The Unacknowledged Clash Between the Supreme Court’s Interpretation of the Religion Clauses and the Free Speech Clause of the First Amendment

VIKRAM DAVID AMAR, ALAN E. BROWNSTEIN

Illinois law dean Vikram David Amar and UC Davis law professor emeritus Alan Brownstein comment on a largely unacknowledged clash between religious accommodations and exemptions on the one hand, and core free speech principles which the U.S. Supreme Court has repeatedly recognized, on the other. Amar and Brownstein describe this apparent conflict and suggest that the Court begin to resolve the conflict when it decides two cases later this term presenting the question of the scope of the “ministerial exception.”

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Church Joint Venture, L.P. v. Earl Blasingame

Court: US Court of Appeals for the Sixth Circuit

Docket: 18-6142

Opinion Date: January 21, 2020

Judge: Alan Eugene Norris

Areas of Law: Business Law, Trusts & Estates

The Blasingames filed for Chapter 7 bankruptcy. CJV purchased their debts to two banks, each arising from personal guarantees made to secure loans to businesses that failed. The Blasingames claimed that they owned no real property, owned personal property worth $5,700, and had a total monthly income of $888. The bankruptcy trustee and CJV successfully argued against the discharge of their debts. The bankruptcy court noted that the debtors had repeatedly concealed assets, including through the use of closely-held, interconnected corporations and trusts. CJV sued the Blasingames, their children, and those entities and trusts. CJV prevailed on two fraudulent transfer claims for transfers of money and of real property to trusts. CJV appealed the dismissal of claims based on reverse alter ego or reverse veil piercing; the denial CJV’s motion to certify to the Tennessee Supreme Court the question of whether Tennessee would recognize such theories; and the denial of CJV’s motion for leave to amend its complaint to add to its legal theories that the trusts were “self-settled.” The Sixth Circuit affirmed, finding “no persuasive data” to conclude that Tennessee’s high court would embrace the reverse piercing claims; reverse piercing is not a novel or unsettled area of law and certification was unnecessary. The failure of CJV to realize it could have made claims under a self-settled theory is not an adequate reason for a nearly five-year delay; the prejudice to defendants was apparent and substantial.

Hensel Phelps Construction Co. v. Super. Ct.

Court: California Courts of Appeal

Docket: D076264(Fourth Appellate District)

Opinion Date: January 22, 2020

Judge: Guerrero

Areas of Law: Business Law, Construction Law, Contracts

Petitioner Hensel Phelps Construction Co. (Hensel Phelps) was a defendant in construction defect litigation filed by plaintiff and real party in interest Smart Corner Owners Association (Smart Corner). Hensel Phelps moved for summary judgment contending, among other things, that Smart Corner's claims were barred by a 10-year limitations period under Civil Code section 941. Smart Corner was not a party to the contract between Hensel Phelps and the developer of a mixed-use project, to which Smart Corner was a lessee. In its motion for summary judgment, Hensel Phelps asserted that "substantial completion" under the statute had the same meaning as "substantial completion" in its construction contract with the developer. Because the parties to the construction contract agreed that "substantial completion" occurred on a certain date at the time of construction, Hensel Phelps argued that the limitations period began to run on that date. Because Smart Corner asserted its claims more than 10 years later, Hensel Phelps contended they were untimely. The trial court denied the motion, finding that the definition of substantial completion in the contract did not trigger the running of the statute. And, even if it did, Smart Corner had raised a triable issue of fact whether the definition of substantial completion under the contract had been satisfied on the date asserted by Hensel Phelps. Hensel Phelps petitioned the Court of Appeal for mandamus relief, arguing again that the date of substantial completion adopted by the parties to the contract "conclusively establishe[d]" the date of substantial completion under the statute. After review, the Court of Appeal concluded the trial court did not err by denying Hensel Phelps's motion for summary judgment. "Hensel Phelps offers no authority for the novel proposition that certain parties may, by contract, conclusively establish the date when a limitations period begins to run on another party's cause of action. ... it is clear that the statute does not simply adopt the date determined by private parties to a contract for their own purposes as the date of substantial completion." The Court therefore denied the petition.

