Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

ABC makes and distributes soft drinks and other non-alcoholic beverages for Dr Pepper Snapple Group and leased a Hazelwood, Missouri facility. After concluding that its rent was too high, it exercised an option to buy the property. Appraisals valued the property without the lease at $2.75 million, and ABC determined that the fair market value with the lease would be at least $9 million. ABC bought the property for more than $9 million. On its tax return, ABC reported $2.75 million as its cost of acquiring the property and deducted $6.25 million as a business expense for terminating the lease. The IRS disallowed the deduction and assessed a tax deficiency; ABC paid the deficiency and sued for a refund. On summary judgment, the district court ruled in favor of ABC. The Sixth Circuit affirmed. Because the lease terminated when ABC acquired the property, the property was not acquired subject to a lease, and I.R.C. section 167(c)(2) does not apply to bar ABC’s deduction. The government conceded that ABC could deduct a lease termination payment if it first paid to terminate the lease and then purchased the property. The court declined “to elevate this transaction’s form over its substance.” View "ABC Beverage Corp. v. United States" on Justia Law

In 2005, Starr’s husband, Bernard, invested millions in Atlanta-area residential developments. Following the 2008 financial crisis, the investments were $10 million in debt. Bernard sought to refinance and approached Bryan, a BB&T Bank loan officer. BB&T concluded that Bernard and his company were not independently creditworthy to refinance both loans. To refinance one loan, Bernard agreed to pledge 40,000 shares of BB&T stock and a corporate debenture. Starr agreed to pledge her independently-owned BB&T shares, for a total of $8.8 million of collateral. Bernard executed a personal guaranty. Bryan asserts that he suggested that Bernard’s daughters provide collateral or a guaranty and that Bernard suggested that Starr act as guarantor. Bernard insists that Bryan demanded that Starr provide a guaranty. BB&T’s summary of its requirements reads: “[Starr] will be required to co-sign the notes.” Starr never spoke with anyone from BB&T; Bernard told her that BB&T required her signature. Starr claims she felt tremendous pressure to sign. The loan for $6.4 million, plus interest, closed with each executing a guaranty. As of the 2010 due date, they had paid less than $2 million of the principal. BB&T’s successor sued, including a claim of breach of guaranty against Starr. Starr asserted that her guaranty was unenforceable as violating the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 and Regulation B’s prohibition on requiring spouses to guarantee loans. The district court held that Starr could not raise violations of ECOA and Regulation B as an affirmative defense. The Sixth Circuit vacated, holding that the violations can be asserted as an affirmative defense of recoupment.View "RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC" on Justia Law

Payton would find an accomplice, usually a woman, addicted to drugs or engaged in prostitution, and would convince this accomplice to rob a bank in exchange for part of the proceeds. He would provide a costume, a threatening note to give to the teller, bags, and a toy gun, would perform reconnaissance, and would drop off and pick up his accomplice. The first time he was caught, Payton (then 26 years old) was convicted for six bank robberies and sentenced to 10 years in prison. Released in 2002, he was arrested later that year for robbing seven more banks using his accomplice method. Released again in 2011, he was arrested later that year for robbing four more banks. Payton turned 46 years old before his sentencing hearing. Taking into account Payton’s criminal record, the seriousness of his crime, and recidivism, the presentence report recommended a sentence within the Guidelines range of 210 to 262 months. Neither party objected. The district court found the report accurate. The government urged a sentence of “at least” 300 months. Payton’s counsel requested a sentence within the Guidelines range, arguing that Payton would be released between 63 to 68 years old, and would present little threat. The judge sentenced Payton to 540 months after discussing the factors listed in 18 U.S.C. 3553(a), focusing on Payton’s recidivism and the threat he posed. The Sixth Circuit found the sentence unreasonable and remanded. View "United States v. Payton" on Justia Law

