On July 24th, the California Appellate Court ruled on what distinguishes an “employee” from a “volunteer” for purposes of FEHA discrimination claims in Estrada v. City of Los Angeles (2013) — Cal.App.4th–. The trial court held held that Estrada, a former volunteer Reserve Police Officer for the City, was not an employee, but merely a volunteer. The Appellate Court affirmed.

Estrada became a reserve officer for the Los Angeles Police Department (LAPD) in 1990. While reserve officers are volunteers who are not compensated for their time, the City deems such officers “employees” for the limited purpose of extending workers’ compensation benefits to them in the event they are injured while performing their duties. This exception is codified in the Los Angeles Administrative Code, which states that such volunteer officers shall not be deemed an employee but for this one purpose- to receive workers’ compensation benefits. In his application, Estrada acknowledged that he was not a regular salaried officer and was not entitled to compensation.

In 1995 and 1996, Estrada was involved in a traffic collision and sustained leg, back, and shoulder injuries. In both cases he obtained workers’ compensation benefits. In 2004, the Food and Drug Administration (FDA) served a search warrant on Estrada’s personal nutritional supplement company which was followed by the filing of a complaint by the Department’s Internal Affairs Division. The complaint alleged that Estrada illegally sold certain products. Pending an outcome of the complaint, Estrada was suspended from his duties with the LAPD. Following the administrative proceedings, the LAPD terminated Estrada in 2007.

In 2009, Estrada filed suit against the City alleging disability discrimination under FEHA. The primary issue to be determined was whether Estrada was an employee or a volunteer for purposes of FEHA.

The Court of Appeals held that an uncompensated volunteer is not an employee. While only employees have the right to bring action under FEHA against their employers, the statutory definition of “employee” is not clear in determining who is an employee, as it merely excludes certain classes of individuals from employee status. The Court then looked at the definition of “employee” contained in the Department of Fair Employment and Housing regulations which defines an employee as “[a]ny individual under the direction and control of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written.” (Cal.Code Regs., tit. 2, § 7286.5, subd. (b).) The Court went on to analyze other California cases, as well as out of state cases, and determined that Estrada’s status as an uncompensated volunteer officer did not render him an employee for purposes of FEHA.

Furthermore, the Court determined that Estrada’s receipt of workers’ compensation coverage and benefits did not alter his status as a volunteer. Pursuant to the terms of the Los Angeles Administrative Code, reserve officers were expressly designated as volunteers and would not be deemed employees for any purpose other than to receive workers’ compensation benefits. This provision was provided by the City despite the fact that the Workers’ Compensation Act excludes from the definition of employee “[a]ny person performing voluntary service for a public agency or a private, nonprofit organization who receives no remuneration for the services other than meals, transportation, lodging, or reimbursement for incidental expenses.” (Lab.Code, § 3352, subd. (i).) The City’s decision to provide such benefits to its volunteers in the event they sustained an injury did not convert the volunteers to employees.

The Court held that Estrada was not an employee, but merely a volunteer, for purposes of FEHA and affirmed the trial court’s decision.

This case is beneficial to employers, as it clarifies the differences between a volunteer and employee, as well as the rule that some benefits may be provided to a volunteer without elevating the volunteer’s status to that of employee. However, it is important that employers act within the legal limitations to ensure their volunteers are properly classified and not inadvertently converted to employee status.

*This article was originally posted on August 15, 2013, on the Jampol Zimet LLP Insurance Defense blog. Click here to read the original article. 

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Class Action Deemed to Be Improperly Certified by Lower Courts


CHICAGO – (March 27, 2013) The Supreme Court this morning reversed the judgment of the Third Circuit Court of Appeals in the case of Comcast v. Behrend, an opinion in alignment with the position of DRI – Voice of the Defense Bar in its amicus brief filed in August of last year. The majority held that the class action in Comcast v. Behrend was improperly certified under Rule 23(b)(3). 

In this case, subscribers sued Comcast Corp. and various Comcast subsidiaries, alleging that Comcast monopolized Philadelphia’s cable market and excluded competition in violation of federal antitrust laws. To constitute a class, plaintiffs proffered an expert damages model that purported to prove each class member’s damages by evidence common to all. Comcast responded that the plaintiffs’ model was incapable of calculating damages for the class because it was based on several erroneous assumptions about the asserted claims, and indeed that common proof of damages is impossible given significant differences among the class members. The district court nonetheless certified the class.

