl published her story the same day. Again according to the defendants, she cited an "unnamed source" as telling her that the FBI was investigating Mr. Honig and Mr. Brauser, that the source was a "potential victim of securities fraud," and that the "only securities" the victim had were Biozone's. The defendants suggest that Ms. Buhl's source was Mr. Fisher. Strictly speaking, though, even as the defendants relate matters, Ms. Buhl did not name her source.
See Varnavides Decl. - ECF No. 96-2 at 5 (¶¶ 17-18).
Finally, Mr. Honig and Mr. Brauser point to two letters - one dated September 9, 2016 and the other September 29, 2016 — that Mr. Fisher's attorney, Lee Pederson, sent to a member of CoCrystal's board of directors. Neither letter names Mr. Honig or Mr. Brauser. Both letters, however, reiterate assertions that figured into this case, including that something called "the Frost gang" engaged in alleged "pump and dump fraud involving" Biozone. And, as the defendants fairly observe, the second letter made allegations that closely minor those made in the Second Amended Complaint discussed earlier. Mr Pederson copied both letters to the SEC Office of the Whistleblower, and his second one to the U.S. Attorney General as well.
Varnavides Decl. Exs. F, G - ECF Nos. 96-8, 96-9.
See ECF No. 96-8 at 2.
Compare 2d Am. Compl. - ECF No. 96-3 at 9 (¶ 34) with ECF No. 96-9 at 2.
ECF No. 96-8 at 6; ECF No. 96-9 at 10.
Mr. Fisher answers with his own charge of disparagement. In one July 2015 interview with a financial blog, Mr. Brauser said that the "founder" of Biozone "had misrepresented tremendous amounts about the company," and, after being forced from the company, had "attempted to blackmail" Mr. Brauser, which "got him into a bit of trouble" when proof of the attempted "blackmail" was shown to a federal judge during a lawsuit. The "founder" of Biozone was Mr. Fisher, but in the interview Mr. Brauser does not mention him by name.
ECF No. 109-4 at 2-3.
The plaintiff asks for two main things: an injunction against foreclosure and to release him and his wife from their guaranties of the note on the property. The plaintiff has made absolutely no showing that the court should or even can cancel the guaranties. And, while it is clear that the defendants technically breached the lease and thus § 3 of the settlement agreement, it is not clear that the plaintiff is entitled to enjoin a foreclosure. The best way to approach this is through the elements of an injunction.
The plaintiff also claims that the defendants breached the settlement agreement's general "good faith" obligation (§ 5). But the plaintiff has not shown that the defendants breached the lease in bad faith. The facts before the court do not begin to allow that inference. See the discussion in Part 3, below.
"A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Natural Res. Def. Council, 555 U.S. 7, 20 (2008). The standard for a permanent injunction is "essentially the same . . . with the exception that" a plaintiff must achieve "actual success" on the merits to gamer a permanent injunction. Id. at 32 (quoting Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n. 12 ((1987)).
The court leaves aside the complication to the injunctive standard introduced by Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011) as unnecessary to this analysis. For a sense of the issue, see P.P. v. Compton Unified Sch. Dist., 135 F. Supp. 3d 1126, 1134-35 (C.D. Cal. 2015) ("The Court will not apply the standard set forth in . . . [Cottrell], as it views that standard as being in conflict with both the Supreme Court's ruling in Winter and the Ninth Circuit's own subsequent adoption of the Winter standard.") (quoting Fox Television Stations, Inc. v. BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138, 1141 (C.D. Cal. 2012)).
1. Likely to Succeed on Merits?
Whether the plaintiff is likely to succeed on the merits comes down to the question whether nominal damages are available to the plaintiff. Because, under California law, Mr. Fisher has no actual damages.
It is undisputed that the property in question (580 Garcia) is underwater. Which is to say, the plaintiff owes more on the mortgage loan than the property is worth; the plaintiff thus has negative equity in the property. In California law, a plaintiff who has negative equity in residential property has no damage to support a tort claim seeking to enjoin a foreclosure. Granadino v. Wells Fargo Bk., N.A., 236 Cal. App. 4th 411, 419 (2015). Were this the end of the inquiry, it would be clear that Mr. Fisher could not prevail on the merits.
The "claim" on which Mr. Fisher must likely prevail, though, is for breach of the settlement agreement — which is a form of breach of contract. And there can be no real dispute that, by assigning the lease without the landlord's or the bank's consent, CoCrystal breached its lease with 580 Garcia and thus breached its obligation under § 3 of the settlement agreement. Which brings up the uncertainty: Even without actual damages, Mr. Fisher may be able to recover nominal damages for the contractual breach and so, technically, "prevail on the merits" of his "claim."
