Companies in the Washington area can expect to be more vulnerable to environmentalist suits than those in some other parts of the country, in the wake of an appeals court ruling from Richmond.
The Clean Water Act calls for federal enforcement to be supplemented by suits brought by private citizens. Individuals or groups can go to court to seek injunctions or civil penalties against polluters who are "in violation of" the statute. The U.S. Court of Appeals in Richmond, controlling the trial courts in Maryland, West Virginia, Virginia and the Carolinas, recently took an expansionist view of just what that wording means.
The judges approved a suit against a meatpacker that alleged that the facility was not living up to the terms of its discharge permit. The company contended that any violations had been corrected before the action was filed.
In a similar situation last year, the U.S. Court of Appeals in New Orleans decided that "in violation of" meant that the alleged violation had to be taking place at the time of the suit; citizens groups, therefore, could not seek fines for past pollution. But the Richmond judges refused to follow that precedent.
They admitted that the language -- and the records of the debate over the language -- is unclear and open to either interpretation. But they reasoned that the whole point of not leaving enforcement entirely in governmental hands is to encourage concerned citizens to bring additional cases.
The language "in violation of" long has been held to authorize the government to bring suits against those who were violators but have since cleaned up their act. The Richmond ruling found that it makes no sense to give environmentalists less sweeping authority -- at least in this circuit.
In other cases, courts ruled that:
Investors will have more trouble collecting from a commodity broker who lost them money. Some court rulings have interpreted the Commodity Exchange Act as requiring brokers to look out for the best interests of their clients, so that customers can sue for fraud if brokers do not live up to this fiduciary duty.
But a new ruling from the U.S. Court of Appeals in Denver says those decisions "directly contravene" the language of the statute. It decrees that customers cannot bring actions with claims that their brokers were merely negligent, sloppy or wrong. (Hill v. Bache, Halsey, May 6)
Items a merchant cannot sell are not always deductible. The U.S. Court of Appeals in Philadelphia, overturning a district court ruling, decided that a Virgin Islands seller of lottery tickets could not write off as a business expense the cost of tickets left unsold at the time of the drawing (80 percent of face value).
Because the dealer could have turned in any of the tickets that proved to be winners himself, the appellate court majority reasoned that he really was spending the money he paid for the tickets on gambling.
Thus, the loss was merely a gambling loss, which could be used only to offset gambling winnings. Had he given the unsold tickets to a charity, the opinion noted, he could have claimed their cost as an ordinary business expense. (Miller v. Quinn, June 12)
Children can change fathers. Under North Carolina's inheritance laws, a surviving spouse gets a smaller share of an estate if the deceased had children by a prior marriage, but not by the later one. The state Supreme Court held, however, that the provision did not apply to a widower who had legally adopted the children from his former wife's first marriage. That made them children of the second marriage, the justices ruled. (In re Estate of Edwards, June 3)
A court can refuse to accept an electronic copy of legal papers. The U.S. Tax Court refused to consider a taxpayer's challenge to a bill from the Internal Revenue Service, noting that the typed, signed petition had been hand-delivered to the court one day too late.
On the deadline day, a copy of the petition had been sent to Washington electronically, by satellite, reprinted there, and sent to the court by a delivery service.
But the clerks in the mailroom refused to accept the copy, and Judge Samuel Sterrett said they were correct. The court has long refused to accept telegrams or radiograms as legal filings, and the satellite transmission is in the same category, he decided. (Blum v. Commissioner, May 29)
Moskowitz covers legal affairs for McGraw-Hill World News.