Judge Kiser Dissolves Injunction Allowing Confederate Flag on License Plates

On Friday, July 31, 2015, in  Danville, Virginia -- the last capital of the Confederate States of America -- U.S District Court Judge Jackson Kiser presided over a court hearing about whether the Commonwealth of Virginia could ban the display of the confederate flag on DMV-issued license plates.

The Sutherlin Mansion in Danville, Virginia, the last capital of the Confederacy, is now the Danville Museum of Fine Arts & History and is a short walk down Main Street from the US District Court.

Specifically, the question was whether the U.S. Supreme Court's recent decision allowing Texas to ban the confederate flag from its license plates in Texas also applied to Virginia.  Pursuant to an older 2001 decision from the Fourth Circuit, Virginia was prohibited from disallowing an image of the confederate flag on vanity license plates for the Sons of Confederate Veterans.  The Fourth Circuit had held that Virginia's rule was an impermissible content-based restriction (viewpoint discrimination) under the First Amendment.  Since then, nearly 1602 Sons of Confederate Veterans license plates have been issued for cars and motorcycles.

In March 2015, however, the Supreme Court held that Texas's specialty license plate design constitutes government speech, and therefore content-based restrictions on the design and message of the license plates did not run afoul of the First Amendment.  The majority opinion explained that states can use license plate slogans to urge action, promote tourism and tout local industries, and that in doing so, the state can choose to promote some slogans, images and messages, but not others.  The Court compared messages on vanity license plates to message-conveying monuments in public parks.

Given this ruling, the Commonwealth of Virginia asked Judge Kiser to dissolve the 2001 injunction that prohibited it from disallowing the confederate flag on its license plates.  In his ruling from the bench, Judge Kiser agreed that the recent Supreme Court case effectively overruled the prior Fourth Circuit decision, and thus the injunction would be dissolved when he issues a written order.  Judge Kiser rejected the Sons of Confederate Veterans' argument that the process for obtaining a vanity plate in Virginia was so different from Texas that the US Supreme Court case should not apply.  A question that still needs to be answered, however, is what will happen to the existing Sons of Confederate Veterans license plates that have already been issued.  Judge Kiser's written ruling is expected to address whether his decision applies just to new plates or also retroactively to include the existing plates.

Attorney General Mark Herring said in a statement: "This ruling will allow Virginia to remove a symbol of oppression and injustice from public display on its license plates.  Virginia state government does not have to and will not endorse such a divisive symbol.  I appreciate Gov. McAulliffe's leadership in calling for the removal of the flag and those on my team who moved quickly to get it done."

Personally, I think that not only was Judge Kiser's ruling the right decision but it was the only decision possible given the Supreme Court's prior ruling in the Texas case.

Summary Judgment Hearing On First Amendment Challenge To Charlottesville's Panhandling Ban

On Thursday, November 21, Judge Moon heard arguments on summary judgment motions in a case challenging Charlottesville's panhandling ban under the First Amendment.  Judge Moon had originally dismissed the case, but the Fourth Circuit reversed that decision in February.

The arguments during the summary judgment hearing focused on whether the City targeted a specific form of speech or whether the City regulated speech in a neutral way, and whether the ban was broader than reasonably necessary.  The ordinance bans panhandling within 50 feet of two vehicle crossings on the Downtown Mall.  The City justifies the ban as a content-neutral regulation that protects public safety.

The Daily Progress quotes Judge Moon as saying: "The way I see this case, frankly, is whether 50 feet, on either side is too much....  I thought the big problem would be the distraction to divers and the danger to pedestrians."

Counsel for the plaintiffs -- a group of homeless men who want to panhandle on the Downtown Mall -- argued "Panhandlers, for the most part, including my clients, sit passively with a sign along the walls of the Downtown Mall.  They don't stop people."

The attorney for the City of Charlottesville argued that the 50 foot ban was reasonable, especially given the other areas where panhandling is allowed: "What we are dealing with is 200 feet total ... on two crossings on a mall that is one-third of a mile long and 60 feet wide."

Judge Moon is not expected to rule for another two months.  Trial is scheduled in the Western District of Virginia for March 3, 2014.

21 People Apply For Magistrate Judge Position

As noted earlier this week, Magistrate Judge Crigler is going to step down from the bench at the end of this month, and the Western District of Virginia has solicited applications to find a replacement.  Virginia Lawyers Weekly reports that twenty-one attorneys have applied for the job.  A 10-member advisory panel has been appointed and will review the applications in the next 45 to 60 days.  The advisory panel will recommend the five most qualified candidates.  According to Chief Judge Glen Conrad, the district judges will interview those five candidates and select one to serve the eight year term for the federal court.  Other judges will cover Judge Crigler's workload until a new magistrate judge is selected.  Although Judge Crigler's offices were in Charlottesville, the new magistrate judge will be based in Harrisonburg.

Fourth Circuit Certifies Business Conspiracy Question To Virginia Supreme Court

Virginia Lawyers Weekly reports that the Fourth Circuit is asking the Virginia Supreme Court to answer two questions about the interpretation of Virginia's Business Conspiracy Statute.

The first question is whether an allegation of tortious interference with contract or business expectancy can serve as the basis for a statutory conspiracy claim.  The second question is whether a two-year or five-year limitations period applies to a tortious interference claim.

The case, Dunlap v. Cottman Transmissions Systems, LLC, was brought by the owner of a transmission shop who alleged that local competitors and others conspired to get a franchisor to force him out of business.  The Eastern District of Virginia dismissed the lawsuit, and the shop owner appealed.  Instead of addressing the issues on appeal, the Fourth Circuit decided that it would be best to ask the Virginia Supreme Court to answer the unresolved questions of state law pursuant to Rule 5:40 of the Rules of the Supreme Court of Virginia.

