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

Star, a mine staffing company, bought workers’ compensation insurance from Granite. Early in each policy year, Star gave Granite an estimate of its total payroll, which Granite used to calculate an estimated premium. Star paid the preliminary installment. After each year, Granite audited Star’s records to produce an exact payroll number, then charged additional premiums or made reconciliation payments. A 2018 audit revealed that Star had significantly underestimated its 2017 payroll, as it had for 2016. To avoid a similar situation with the 2018 policy, Granite adjusted its estimated premium for Star halfway through the year. In accordance with industry guidelines, Granite increased Star’s 2018 estimated premium to reflect 2017’s actual payroll numbers, giving Star four weeks to pay the difference. Star never paid. Granite canceled the policy three months early. Star closed its business. To determine Star’s final premium—and whether it owed a reconciliation payment—Granite needed to complete its year-end audit. Star would not comply. Granite’s final bill, including the updated estimated premium, prorated for early cancellation, was $1,485,323, including an “audit noncompliance charge” (double 2018’s total estimated premium).Granite sued for breach of contract. The Sixth Circuit affirmed summary judgment for Granite, rejecting Star’s argument that the noncompliance charge is an unenforceable penalty. Kentucky’s insurance regulator approved the rates that Kentucky insurance companies charge, barring their review. View "Granite State Insurance Co. v. Star Mine Services, Inc." on Justia Law

Under 26 U.S.C. 170(h), taxpayers who donate an easement to a land conservation organization may be eligible to claim a charitable deduction on their federal income tax returns if the easement’s conservation purpose is guaranteed to extend in perpetuity. A Department of Treasury rule, 26 C.F.R. 1.170A-14(g)(6), provides that if unforeseen changes to the surrounding land make it “impossible or impractical” for an easement to fulfill its conservation purpose; the conservation purpose may still be protected in perpetuity “if the restrictions are extinguished by judicial proceeding and all of the donee’s proceeds . . . from a subsequent sale or exchange of the property are used by the donee” to further the original conservation purpose. Proceeds are calculated by a formula in 1.170A-14(g)(6)(ii), the “proceeds regulation.”After the IRS denied its charitable deduction, Oakbrook challenged the proceeds regulation, arguing that, in promulgating this rule, Treasury violated the notice-and-comment requirements of the Administrative Procedure Act; that Treasury’s interpretation of section 170(h) is unreasonable; and that the proceeds regulation is arbitrary. The Sixth Circuit affirmed the Tax Court in rejecting those arguments. Oakbrook’s deed to the conservation trust violated the proceeds regulation by ascribing a fixed rather than proportionate value upon judicial extinguishment, and by subtracting from this amount any post-donation improvements that Oakbrook made to the land. View "Oakbrook Land Holdings, LLC v. Commissioner of Internal Revenue" on Justia Law

The Army Corps of Engineers designed a stormwater diversion system for Pond Creek, which drains into a large watershed in the Louisville area. It included Pond Creek’s tributary, Fishpool Creek, and a nearby basin, Vulcan Quarry. The Corps suggested connecting the two through a spillway. The Corps partnered with Metro Sewer District (MSD). MSD filed an eminent domain action. The court awarded MSD only an easement over the quarry and refused to impose water treatment obligations on the easement. MSD’s stream construction permit from the Kentucky Natural Resources and Environmental Protection Cabinet did not require treatment of the water or cleaning up any pollutants.In 2000, the project was completed. South Side bought Vulcan Quarry in 2012 and claimed that MSD had exceeded its easement by diverting all of Fishpool Creek. In 2018, South Side sent MSD notice of its intent to sue for violations of the Clean Water Act’s (CWA) “prohibition on the dumping of pollutants into U.S. waters,” the easement, and Kentucky-issued permits. The district court dismissed certain claims as time-barred and others because the notice failed to identify sewage as a pollutant, provide dates the pollution took place, and describe the source of the pollution.The Sixth Circuit affirmed. MSD did not need a CWA discharge permit when it built the spillway and does not need one now. The waters of Fishpool Creek and Vulcan Quarry are not meaningfully distinct; the spillway is the kind of water transfer that is exempt from the permitting process. View "South Side Quarry, LLC v. Louisville & Jefferson County Metropolitan Sewer District" on Justia Law

