Religious Discrimination? No Actual Knowledge, No Problem

Author: Brynn Stylinski, Associate Member, University of Cincinnati Law Review

Title VII has prohibited religious discrimination and required accommodation of religious needs in the workplace since 1964. Last year, in EEOC v. Abercrombie and Fitch Stores, Inc., the Tenth Circuit ruled that an employer that denied a Muslim woman employment on the basis of her religious appearance was not liable for religious discrimination under Title VII.[1] However, this ruling is incongruous with Title VII’s purpose as a part of the Civil Rights Act of 1964 and the Tenth Circuit actually misapplied the law at issue. The Tenth Circuit’s ruling encourages employers to act with willful blindness and allows employers to discriminate on the basis of religion. The Supreme Court has granted certiorari in the case, and in order to preserve the integrity of Title VII, should overturn the Tenth Circuit’s ruling and clarify the standard of review to be applied in religious discrimination cases.

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Confusion in Lock-Up: Irrevocable Agreements and Section 11 Claims

Author: Dan Stroh, Associate Member, University of Cincinnati Law Review

On October 6, 2014, the Supreme Court denied a writ of certiorari in Moores v. Hildes, which involved the interpretation of § 11 of the Securities Act of 1933.[1] Section 11 protects investors by requiring disclosures regarding the purchase of securities and imposing liability on actors responsible for misstatements or errors in information regarding the securities.[2] By holding directors and other company leaders responsible for the accuracy of required statements, § 11 aims to instill confidence in securities investors. Generally, the Act does not require an investor to show he relied on misleading information in a company’s registration statements to impose liability on those responsible for the accuracy of the information.[3] However, the Eleventh and Ninth Circuits are split as to whether a plaintiff must show reliance on a misleading registration statement when the registration statement was issued after the shareholder entered a binding lock-up contract in a merger. By choosing not to review Moores v. Hildes, the Supreme Court refused to address the issue of reliance when an investor utilizes § 11 to enforce accountability for this type of error. Because § 11 is one of the few remaining areas of securities law where injured investors turn for protection from misstatements affecting the value of their investments,[4] the Supreme Court’s failure to affirm the ruling in Hildes will result in continued confusion, lack of protection for investors, and disparate rulings that vary by jurisdiction.

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Tax Characterization of FCA Settlements: First Circuit Says, “No Agreement? No Problem.”

Author: Matt Huffman, Associate Member, University of Cincinnati Law Review

On August 13, 2014, the First Circuit addressed an issue of first impression in Fresinius Medical Care Holdings, Inc. v. United States,[1] holding that a court may consider factors beyond a tax characterization agreement when determining the deductibility[2] of a settlement payment under the False Claims Act (FCA).[3] In so holding, the court rejected the government’s argument that the Ninth Circuit had appropriately adjudicated this issue in Talley Industries, Inc. v. Commissioner[4] and that the only pertinent inquiry in determining the deductibility of an FCA settlement payment is whether a tax characterization agreement exists between the government and the settling parties. The court explained its disagreement with the Ninth Circuit: “[i]f Talley stands for the proposition asserted by the government, then Talley is incorrectly decided and does not deserve our allegiance.”[5] In its decision, the First Circuit correctly parted from Talley and determined that the economic realities of a settlement agreement should be considered in the absence of a tax characterization agreement. Nonetheless, in adopting this test, the First Circuit should have gone further to hold that economic realities should not be ignored even in the presence of such an agreement. Considering that FCA settlements often involve hundreds of millions of dollars, the First Circuit’s decision will have significant tax consequences for companies settling FCA suits in the future.

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Scrutinizing the Conversion of Scrutiny Applied to Conversion Therapy: A Ninth and Third Circuit Split

Author: Stephen Doyle, Associate Member, University of Cincinnati Law Review

For four decades, homosexuality has not been considered a mental disease or defect.[1] Nonetheless, many parents attempt to subject their children to sexual orientation change efforts (SOCE) to ensure their maturation in a heteronormative lifestyle despite the many negative physical and mental health effects SOCE can have on an individual. Both California[2] and New Jersey[3] passed laws banning the practice of SOCE on minors by licensed mental health providers. Both of these laws were challenged and upheld in Pickup v. Brown[4] and King v. Governor of New Jersey,[5] respectively. Although the Ninth and Third Circuits upheld the laws, the level of scrutiny each court applied to the laws differed. The Ninth Circuit’s rational basis analysis ultimately favors opponents of SOCE, but the Third Circuit’s more practical and precise intermediate scrutiny analysis is the better of the two.

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Are American Companies Liable for Torts Committed Abroad?

Author: Chris Gant, Associate Member, University of Cincinnati Law Review

In Ogoniland, Nigeria, environmentally concerned protestors were beaten, raped, and killed for demonstrations opposing aggressive oil development in the Ogoni Niger River Delta. Nigerian nationals brought suit under the Alien Tort Statute (ATS) in the Southern District of New York, alleging that foreign corporations that do business in the United States aided and abetted these atrocities.[1] In Kiobel v. Royal Dutch Petroleum Co., the Supreme Court held that foreign corporations are not subject to liability in the United States for tortious acts outside of the United States. However, because Kiobel dealt with a foreign corporation, the opinion left open the question of whether a United States corporation could be liable for tortious acts outside of the country, and the open question resulted in a circuit split. The Fourth Circuit has held that American corporations can be sued for acts committed outside of the United States, while the Eleventh Circuit has expanded Kiobel and stated that American courts lack jurisdiction over these claims, thus barring them in that circuit. The Fourth Circuit’s reasoning is a better analysis of claims brought under the Alien Tort Statute (ATS) because the statute was intended to provide a remedy for foreigners injured by Americans. As such, the United States has an obligation to provide a forum for noncitizens to receive compensation for torts committed by Americans in other countries. Furthermore, the ATS was created to regulate an American citizen’s conduct outside of the United States. Without a court enforcing this obligation, corporations have little concrete incentive to monitor employees’ potential tortious activities abroad.