Interestingly, the Fourth Circuit panel that issued the ruling included former Supreme Court Justice Sandra Day O'Connor, who was sitting on the panel by designation.  In this day and age, Supreme Court Judges are frequently accused of judicial activism by those who disagree with their rulings.  Justice O'Connor's decision to certify a question to a state court instead of resolving it herself is perhaps the epitome of judicial restraint and moderation.

The issues raised in this case are interesting and noteworthy for attorneys practicing business litigation.  There is generally a lack of case law regarding statutory business conspiracy claims.  I recently had a case in state court that involved similar issues, but the claims against my clients were dismissed without the court having to resolve these questions.

The Fourth Circuit's opinion explained why it was certifying these two issues thusly:

The reason to certify the first issue is straightforward: The Virginia Supreme Court’s recent decision in Station #2 signals obvious skepticism about business conspiracy claims predicated on contract disputes, but we are unable to ascertain with certainty how far that skepticism extends.

On the one hand, Station #2 clearly represents an important change in Virginia’s business conspiracy law, and we agree with the district court that this case raises concerns of the kind addressed there.

...

On the other hand, there are plausible reasons to limit Station #2’s holding to actual breach of contract claims, and to distinguish tortious interferences with contract or business expectancy.

...

The reason to certify the second question is even more straightforward: The question which statute of limitations to apply to tortious interference claims is a pure legal issue that has not been settled by the Virginia Supreme Court. Virginia applies a two-year statute of limitations to claims regarding personal injuries and a five-year statute of limitations to claims regarding injuries to property. See, e.g., Willard, 262 Va. at 478. But that distinction can be hard to draw, and the Virginia Supreme Court has previously disagreed with how this Circuit has attempted to articulate it. See id. at 479 (rejecting the test applied in Brown v. Am. Broad. Co., 704 F.2d 1296, 1303-04 (4th Cir. 1983)). As with the previous issue, we believe that this question at bottom concerns an ambiguity in the Virginia Supreme Court’s recent precedent that is best resolved by that Court.

Johnson v. Federal Home Loan Mortgage Corporation

As previously noted on this blog, homeowners who are in default sometimes file lawsuits against the noteholder or servicer of their mortgage in order to delay or prevent foreclosure.  I have handled a number of these types of cases, on behalf of banking clients.  In July, the Western District of Virginia (Judge Wilson) dismissed one such claim on a motion to dismiss.  See Johnson v. Federal Loan Mortgage Corporation, Case No. 7:12cv00507 (W.D.Va. 2013).

The facts of the case are as follows.  The homeowner alleged that the bank's notice of acceleration was deficient because it failed to include language required by her deed of trust.  The deed of trust said that that the notice of acceleration shall, among other things, "inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale."  According to the homeowner, the notice that she received failed to track this language from the Deed of Trust because it did not notify her of her right to bring a court action.  Therefore, the homeowner alleged that notice of acceleration constituted a breach of contract.

In analyzing this claim, the Court noted that a deed of trust was a contract and that a deficient notice of acceleration could constitute a breach of contract.  Recognizing the difference between a material and nonmaterial breach of contract, however, the Court noted that "immaterial differences in language will not nullify a substantially conforming notice of acceleration."  The Court then ruled that although the notice of acceleration contained different language than what was required in the deed of trust, the notice was in effect the "functional equivalent."  Accordingly, the Court dismissed the breach of contract claim.

This certainly seems like the right result to me.  One of the important distinctions between a material and immaterial breach of contract is that a material breach excuses performance, whereas an immaterial breach does not excuse performance, but only gives rise to a cause of action for damages.  The homeowner did not appear to allege any damages as a result of the different language in the notice of acceleration.  For example, it does not appear that the homeowner alleged that she had a valid defense to foreclosure which she would have asserted in a court action had the notice of acceleration informed her of the right to bring a lawsuit.  Moreover, it appears that the notice of acceleration that was delivered conformed with all of the requirements of Virginia law.

Magistrate Judge's Opinion Prompts Inspector General Investigation Into Attorney General's Office

An article in yesterday's Daily Progress stated that "Virginia' inspector general is still investigating whether an attorney general staffer wrongfully advised energy company lawyers in a on going federal court battle with regional landowners seeking natural gas royalties."

The federal lawsuit is a class action between landowners and two energy companies regarding $28 million in natural gas royalties which are currently held in escrow accounts by the State of Virginia.  Virginia law allows energy companies, in some circumstances, to siphon natural gas below multiple tracts of land.  The royalties are then placed in escrow pending a determination of who owned the gas and who is entitled to the royalties.  The Attorney General's office is involved to defend the constitutionality of the Virginia Gas and Oil Act.

The investigation into the Attorney General's office appears to have been prompted by a comment from Magistrate Judge Pamela Meade Sargent expressing shock that an attorney from the AG's office was "actively involved in assisting" the energy companies "with the defense of these cases, including offering advice on and providing information for use on the motions before the court."  This comment was made in the Magistrate Judge's Report and Recommendation granting in part Plaintiff's motion for class certification.

This story has been the subject of numerous newspaper reports and editorials.

It will be interesting to see the inspector general's report.  It is not uncommon for lawyers representing different parties in a case to share information with each other, especially if their interests align.  Yet, the criticism in this case seems to be that the AG's office was improperly taking sides in a civil case and the suggestion (by some) that the AG's office was being influenced by campaign contributions to current Attorney General and gubernatorial candidate Ken Cuccinelli.