Zheng became a permanent U.S. resident in 2004. He was a professor at the University of Southern California, Pennsylvania State University, and The Ohio State University and performed research under National Institute of Health (NIH) grants. Zheng had financial and information-sharing ties to Chinese organizations and received grants from the National Natural Science Foundation of China. Including that information on NIH applications would have derailed Zheng’s funding prospects, so Zheng clouded his ties to China. By 2019, the FBI began investigating Zheng. Zheng left for China but federal agents apprehended him in Anchorage.Zheng pleaded guilty to making false statements, 18 U.S.C. 1001(a)(3). Rejecting an argument that the research Zheng completed offset the amount of money lost, the district court calculated a Guidelines range of 37-46 months and sentenced Zheng to 37 months. On appeal, Zheng argued that his counsel was ineffective by not seeking a downward variance based on Zheng’s immigration status as a deportable alien, which would have an impact on the execution of his sentence. The Sixth Circuit dismissed, noting that the record was inadequate to establish ineffective assistance for the first time on direct appeal. Nothing in the record shows counsel’s reasons for making certain strategic decisions or why he advanced one argument over another. View "United States v. Zheng" on Justia Law

At the Detroit Detention Center, officers searched Lipford and did not find any contraband. Lipford denied being under the influence of drugs or carrying any medication. At 9:48 p.m., officers placed Lipford in a glass-walled room used to hold multiple detainees awaiting arraignment. Lipford nodded off. He slid to the floor at 11:02 p.m. Lipford laid on the floor motionless until 2:50 a.m. when he was found unresponsive. He was pronounced dead at 3:50 a.m. Hospital staff found cocaine, heroin, and fentanyl, concealed in Lipford’s rectum. The jail’s operating procedures required that officers conduct rounds every 30 minutes; “physically open the cell doors" and ensure that detainees are actually there; and check "that every detainee is living and breathing.” Although Officer Lewis ostensibly made his rounds that night, he did not physically enter the video-arraignment room nor speak with the detainees. Avoiding interaction with detainees was apparently common because detainees would become agitated at officers waking them up.The district court dismissed claims by Lipford’s estate against several defendants. The Sixth Circuit affirmed summary judgment in favor of Lewis. The estate did not establish that a reasonable officer in Lewis’s position would have known that Lipford was potentially concealing drugs, subjecting himself to an excessive risk of harm, and that Lewis’s ignoring this risk was objectively reckless. Failure to follow internal policies does not, alone, equal deliberate indifference. View "Hyman v. Lewis" on Justia Law

Blanchet sold Charter’s services door-to-door. Blanchet received Charter’s standard maternity leave, short-term disability benefits, and Family and Medical Leave Act (FMLA) benefits until September 2016, but, suffering from postpartum depression, requested additional leave. Blanchet exhausted FMLA leave, exhausted short-term disability leave, then had long-term disability leave through February 1, 2017, as an Americans with Disabilities Act (ADA), 42 U.S.C. 12112(a), accommodation. Sedgwick, a third-party administrator, was responsible for all communications with employees who requested leave and customarily delayed paperwork long after initial verbal approvals. In February 2017, Sedgwick received a letter from Blanchet’s doctor, indicating that Blanchet was not capable of working. Blanchet requested accommodation through April 3. Sedgwick representatives reassured Blanchet that her application would be approved. On March 9, Blanchet received a termination letter “effective January 10, 2017.” She received an approval letter for extended leave 10 days later. The next day, Charter’s HR officer notified Sedgwick that the extension was approved.The Sixth Circuit reversed the dismissal of Blanchet's ADA suit. Genuine issues of material fact remain regarding Blanchet’s disability discrimination claim. A reasonable juror could find that Blanchet would be otherwise qualified for her job after her medical leave accommodation and that Blanchet’s proposed accommodation was reasonable, given that Charter considered it reasonable. Charter did not "engage" with Blanchet concerning her accommodation request. View "Blanchet v. Charter Communications, LLC" on Justia Law