Can nominal damages support a contract claim in California? The answer is not clear. The law points in both directions. See In re Facebook Privacy Litig., 192 F. Supp. 3d 1053, 1060-62 (N.D. Cal. 2016) (reviewing authorities). In Facebook Privacy, Judge Whyte looked the matter over closely and decided that nominal damages do support a contract claim in California. Id. This court agrees. Though "uncertainty" on the point runs through the law of California, the Ninth Circuit, and this district, in the end the better view is that nominal damages will support a contract claim in California, "even in the absence of actual damages." Id. at 1061-62; see, e.g., Cal. Civ. Code § 3360 ("When a breach of duty has caused no appreciable detriment to the party affected, he may yet recover nominal damages."). The court thus concludes that Mr. Fisher would likely prevail on the merits of a contract claim for breach of § 3 of the settlement agreement.
The plaintiff has not shown that he will suffer irreparable harm if foreclosure goes forward. Recall the "no actual damage" point made above. That Mr. Fisher has negative equity in 580 Garcia makes it impossible to say (as a matter of law) that foreclosure would harm him in the sense of his losing money — such as would support a tort claim or actual damages in contract. See Granadino, 236 Cal. App. 4th at 419.
But, again, the parties have not addressed this question. The court thus directs the parties to brief the issue according to the schedule set out in the Conclusion below.
These probably tip slightly in the plaintiff's favor. The defendants did breach the lease. And they knew that they were breaching the lease: An indemnity term in the acquisition agreement between CoCrystal and MusclePharm specifically contemplates liability flowing from the wrongful assignment of the 580 Garcia lease. See (ECF 95-10 at 7).
The court does not wish to overstate this point. It is, after all, a familiar tenet that a breach of contract does not itself constitute or imply bad faith or tortious misconduct. At least not necessarily. On the facts before it, the court cannot say that the defendants breached the lease (and, by extension, the settlement agreement) in bad faith, or that they otherwise have "unclean hands." To the contrary: The record suggests that assigning the 580 Garcia lease may have been the most sensible practical course available to CoCrystal.
California's experience in this area has been complicated. After some tumultuous experiments blending tort and contract theories, the state returned to a more traditional view that, among other things (and outside the special area of insurance), denied that contractual breaches necessarily cany tortious or inequitable overtones. See generally Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85, 90-103 (1995) (discussing precedent) ("[C]onduct amounting to a breach of contract becomes tortious only when it also violates an independent duty arising from principles of tort law . . .[;] the law generally does not distinguish between good and bad motives for breaching a contract.") (quotation omitted).
The parties say little in this regard. This factor does not play a significant role in this case.
The plaintiff has given absolutely no justification for releasing the guaranties. The parties scarcely address this issue. The plaintiff has not shown that this is a ground on which he is likely to win on the merits. The court thus denies his motion insofar as it asks the court to release him and his wife from the guaranties.
In their motion to enforce § 24 of the settlement agreement, the "non-disparagement" clause, defendants Brauser and Honig seem basically correct. After agreeing to settle, the plaintiff continued to circulate the very allegations about the defendants that the settlement was supposed to put to bed. These being, most centrally, charges that the defendants were involved in a scheme of "pump and dump" securities fraud.
The plaintiff does not dispute the fact that he: (1) filed a new state-court lawsuit that alleged that these defendants had engaged in securities fraud; and (2) emailed a journalist repeating similarly toxic allegations.
The plaintiff makes numerous errors in responding to the defendants' motion. For example, contrary to the plaintiff's suggestion, the settlement's non-denigration term does not implicate First Amendment rights. See George v. Pacific-CSC Work Furlough, 91 F.3d 1227, 1229 (9th Cir. 1996); FreeLife Int'l, Inc. v. Am. Educ. Music Publ'ns Inc., 2009 WL 3241795, *5 (D. Ariz. 2009). Nor is the point whether the defendants have established a tort such as defamation. The information that the plaintiff continued to disseminate — accusing the defendants of securities fraud, and informing others that he had filed a whistleblower complaint on the defendants with the SEC — these things are disparaging in the normal sense, and certainly in the broad sense intended by the settlement agreement. Even if what the plaintiff said was old information, and probably even if it was true, this still breached the broad mandate of the settlement agreement's non-disparagement clause. As the defendants rightly observe, the non-disparagement clause says one thing about such matters: Don't say anything.
The plaintiff violated the non-disparagement clause of the settlement agreement in his email to the journalist Drose. The plaintiff may have breached the clause by communicating with the journalist Buhl and through his attorney Pederson. The court is unwilling to say that the plaintiff also breached the non-disparagement clause by filing a state-court complaint. That raises complex issues that the parties have not started to address.
