Vol 7 No 2 - Roger Williams University School of Law

ROGER WILLIAMS UNIVERSITY LAW REVIEW

VOLUME 7 Spring 2002

ROGER WILLIAMS UNIVERSITY SCHOOL OF LAW © Copyright Roger Williams University Law Review 2002 Copies of Articles: Except as otherwise provided, the author of each article in this issue and the Roger Williams University Law Review grant permission for copies to be made available for classroom use, provided that (1) the copies are distributed at or below cost; (2) the author and the Law Review are identified on each copy; (3) a proper notice of copyright is affixed to each copy and (4) the user notifies the Law Review that copies have been made.

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ROGER WILLIAMS UNIVERSITY LAW REVIEW VOLUME SEVEN

SPRING 2002

NUMBER TWO

EDITORIAL BOARD Christopher A. Anderson Editor-in-Chief Stephen P. Cooney Articles Editor

Stanley F. Pupecki Articles Editor

Christy L. Hetherington Notes and Comments Editor

Lucy H. Holmes Notes and Comments Editor

Dena M. Castricone Survey Editor

SENIOR STAFF Michael J. Daly

Joseph M. Proietta

STAFF Michelle M. Alves Mark P. Gagliardi Camille A. McKenna Jill A. Taft

Marjorie A. Connelly Joe H. Lawson II Susan K. Rodriguez Betsy Wall

FACULTY ADVISOR Edward J. Eberle

ADMINISTRATIVE ASSISTANT Gerlinde Celona

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ROGER WILLIAMS UNIVERSITY LAW REVIEW VOLUME SEVEN

SPRING 2002

NUMBER TWO

TABLE OF CONTENTS Page IN MEMORIAM A Tribute to Esther F. Clark, Distinguished Visiting Professor of Law ARTICLE Protecting the Public Without Protectionism: Access, Competence and Pro Hac Vice Admission to the Practice of Law . . . . . . . . . . . . . . Peter S. Margulies NOTES AND COMMENTS Re-evaluating the Effectiveness of the Intangible Rules under Section 197 . . . . . . . . . . . Marjorie A. Connelly Stiring up the Dabate in Rhode Island: Should Lead Paint Manufactures Be Held Liable for the Harm Caused by Lead Paint? . . . . . . . . . . . . .Mark P. Gagliardi REMARKS Remarks on the Occasion of the Creation of a Joint Degree Program in Law, Labor Relations and Human Resources . . . . . . . . . . Stewart J. Schwab BOOK NOTE Why Lawsuits Are Good for America, By Professor Carl T. Bogus . . . . . . . . . . . . . . . . . . . . . . .Arlene Violet 2001 SURVEY OF RHODE ISLAND LAW

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ROGER WILLIAMS UNIVERSITY SCHOOL OF LAW 2001 - 2002 FACULTY AND ADMINISTRATIVE OFFICERS Roy J. Nirschel, M.A., Ph.D., University of Miami, University President. Bruce I. Kogan, B.A., Syracuse University; J.D., Dickinson School of Law; LL.M., Georgetown University Law Center; Interim Dean; Professor of Law. Diana Hassel, B.A., Mount Holyoke College; J.D., Rutgers, The State University of New Jersey School of Law-Newark; Associate Dean for Academic Affairs and Associate Professor of Law. Dennis J. Tonsing, B.A., St. Marry’s College of California; M.A., Northern Arizona University; J.D., Southwestern University School of Law; Dean of Studens and Accademic Support Program Director. Christel L. Ertel, B.S., The Pennsylvania State University; J.D., Widener University School of Law; Dean of Admissions and Associate Professor of Law. Gail I. Winson, B.A., Moravian College; M.S., Drexel University; J.D., University of Florida; Director of Law Library and Associate Professor of Law. Laurie Barron, B.A., Yale University; M.S.W., New York University School of Social Work; J.D., New York University School of Law; Director of the Feinstein Institute for Legal Service. Linda J. Vieira, B.S., Roger Williams University; Director of Student Finance and Records. Nancy Waggner, B.S., Northeastern University; J.D., Suffolk University Law School; Director of Career Services. Chelsie Horne, B.S., M.B.A., C.M.P., Johnson & Wales University; Coordinator of Alumni, Programs and Events.

Barbara L. Bernier, B.A., State University of New York at Plattsburgh; M.S.W., Adelphi University; J.D., Howard University School of Law; LL.M., Temple University School of Law; Associate Professor of Law. Carl T. Bogus, A.B., J.D., Syracuse University; Associate Professor of Law. Debra R. Cohen, A.B., Brown University; J.D., Emory University School of Law; Visiting Associate Professor of Law. Edward J. Eberle, B.A., Columbia College; J.D., Northwestern University School of Law; Professor of Law. Jonathan M. Gutoff, A.B., Brown University; J.D., University of Chicago School of Law; Associate Professor of Law. Matthew P. Harrington, B. Th., McGill University; J.D., Boston University School of Law; LL.M., S.J.D., University of Pennsylvania Law School; Professor of Law and Director of the Marine Affairs Institute. Andrew Horwitz, B.A., Haverford College; J.D., New York University School of Law; Associate Professor of Law and Director of the Criminal Defense Clinic. Robert B. Kent, B.A., Harvard University; LL.B., Boston University School of Law; Distinguished Visiting Professor of Law. Peter C. Kostant, B.A., Yale College; M.A., Washington University of St. Louis; J.D., Fordham University School of Law; Associate Professor of Law. John C. Kunich, B.S., M.S., University of Illinois; J.D., Harvard University Law School; LL.M., George Washington University School of Law; Associate Professor of Law. Peter S. Margulies, B.A., Colgate University; J.D., Columbia University School of Law; Professor of Law and Director of the Disability Law Clinic. Lisa T. McElroy, B.A., Dartmouth College; J.D., Harvard Law School; Professor of Legal Writing. Colleen P. Murphy, B.A., University of Virginia; J.D., Yale Law School; Professor of Law. David A. Rice, B.B.A., University of Wisconsin; LL.B., Columbia University School of Law; Professor of Law. Harvey Rishikof, B.A., McGill University; M.A., Brandeis University; J.D., New York University School of Law; Professor of Law. Larry J. Ritchie, B.A., J.D., University of South Carolina; LL.M., Georgetown University Law Center; Professor of Law.

