Providing summaries of opinions as they are released from the Michigan Supreme Court, Michigan Court of Appeals (published & unpublished), and selected U.S. Sixth Circuit. Over 60,000 cases summarized to date.
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Attorney fees allocation following a class action settlement; The district court’s approval of the settlement’s “quick pay provision”; Standing; Denial of a motion for reconsideration of the fee award order seeking to cancel the co-lead class counsel’s authority to allocate fees; Whether the district court gave a sufficient explanation for its delegation decision; Whether the district court “abdicat[ed] its allocation discretion to class counsel”; Whether the district court verified the fee allocation
The court affirmed the district court’s denial of appellant-law firm’s (Morgan & Morgan) motion for reconsideration seeking to undo the co-lead class counsel’s authority to allocate fees among the various plaintiffs’ attorneys. But it reversed and remanded for review of Morgan & Morgan’s specific allocation of the total fee award. The appeal involved the allocation of attorney fees after the settlement of a class action arising from a train derailment. All counsel, including Morgan, signed the settlement agreement and there were no objections by the July deadline. Co-lead counsel and Morgan moved for final approval of the settlement, requesting 27% of the recovery as the attorney fee award. The district court approved the settlement and the fee application. Four weeks later, Morgan moved for reconsideration, challenging the settlement’s quick pay provision and co-lead counsel’s role in the allocations, among other things. And during a telephone hearing, it raised an issue about its fee allocation. The district court denied Morgan’s motion. On appeal, the court first held that Morgan lacked standing to challenge whether the district court erred by approving the quick pay provision where it failed to establish an “actual injury.” It was unable to show that receiving its fees ahead of time instead of a year later harmed it in any way. It also rejected Morgan’s claim that the district court erred by denying its motion in regard to the co-lead class counsel’s allocation authority. A motion for reconsideration, “given its post-decision posture, is typically not a vehicle to present new arguments that could have been raised prior to the court’s dispositive decision.” While the district court could have appointed an external auditor or special master, it “allow[ed] counsel to take the first crack at a fee allocation subject to court review later on[.]” The court found no abuse of discretion in that. It also found no merit to Morgan’s argument that the district court failed to sufficiently explain its delegation decision where it was belied by the record. And it rejected Morgan’s assertion that the district court “‘abdicat[ed] its allocation discretion to class counsel.’” Lastly, Morgan claimed the district “court failed to ‘verify’ co-lead class counsel’s decision-making by insufficiently scrutinizing the allocation to Morgan & Morgan.” The court held that Morgan “preserved its fees distribution-based challenge in district court” and that despite suggesting “that it would consider all of the arguments presented during the telephonic hearing, the district court failed to do so.” While it was not clear if Morgan’s assertions were meritorious, the district court abused its discretion by failing to address them. Thus, remand was required for further consideration of this issue.
Motion to compel arbitration under a boilerplate employment application & agreement; Distinguishing Rayford v American House Roseville I, LLC; Rembert v Ryan’s Family Steak Houses, Inc; Adhesion contract; Unconscionability; The Elliott-Larsen Civil Rights Act (ELCRA)
On remand from the Supreme Court, the court held that the employment contract provision at issue requiring arbitration was reasonable and not unconscionable. Thus, it again affirmed the trial court’s order granting defendant’s motion to compel arbitration. The Supreme Court vacated its prior opinion and remanded for reconsideration in light of Rayford. The court noted that plaintiff’s challenge was “not to a shortened limitations period, but to an arbitration agreement that was part of a larger employment application. Thus, Rayford’s specific holding is inapplicable, but the standards it applied are not.” The court assumed that the contract here was an adhesion contract. As “in other states, in Michigan an agreement is not an unlawful adhesion contract if a court determines that the terms a party essentially had no option to dispute are otherwise reasonable.” Thus, the issue of the arbitration agreement’s validity turned on whether it was reasonable. The court held that it was. It first noted that the “Legislature and Supreme Court have long approved arbitration as a legitimate, efficient alternative to resolving matters in court.” Further, in light of the “general public policy favoring arbitration, a conflict panel of” the court held in Rembert “that an agreement to arbitrate a civil rights claim was reasonable as a matter of law, because it did not deprive plaintiff of her statutory rights and remedies and was procedurally fair.” The arbitration provision here, like the one in Rembert, did “not limit plaintiff’s substantive rights or remedies available under the [ELCRA]. The provision requires both the employer and employee to bring all nonexempt claims in arbitration, and the rules of the American Arbitration Association govern all proceedings.” The court concluded there was nothing in the agreement that was “unusual, as it contains many provisions typically found in arbitration agreements. In light of the terms of the agreement, and the common law and statutory law of this state containing a general approval of arbitration as an alternative means to decide matters, we hold that the arbitration provision is reasonable, and is therefore not an unlawful adhesion contract.” It was also not unconscionable, as it “in no way ‘shocks the conscience’ of the Court.”