The defendants will be allowed to conduct further discovery into the Buhl and Pederson communications. In a settlement-enforcement decision, even after an already complicated procedural history, a party was allowed to conduct further discovery to flesh out its case for an injunction. In re Wachovia Corp. "Pick-A-Payment" Mtge. Mktg. and Sales Pracs. Litig., 2013 WL 5424963, *9, *11 (N.D. Cal. Sept. 25, 2013).
The court will not order third parties to remove material from the internet. That's a thicket that the court cannot enter on the briefing before it. That would be "state action" against First Amendment rights. To get that result, the defendants would have to make a profoundly stronger showing than they have made.
The court can order sanctions and fees and costs. The cases that the defendants cite (ECF No. 96 at 24) adequately support this proposition.
• The court denies the plaintiff's request to release the plaintiff and his wife from their guaranties.
• The court directs the parties to provide additional briefing on whether foreclosing on an underwater commercial property can constitute "irreparable injury" for purposes of an injunction. The parties must simultaneously file a brief of no more than 10 pages in this issue by Thursday, March 30, 2017. Ruling on this part of the plaintiff's motion is suspended until these briefs are filed.
• The court enjoins the plaintiff from making any further disparaging comments about the defendants. The plaintiff is ordered to fully comply with the settlement agreement's non-disparagement term. Further violations of this term will be considered both a breach of the settlement agreement and contempt of court.
• The court orders the plaintiff to withdraw his FBI and SEC grievances against the defendants, as well as any other such grievances as the plaintiff may have outstanding and which fall within the scope of his commitment under the settlement. He agreed to do this in the settlement agreement and does not deny that he has failed to.
• The court fines Mr. Fisher and Mr. Brauser (not their lawyers) for violating the settlement agreement's non-disparagement clause. Mr. Brauser is fined $250. Mr Fisher is fined $1000. The parties must each choose one of legal-aid groups listed on the State Bar of California's legal-aid program, remit their fine to that organization, and provide proof of having done so within 60 days of this order.
The parties' motions are otherwise denied.


This matter is before the Court on pro se Defendant Micah Israel's Motion under 28 U.S.C. § 2255 to Vacate, Set Aside, or Correct Sentence by a Person in Federal Custody. (R. 115). The United States filed its Response (R. 123) and, although untimely (see R. 124; R. 126), Defendant has filed a Reply. (R. 127). With his Reply, Defendant also filed a separate Motion for Evidentiary Hearing which included a request for counsel to be appointed. (R. 128). The United States responded on November 8, 2017. (R. 130). Having all relevant documents before the Court, this matter is ripe for consideration and preparation of a Report and Recommendation pursuant to 28 U.S.C. § 636(b). For the reasons set forth below, it will be RECOMMENDED that Defendant's § 2255 Motion (R. 115) and Motion for Evidentiary Hearing (R. 128) be DENIED.
On September 4, 2014, a federal grand jury returned an Indictment charging Defendant Israel with the knowing and intentional attempt to possess with the intent to distribute 500 grams or more of a mixture or substance containing a detectable amount of cocaine, a Schedule II controlled substance, a violation of 21 U.S.C. § 841(a), all in violation of 21 U.S.C. § 846. (R. 1). Following the issuance of an arrest warrant (R. 3), Israel was arrested on September 9, 2014, (see R. 8) and pleaded not guilty at arraignment the following day. (R. 13). Defendant's jury trial commenced on February 2, 2015 (R. 51), and the jury returned a guilty verdict for the sole count against him on February 3, 2015. (R. 52).
The evidence at trial established that Israel had attempted to purchase one kilogram of cocaine from his codefendant Emmanuel Chenault. See United States v. Israel, 662 F. App'x 382, 383-85 (6th Cir. 2016) (opinion on direct appeal) (describing case facts). Chenault had unknowingly been involved with a law enforcement confidential informant (“CI”) in what Chenault believed to be a transaction to obtain several kilograms of cocaine. On July 1, 2014, the CI fronted Chenault with what Chenault thought was four one-kilogram bricks of cocaine, though the bricks were actually four blocks of wood wrapped in tape, axle grease, and cellophane. Chenault left his meeting with the CI with possession of the purported bricks of cocaine, intending to sell them and return with payment of $30, 500 for each brick. Id.
Meanwhile, minutes after Chenault drove away, undercover officers observed Israel pacing back and forth in his front yard. Israel was arguing with someone on the phone and, according to one police observer, “looked agitated and stressed.” He then went back into his house and quickly exited again, this time leaving in his car. At this point, officers attempted to stop and detain Israel. However, Israel had other plans. He took the officers on a slow-speed car chase, evading two road blocks and eventually arriving back at his house. During the brief escapade, he called his girlfriend, Jashae Watts, and told her to “go into the bathroom, . . . get the stuff that was in there[, ] and throw it over the fence.” When Israel finally arrived back at his house, he was arrested without incident.