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Emily J. Sack, B.A., Swarthmore College; M.A., M.Phil, Columbia University; J.D., New York University School of Law; Associate Professor of Law. Ellen M. Saideman, B.A., Barnard College; J.D., Columbia University School of Law; Professor of Legal Writing. Anthony J. Santoro, B.A., Boston College; J.D., LL.M, Georgetown University Law Center; President Emeritus of Roger Williams University and Senior Professor of Law. B. Mitchell Simpson III, A.B., Colgate University; M.A., M.A.L.D., Ph.D., Tufts University; LL.B., University of Pennsylvania Law School; Professor of Legal Writing. Louise E. Teitz, B.A., Yale College; J.D., Southern Methodist University School of Law; Associate Professor of Law. Michael J. Yelnosky, B.S., University of Vermont; J.D., University of Pennsylvania Law School; Associate Professor of Law. David M. Zlotnick, B.A., State University of New York at Binghamton; J.D., Harvard Law School; Associate Professor of Law.

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Identification Statement The Roger Williams University Law Review is published twice annually by the students of the Roger Williams University Law Review, 10 Metacom Avenue, Bristol, Rhode Island 02809; [email protected] (electronic mail); http://www.rwu.edu/law/lawrev.html (internet address). Subscription rates: $28.50 per year in the United States; $33.00 per year in foreign countries. Single issues: $15.00 each. Address all subscription requests and other business communications to the attention of the Administrative Assistant, Roger Williams University Law Review. If a subscription is to be discontinued at the expiration of the current volume, then notice to that effect should be sent to the Administrative Assistant; otherwise, subscriptions will be automatically renewed. One month’s notice is necessary to effect change. Citations generally conform to The Bluebook: A Uniform System of Citation (17th ed. 2000). Copyright © 2000 by The Columbia Law Review Association, the Harvard Law Review Association, the University of Pennsylvania Law Review and The Yale Law Journal. ______________________________________________________ Submission of Articles and Letters The Roger Williams University Law Review accepts unsolicited manuscripts and letters. All manuscripts must be typewritten, doublespaced and on 8½ x 11" non-bond paper; footnotes should conform to The Bluebook: A Uniform System of Citation. The Roger Williams University Law Review reserves the right to edit all manuscripts and letters. However, it is requested that such permission be given to the Roger Williams University Law Review. No manuscripts can be returned unless accompanied by a stamped, self-addressed envelope of appropriate size. Letters cannot be returned. Acknowledgment of receipt of manuscripts will be made in approximately three weeks. Copyright is reserved by the Roger Williams University Law Review to all material published by the Roger Williams University Law Review, absent express agreement to the contrary.

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In Memoriam In Memory of Esther F. Giaccio Clark Eulogy delivered at Memorial Service held for Esther F. Giaccio Clark on March 5, 2002 in Media, Pennsylvania William R. Taylor*

We are here today to honor the life of a GIANT AMONG MEN. Yes, Esther F. Clark was a petite woman in physical stature, but she towered over others in competency, compassion and caring in her chosen life path as counselor. Nearly everyone has seen the notices of Esther’s career in the Daily Times and Inquirer. They tell you a lot about what she did, but not how she did it. Nor do they tell what kind of person Esther really was. She established so many firsts in her life it seems only proper that her middle initial was “F.” She became a public defender in Chester, Pennsylvania and a criminal defense attorney while practicing with her husband. She consumed herself in preparation to give each of her clients her total effort. She outworked her adversaries. Her manner, style and presentation before juries made juries believe what she was saying and actually like her. That may have tipped the balance in her favor. She was a GIANT among defenders. Esther was recognized as being the best. Rumor has it that many prosecutors, when hearing that Esther was the defense attorney, would suddenly have more pressing matters than opposing her in a courtroom. She was nominated by governors of both parties to be a judge, but she was never confirmed because of an archaic rule of *

A close family freind.

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senatorial courtesy that allows one person to keep the nomination from coming to a vote. That hurt Esther because her peers viewed her credentials as impeccable; she was given the highest rating by the Bar Association. It forever tarnished Delaware County, which has always espoused selecting the best qualified to serve. She could have changed parties and been embraced but that was not Esther. She was a GIANT among the principled. Thanks to the foresight of Dr. Clarence Moll, she began a new career in 1976—Professor at the Delaware School of Law, now Widener University School of Law. In that setting she did more for Delaware County and the legal profession than she could ever have accomplished as a judge. For twenty-six years she molded and mentored men and women to prepare them to enter the legal profession, which she felt was a special calling. Professor Clark s fondly remembered by her students as being kind, patient, learned and as someone who had been in the trenches before entering academia. She co-authored a law school casebook. She was a GIANT among professors. The articles about Esther mention her several times, “as a member of a committee or organization.” Esther Clark was never just a member of anything. When her name was linked with any association, board, committee or group, she worked. There was no belonging for resume value; she belonged to make a difference, and did. She was a GIANT among volunteers. Esther was a trailblazer but not a crusader for special consideration. She felt that when you earn it, it will come to you. Being named Man of the Year by the lawyers of Delaware County, the Woman Lawyer of the Year by the Pennsylvania Bar Association, the Teacher of the Year by her students year after year, having the opportunity to teach at the beautiful new law school at Roger Williams University and receiving the Distinguished Alumni Award from her alma mater, were all highlights she treasured. She was a GIANT among leaders. But nothing surpassed the joy of her family life. Being in practice with her husband, having their daughter, Jacqueline, become a lawyer, and being with her granddaughter, Lucianna, topped off the life of a satisfied person. She was a GIANT in family relationships. Now, before you rush out to have Esther proclaimed a saint there are some personal things you should know. When Esther