Techno Lite, Inc. v. Emcod, LLC

Court: California Courts of Appeal

Docket: B284989(Second Appellate District)

Opinion Date: January 21, 2020

Judge: Nora M. Manella

Areas of Law: Business Law

Techno Lite filed suit against defendants, alleging claims for breach of fiduciary duty, misappropriation of trade secrets, interference with contractual relationships, intentional and negligent interference with prospective economic advantage, conversion, injunctive relief, and constructive trust. Defendants cross-complained against Techno Lite and several others. In the published portion of the opinion, the Court of Appeal rejected defendants' argument that they could not be found liable for fraud because their promise not to compete against their current employer was void under Business and Professions Code section 16600. In this case, a promise not to compete with an employer while employed is not void, and defendants had a duty of disclosure.

Devore v. American Eagle Energy Corporation, et al.

Court: North Dakota Supreme Court

Citation: 2020 ND 23

Opinion Date: January 23, 2020

Judge: Jerod E. Tufte

Areas of Law: Business Law, Labor & Employment Law, Personal Injury

Dylan Devore appealed summary judgments dismissing his negligence and gross negligence claims against defendants American Eagle Energy Corporation, Integrated Petroleum Technologies, Inc. (“IPT”), and Brian Barony. Devore was a crew supervisor for Fort Berthold Services (“FBS”), which provided water transfer services for hydraulic fracturing operations at oil wells. In February 2014, American Eagle Energy Corporation began hydraulic fracturing operations on an oil well in Divide County, North Dakota and contracted with FBS to provide water. American Eagle also contracted with IPT, a consulting company. Though IPT coordinated American Eagle’s independent contractors, American Eagle authorized any contractor to stop work at any time if a work condition was unsafe. IPT had no contractual relationship with FBS. FBS took direction from IPT, but FBS controlled its own day-to-day activities, including how it performed its work. On the morning of March 2, 2014, ice had formed in a hose between a pond near the well site and a tank. While the hose was still pressurized from the compressed air, at least one FBS crew member struck it with a sledgehammer in an attempt to dislodge the ice obstruction. The sledgehammer blows caused the hose to break apart and uncontrollably jump and whip around. The flailing hose struck and injured Devore. After review, the North Dakota Supreme Court concluded the facts, viewed in a light most favorable to Devore, did not support a conclusion that American Eagle, IPT, or Barony owed Devore a duty of care or proximately caused his injuries. Therefore the Court affirmed the summary judgments.

McDougall, et al. v. AgCountry Farm Credit Services, PCA, et al.

Court: North Dakota Supreme Court

Citation: 2020 ND 6

Opinion Date: January 23, 2020

Judge: Gerald W. VandeWalle

Areas of Law: Business Law, Consumer Law, Real Estate & Property Law

Michael and Bonita McDougall appealed a judgment dismissing their deceit and unjust enrichment claims against AgCountry Farm Credit Services, PCA and granting summary judgment in favor of AgCountry on its claims to enforce assignment of rents and to foreclose a mortgage. The North Dakota Supreme Court concluded the district court erred by concluding the McDougalls’ deceit claim was precluded by the statute of frauds. Therefore the Court reversef the judgment as to the deceit and unjust enrichment claims, affirmed judgment on the remaining claims, and remanded.

Minn-Kota Ag Products, Inc. v. N.D. Public Service Commission, et al.