Id. at 384. Police spoke with Israel's girlfriend at the residence. She told law enforcement that she had communicated with Israel after he left the residence, at which time he told her to go into the bathroom and get rid of everything and throw it over the fence and she did so. (R. 96, at 86, 89-90).
Police later executed a search warrant at Israel's house, finding items associated with drug trafficking-digital scales with cocaine residue, plastic baggies and bottles containing cutting agents, a money counter, a firearm and ammunition, cocaine test kits, and marijuana cultivation and cocaine handbooks. United States v. Israel, 662 F. App'x at 384. On the other side of the fence at Israel's property line, police also found one of the faux cocaine bricks, a digital scale, and a rubber glove with grease residue. Id.
Following the entry of the jury's verdict and prior to Defendant's sentencing hearing, the Probation Office prepared a Presentence Investigation Report (“PSR”). (R. 77). The PSR calculations under the Sentencing Guidelines placed Defendant at a base offense level of 24. (Id. at 6, ¶ 24). The offense level was increased 2 levels because Defendant possessed a firearm during the commission of the underlying offense (id. at ¶ 25), and increased 2 additional levels for obstruction of justice, Israel having instructed another person to discard physical evidence. (Id. at ¶ 28). Defendant's adjusted offense level was therefore calculated to be a level 28. (Id. at ¶ 29).
However, after determining that Defendant qualified as a career offender, his base offense level was increased to a level 37. (Id. at ¶ 32).
The PSR also contained an analysis of Defendant's background, including his criminal history. (Id. at 7-12). In light of his career offender status, the PSR lists Defendant's criminal history category as VI. (Id. at 10, ¶ 41). Based on Defendant's total offense level of 37, and a criminal history category of VI, his Sentencing Guidelines range was calculated to be 360 months to life in prison. (Id. at 16, ¶ 80).
Defendant appeared before the District Judge for sentencing on May 20, 2015. (R. 72). The Court adopted the findings and guideline calculations set out in the PSR (id.), and sentenced Defendant to 420 months' imprisonment, to be followed by an 8-year term of supervised release. (R. 74). Defendant appealed his conviction and sentence on May 27, 2015. (R. 78). Defendant's conviction and sentence were affirmed by the Sixth Circuit Court of Appeals on October 31, 2016. (R. 111). Defendant's time to petition the United States Supreme Court for certiorari expired on January 29, 2017, and Defendant filed no such petition.
On July 26, 2017, Defendant filed the pending motion pursuant to 28 U.S.C. § 2255. (R. 115). In his motion, Defendant presents five claims; one claim challenging the constitutionality of the criminal statutes under which he was convicted and sentenced, claiming 21 U.S.C. § 841 fails to provide an appropriate penalty and § 846 is unconstitutionally vague, and four claims alleging ineffective assistance of counsel. (Id. at 4-9). Defendant alleges his trial counsel was ineffective for: 1) failing to properly advise him of his charges; 2) failing to argue against sentence enhancement despite his request; 3) failing to object to an agent's testimony at trial and move to suppress; and 4) failing to present an alternative description of the events leading to his arrest. (Id.).
In its Response, the United States argued that neither statute referenced by Defendant is unconstitutional. (R. 123). The United States also argued that Defendant's trial counsel was not ineffective, and supported its argument with references to an affidavit from Defendant's trial counsel. (Id.; R. 123-1). According to the United States, Defendant was adequately informed on multiple occasions of the charges, defense counsel effectively represented Defendant with respect to sentencing enhancements, defense counsel properly questioned a responding law enforcement officer, and defense counsel was never aware of Defendant's alternative description of the facts and therefore was not ineffective in allegedly failing to raise such an argument. (R. 123, at 3-9).
Under 28 U.S.C. § 2255(a), a defendant must demonstrate his “sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack.” To prevail on a § 2255 motion alleging a nonconstitutional error, a defendant “must establish a ‘fundamental defect which inherently results in a complete miscarriage of justice, ' or an error so egregious that it amounts to a violation of due process.” Watson v. United States, 165 F.3d 486, 488 (6th Cir. 1999) (quoting United States v. Ferguson, 918 F.2d 627, 630 (6th Cir. 1990) (citing Hill v. United States, 368 U.S. 424, 428 (1962)). To succeed on a § 2255 motion alleging constitutional error, a defendant “must establish an error of constitutional magnitude which had a substantial and injurious effect or influence on the proceedings.” Watson, 165 F.3d at 488 (citing Brecht v. Abrahamson, 507 U.S. 619, 637-38 (1993)). In sum, a defendant must allege in his § 2255 motion that: (1) his conviction was the result of an error of constitutional magnitude; (2) his sentence was imposed outside of statutory limits; or (3) there was an error of law or fact so fundamental as to render the proceedings invalid. Pough v. United States, 442 F.3d 959, 964 (6th Cir. 2006) (citing Mallett v. United States, 334 F.3d 491, 496- 97 (6th Cir. 2003)). A defendant must prove his allegations by a preponderance of the evidence. Pough, 442 F.3d at 964.