did not like something, everyone knew about it. She detested the description given to wives of Rotary members before women were allowed to join. Rotary Ann was the term. She made it clear that she was not John Clark’s Rotary Ann, she was his wife. That designation was dropped—at least in our club. Also if ever there was a compete background check of Esther, the report would show there are several places she would be considered a “high roller”: Atlantic City, Foxwoods and Las Vegas. The unique thing was that she played with the casino’s money most of the time. She had a taste for fine food and visited the best restaurants that John could find offering “two-fers.” Something I learned about Esther in the last two years typified her concern for others while downplaying her talents and abilities. Every once in awhile, the lunch table would have wives join us. One day while speaking with Esther, I asked her to join us and she said she had a previous engagement. I told her nothing could be more fun and important than having lunch with her husband, Don Tonge and me. She retorted, “you people grossly overestimate your congeniality as well as your importance.” Another time, in arranging for a dinner with the wives, we had to reschedule because she was having dinner with another person. John was not concerned about these meetings, but my curiosity peeked. I found out who she met and asked her why she didn’t let her students and others know who her prominent friends were. She looked at me and said, “although it’s the 21st century, we are in Delaware County, and confidentiality is important because I would not want to negatively affect their careers.” She was a GIANT in confidentiality and advising. Esther was a GIANT here on earth who was excellent in all she did as an advocate, a defender, a professor, a volunteer, in community service, with her family, and as an advisor. Most of us will never fill even one of the deep impressions left by this GIANT’S footsteps, but there is the opportunity to strive to do what Esther did. It is interesting to note that of all the books of the Bible, only two have women’s names. Esther in the Old Testament is one of those. Did her parents know she was a special person when they named her? Heaven is never thought of too much by most of us until a good person like Esther dies. There is no question among any of

us who knew Esther as to where Esther’s soul is today. She is in heaven. Allow me to construct a hypothetical (non-legal) picture that may make a vision of heaven a little more real today. There may be some who breathe a sigh of relief because they think Esther is assuming the role of defense counsel, and since they knew her as a friend, student or peer, there is hope she will defend us and our shortcomings when the time comes. But what if my scenario is correct, that God decided it was time for Esther to be a judge in the highest court and to sit with the first female judge in the Bible—Deborah—somewhere on his left side, and they have the responsibility for upgrading the minimal standards for acceptance based on Esther’s life? Thank God for giving us more time to try and fill a part of that GIANT’s footprints.

A Remembrance of Professor Esther Clark Bruce I. Kogan*

I first met Esther Clark on a snowy day in January 1982 when I interviewed for a full-time teaching position at what was then called the Delaware Law School in Wilmington, Delaware. At the time, I had been practicing tax and business law with a firm in Harrisburg, Pennsylvania, while teaching as an adjunct professor at the Dickinson School of Law. I very much wanted to make the transition onto a law school faculty and was clearly a little nervous. Talking with Esther in her office just before I had to do my “job talk,” she asked me what I was going to talk about. Even though I am sure that I completely bored her by describing what I thought was wrong with the penalty provisions of the recently passed Reagan tax reform act, Esther put me at ease and demonstrated her characteristic kindness by telling me: “Don’t worry, they hired me and you actually know something!” Immediately from the outset of our working relationship, Esther Clark and I became fast friends. Her office was just across the hall from mine while we worked together on the faculty of what came to be known as the Widener University School of Law. When I started at Widener, Esther was the only woman out of a faculty of twenty-five. That changed over time as more women entered law teaching and the legal profession, but what did not change was the role that Esther played first at Widener and later at Roger Williams. Esther was for me (and for most others who met her) kind of like the “good mother” that we all wished we had had growing up. She was optimistic, kind and supportive, but she also told you very directly when she thought you got things wrong.

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Interim Dean and Professor of Law, Roger Williams University Ralph R. Papitto School of Law.

For her students, Esther was both a demanding teacher and a loyal cheerleader. She managed to challenge them to master the nuances of each of the exceptions to the hearsay rule while encouraging them to have the self-confidence that they would need for a lifetime of professional practice. Above all she was committed to teaching (what I often heard her refer to as) her “babies.” Esther was also a helpful and supportive friend for her colleagues. Many younger law teachers (including me when I was younger) went to Esther Clark for advice about how to handle one thorny classroom teaching problem or another. She was always generous with her time and sage with her counsel. Although Esther did not consider herself a scholar, she did respect the efforts of her colleagues to engage in the difficult enterprise of legal scholarship. In the more than twenty years that I knew and worked with Esther, I do not believe that I ever heard her trivialize or demean any article or book written by a colleague. As a friend, Esther Clark was loyal and just a whole lot of fun to be with. She ventured far away from her home and family in Pennsylvania in 1994 because a few of her friends from Widener (Professor and President Emeritus Anthony J. Santoro, Dean of Admissions Christel L. Ertel, and me) asked her to help us try to build the best law school that we could in Rhode Island. The hundreds of Roger Williams law students that Professor Clark taught are testimony to her part in building that better school. Once Esther and John Clark got to Bristol they discovered a truly wonderful thing . . . Foxwoods! My wife, Jaime, and I went with the Clark’s to the Connecticut casinos on one or two occasions. It was amazing to see just how long Esther could make that $ 25 last. Just as amazing were the delicious home-cooked dinners that she would frequently whip up for two or three or four other faculty members at her North Farm condo. Watching the sun go down on Narragansett Bay from the deck of her apartment in the company of good friends was a particular treat for Esther. She loved good meals and introduced Jaime and me to a number of our favorite restaurants. We will miss her insightfulness, her optimism, and her joy in living. Much of that joy came from her family . . . John Clark, her husband of nearly fifty years, her daughter, Jackie, and her precious granddaughter, Luciana. When I think about the life that Esther Clark lived (wife, mother, grandmother, lawyer, bar leader, and law professor), I