Comcast sought review in the Third Circuit Court of Appeals, which affirmed the certification order after expressly declining to consider Comcast’s contentions. While the Third Circuit acknowledged that, “[t]o satisfy . . . the predominance requirement, Plaintiffs must establish that the alleged damages are capable of measurement on a class-wide basis using common proof,” it nonetheless insisted that “[w]e have not reached the stage of determining on the merits whether the methodology [offered by Plaintiffs] is a just and reasonable inference or speculative.” The court concluded that Comcast’s “attacks on the merits of the methodology” have “no place in the class certification inquiry.” 

In his dissent, Judge Jordan stated in part, “not only have Plaintiffs failed to show that damages can be proven using evidence common to the class, they have failed to show . . . that damages can be proven using any evidence whatsoever—common or otherwise.” 

The Supreme Court held that the Third Circuit erred in refusing to decide whether the plaintiff class’s proposed damages model could show damages on a class-wide basis. Under proper standards, the model was inadequate and the class should not have been certified. The vote was 5–4 with Justices Breyer, Ginsburg, Sotomayor and Kagan dissenting.

Citing the Federal Judicial Center’s Reference Manual on Scientific Evidence, the majority held that “’The first step in a damages study is the translation of the legal theory of the harmful event into an analysis of the economic impact of that event.’ The District Court and the Court of Appeals ignored that first step entirely.”

The Third Circuit’s approach to class certification would have allowed plaintiffs to obtain certification without showing a reasonable likelihood that they will be able to prove their class-wide claims (predominately) by common evidence. This would have significantly lowered class plaintiffs’ burden under Rule 23 and resulted in the certification of many more non-meritorious class actions.
Brief author Jonathan F. Cohn of Sidley Austin LLP, Washington DC, is available for interview or for expert comment through DRI’s Communications Office.
For the full text of the brief, click here.

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As the California Judicial Branch budget crisis deepens, more and more cases will be resolved in mediation rather than in the courtroom. Meanwhile, the rules regarding mediation confidentiality are under close scrutiny.  Currently, lawyers who commit malpractice during mediation are protected by strict confidentiality statues.  Under Evidence Code sections 1119 and 1126, all oral and written communications made in connection with a mediation or mediation consultation generally are absolutely inadmissible and protected from discovery in subsequent civil actions or other noncriminal proceedings, including claims of legal malpractice. Earlier this year, a bill was introduced in the state Assembly that would have created an exception allowing the admission of such evidence in legal malpractice cases. 

In February of 2012, Assembly Bill 2025 (AB 2025) was introduced in response to a 2011 California Supreme Court decision in the case of Cassell v. Sup. Ct. (Wasserman, Comden, Casselman & Pearson, L.L.P.)  In Cassell, the appellant had sued his attorneys for malpractice, claiming they improperly pressured him to accept an inadequate settlement during mediation.  The Court upheld the lower court’s decision to exclude evidence of communications between the appellant and the attorneys, reasoning that mediation confidentiality covered all oral or written communications made for the purpose of or pursuant to mediation, even if their application would preclude a client from seeking redress for attorney malpractice. 

As introduced, Assembly Bill 2025 would have added an exception excluding from protection “communications directly between the client and his or her attorney during mediation if professional negligence or misconduct forms the basis of the client’s allegations against the attorney.”   However, there was much opposition to the bill, which was ultimately withdrawn and replaced in June with another version of 2025 which sent the question to the California Law Revision Commission (CLRC) for study.  (As of this writing, the CLRC website does not list “mediation confidentiality” as an active topic of study, but it is clearly “on deck”.)