Admission of defendant’s police interview statements; Voluntariness; Distinguishing People v Stewart; Ineffective assistance of counsel; Failure to make a futile motion to suppress; Failure to call an expert on youth brain science to support a self-defense theory; Reliance on People v Parks; Right to an impartial jury; Juror qualifications; MCL 600.1307a(1)(d); Seating jurors who had previously served together; Whether an error was structural; People v Miller; Whether a new trial was necessary; MCL 600.1354(1); Extraneous jury influences; Jury instructions on transferred intent & self-defense; Cumulative error
The court held that the Stewart factors did not support that the then-17-year-old defendant’s police interview statements were involuntary. His trial counsel was not ineffective for, among other things, failing to make a futile motion to suppress or for failing to call an expert on youth brain science. He was not entitled to a new trial based on three jurors’ prior jury service. The “juror qualification error was not structural” and he failed to show prejudice. His claims about jury instructions as to transferred intent and self-defense failed. Finally, the potential errors as to unqualified jurors and jurors exposed to extraneous influences did not result in substantial prejudice so as to entitle him to relief based on cumulative error. He was convicted of second-degree murder, AWIGBH, and felony-firearm. As to the voluntariness of his statements, defendant conceded “the 40-minute interview was not excessively long and that the interviewing officers were not physically abusive.” The fact that he “was 17 years old certainly is relevant. However, unlike the defendant in Stewart, defendant no longer lived with his parents and did not request to call them during his interview. Nor did the interrogating officers make references to [his] age or otherwise indicate that [his] youth was influencing” his treatment. Thus, this case was “distinguishable from Stewart.” He also conceded “that, despite his young age, he had prior experience with law enforcement, including several arrests. Regarding his intelligence level, defendant was taking ninth-grade classes online and was employed a few months before the shooting, until he quit.” The record also did not support that he “was in any way impaired during his interview.” Further, the court rejected his claim “that the officers used coercive psychological tactics,” determining that their statements were “much more similar to general observations about honesty and leniency[.]” It held that “based on the totality of the circumstances,” the police interview not coerced. The court was also unpersuaded by his “novel” argument about trial counsel’s failure to call an expert on youth brain science for his self-defense theory. Absent any case law “applying Parks or its underlying concepts in the context of a juvenile’s” self-defense claim the court could not find “that trial counsel was ineffective for failing to be the first to” do so. Affirmed.
Sufficiency of the evidence for health care fraud convictions; FRE 404(b) “propensity evidence”; Jury instructions as to local coverage determinations (LCDs); Whether there was a “material variance” from the indictment; Prosecutorial misconduct; Conflict-of-interest waiver; Sentencing; Procedural reasonableness; Loss amount calculation; USSG § 2B1.1
The court held that there was sufficient evidence to support defendant-Siefert’s health care fraud conviction where the evidence showed that he performed medically unnecessary tests to obtain the highest Medicare reimbursement. It also rejected his prosecutorial misconduct claim where the district court had not prohibited the government’s introduction of patient death evidence and where “the government’s inability to ultimately show Siefert’s knowledge does not constitute lack of good faith.” A jury found Siefert guilty of health care fraud and defendant-Ehn guilty of the same offense and conspiracy to commit it, arising from a scheme involving a pain management clinic, “specialized urine drug tests,” and Medicare reimbursement. Ehn argued there was insufficient evidence to support either of his convictions. But the court held that there was enough evidence to convince a reasonable juror given the evidence that he knew he was not qualified to perform the testing and that the testing machine was malfunctioning, but he continued to bill “for the unreliable, medically unnecessary tests the machine produced.” This same evidence supported the conspiracy conviction where Ehn and Siefert planned to do unnecessary “definitive testing” and to share the profits. The court also upheld the admission of evidence of Ehn’s prior improper billing practices under FRE 404(b)(2). It further found that the district court did not abuse its discretion by declining to give a jury instruction requested by Ehn about LCDs, concluding the proposed instruction incorrectly stated the law. Next, it found no material variance from the indictment, determining the “stated method, manner, and means of fraud” gave Ehn adequate notice of the charges he would need to defend. That the government’s trial evidence went into further detail did not mean it varied from the indictment. His conflict of interest claim also failed where he signed a waiver regarding his trial counsel’s possible conflict. Siefert argued that the introduction of evidence about seven uncharged patient deaths constituted prosecutorial misconduct. But the district court’s pretrial ruling on this evidence was not a “hard-and-fast prohibition against” its introduction. The court agreed “with the district court that the evidence relating to patient deaths was relevant and not unduly prejudicial” and concluded that the prosecution did not act improperly. Lastly, it held that defendants’ sentences were procedurally reasonable where the district court’s loss amounts were supported by their own expert and were a “reasonable estimate” of the financial loss caused by their fraud. Affirmed.