think about a woman who was a pathfinder and inspiration for countless other women in the legal profession who followed after her. Esther did everything that she wanted to do, she loved what she was doing, she dearly loved her family and she was loved by everyone who knew her. That was not at all bad for a little Italian-American girl from South Philadelphia.

Esther F. Clark Anthony J. Santoro*

This is a very sad task for me. It is the second time the Roger Williams Law Review has asked me to write a piece celebrating the life of one of the law school’s founders. First, it was Dean Gary Bahr who shocked the law school with his untimely passing while establishing our program in Lisbon. Now, it is the untimely passing this last February of Professor Esther Clark that has shocked all concerned with the law school. Henry Adams once said, “A teacher affects eternity; he can never tell where his influence stops . . .” Adams was, of course, paying tribute to legions of dedicated teachers, but he could have been speaking directly about Professor Esther Clark—a techer who had a profound impact on the lives of her students, in class and beyond. Indeed, she played a major role in the lives of everyone she touched. Esther was an extraordinary woman who for almost twenty years was my colleague, my teacher and, above all, my friend. I can still recall rather vividly my first experience with the formidable Professor Esther Clark. In early 1983, I received a letter from Esther writtin in her capacity as chair of the the Dean Search committee at Widener University School of Law. She informed me that I had been nominated for the position of dean and that, if I had any interest in the position, I should call her at my earliest convenience. I did not know it then, but that letter was an invitation to a twenty year odyssey with one of the finest law teachers and best lawyers I have ever met. At the time, I was a professor at the University of Bridgeport (now Quinnipiac) School of Law, having stepped down as dean some 18 months earlier after the school became ABA approved; I *

President Emeritus and Senior Professor of Law, Roger Williams University Ralph R. Papitto School of Law.

had only recently returned from a one year visit at McGeorge School of Law in Sacramento, California. Pauline, my wife, and I had just purchased a new home after several years of living on campus and the children had settled into their third school in three years. The thought of moving was simply too difficult to consider even for a moment. I threw the letter away. This was the first of two mistakes I made with Professor Clark. Three days after tossing the letter away, I received a phone call from Esther, chiding me for my failure to respond promptly to her letter. I apologized, but reminded her that her letter invited a response only if I were interested in the deanship. That was my second mistake. That was, in her word, “ridiculous.” She spent 10 mintes explaining to me why I should have responded even if I was not interested in the position. More importantly, she went on, I should be interested because it was a good position at a law school and, after all, I had been at Bridgeport long enough. I felt as if I was on trial and about to be convicted. Accordingly, I did the only thing possible: I stalled, promising to think about it for a few days. That evening, I spoke to Pauline about the call and we agreed that there would be no move in the immediate future and that I would call Esther early the next day to inform her. Apparently, I took too long to think because Esther called me at home the next morning before I left for class. For reasons which are still not clear to me, although one was certainly to placate Esther, I agreed to stand for the deanship. My wife, who overheard the conversation, took the news in silence. Esther, on the other hand, shrieked her approval. I knew then that I was dealing with a passionate, dedicated lawyer who refused to take no for an answer and that I may as well surrender. Her reaction a good rang a familiar chord. I asked her if by chance she was of Italian heritage. She hesitated, obviously taken aback by my question, but answered, “Yes, my maiden name is Giaccio and I grew up in South Philly. But, how did you know?” At that point Esther and I became fast friens and I soon came to learn that she was the quintessential Italian mother who cared for everyone with love, devotion and compassion that knew no bounds. While all of us who met Esther are the bett6er for having met her, young women of today owe Esther a special debt of gratitude. She was a pioneer in paving the way for women to succeed, not

only in the legal profession, but also in the everyday matter of living. She worked diligently, but silently, in opening the doors of oppoartunity for all women who followed her. He finished high school and went to college when few women from South Philly did either. She went to law school when very few women went to law school. She became a trial lawyer when no women became trial lawyers, much ess criminal defense lawyers. She demonstrlated concretely and in no uncertain terms that a woman could make it in what in her day was a man’s world. She worked tirelessly to open the profession to women and especially to open the law school teaching world to women, mentoring all that sought her help. While there are other women who have advanced the role of women in the profession, I know of few, if any, who did so in Esther’s quiet , unassuming and effective manner. I remember well when the Lawyer’s Club of Delaware County, Pennsyulvania named her the “Man of the Year”. Rather than forcing the club to change the plaque to read “Woman of the Year”, she let the designation remain “Man of the Year.” This very simple act of humor caused the gender issue to resonate for more loudly than if the ranted and raved at the injustice of continuing to call the award “Man” of the year. There is no doubt about it, Esther forever changed the le gal profession as an eclusive male preserve and she did it in a quiet, unassuming manner. She did it with humor, not ranccor. She especially did it by demonstrating that competence knows no gender barrier. I will also remembeer Esther for her integrity. For many years she was a much-talked about candidate for election or appointment to the Delaware County Court of Common Pleas. Each time the majority political party thwarted her. Once, she ran for election to the court and received a merit nomination from a republican governor, only the second woman to receive a merit selection nomination, but the republican county apparatus vetoed the selection. Esther could have secured the appointment or won the election simply by changing her party affiliation, but she refused to do so because she was tied by principle to the precepts of her chosen party. I will also remember Esther for her compassion and kindness. No person who was troubled could remain so after talking with Esther. My own family has been the beneficiary of Esther’s