In August of 2012, our own Second Appellate District, Division Eight, handed down an unpublished opinion in Hadley v. The Cochran Firm (B233093). The Cochran Firm represented Hadley and seven other plaintiffs in a racial discrimination case against their employer.  The case was apparently settled at mediation; however, the plaintiffs allege that The Cochran Firm induced them to sign a fake confidentiality agreement at the mediation, later fraudulently appending the signature sheet to a settlement agreement that the plaintiffs had not seen. The Court cited Evidence Code 1119 and Cassell, finding that “mediation confidentiality provisions are clear and absolute.”  Even in the face of the egregious facts alleged in Hadley, the notion that “what happens in mediation, stays in mediation,” has held firm.  However, change may be afoot as this issue has already captured the attention of the Legislature, which is awaiting the results of the CLRC study. Change is not likely to come quickly, but stay tuned, because when it comes it could be a game-changer with the potential to expose attorneys to liability for their communications during mediation, just as there is more pressure than ever to mediate rather than litigate.

Jampol Zimet LLP - Insurance Defense Blog originally posted this entry on December 3, 2012. Click here to read. 
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SCOTUS Update - Hadden v. United States

Posted on September 25, 2012 02:05 by Robert H. Wright

The Supreme Court of the United States is meeting today to decide which cert. petitions will be granted for the new term, which formally begins next Monday.  One of the petitions distributed for review at the conference will be that from Hadden v. United States, in which DRI – The Voice of the Defense Bar filed an amicus curiae brief in support of cert.  The issue in the case is whether, under the Medicare Secondary Payer Act, the government is entitled to full reimbursement of its Medicare payments when a beneficiary compromises a tort claim and recovers a reduced amount for medical expenses, or whether the government (like its beneficiary) is entitled to only a proportionate recovery from the settlement.  The petition is listed on the scotusblog.com (a blog devoted to coverage of the Supreme Court) as one of the “Petitions to Watch” at this conference.  Today, at about 9:30 a.m. eastern, the court is expected to release its list of the petitions granted in today’s conference.

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Shortly after the NCAA’s imposition of unprecedented sanctions against Penn State, I wrote in this space about the myth of due process protection in the NCAA arena. Essentially, the NCAA, as a private voluntary association of member institutions, is not a state actor and is not bound by state or federal constitutional constraints. Since NCAA member institutions appear to have validated President Mark Emmert’s unilateral punishment (through the NCAA Executive Committee and Division I Board of Directors), and Penn State consented, affected parties were left with very little recourse. Now, it appears that the Paterno family intends to challenge this notion. For various reasons, the family is unlikely to succeed either through an administrative appeal or in court.

As a threshold matter, the consent decree falls completely outside the normal NCAA procedural process outlined by Article 32. Normally, an appeal cannot occur until a hearing has been conducted, and a decision has been rendered. The Paternos could conceivably circumvent the standard appeals process by arguing that the NCAA did not adhere to its own prescribed procedure, and therefore, an exception should be made allowing for an unconventional appeal as well. With no hearing, however, there can be no subsequent appeal of a decision based on the same.

Even assuming, arguendo, that an appeal would be permitted from a procedural standpoint, the family simply has no standing to appeal. Counsel for the Paterno family has stated the opposite, based on the fact that Joe Paterno’s name is found in the Freeh Report as well as the consent decree. This is a misguided assertion. For an “involved individual” such as Paterno to appeal, he would have had to make an in-person appearance before the Committee on Infractions. Bylaw 32.10.1.2. To reiterate, the Committee has never been involved here. The standing argument on behalf of a family of an affected individual is even more attenuated, as no member of the Paterno family would even qualify as an involved individual. To analogize: would the NCAA allow the family of an ineligible student-athlete to bring its own appeal to the Student-Athlete Reinstatement Committee for related pecuniary or reputational damage? Clearly not.

The Paterno family’s hopes of recompense in a court of law may be equally slim. The Paternos may bring suit on behalf of the late Joe Paterno seeking toprohibit the NCAA from vacating his wins, and ordering the NCAA to follow its own procedures, thereby invalidating the consent decree. The Paterno family could contend that the consent decree is unenforceable as a whole because it had a significant adverse impact on Paterno as a third-party affected by a decree that neither Paterno nor his family consented to. But setting aside, for a moment, the fact that courts look with skepticism upon challenges to NCAA decisions, and separating the family’s claim from the arguments advanced by some members of the Board of Trustees, the Paternos simply cannot show sufficient harm warranting the issuance of an injunction against enforcement of the NCAA decision.