Plaintiffs are non-profit entities affiliated with the Catholic Church who have religious objections to certain preventive care standards under the Patient Protection and Affordable Care Act, 42 U.S.C. 300gg-13, particularly the requirement that their employer-based health insurance plans cover all FDA-approved contraception, sterilization methods, and counseling. All are eligible for either an exemption from the requirement or an accommodation to the requirement, through which the entities will not pay for the contraceptive products and services and the coverage will be independently administered by an insurance issuer or third-party administrator. Nonetheless, they alleged that the contraceptive-coverage requirement violated the Religious Freedom Restoration Act; the Free Speech, Free Exercise, and Establishment Clauses of the First Amendment; and the Administrative Procedure Act. Two district courts denied the appellants’ motions for a preliminary injunction. The Sixth Circuit affirmed, finding that the plaintiffs did not demonstrate a strong likelihood of success on the merits of any of their properly raised claims; because they did not demonstrate a strong likelihood of success on the merits of their claims, they also do not demonstrate that they will suffer irreparable injury without the injunction. View "MI Catholic Conference v. Sebelius" on Justia Law

A purported class action alleged that Beachwood Hair Clinic violated the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227, by disseminating more than 37,000 unsolicited fax advertisements in 2005 and 2006. Facing more than $18 million in statutory damages, Beachwood and its insurer, Acuity, agreed to a $4-million class settlement with the Ohio-based class representative, Siding. The settlement stipulated that separate litigation between Acuity and Siding would resolve a $2-million coverage dispute under Beachwood’s policy. Siding sought a declaratory judgment under Beachwood’s policy. The district court granted summary judgment to Acuity denying coverage. The Sixth Circuit vacated, finding that Siding did not establish diversity jurisdiction, which requires an amount in controversy greater than $75,000, 28 U.S.C. 1332(a). Unable to identify a singular interest exceeding $75,000 in the remaining $2-million coverage dispute, Siding sought to aggregate its interest with putative class members to satisfy that requirement, or to have the court consider the value of the policy dispute from Acuity’s perspective: $2 million. Acuity suggested ancillary jurisdiction via the settlement judgment in the underlying class action. The court rejected all arguments. View "Siding & Insulation Co. v. Acuity Mut. Ins. Co." on Justia Law

Rafters Bar and Grill, a golf-course restaurant in Canton, Ohio, offers music and dancing, sometimes turning on a recording, sometimes bringing in live performers, but it hosts performances of the music without getting the copyright owners’ permission. BMI, an organization of songwriters and composers that licenses music and collects royalties on behalf of its members, sent Rafters more than a score of letters, warning the restaurant not to infringe its copyrights and offering to license its music. It got no response. BMI sued for copyright infringement. Roy, the owner of Rafters, argued that he did not perform any of the copyrighted music. The bands that played at the restaurant and the people who turned on the recordings did that. The district court granted BMI summary judgment. The Sixth Circuit affirmed, noting that a defendant becomes vicariously liable for a direct infringement of a copyright “by profiting from [the] infringement while declining to exercise a right to stop or limit it.” A defendant’s ignorance about the infringement or the performances does not negate vicarious liability. View "Broadcast Music, Inc. v. Meadowlake Ltd." on Justia Law

In 2007, the Easthams entered into a five-year lease with Chesapeake, granting the right to extract oil and gas from the Easthams’ 49 acres in Jefferson County, Ohio. The Easthams were granted a royalty of one-eighth of the oil and gas produced from the premises. Until a well was commenced on the premises, the Easthams were entitled to “delay rental” payments of $10 per acre annually. The lease stated “Upon the expiration of this lease and within sixty (60) days thereinafter, Lessor grants to Lessee an option to extend or renew under similar terms a like lease.” In 2012, Chesapeake filed a notice of extension with the County Recorder and sent the Easthams a letter stating that it had extended the lease on the same terms for an additional five years, with a delay rental payment for $490.66. The Easthams later claimed that they did not read and did not understand the lease, but were not pressured into signing it. They filed a class action, seeking a declaration that the lease expired and that title to the oil and gas underneath the property be quieted in their favor. They claimed that the agreement did not give Chesapeake the option to unilaterally extend, but required that the parties renegotiate at the end of the initial term. The district court entered summary judgment for Chesapeake, concluding that the lease’s plain language gave Chesapeake options either to extend the lease under its existing terms or renegotiate under new terms. The Sixth Circuit affirmed View "Eastham v. Chesapeake Appalachia, L.L.C." on Justia Law