compassion. The day I moved to Widener, my then three year old daughter, Anne, seriously injured herself when a lever which held the net to our tennis court taut, flipped up, caught her jaw and cut the inside of her mouth and broke most of her teeth. No one could console her until Esther came by with a Paddington Bear. Anne Knew then what we would all come to know—everything would be fine if Esther were involved. One of my fondest memories of Esther came about when Ralph Papitto, Chairman of the Roger Williams Board of Trustees, visited me at Widener. He and other trustees wanted to see for themselves a relatively new law school building as well as some renovations I had recently finished to an older building. They were preparing to design the building the law school curretnly occupies. During the course of the tour, we came upon Esther who invited us in to her office. Raslph spotted several plawues on the wall commemorating Estjher as the Outstaning Faculty Member of the Year and immediately asked her to become a faculty member at Roger Williams University. Without hesitation, Esther said, “If Tony goes, I will come.” And so she did. She joined Dean Kogan, Dean Ertel and I in leaving Widener to become part of the tiny band of faculty and staff who, with a slightly larger band of students, established this law school. We all have benefited from her participation. We will all miss her. For me, I am sure the memories will become clearer. But, I miss her visits to my office. I miss her greetings. If she called me “dear”, I knew I had done nothing wrong. If she called me “sweetie”, I knew I was in trouble. How I wish I could hear that voice today. I do know this, however, she continues to influence me. I know this also, she would have seen the humor in being the “he” in the Henry Adams quote.

Article PROTECTING THE PUBLIC WITHOUT PROTECTIONISM: ACCESS, COMPETENCE, AND PRO HAC VICE ADMISSION TO THE PRACTICE OF LAW Peter S. Margulies*

Traditional state limits on the practice of law by out-of-state attorneys clash with powerful economic and technological trends. In the increasingly interconnected world of the 21st century, state rules that characterize the performance of legal work by out-ofstate lawyers as the “unauthorized practice of law” require fresh justification or risk becoming relics.1 The heart of the matter is the trade-off embodied by restrictions on multistate practice: While such rules aim to ensure lawyer competence, they also impair clients’ access to attorneys of their choice. Balancing these values of competence and access, most jurisdictions supplement plenary admission rules by permitting the admission of out-of-state attorneys pro hac vice—for the * Professor of Law and Director, Family and Disability Law Clinic, Roger Williams University School of Law. I thank Justin Holden, Lauren Jones, Pat Sullivan and Bruce Kogan for comments on a prior draft. 1. Many states, including Florida, New Jersey, and Rhode Island, also impose substantial barriers on the plenary admission of out-of-state attorneys. Barriers include requiring attorneys to take the state bar exam, and sometimes the multi-state bar exam too, in order to practice in the state on the full range of legal matters. See Deborah L. Rhode, In the Interests of Justice, 153-54 (2000).

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occasion of a case currently before a court.2 Pro hac vice rules temper the effect on clients of barriers to practice by out-of-state attorneys. However, disputes about the process and scope of pro hac vice admission embody the same tension between competence and access that pro hac vice admission is designed to alleviate. A case study of this abiding tension between competence and access is the Rhode Island Supreme Court’s recent jurisprudence in In re Small3 and In re Ferrey.4 The court’s decisions reflect a comprehensive vision of pro hac vice admission, with the state’s highest court having sole authority. In adopting a comprehensive model, the court rejected other models, such as a market approach that allows out-of-state attorneys to freely practice within the jurisdiction, or a tribunal option approach granting particular courts and agencies control over pro hac vice admissions in cases before them. A comprehensive model has the potential to best serve the values of competence and access. However, the Rhode Island Supreme Court’s implementation of the model is flawed in three respects. First, the court’s retroactive application of the comprehensive model has disrupted settled expectations, disallowing compensation to attorneys for work done competently and in good faith. Second, the court has been inconsistent in its outcomes. For example, the court denied pro hac vice admission to attorney Small, who was conducting a high-profile ethics investigation, while it granted admission to other lawyers on similar facts. Third, the court has failed to provide adequate reasons for its decisions, exemplified by its issuance of a stark unpublished order in place of an opinion in Small.5 While justices of the court subsequently published op-ed pieces that offered valuable insights on their ruling, judges’ use of the media cannot substitute for a well-reasoned judicial opinion. This Article is in three parts. Part I discusses trends toward multijurisdictional practice and both market and tribunal-option approaches, viewed through the lenses of competence and access. Part II discusses the Ferrey and Small rulings, and outlines the virtues of a comprehensive model. This Part also analyzes the 2. See Black’s Law Dictionary 1227-28 (7th ed. 1999). 3. In re Rhode Island Ethics Comm’n (Small), No. 01-79 M.P. (R.I. Mar. 1, 2001) (Flanders, J., dissenting). 4. 774 A.2d 62 (R.I. 2001) (per curiam). 5. See In re Small, No. 01-79 M.P.

flaws in the Rhode Island Supreme Court’s implementation of the model. Part III outlines the factors a comprehensive model of pro hac vice admission might take into account in deciding particular cases. It also discusses other questions left unresolved in Ferrey, including the legality of work by out-of-state lawyers on drafting and negotiation prior to the commencement of litigation, the status of non-litigation transactional and counseling work by outof-state lawyers, and the need for review of Rhode Island’s current restrictions on plenary admission of out-of-state attorneys. I. MULTISTATE PRACTICE AND THE OUT-OF-STATE ATTORNEY