Based on convictions for cocaine possession and facilitating second-degree murder Bailey was incarcerated until 2005. In 2008, Bailey was convicted for the possession and distribution of crack and powder cocaine, 21 U.S.C. 846, 841(a)(1), (b)(1). Because Bailey had a prior felony drug conviction, he was subject to an enhanced mandatory minimum of 20 years’ imprisonment for the (b)(1)(A) offenses. Bailey was also classified as a career offender, resulting in a Guidelines range of 360 months to life imprisonment. The court imposed a 360-month sentence. The 2010 Fair Sentencing Act increased the quantity of cocaine base necessary to trigger certain statutory penalties; the 2018 First Step Act allows courts to apply the change retroactively.Bailey sought a reduced sentence, citing his efforts at rehabilitation, his continuous employment during his incarceration, and his incident-free record in custody. The district court denied Bailey’s request, finding that the First Step Act did not affect Bailey’s guideline range as a career offender and that his sentence was already at the bottom of his Guidelines range. The Sixth Circuit affirmed. The district court had the authority to reduce Bailey’s sentence, but neither Act required it to do so; not reducing his sentence was not an abuse of discretion. View "United States v. Bailey" on Justia Law

The Adamses want to build a home on their Michigan property, but their neighbors, the Schulers, believe that their plans violate a restrictive covenant running with the lakefront land. A state court granted the Schulers a preliminary injunction stopping the construction. After the court’s order, the Adamses filed a third-party complaint against the U.S. Army Corps of Engineers, which had granted a permit that authorized the clearing of over 12,000 square feet of wetlands and the construction of the larger home.The Corps removed the case to federal court under 28 U.S.C. 1442(a)(1), the federal-officer removal statute. The Sixth Circuit dismissed the Adamses’ appeal from the state court injunction for lack of appellate jurisdiction, stating that it has jurisdiction only over injunction orders “of” district courts, not state courts. The court noted that a district court may, after removal, modify or dissolve a state court’s injunction if the injunction conflicts with federal standards; the district court’s action would be reviewable. View "Schuler v. Adams" on Justia Law

IRS Notice 2007-83, entitled “Abusive Trust Arrangements Utilizing Cash Value Life Insurance Policies Purportedly to Provide Welfare Benefits” designates certain employee-benefit plans featuring cash-value life insurance policies as listed “tax avoidance" transactions. A cash-value life insurance policy combines life insurance coverage with a cash-value investment account. The IRS believes these transactions run the risk of allowing small business owners to receive cash and other property from the business “on a tax-favored basis.” The regulation requires reporting of transactions involving cash-value life insurance policies connected to employee-benefit plans.Taxpayers claimed that the IRS skipped the notice-and-comment process before promulgating this legislative rule as required by the Administrative Procedure Act, 5 U.S.C. 551, 553–59, 701–06. The Sixth Circuit reversed the district court and found the regulation invalid. The Notice was a “legislative rule,” with the “force and effect of law,” not a policy statement or interpretation. Congress did not expressly exempt the IRS from the APA’s requirements. View "Mann Construction, Inc. v. United States" on Justia Law

Doctors Hills, Alqsous, Elrawy, and Al-Madani were convicted of offenses connected to their employment at a publicly-owned Cuyahoga County hospital, MetroHealth, which receives federal funds. Hills solicited and received bribes from Alqsous, Al-Madani, and Elrawy in exchange for favorable treatment with respect to their employment. Alqsous, Al-Madani, and Sayegh solicited and/or accepted bribes from applicants to MetroHealth’s dental residency program. Hills and an unindicted business partner operated OHE to provide training for dentists with discipline or performance issues. Some of OHE’s business was accomplished using MetroHealth personnel, equipment, or facilities without permission or compensation. Hills received and Alqsous and Al-Madani offered or paid kickbacks for referrals to private clinics. There were recordings of discussions concerning warning a resident to stay quiet, preparing 1099 forms to hide the kickbacks, and telling a grand jury witness to “forget” seeing envelopes of cash. Hills also arranged for his attorney to receive extensive dental work without charge and assigned MetroHealth residents to work at a private clinic.The district court imposed aggregate terms of imprisonment of: 188 months (Hills), 151 months (Alqsous), and 121 months (Al-Madani). They were also ordered to pay restitution, some jointly and severally, in amounts approaching $1 million. The Sixth Circuit affirmed, rejecting challenges to the sentences, the loss calculation, the sufficiency of the evidence, the jury instructions, the denial of a motion to suppress, and other procedural rulings. View "United States v. Alqsous" on Justia Law