Pennsylvania courts will only grant a preliminary injunction when relief is necessary to prevent immediate and irreparable harm where the aggrieved party cannot be adequately compensated by damages. Summit Towne Ctr., Inc. v. Shoe Show of Rocky Mount, Inc., 786 A.2d 240 (Pa. Super. Ct. 2001).Courts have defined an injunction as an extraordinary remedy that should be issued with caution. Big Bass Lake Cmty. Ass’n v. Warren, 950 A.2d 1137, 1144-45 (Pa. Commw. Ct. 2008).

By any discernable standard, the diminution of Paterno’s win total does not constitute a harm warranting redress, in part because Paterno’s reputation has already been significantly tarnished by the entire ordeal, but primarily because no “show cause” order was ever issued against Paterno. If the NCAA  had issued a show cause order as part of this major infractions case, the irreparable nature of harm would be more evident, since it would result in a loss of employment opportunity. See Sanchez v. Dubois, 291 F. App’x 187 (10th Cir. 2008) (holding that since the secondary infractions case was unpublished, there was no deprivation of a liberty interest, but suggesting that a show cause order preventing employment could be sufficient). But since the NCAA did not issue such an order, and given that Paterno has since passed, this argument becomes moot. Likewise, an equitable remedy would be unnecessary to prevent immediate future harm for the same reasons. Barring a successful challenge to the consent decree by the University, the Paterno family is likely going to be bound by its contents and its reputational effects.

The same conclusion is likely to be reached in the appeal filed by individual members of the Board of Trustees. The Board members contend that the NCAA violated their “fundamental” due process rights, but again, this is a misconceived notion. The Board members further argue that the consent decree is null and void since President Rodney Erickson lacked the legal capacity to agree to the sanctions and did not properly consult the Board. Even if true, this likely has no bearing on the NCAA’s ruling, and similarly, a court would likely find that Erickson was acting with apparent or actual authority to bind the University. The Board may elect to take internal action against Erickson and is well within its rights to do so, but it is difficult to foresee a scenario that would result in a re-adjudication of the punishment rendered against Penn State that would produce a more favorable result for Happy Valley. Given the reputational damage that the University has already suffered, perhaps that is for the best. 

As originally published on Sports Law Blog  Hat tip to law clerks Brian Konkel and Jane Kwak for their assistance on this piece.

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Until now, there has been a split of appellate authority in New York concerning what a prospective purchaser must show in seeking damages for a seller’s repudiation of a contract for the sale of real property. It is the general rule that a prospective purchaser seeking specific performance of a real estate contract must demonstrate that it is “ready, willing and able to close.” However, there has been a split of authority concerning whether the purchaser must demonstrate that it is “ready, willing and able” to close in seeking damages for seller’s anticipatory breach of contract.

In Pesa v. Yoma Development Group, Inc. et al., 18 N.Y.3d 527, … N.Y.S.2d … (Feb. 9, 2012), the New York State of Appeals examined the issue whether prospective buyers in a damages suit must show that they were “ready, willing and able” to close the transaction – that is, but for the seller’s repudiation, the transaction could and would have closed. In reversing the Appellate Division, Second Department, the Court held that the burden of proof was the “real question” in a case like this:

"Should the buyers be required to show they would and could have performed? Or should the seller have the burden of showing that they would not or could not? Since the buyers can more readily produce evidence of their own intentions and resources, it is reasonable to put the burden on them."

To New York's high court, its conclusion was "supported by common sense" Thus, the Court of Appeals held that the buyers were not entitled to summary judgment and that issues of fact needed to be resolved, in favor of the buyers, before the buyers could be found to be actually “ready, willing and able.” In the instant case, for example, the buyers needed to demonstrate that they could secure a mortgage commitment within the required sixty day period.

The take-away from this decision is that buyers seeking redress for a seller’s repudiation of a real estate contract now have the same burden of proof whether they are seeking damages or specific performance.

This article was originally published in the Toxic Tort Litigation Blog of EpsteinBeckerGreen
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Private attorneys representing government entities are entitled to assert qualified immunity as a defense to civil rights claims, the U.S. Supreme Court unanimously ruled on Tuesday in Filarsky v. Delia.  The Court’s decision allows private attorneys to rely on the same protections that their public counterparts use.