Economic, technological, and legal imperatives drive the trend toward multijurisdictional practice. In an era in which the United States and global economies are increasingly interwoven, barriers between jurisdictions increasingly seem antiquated. Clients want access to legal services that are not hamstrung by these restrictions. Since business flows between jurisdictions, many argue that lawyers serving business needs should be able to travel without undue burden.6 In addition, technological innovations, such as online legal databases, air transportation, fax machines, e-mail and teleconferencing, have loosened the ties of lawyers to particular jurisdictions, making the physical location of lawyer, client or hard-copy legal materials virtually irrelevant. Finally, developments within the legal system, such as the increasing role of federal law, international law, and statutes such as the Uniform Commercial Code, have diminished the incidence and significance of interstate distinctions.7 6. See Mary C. Daly, Resolving Ethical Conflicts in Multijurisdictional Practice— Is Model Rule 8.5 the Answer, an Answer, or No Answer at All?, 36 S. Tex. L. Rev. 717 (1995); Diane L. Babb, Commentary, Take Caution When Representing Clients Across State Lines: The Services Provided May Constitute the Unauthorized Practice of Law, 50 Ala. L. Rev. 535 (1999). Indeed, the American Bar Association committee proposing revisions to the Model Rules of Professional Conduct Rule 5.5 (1999) has advanced a formulation that significantly liberalizes multistate practice. See Model Rules of Prof’l Conduct R. 5.5 (Proposed 2000) (permitting lawyer to act, inter alia, “with respect to a matter that arises out of or is otherwise reasonably related to the lawyer’s practice on behalf of a client in a jurisdiction in which the lawyer is admitted to practice”). 7. See Daly, supra note 6, at 725. Indeed, traditional barriers between professions, such as rules that bar non-lawyers from receiving fees generated by legal business or co-owning a law practice, are increasingly under siege by calls for a multidisciplinary approach that merges professions such as law and accounting. Just as in the multijurisdictional context, the argument for multidisciplinary practice is an argument for access. See, e.g., Phoebe A. Haddon, The MDP Controversy: What Legal

These developments do not extinguish the concern for competence that underlies rules on multijurisdictional practice. Competence has several facets worthy of discussion here. These sound in the keys of client protection, systemic integrity and state interests. I discuss each in turn. The first interest served by the competence value is the protection of a specific client represented by an attorney. The client should be able to rely on a floor of adequacy beneath any attorney’s work. In addition, the client should be able to seek remedies under the law of the state in which an attorney does legal work or appears before an administrative or judicial body. Admission rules link attorney competence with attorney accountability. Second, clients are not the only parties with an interest in the competence of legal representation. Attorney incompetence touches not only clients, but also other institutions, players and values, including courts, opposing parties and our adversarial conception of justice. When an attorney demonstrates incompetence, one could attempt to safeguard the wronged client’s interests by requiring adjudicators or other attorneys appearing in a matter to step in and protect that client’s interests. While states have such rules for egregious cases of misconduct or nonfeasance, expanding the reach of such rules imposes burdens on courts and on the adversarial process. Third, competence serves significant state interests. A state has an interest in maintaining a reputation based on both the skill and ethics of those who appear before its tribunals. No state wishes to be known as a “mill” in which attorneys lacking in diligence, excellence, or ethics ply their trade. Despite the validity of these interests, a complete history of the bar’s attempts to promote competence would also have to acknowledge that these efforts have a nasty underside of exclusion. State bars through the first half of the twentieth century used character and background investigations to keep out minorities deemed a threat by the legal establishment.8 More Educators Should Know, 50 J. Legal Educ. 504 (2000); Mary C. Daly, What the MDP Debate Can Teach Us About Law Practice in the New Millennium and the Need for Curricular Reform, 50 J. Legal Educ. 521 (2000). 8. See Rhode, supra note 1, at 152-53; see also Anthony T. Kronman, The Lost Lawyer: Failing Ideals of the Legal Profession (1993). Kronman makes a more subtle argument that homogeneity within the profession facilitated the transmission of “local

recently, bar applications discriminated on the basis of disability, requiring that applicants disclose whether they had ever received counseling for any purpose, including fertility or stress in law school.9 Similar invidious concerns may play a role in prohibitions against out-of-state practice. Motivations for such rules may flow in significant part from protectionist concerns about insulating the lawyers of one state from competition.10 The accumulated folk wisdom among lawyers about rationales for attorney admission practices lends some credence to the “competence as protectionism” thesis. In Florida, for example, attorneys explain the requirement that even experienced attorneys from other states sit for both the Multistate and Florida Bar Exam as a function of the fear that “snowbird” attorneys from Northern states will descend on Florida during the winter or when they approach retirement, and take away the trusts and estates business generated by Florida’s substantial senior population. In New Jersey, the folk wisdom goes, the bar fears an influx of New York lawyers. In Rhode Island, fear of Massachusetts lawyers reigns. Some restrictions on out-of-state practice, such as requirements that lawyers reside in a given state in order to practice there, are so overtly protectionist that courts have struck them down as violating the constitutional right to travel.11 Nor is protectionism waning. A California court has recently suggested, for example, that even a passing involvement with California law in a transaction, whether or not the involvement physically occurred in California, may constitute the unauthorized practice of law when not conducted by an attorney admitted to practice in the state.12 knowledge” conducive to lawyer competence and service. For Kronman, the increasing heterogeneity of the profession, as well as market forces and reductive movements in legal education that promote rigid theory at the expense of an appreciation for facts “on the ground” have contributed to lawyers’ disrepute and decline. 9. See Ellen S. v. Fla. Bd. of Bar Examiners, 859 F. Supp. 1489 (S.D. Fla. 1994) (holding that such intrusive questions violated the Americans with Disabilities Act). 10. See Russell G. Pearce, The Professionalism Paradigm Shift: Why Discarding Professional Ideology Will Improve the Conduct and Reputation of the Bar, 70 N.Y.U. L. Rev. 1229 (1995). 11. See Keenan v. Bd. of Bar Exam’rs of the State of N.C., 317 F. Supp. 1350, 1361 (E.D.N.C. 1970). 12. See Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 949 P.2d 1 (Cal.) cert. denied, 525 U.S. 920 (1998); cf. John J. D’Attomo, The $1 Million Message: Lawyers Risk Fees and More When Representing Out-of-State Clients, 39 Santa Clara L. Rev. 447 (1999) (analyzing Birbrower case).