In his § 2255 Motion, Defendant claims that 21 U.S.C. §§ 841 and 846 are unconstitutional. (R. 115 at 6). He claims that § 841 is unconstitutional as it applies to him because it does not provide a penalty for his action, as the appropriate punishment is determined by the quantity of illegal substance involved, and Defendant did not possess any quantity of illegal substance. (R. 115-1, at 12-16). As for § 846, Defendant claims the statute is unconstitutionally vague and it “does not adequately inform citizens as to what is illegal.” (Id. at 17).
Defendant did not challenge the constitutionality of §§ 841 and 846 on direct appeal. See Israel, 662 F. App'x at 386. He raises this challenge for the first time in his § 2255 Motion. It is well-settled that a defendant is generally barred from raising claims in a § 2255 motion that he failed to present on direct appeal. United States v. Gibson, 424 F. App'x 461, 466-67 (6th Cir. 2011) (citing United States v. Frady, 456 U.S. 152, 167-68 (1982)). The Sixth Circuit has applied procedural default to a § 2255 defendant's claim to the extent the defendant argued, similar to Israel's argument here, that the statute under which she was convicted was unconstitutional for failing to allege a specific quantity of drugs. See Regalado v. United States, 334 F.3d 520, 527-28 (6th Cir. 2003).
“Where a defendant has procedurally defaulted a claim by failing to raise it on direct review, the claim may be raised in habeas only if the defendant can first demonstrate either ‘cause' and actual ‘prejudice, ' (citations omitted), or that he is ‘actually innocent.'” Bousley v. United States, 523 U.S. 614, 622 (1998) (citing Murray v. Carrier, 477 U.S. 478, 485 (1986); Smith v. Murray, 477 U.S. 527, 537 (1986); Wainwright v. Sykes, 433 U.S. 72, 87 (1977)); see also Vanwinkle v. United States, 645 F.3d 365, 369 (6th Cir. 2011). Israel has not made any effort to show that cause and actual prejudice exist as to allow the adjudication of this claim.
Nor in his unconstitutionality claim has Israel argued his actual innocence. A defendant who fails to establish cause and prejudice may still be able to obtain review of a procedurally defaulted claim if his case fits within a narrow class of cases permitting review in order to prevent a fundamental miscarriage of justice, as when he submits new evidence showing that a constitutional violation has probably resulted in a conviction of one who is actually innocent. Murray v. Carrier, 477 U.S. 478, 495-96 (1986). “[A]ctual innocence means factual innocence, not mere legal insufficiency.” Lee v. Brunsman, 474 F. App'x 439, 442 (6th Cir. 2012) (citing Bousley v. United States, 532 U.S. 614, 623 (1998)). Moreover, the actual innocence exception deals with a “severely confined category: cases in which new evidence shows ‘it is more likely than not that no reasonable juror would have convicted [the petitioner].'” McQuiggin v. Perkins, 133 S.Ct. 1924, 1933 (2013) (quoting Schlup v. Delo, 513 U.S. 298, 329 (1995)). For a claim of actual innocence to be credible, a defendant must come forward with “new reliable evidence-whether it be exculpatory scientific evidence, trustworthy eyewitness accounts, or critical physical evidence-that was not presented at trial.” Schlup, 513 U.S. at 324. The court “must assess the probative force of the newly presented evidence in connection with the evidence of guilt adduced at trial.” Schlup, 513 U.S. at 332. The Supreme Court has recognized it is an extraordinary case that can meet Schlup's high threshold for establishing actual innocence. See Id. at 321. Ultimately, a defendant must prove that, in light of the new evidence, it is more likely than not that no reasonable juror would have found him guilty beyond a reasonable doubt. Id. at 327-29; House v. Bell, 547 U.S. 518, 536-37 (2006).
Here, the only allegedly “new reliable evidence” offered by Defendant in support of his purported innocence is student loan documentation (R. 129) he filed to support his declaration statement attached to his Reply (R. 127-1). Israel declares that he “never knew that the wood [block used in place of a cocaine brick] was in My house until after Emmanuel Chenault was allowed to use My bathroom” (id. at ¶ 7); that he “tried to contact Chenault on My cell phone to question him about the anonymous package left under My bathroom cabinet” (id. at ¶ 10); that “Chenault stole cash from My residence when he secretly left (while I was using the bathroom)” (id. at ¶ 9); and that Chenault had “stole[n] My tuition money that I had got through student loan” (id. at ¶ 12). Defendant supplemented the declaration with copies of school loan papers he claims evidence his source for the money in his house that Chenault stole from him. (R. 129).