The decision reverses a ruling of the Ninth Circuit Court of Appeals that held a private attorney could not rely on qualified immunity.

The City of Rialto, California hired a private attorney to conduct an internal affairs investigation of a firefighter taking sick leave after cleaning up a toxic spill. The firefighter’s superiors suspected that he was not ill because he had been the subject of disciplinary action immediately prior to the spill.

The firefighter claimed that he was forced to allow a warrantless inspection of his home as part of the investigation.  He sued both the City and the attorney who conducted the investigation under 42 U.S.C. § 1983, claiming violations of his civil rights. 

Section 1983 is the enforcement arm of the Fourteenth Amendment, which guarantees equal protection of rights under federal and state laws, and establishes a cause of action against persons who violate constitutional rights under color of state law.

Speaking for a unanimous Court, Chief Justice John G. Roberts, Jr. cited historical examples of the protections available to persons who worked for the government when Congress passed the statute in 1871.  He concluded that the protections provide did not vary depending on whether the person worked full time or part time for the government.

“The government’s need to attract talented individuals is not limited to full-time public employees,” the Chief Justice wrote.  “Indeed, it is often when there is a particular need for specialized knowledge or expertise that the government must look outside its permanent workforce to secure the services of private individuals.”

The Court noted that the private lawyer had specialized experience in conducting internal affairs investigations, and that the City had no permanent employees with comparable qualifications. 
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Supreme Court Hears Glaxo Overtime Pay Case

Posted on April 17, 2012 05:54 by Scott Gibson

The U.S. Supreme Court heard oral argument Monday on the hotly questioned issue of whether pharmaceutical sales representatives are subject to the outside sales exemption under the Fair Labor Standards Act.  

The case, Christopher v. SmithKline Beecham, Corp., challenges the Ninth Circuit’s decision that sales representatives were subject to the outside sales exemption of the FLSA.  That decision conflicts with a prior decision of the Second Circuit holding that pharmaceutical sales reps are entitled to overtime compensation.

The reps – and the Department of Labor – argue that they are not subject to the exemption because they do not interact with the patients and hospitals that ultimately purchase the medications from wholesalers.  Rather, they promote medications to physicians, who write prescriptions for their patients.
The case impacts employment conditions of tens of thousands of sales representatives, and could give rise to astronomical claims for unpaid overtime compensative.  In January, for example, Novartis agreed to pay $99 million to settle a similar case after receiving an adverse ruling on appeal.
As important as the overtime issue is, the case raises a second issue that could prove to be more wide reaching in its effect, specifically, the deference owed to the Secretary of Labor’s interpretation of regulations.

The Supreme Court should issue its decision in June.
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On January 23, 2012, the Supreme Court issued a unanimous opinion in the case of National Meat Association v. Harris, No. 10-224.  

In its decision, the Court reversed the Ninth Circuit Court of Appeals, reasoning that the Federal Meat Inspection Act (“FMIA”), 21 U.S.C 601, et seq., expressly preempts inconsistent state law. This decision is the latest in a long line of Supreme Court opinions that have historically and consistently affirmed the preemptive effect of of the FMIA. 

The FMIA governs the production and distribution of meat products in interstate commerce.  The Act is enforced by the United States Department of Agriculture’s Food Safety Inspection Service (“FSIS”), and requires continuous, on-site inspection of all slaughter and processing establishments.  The FSIS is required, among other things, to ensure that all meat products are: (1) produced under sanitary conditions; (2) not adulterated; and (3) properly labeled.  

Under the FMIA, slaughter establishments are expressly permitted, under defined circumstances, to receive, hold and slaughter nonambulatory animals.  After slaughter, but prior to being used for human food, the carcasses of such animals must first be inspected by a FSIS inspector.  

The FMIA also contains an express preemption provision, 21 U.S.C. 678, which prohibits states from adopting any different or additional requirements than those imposed by the FMIA.  

Despite the existence of a federal law governing the treatment of nonambulatory animals in slaughter establishments, and the existence of an express preemption provision within the FMIA, the state of California nevertheless amended its penal code in 2008 to prohibit slaughter facilities from receiving, holding or butchering nonambulatory animals.  Because the federal standards under the FMIA and the new state law were inconsistent, the Nation Meat Association brought suit challenging the California law.