Invocations of competence also rarely acknowledge the tension between competence and access. Access refers to a client’s ability to secure counsel, preferably the counsel of her choice. Access in this sense promotes values of human autonomy at the heart of our political and legal system. The task of selecting counsel, on this view, is not merely a mechanical exercise in matching a set of credentials with a recipient of services, but a relational activity.13 Our choices in relationships and associations are fundamental to our freedom.14 Relationships between client and counsel have an affective component requiring personal commitment and rapport not provided by credentials on a resume.15 Once such relationships have developed, the state bears a heavy burden of justification in interfering with them. Requiring a client to deal with a lawyer that is not her lawyer of choice may impose a cost on human autonomy only marginally less significant than denying the client access to any lawyer. Indeed, “local counsel” rules on multistate practice that require a client wishing to preserve her relationship with a trusted attorney to also hire a lawyer licensed to practice in a particular state can in effect deny clients access to any counsel by pricing the cost of representation out of reach. Despite these concerns, a careful examination of competence and access reveals that these values are not necessarily in conflict. Competence may increase when a broader group of attorneys competes for clients, minimizing the insularity within a given community of lawyers. Fresh legal blood can boost competence and banish complacency. Similarly, access has meaning only when the access produced is access to competent counsel: few clients would knowingly choose an attorney whose competence was demonstrably in doubt. Moreover, one element of competence is what sociologists call “local knowledge”—a working knowledge of specific practices, like the practice of law, as those practices

13. See Kronman, supra note 8 (discussing attorney-client relationships); Peter S. Margulies, Representation of Domestic Violence Survivors as a New Paradigm of Poverty Law: In Search of Access, Connection, and Voice, 64 Geo. Wash. L. Rev. 1071 (1995) (same). 14. Cf. Nancy L. Rosenblum, Membership and Morals: The Personal Uses of Pluralism in America (1998) (discussing importance of personal and civic associations in a democracy). 15. See Margulies, supra note 13.

have evolved within a particular community.16 Surely, however, local knowledge also includes the knowledge of a client’s needs yielded by a long professional relationship. Excluding such precious knowledge because an attorney lacks a license in a particular state seems to exalt form over substance. In considering tensions between access and competence, courts and commentators have focused on two models: markets and tribunal options. The market approach allows prospective clients to choose the mix of services and staffing that suit their needs, relying on pricing, lawyer disclosure, and the client’s own experience to allocate the risks and benefits of such choices.17 The tribunal option approach delegates decisions about admission of out-of-state attorneys to specific tribunals, such as state trial courts or administrative agencies.18 The following paragraphs explore the strengths and weaknesses of the market and tribunal option models. Each approach argues that the institutions it favors generate superior information. A market approach would allow clients to pick their own attorneys among a mix of in- and out-of-state lawyers.19 Market advocates would argue that markets will inevitably “clear.” Information will become available to prospective clients about competent out-of-state attorneys, and the market will weed out attorneys who are incompetent. A local approach, in contrast, would assert that individual tribunals, deciding to admit attorneys on a pro hac vice basis, have the expertise to decide which attorneys are competent to practice before it, and the first-hand experience to monitor attorneys admitted. Unfortunately, both market and tribunal option models have flaws. The market approach assumes too readily that information will be available, particularly to less sophisticated and affluent consumers of legal services. Just as professional responsibility rules generally address market failure, rules on attorney admission offer an example of how to compensate for flaws in market processes. The tribunal option approach also has problems. First, the 16. See Brian Z. Tamanaha, Realistic Socio-Legal Theory: Pragmatism and a Social Theory of Law 149 (1997) (discussing the conceptions of practice). 17. See Pearce, supra note 10. 18. Id. ?? 19. Id. ??

plethora of courts in a given jurisdiction, along with agencies, arbitrators and mediators, and other fora, means that a decentralized approach will not generate the comprehensive monitoring and information gathering required to ensure that attorneys are providing competent representation. Instead, it may produce a crazy-quilt of differing requirements, some unduly restrictive, some unduly permissive, and most accessible not in writing but only in the able but sometimes preoccupied minds of court and agency clerks, adjudicators, and practitioners.20 Second, particular tribunals may have agendas that do not match with client protection or the public interest. For instance, an arbitrator may be reluctant to lodge a complaint against an attorney who appears to have failed to represent a client competently or engaged in some form of misconduct, because the arbitrator is afraid of losing her place on the arbitrator’s panel if she complains about the attorney. A member of a state agency that deals with powerful economic entities such as corporations may be unwilling to point out attorney misconduct because the agency member has been in a subtle or egregious way “captured” by the interests of the corporation her agency is supposed to regulate. In addition, some trial level courts might prefer to have attorneys who are docile or indolent and settle cases, rather than insist on discovery and evidentiary proceedings that keep cases on the docket and consume judicial time and resources.21 The flaws