Even assuming Israel could establish this loan evidence is “new, ” it is hardly adequate to show that, had it been presented at trial, no reasonable juror would have convicted Israel. The evidence presented at Israel's trial has been carefully reviewed. Law enforcement agents and the cooperating informant testified to the circumstances surrounding the arranged transfer of the purported kilograms of cocaine between Chenault and the CI, and the sale of some of that purported cocaine from Chenault to Israel. These various witnesses explained their participation in or observation of these events, the timing of these events, and the recording or surveillance of some of the events. They testified concerning the physical evidence retrieved from Chenault upon traffic stop and upon search of Israel's house and yard, including the fake cocaine bricks, currency, and the items associated with drug trafficking that were found in Israel's house. Israel's girlfriend also testified at trial, explaining to the jury Israel's instruction for her to remove incriminating items from the bathroom and dispose of the items by throwing them over a fence into an adjoining yard. (R. 95; R. 96 - trial transcripts).
By declaration, Defendant now claims Chenault left the fake brick of cocaine at his house without his knowledge and stole the money from him. But with the exception of the cash found with Chenault, Israel offers no actual evidence to counter the testimonial details and the physical evidence provided at trial. The loan paperwork now put forth by Israel appears to document that from June 2010 through September 2013 Israel received a total of approximately $29, 000 in student loan funds for purposes of attending Bluegrass Community and Technical College. (R. 129-1, at 2). This documents that Defendant received student loans. However, it is not credible nor sufficient to counter the reasonable inference that the $35, 000 cash found with Defendant Chenault was provided by Israel as payment for a purported kilogram of cocaine. At best, the loan papers show Israel had a source of substantial funds to support Israel's contention that Chenault stole the money from him. But that evidentiary connection is weak, as the documents suggest Israel received the loan monies over more than a three-year period, for schooling, rather than personally retaining and accruing the loan proceeds, and in cash no less.
This “new” evidence has little probative value based on the other evidence of Israel's involvement with drugs generally and this fake cocaine transaction specifically. Any probative value the evidence does have would not overcome the evidence of guilt at trial. Defendant simply has not shown, based on this purported new evidence, that “it is more likely than not that no reasonable juror would have convicted him.” Schlup, 513 U.S. at 298. These loan documents and Defendant's conclusory statements of what they represent do not meet the demanding standards set forth in Schlup, which requires “evidence of innocence so strong that a court cannot have confidence in the outcome of the trial unless the court is also satisfied that the trial was free of nonharmless constitutional error.” Schlup, 513 U.S. at 316. As Defendant has not made any effort to show cause and actual prejudice exist to excuse his procedural default, and Defendant has not satisfied the requirements of the actual innocence exception, Defendant's claim that §§ 841 and 846 are unconstitutional is procedurally defaulted.
Even if Defendant's unconstitutionality claim were not procedurally defaulted, it would still fail on the merits, as neither of the criminal statutes referenced by Defendant is unconstitutional. Defendant attacks § 841 based on subsection (a)(2) of the statute (R. 123, at 10; R. 151-1 at 12-16), but Defendant was convicted under subsection (a)(1). (R. 74). Defendant also attacks the constitutionality of the penalty provision of § 841, provided in subsection (b). However, Defendant fails to recognize that he was convicted under §§ 841 and 846 together. (See R. 74). Even assuming arguendo that Defendant was correct in asserting § 841 independently does not provide a penalty for his conduct specifically, § 841 must be read in conjunction with § 846, which provides that “[a]ny person who attempts or conspires to commit any offense defined in this title shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt.” 21 U.S.C. § 846 (emphasis added).
To the extent Defendant claims 21 U.S.C. § 841(a)(2) is unconstitutional, the constitutionality of § 841(a)(2) is irrelevant here, as Defendant was convicted under § 841(a)(1). (See R. 74). Construing Defendant's Motion liberally, to the extent Defendant asserts he should have been convicted under § 841(a)(2), such argument fails, as Defendant failed to raise such a ground on direct appeal. See Gibson, 424 F. App'x at 466-67.
As for 21 U.S.C. § 841(a)(1), the section of the statute under which Defendant was actually convicted, that section states that it is unlawful to knowingly or intentionally “manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance.” As previously stated, § 841 must be read in conjunction with § 846. Defendant was found guilty of “knowingly and intentionally attempt[ing] to possess with the intent to distribute 500 grams or more of a mixture or substance containing a detectable amount of cocaine.” (R. 77, at 3, ¶ 1). Whether Defendant actually possessed cocaine and in such quantity is irrelevant. When read in conjunction with § 846, the conduct which is penalized under § 841 effectively becomes the attempt to possess such a quantity of cocaine and, contrary to Defendant's assertion, § 841(b) sets forth a penalty for such.