In an opinion authored by Justice Kagan, the Supreme Court confirmed that FMIA’s preemption clause “sweeps broadly,” and prohibits states from imposing  any additional or different (even if non-conflicting) requirements concerning slaughterhouse facilities or operations.  Because the State of California was attempting to govern in an area reserved exclusively for federal regulation, the Court held that the California law was preempted.

Thus, once again, the Supreme Court has made clear that the states are strictly prohibited from legislating in those areas already occupied by the FMIA.  

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On Monday, January 9, 2012, the Supreme Court heard argument in a case challenging the Environmental Protection Agency’s issuance of administrative compliance orders under the Clean Water Act, 33 U.S.C. §§ 1251 et seq. (the “CWA”).  Sackett v. United States Environmental Protection Agency, No. 10-1062. 

Chantell and Mike Sackett bought a vacant lot near Priest Lake, Idaho, intending to build their home there.  The lot is zoned residential and is located in a platted subdivision, with sewer and water hookups.  Surrounding lots already have homes built on them.  The Sacketts applied for and obtained the necessary building permits from the local authorities.  Once they began laying gravel, however, they were hit with a compliance order from the EPA.  The order declared the Sacketts’ property to be “wetlands,” and charged the Sacketts with discharging pollutants into the waters of the United States, absent a permit, in violation of 33 U.S.C. § 1311(a).  In the order, the EPA required the Sacketts to return the property to its prior condition and to seek a wetlands permit – costs that, according to the Sacketts, would add up to tens of thousands of dollars, many times the $23,000 they paid for the property.  Failure to comply with the order could result in fines of up to $37,500 per day. 

The Sacketts tried to challenge the wetlands finding – both before the EPA and in federal court under the Administrative Procedure Act, but their challenges were rejected.  The district court in Idaho concluded that the CWA precludes judicial review of compliance orders before the EPA has started an enforcement action in federal court, and granted the EPA’s motion to dismiss.  Sackett v. EPA, No. 08-CV-185-N-EJL, 2008 WL 3286801 (D. Idaho Aug. 7, 2008).  The Ninth Circuit affirmed.  Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010).  In other words, the only way in which the Sacketts could obtain judicial review of the order would be to violate the order and then raise their arguments in any enforcement action brought by the EPA. 

Arguing on behalf of the Sacketts, Damien Schiff of the Pacific Legal Foundation stated that his clients’ inability to seek relief from the courts when the EPA issues a compliance order under the CWA amounts to a denial of due process.  The majority of the justices seemed sympathetic with his argument.  Justice Stephen Breyer, for example, later commented that not allowing judicial review of administrative actions would represent a “huge upheaval” of federal practice, because “for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite.”  Justice Elena Kagan, however, suggested that the Sacketts had not exhausted all of their administrative remedies and could have obtained a wetlands permit from the Army Corps of Engineers.  Mr. Schiff disagreed, stating that having to go through the wetlands permit process before a second agency was not an adequate remedy. 

Deputy Solicitor General Malcolm Stewart argued for the EPA, and stuck to the EPA’s position that the Sacketts’ property is a wetland and that the CWA precludes any judicial review of compliance orders.  The Court did not appear to be persuaded.  In particular, Justice Anthony Scalia and Justice Samuel Alito sharply criticized the EPA’s argument.  Justice Alito remarked at one point that “most ordinary homeowners would say this kind of thing can’t happen in the United States,” adding later that the EPA’s conduct is even more “outrageous” because it can change its mind at any time after issuing the compliance order.

The case is being closely watched by industry and public interest groups alike.  Fifteen different amicus briefs have been filed, fourteen of them in favor of the Sacketts – including briefs filed by the Chamber of Commerce, the State of Alaska and various trade and industry groups.  The media is describing the case as a fight between the “little guy” and big government.  We’ll find out if David or Goliath wins this fight when a decision is issued this spring.  The Court’s decision could impact not only CWA enforcement authority, but possibly also review of compliance orders issued under other federal environmental statutes. 

Carmen R. Toledo is a partner at King & Spalding in Atlanta, Georgia.  

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