Sentencing; Procedural reasonableness; Application of the four-level sadism enhancement in USSG § 2G2.1(b)(4)(A); What constitutes “sadism” involving pubescent minors; United States v Groenendal; United States v Corp; United States v Cover; “Foreign objects”; United States v Preston (Unpub 6th Cir); The correct legal standard for application of § 2G2.1(b)(4)(A)
The court vacated defendant’s sentence for receiving child pornography involving a pubescent minor, holding that the district court improperly applied a four-level enhancement for sadism where the government failed to offer evidence of “pain or humiliation,” which would need to be evident in the video in question. Defendant, who has autism, pled guilty to receiving child pornography. At sentencing, the district court applied a four-level enhancement under § 2G2.1(b)(4)(A) overruling defendant’s objection. The video involved defendant’s suggestion to the minor (Doe) that she penetrate herself with a marker, which she did. His advisory range would have been 168-210 months, but the enhancement raised it to 262–327 months. With a downward departure for his “immaturity,” he was sentenced to 226 months in prison and 25 years of supervised release. He argued that his sentence was procedurally unreasonable due to the district court’s application of the sadism enhancement. The court reviewed precedent relating to pubescent minors, citing Corp, where it held that determining whether an image meets the definition of “sadistic or masochistic conduct or other depictions of violence” involves a two-step inquiry. “A district court must find by a preponderance of the evidence that the material (1) depicts sexual activity involving a minor and (2) portrays conduct that an objective viewer would perceive as inflicting ‘physical pain, emotional suffering, or humiliation on the minor.’” Further, this is determined “‘within the four corners of the image.’” The court rejected a per se rule for materials depicting penetration of pubescent minors. It held that “the enhancement must rest on specific facts rather than on broad generalizations” and that the painful or humiliating nature of the penetration must “appear on the face of the material and support an objective finding of mental or physical anguish.” Because this case involved penetration with a foreign object, a marker, the government needed to show “evidence of pain or humiliation[,]” which it failed to do, admitting that at “no point” did Doe’s facial expression indicate pain or her body language indicate pain or humiliation. The district court applied an incorrect legal standard when it relied on what it considered to be a per se rule in Preston, and “relied on two facts to find that the enhancement applied here: that Doe was twelve years old and that the video showed her ‘inserting an “everyday object[] into her private parts.”’ [It] did not consider whether Doe was pubescent. It also did not identify any other facts that could support the application of the enhancement.” Vacated and remanded for resentencing.
Termination under § 19b(3)(c)(i); Children’s best interests
Concluding that § (c)(i) existed and the trial court did not err “by finding it was in the children’s best interests to terminate” respondent-mother’s parental rights, the court affirmed. It was undisputed that, by the time her “parental rights were terminated, more than 182 days had passed since the initial dispositional order. Furthermore, many of the conditions which led to the adjudication still existed by the time of termination, and there was no reasonable likelihood that they would be rectified in a reasonable time given the children’s age.” While she had “secured employment, her psychological evaluation indicated no mental health disorders, and the record [was] inconsistent on the progression of her parenting skills, she continued to struggle with substance abuse and housing, which the trial court identified as the two most significant barriers at the outset of this case.” The court found that her “substance abuse was the most significant barrier to reunification of the family.” While she “showed some improvement, she also suffered setbacks and even relapsed, which apparently led to her decision to remove herself from the children’s lives for months.” Throughout the proceedings, she “presented a pattern of improvement followed by regression. By the time of the termination hearing, [she] had not been able to demonstrate consistent, lasting sobriety. Additionally, given her inconsistent behavior during the proceedings below, as well as the fact that [her] substance-abuse problem has lasted for ‘nearly a decade,’ [the court concluded] that the trial court did not clearly err when it found that [she] would not be able to rectify this barrier within a reasonable time given the children’s age.” It also found that respondent’s “unresolved homelessness was another barrier to reunification on which the trial court relied. At no point during this case did [she] procure independent, appropriate housing for herself and the children.” The record supported the trial court’s finding that she “had failed to rectify her housing barrier by the time of the termination hearing and that she would not be able to do so in a reasonable time given the children’s age.”