Regarding 21 U.S.C. § 846, Defendant claims “the federal law of conspiracy is vague and does not adequately inform citizens as to what is illegal.” (R. 115-1, at 17) (emphasis added). Defendant essentially argues that the statute punishes thought, and not action, and is therefore unconstitutional. Id. However, as previously stated, § 846 must be read in conjunction with § 841. The action that is punished is set forth in § 841, which makes it unlawful “for any person knowingly or intentionally . . . to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance.” 21 U.S.C. § 841(a).
Further, Defendant was not convicted under the conspiracy portion of the statute, but rather the attempt portion. (R. 123, at 10; R. 1, at 1-2). Defendant offers no authority, and this Court is unaware of any, successfully attacking the constitutionality of a statute proscribing an attempt to commit an unlawful act. The constitutionality of § 846 has been upheld numerous times by the Sixth Circuit Court of Appeals. See, e.g., United States v. Mazzio, 48 Fed.Appx. 120, 130 (6th Cir. 2002) (upholding the defendant's conviction for violating §§ 841 and 846 after being the subject of a drug crime investigation); United States v. Spearman, 39 Fed.Appx. 63, 72 (6th Cir. 2002) (ruling § 841 and § 846 constitutional as applied to a defendant convicted of attempt to possess with intent to distribute cocaine as a result of the defendant's involvement in an undercover operation). Therefore, Defendant's argument that 21 U.S.C. §§ 841 and 846 are unconstitutional fails because it is procedurally defaulted and, alternatively, because it is without merit.
A post-conviction motion under § 2255 is the proper vehicle for raising claims of ineffective assistance of counsel. United States v. Crowe, 291 F.3d 884, 886 (6th Cir. 2002) (citing United States v. Wunder, 919 F.2d 34, 37 (6th Cir. 1990)). Here, as stated above, Defendant asserts four claims of ineffective assistance of his trial counsel, Benjamin Hicks: 1) failing to properly advise him of his charges; 2) failing to argue against sentence enhancement despite his request; 3) failing at trial to object to a witness's testimony and move to suppress; and 4) failing to present at trial an alternative description of the facts pertaining to the events leading to his arrest. (R. 115, at 4-9).
The Supreme Court has held that “[t]he benchmark for judging any claim of ineffectiveness must be whether counsel's conduct so undermined the proper function of the adversarial process that the trial cannot be relied on as having produced a just result.” Strickland v. Washington, 466 U.S. 668, 686 (1984). To meet this standard, the Supreme Court set forth a two-part test. First, a defendant is required to show that counsel's representation fell “below an objective standard of reasonableness.” Id. at 687-88. To demonstrate this first prong, a defendant must point to specific errors in counsel's performance, and the reviewing court must subject the allegations to rigorous scrutiny, determining “whether, in light of all the circumstances, the identified acts or omissions were outside the wide range of professionally competent assistance.” Id. at 690. In reviewing this prong, the lower court is to apply a deferential standard; there is a “strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance.” Id. at 689.
The second prong of the test requires a defendant to demonstrate that the deficient performance prejudiced his defense. Id. at 687. Specifically, he must “show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different.” Id. at 694. Thus, an error by counsel, even if professionally unreasonable, does not warrant setting aside the judgment of a criminal proceeding if the error did not affect the judgment. Pough, 442 F.3d at 961. A defendant must establish both prongs by a preponderance of the evidence. Id. at 964. Courts may approach the Strickland analysis in any order, and an insufficient showing on either prong ends the inquiry. Id. at 967; see also Baze v. Parker, 371 F.3d 310, 321 (6th Cir. 2004) (stating “[w]e do not need to address the question of competence, however, if it is easier to dispose of an ineffectiveness claim on the ground of lack of sufficient prejudice.”) (internal citations omitted).
Defendant argues generally that Attorney Hicks advised him as if he had been charged with conspiracy to possess and distribute cocaine, rather than attempt to possess and distribute cocaine as he was actually charged. Israel claims this misadvise was material and prejudiced him, because it influenced his decision not to enter a guilty plea pursuant to a plea agreement and instead proceed to trial. (R. 115-1, at 5). To evidence this error, Defendant attached a letter from trial counsel to Defendant dated December 19, 2014, wherein counsel referred to Defendant as facing a conspiracy charge, rather than an attempt charge. (Id. at 34) (emphasis added).
The subject letter does, in fact, use the word conspiracy rather than attempt. In considering Defendant's argument, the reference in the letter must be viewed in context. Counsel wrote to Israel to report that he had filed the motion to suppress Defendant wanted filed. (Id.). He also informed Israel that he believed, based on the law and the affidavit supporting the challenged search warrant, that the evidence taken from his house would not be suppressed. He went on to note that even if those items taken from Israel's house were to be suppressed, because of the other case evidence, “you would still be facing the same conspiracy charge.” (Id.). Thus, counsel did in fact refer to it as a conspiracy charge rather than a charge of attempt.