Court: North Dakota Supreme Court

Citation: 2020 ND 12

Opinion Date: January 23, 2020

Judge: Gerald W. VandeWalle

Areas of Law: Business Law, Construction Law, Government & Administrative Law, Utilities Law

Minn-Kota Ag. Products, Inc. appealed a district court order dismissing Minn-Kota’s appeal of findings of fact, conclusions of law and order issued by the North Dakota Public Service Commission (PSC) for lack of standing and affirming an administrative law judge’s (ALJ) order denying Minn-Kota’s petition to intervene. In 2017, Minn-Kota began construction of a large, $20 million grain handling facility near the municipalities of Barney and Mooreton, North Dakota. During construction of the facility, Minn-Kota received proposals to provide electric power to the facility from Otter Tail Power Co., an electric public utility, and Dakota Valley Electric Cooperative, a rural electric cooperative. Minn-Kota determined Otter Tail would provide cheaper and more reliable electric service and chose Otter Tail as its preferred provider. Dakota Valley protested Otter Tail’s application and requested a hearing. Otter Tail and Dakota Valley were represented at the hearing, and each offered evidence and testimony. Minn- Kota was not a formal party represented at the hearing and, other than the testimony offered by Schuler, Minn-Kota did not contribute to the hearing. In December 2017, the PSC held a work session to contemplate and discuss Otter Tail’s application. The concerns expressed by the PSC at the work session made it clear the PSC was likely going to deny Otter Tail’s application. As a result, Minn-Kota submitted a petition to intervene, which an ALJ determined Minn-Kota submitted after the deadline to intervene had passed, and denied it. Minn-Kota argued it has standing to appeal the PSC’s decision because it participated in the proceedings before the PSC, and the PSC’s decision should be reversed because it was not supported by the facts or law. In the alternative, Minn-Kota argued the case should have been remanded to the PSC and it should have been allowed to intervene and introduce additional evidence into the record. The North Dakota Supreme Court determined Minn-Kota had standing, but did not provide a compelling argument on how Otter Tail did not adequately represent its interests at the administrative hearing or throughout the entirety of the proceedings. Therefore, the Court affirmed in part, reversed in part, and thus affirmed the PSC's order.

PHI Financial Services v. Johnston Law Office, et al.

Court: North Dakota Supreme Court

Citation: 2020 ND 22

Opinion Date: January 23, 2020

Judge: Daniel J. Crothers

Areas of Law: Business Law, Civil Procedure

In consolidated appeals, garnishees N.Starr, LLC; Lee Finstad; and Jeff Trosen appealed from a Grand Forks County, North Dakota district court order dismissing their counterclaims in a garnishment proceeding, and Johnston Law Office, P.C. appealed from a Cass County district court order dismissing its action. Both orders dismissed their respective claims in each case against PHI Financial Services, Inc. (“PHI”) and Jon Brakke and the Vogel Law Firm, Ltd. (collectively, “Vogel Law”). Finding no reversible error, the North Dakota Supreme Court affirmed dismissal as to all claims.

Institute For Responsible Alcohol Policy v. Oklahoma ex rel. Alcohol Beverage Laws Enforcement Comm.

Court: Oklahoma Supreme Court

Citation: 2020 OK 5

Opinion Date: January 22, 2020

Judge: James R. Winchester

Areas of Law: Antitrust & Trade Regulation, Business Law, Government & Administrative Law

Oklahoma Senate Bill 608 mandated that manufacturers of the top 25 brands of liquor and wine sell their product to all licensed wholesalers. Appellees, a group of liquor and wine wholesalers, manufacturers, retail liquor stores, and consumers, challenged Senate Bill 608 as unconstitutional, contending it was in conflict with Okla. Const. art. 28A, section 2(A)(2)'s discretion given to a liquor or wine manufacturer to determine what wholesaler sells its product. The district court agreed and ruled Senate Bill 608 unconstitutional. The Oklahoma Supreme Court held SB 608 was "clearly, palpably, and plainly inconsistent" with Article 28A, section 2(A)(2)'s discretion given to a liquor or wine manufacturer to determine what wholesaler sells its product. Furthermore, the Court ruled that SB 608 was not a proper use of legislative authority as Article 28A, section 2(A)(2) was not in conflict with the Oklahoma Constitution's anticompetitive provisions. The district court, therefore, did not err by granting Distributors' Motion for Summary Judgment and ruling SB 608 unconstitutional.