In 2002, Freeze was hired by the Decherd Police Department. He became Chief of Police in 2007. Colvin, Freeze’s brother-in-law, was hired as a patrolman in 2007. The Board of Aldermen is responsible for hiring and firing. During a February 2009 meeting, the Aldermen told Freeze that they “might need to just let [him] resign as the Chief and put [him] in as a sergeant at $15 an hour.” Freeze stated that “if it’s going to keep my job, yes, I will take a demotion.” After several confrontations during a March meeting, the Board terminated the employment of Colvin and Freeze. The city did not provide notice that terminations would be considered at the meeting, but claims that it provided oral notice that “general job performance may be discussed.” Neither officer was allowed to present witnesses or evidence. The separation notice regarding Freeze reads: “No reason given.” The city’s 1999 Personnel Resolution designates every city worker as an at-will employee with no property right in employment, but a 2000 Police Resolution states that “discipline shall be for cause and shall follow the basic concepts of due process.” The district court dismissed, finding that the officers possessed no property interest in continued employment. The Sixth Circuit reversed, based on the unequivocal language of the Police Resolution. View "Freeze v. City of Decherd" on Justia Law

Thomas and Jennifer married and purchased a family home with a first mortgage, then obtained a second mortgage. In a 2003 divorce consent decree, Thomas agreed to relinquish any interest in the home. Jennifer agreed to assume and hold him harmless from the obligation to pay both mortgages. Thomas agreed to pay child support. The couple remarried in 2004, but, in 2007, this marriage also ended in divorce. The 2007 consent decree waived spousal support; Thomas again agreed to give up any interest in the house, which he had never conveyed under the 2003 decree. Jennifer agreed to assume the first mortgage. Thomas's child support obligation was reduced and they agreed to split the second mortgage obligation. Thomas deeded his interest in the house. A $8,082.37 judgment lien was not addressed in the 2007 decree although it attached to the property before the second divorce. Jennifer sold the house in 2008. The first and second mortgage debts were satisfied. Jennifer negotiated release of the judgment lien for $5,000.00 and paid $836.14 to close the transaction. The state court entered an order in the 2007 divorce proceeding, requiring Thomas to reimburse Jennifer $7,500.00 for the second mortgage and $5,000.00 for the judgment lien. Thomas filed a petition for Chapter 13 bankruptcy relief, listing an unsecured priority claim for child support and a $15,000.00 unsecured claim on Schedule F. Jennifer asserted a priority unsecured claim for “[a]limony, maintenance, or support” of $12,500.00 for the second mortgage and judgment lien debts. Thomas objected, arguing that the claim was “satisfied when the real estate was sold,” and not a domestic support obligation. The bankruptcy court applied the Calhoun test and found Jennifer’s claim was in the nature of “alimony, maintenance or support.” The Sixth Circuit Bankruptcy Appellate Panel affirmed. View "In re: Thomas" on Justia Law

The Gallia County (Ohio) Public Defender Commission contracted with the non-profit Corporation for defense attorneys to represent indigent criminal defendants. The Corporation hired Bright, who represented R.G. before Evans, the county’s only trial judge. Bright negotiated a plea agreement, but R.G. hesitated during the plea colloquy. “Mere seconds” later, R.G. informed Bright and Evans that he would take the deal after all. Evans refused. Bright and the prosecutor met with Evans to convince the judge to accept R.G.’s plea. He refused. In pleadings, Bright criticized Evans’s policies as “an abuse of discretion,” “unreasonable,” “arbitrary … unconscionable.” Bright’s language did not include profanity and did not claim ethical impropriety. Evans subsequently contacted the Office of Disciplinary Counsel and filed a grievance against Bright and filed a public journal entry stating that Bright’s motion, although not amounting to misconduct or contempt, had created a conflict. He ordered that Bright be removed from the R.G. case. He then filed entries removing Bright from 70 other felony cases. The Corporation terminated Bright’s employment, allegedly without a hearing or other due process. Bright sued Evans, the Board, the Corporation, and the Commission. The district court concluded that Evans was “not entitled to absolute judicial immunity because his actions were completely outside of his jurisdiction.” The court held that Bright failed to sufficiently plead that the Board or the Commission retaliated against him for exercising his constitutional rights or that liability attached under the Monell doctrine, then dismissed claims against the Corporation. The Sixth Circuit reversed with respect to Evans. While Evans’s conduct was worthy of censure, it does not fit within any exception to absolute judicial immunity. The court affirmed dismissal of claims against the Board and Corporation; the First Amendment offers no protection to an attorney for his speech in court.View "Bright v. Gallia Cnty." on Justia Law