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Net Neutrality in the Wake of Verizon v. FCC

Author: Jon Kelly, Associate Member, University of Cincinnati Law Review

One of the greatest benefits of the internet is the seemingly endless supply of content and information available to users. Indeed, people have the ability to download or stream any type of media or purchase any type of product thanks in part to the openness of the internet. The Federal Communications Commission (FCC) is responsible for regulating this massive amount of content and the companies that provide access to it. However, the growth of the internet and the enforcement of the Telecommunications Act of 1996 has sparked legal disputes over the FCC’s right to enforce net neutrality—the idea that quality and speed of access should not depend on content or its source.[1] Earlier this year in Verizon v. FCC, the D.C. Circuit struck down the FCC’s key rules in its enforcement of net neutrality.[2] In this case, FCC “net neutrality” regulations prevented internet providers from withholding proper user access to content providers like Amazon or Netflix.[3] Given the structure of the Telecommunications Act, the decision by the Circuit is well-grounded. However, considering the importance of free and open internet, Congress should amend the Act to allow the FCC to enforce net neutrality rules on internet service providers.

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Fantasy Football: Better to Be Good Than Lucky

Author: Matt Huffman, Associate Member, University of Cincinnati Law Review

In 2014, nearly 37 million people will participate in a fantasy football league.[1] As the game’s popularity has grown, it has drawn unwanted attention from state officials questioning the legality of betting on fantasy football. While a small group of friends drafting fantasy football teams in a basement is unlikely to attract law enforcement scrutiny, fantasy football host sites[2] have become a billion dollar industry and are potentially subject to prosecution in states with strict gambling laws. Congress addressed fantasy football and determined that, under certain circumstances, betting on fantasy football is a legal activity.[3] However, some state gambling laws are stricter than federal law. Ohio law does not explicitly address the legality of fantasy football gambling, but based upon Ohio’s application of the “predominant factor test,” Ohio courts would likely determine that betting in fantasy football leagues, particularly those of shorter duration, would violate state gambling laws. Therefore, any host site (and its operators) accepting bids from Ohio or a state with similar gambling laws could be subject to criminal prosecution under state gambling laws.

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City of Indianapolis v. Annex Books: Has Renton’s “Reasonable Belief” Standard Become Unreasonable?

Author: Rebecca Dussich, Associate Member, University of Cincinnati Law Review

Among the petitions reviewed during the Supreme Court’s September conference was a request[1] to reverse a Seventh Circuit decision, City of Indianapolis v. Annex Books, in which the court invalidated an Indianapolis ordinance that restricted the permissible hours of operation for “adult entertainment businesses.”[2] The Supreme Court denied certiorari.[3] In that case, the Seventh Circuit held that the Indianapolis ordinance was unsupported by evidence of a justifiable government interest to restrict First Amendment rights. The Seventh Circuit’s decision employed a foundational standard of free speech jurisprudence originally set forth in Renton v. Playtime Theaters[4] and the denial of certiorari confirms the interpretation of this standard by lower courts. The Supreme Court was correct to allow the Seventh Circuit’s holding to stand. Had the Court granted certiorari and reversed the Seventh Circuit’s decision, this case would have signaled the first major shift in time, place, manner jurisprudence in almost three decades.

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Protecting Attorneys and Jeopardizing Creditors: In re Thelen LLP and Rejection of the “Unfinished Business Rule”

Author: A.J. Webb, Articles Editor, University of Cincinnati Law Review

In recent years, numerous multinational law firms have declared bankruptcy amidst dwindling demand for legal services. Generally, the bankruptcy of a law firm is similar to that of any other debtor: a trustee must carefully scrutinize the debtor’s assets, ensuring their availability for distribution to outstanding creditors. These assets are essential in repaying the partnership’s previous debts.

The New York Court of Appeals, however, holds a different view of how a bankrupt law firm should be treated, at least with respect to legal fees generated after the law firm declares bankruptcy. In a decision this past July, the Court of Appeals held that the “unfinished business” rule of partnership law, which provides that any “profits arising from work begun by former partners of dissolved law firms are a partnership asset that must be finished for the benefit of the dissolved partnership,” is inapplicable to pending hourly fee matters.[1] Fees generated after the declaration of bankruptcy concerning pending matters prior to the firm’s bankruptcy belong to the attorney, not the bankruptcy estate.[2] This single decision by the Court of Appeals will have major ramifications in bankruptcy law. While rejecting the unfinished business rule increases attorney and client independence, it seriously harms a creditor’s chance of recovery from the firm in bankruptcy.

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A Tail Is Not a Leg: Statutory Interpretation Games at the Ohio Supreme Court

Author: Colin P. Pool*

It is often said that Abraham Lincoln, “faced with some thorny issue that could be settled by a twist of language,” would ask his questioner how many legs a dog would have if you called its tail a leg. “Five,” the questioner responds. “No,” Lincoln answers. “Calling a dog’s tail a leg doesn’t make it a leg.”[1] In a recent decision, Hauser v. Dayton Police Department,[2] the Ohio Supreme Court effectively “called a tail a leg,” and held that an employment discrimination statute that imposes liability on “any person acting directly or indirectly in the interest of an employer” did not, in fact, impose individual liability against public-sector supervisors. In doing so, the Court arbitrarily limited the tort remedies available to public-sector employment discrimination plaintiffs, and showed its willingness to engage in intellectual dishonesty to reach these results.

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