But viewed in context, this single mistaken reference in counsel's letter does not constitute performance by counsel falling “below an objective standard of reasonableness.” Strickland, 466 U.S. at 687-88. Defendant essentially concedes as much because he further argues not just that the letter contains an error; rather, he points to the letter as evidence corroborating his more general assertion that counsel actually misadvised him about the substance of what he was charged with. Defendant sets forth the legal elements for conspiracy and attempt in his Motion, maintains that counsel never explained to him the elements necessary to prove the charge of attempt, and seems to suggest that counsel instead advised him of the elements of conspiracy, though Israel does not expressly allege this. Israel contends that if Attorney Hicks had actually advised him about the elements of attempt, he would have entered into a plea agreement with the United States. (R. 115-1, at 5, 7, 32-33).
As noted above, when viewed in context, the letter itself does not actually advise Defendant about the elements of a conspiracy charge or an attempt charge. To the extent Israel points to the letter as evidencing counsel actually believed him to be charged with conspiracy and, consequently, counsel's representation of and advice to him was all done based upon this erroneous premise as to the charge, Israel has not presented any evidence of this, just conclusory statements from which Israel would like the Court to infer that counsel did so advise. But the affidavit of counsel explains that the crux of his communications with Israel were about ways to try and defend the case if case discovery showed that Defendant knowingly received what he thought to be cocaine in exchange for over $30, 000. (R. 123-1, at ¶ 3). Counsel states he advised Defendant that if the jury believed from the evidence that he did this, he would be convicted. (Id. at ¶ 4). Therefore, Defendant has not shown that counsel rendered deficient performance based upon the mistaken reference to conspiracy in the letter.
Moreover, even assuming Defendant could show by a preponderance of evidence that Attorney Hicks actually did counsel and advise him based on an incorrect charge, and that this conduct by counsel fell below an objective standard of reasonableness, Defendant has not shown by a preponderance of evidence that he was prejudiced. Defendant maintains that counsel's conduct did prejudice him because it influenced his decision not to enter into a plea agreement with the United States and change his plea. (R. 115-1, at 5). Therefore, according to Defendant, his decision to maintain his not guilty plea on the sole count against him rather than to plead guilty was unintelligent, unknowing, and involuntary. (Id. at 7).
Israel's claimed unawareness of actually being charged with attempt due to his counsel's error could not have influenced his plea decision as he alleges. As the Government points out, the record reflects Israel had been informed of his actual charge of attempting to possess with intent to distribute cocaine, both at the outset of the case (see R. 13, Criminal Minutes from Arraignment and Plea, “Copy of Indictment given to the defendant.” and “The Court advised Defendant of the charges and potential penalties.”) and during the trial (see R. 96, at 129, jury instruction conference, “the first sentence of paragraph 1, that should read, ‘The defendants are charged in Counts 1 and 2 of the indictment with the crime of attempting to possess, ”; R. 96, at 143, court's instructions to the jury, “defendants are charged in Counts 1 and 2 with attempting to commit the crime of possession with the intent to distribute 500 grams or more of a mixture or substance containing a detectable amount of cocaine”).
In his untimely Reply, Defendant points out the Strickland standard applies to his counsel informing him of his charge, not the Court doing so. The Court proceedings are, however, relevant to show that even if defense counsel's performance were deficient, Defendant cannot satisfy Strickland's prejudice prong because he had been informed that he was charged with attempt.
Defendant tries to say he did not understand the Court's explanation of the charges during trial due to confusion caused by Attorney Hicks's prior representation to him that he was charged with conspiracy. This is disingenuous. Defendant was also informed of the charge at his initial appearance and received a copy of the indictment. In fact, the record reflects that Defendant had been previously represented by a different court-appointed attorney, Adele Brown, who had been appointed to represent him at his September 10, 2014 initial appearance and arraignment. (See R. 13). Indeed, the transcript of that proceeding reveals Defendant was not only informed but confirmed he understood the charge against him.
MS. BROWN: Yes, Your Honor, I've obtained a copy of the indictment and have given Mr. Israel one. We have reviewed it together. I believe he understands the charge against him, and also the forfeiture allegation.
And we have discussed the penalties, prepared to waive formal reading, and enter a plea of not guilty at this time.
For the defendants I am going to briefly talk about the content of the indictment with you, including the charge and the penalties. I'm doing that just to make sure that you do on the record have that information. . . . .
The indictment contains one substantive count against each of you. It actually alleges the same conduct but in different counts, one for each defendant.
Mr. Chenault is named in Count 1, Mr. Israel is Count 2.