20. The other exception to state attorney admission requirements (along with pro hac vice rules) is federal practice, which does not necessarily support the argument for tribunal option. Federal courts, for one, usually require that an attorney be a member of the bar of the jurisdiction in which the court is located. Federal agencies do not have such a requirement. However, most federal agencies deal with highly specialized bodies of law, such as tax, so that the monitoring of attorney performance is easier. In addition, some federal agencies, such as the INS and Executive Office for Immigration Review (Immigration Court) have monitoring problems with some attorneys because many prospective clients are unsophisticated and lacking in market power. 21. Cf. John F. Sutton, Jr., Unauthorized Practice of Law by Lawyers: A PostSeminar Reflection on “Ethics and the Multijurisdictional Practice of Law,” 36 S. Tex. L. Rev. 1027, 1031 n.27 (1995) (arguing against giving tribunals discretion to apply rules for attorneys admitted pro hac vice that are stricter than rules that apply to attorneys licensed in that jurisdiction, on grounds that such disparate treatment might impair zealous representation by attorneys admitted pro hac vice); compare Koller v. Richardson-Merrell, Inc., 737 F.2d 1038, 1054-55 (D.C. Cir. 1984) (arguing that standard for misconduct should be the same for attorneys admitted pro hac vice and other attorneys), with Royal Indem. Co. v. J.C. Penney Co., 501 N.E.2d 617 (Ohio 1986) (declining to reach issue of whether disparate treatment of pro hac vice attorneys is appropriate, and noting that pattern of misrepresentations by lawyer was sufficiently

in both the market and local option approaches suggest that another model is needed. II. THE VIRTUES AND PITFALLS OF A COMPREHENSIVE APPROACH: RHODE ISLAND IN TRANSITION

A comprehensive model of pro hac vice admission can remedy the flaws of both the market and tribunal option approaches. The Rhode Island Supreme Court has recently made clear that this model constitutes the law of the state.22 While the court’s underlying holding is sound, its application of the comprehensive model suffers from three serious flaws: disruption of settled expectations, inconsistency in results, and failure to provide adequate reasons. This section analyzes the strengths of the court’s substantive holding, and then addresses the flaws in implementation identified above. A. The Comprehensive Approach in Action Two recent cases, In re Ferrey and In re Small, illustrate the court’s adoption of the comprehensive approach. In In re Ferrey, the Supreme Court of Rhode Island held that only the supreme court could grant pro hac vice applications for appearances before Rhode Island courts or administrative agencies.23 While the Rhode Island Energy Facility Sitting Board previously had granted the pro hac vice application of Ferrey, a Massachusetts attorney, the supreme court held that state agencies and inferior courts lacked authority to grant such applications.24 The court went on to authorize Ferrey to appear in the future before the Board. However, the court held that it lacked authority to grant Ferrey’s request to approve his application nunc pro tunc, i.e., dating back to his initial appearance before the agency.25 As a consequence, the court held, it had no alternative but to require Ferrey to disclaim any compensation from his putative client for his prior work.26 In re Small concerned a Massachusetts attorney hired by the

egregious to constitute misconduct under any standard). 22. In re Ferrey, 774 A.2d 62, 64 (R.I. 2000) (per curiam). 23. Id. 24. Id. at 65. 25. Id. 26. Id. at 64 (citing R.I. Gen. Laws § 11-27-6 (1956) (2000 Reenactment)).

Rhode Island Ethics Commission to investigate alleged unethical behavior by a powerful lobbyist.27 The lobbyist’s lawyers opposed Small’s pro hac vice application, arguing that Small’s acceptance of compensation for his work with the Commission prior to filing a pro hac vice application violated Rhode Island law.28 The court, in an unpublished order, denied Small’s application.29 The core holding of the Rhode Island Supreme Court in these cases—that the court, not the market or individual tribunals, is best situated to exercise authority over practice by out-of-state attorneys—is sound. This comprehensive approach locates authority within the state’s highest court, which has the greatest stake in promoting competent, ethical practice. Locating decisionmaking within the institution with the greatest stake represents an improvement over both the market and tribunal option approaches. The superiority of the supreme court to both the market or individual tribunals becomes clear when one considers how legal ethics figures in conceptions of competence. A competent attorney fulfills a role toward both clients and the legal system. Ethical practice is important in both areas. For example, a competent attorney must undertake to make a record at trial that can serve to ground an appeal from an adverse verdict or ruling at trial. Individual tribunals may grow irritated with the lawyer’s persistence in this regard. Yet a lawyer serves clients, appellate tribunals and the underlying systemic value of due process by ensuring development of the record. While individual tribunals, particularly trial courts, have some incentive to prod out-of-state attorneys to “move along” by threatening attorneys’ pro hac vice status, the supreme court of the state has no such interest. Conversely, markets sometimes give short shrift to “public goods” that are in everyone’s long-term best interest, but may conflict with some parties’ short-term agendas.30 Clients choosing attorneys in an unregulated market might undermine the public goods served by ethics rules. For example, clients might reject

27. In re Small, No. 01-79 M.P.. 28. Id.; see Victoria Lederberg, Editorial, We’re Victims of Erroneous Innuendoes – In Defense of the R.I. Supreme Court, Prov. J. Bull., Mar. 23, 2001, at B6. 29. In re Small, No. 01-79 M.P.; see Carl T. Bogus, Why Judicial Silence Is Golden, Prov. J. Bull., Apr. 12, 2001, at B6. 30. Cf. Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Community 289 (2000) (discussing interplay of private and public interests).

out-of-state lawyers who honor ethical dictates such as candor toward the tribunal,31 that preserve the integrity of the system but do little to concretely benefit those clients. The supreme court, however, has an incentive to maintain and enhance such public goods, rather than cut corners as a market might do. In this sense, a comprehensive approach relying on the supreme court is the best institutional choice for regulation of out-of-state practice. B. Flaws in Implementation While the supreme court’s choice of a comprehensive approach is sound, its implementation of that choice would have benefited from further refinement. Reflecting the view that constructive criticism is the best tribute to a tribunal’s efforts, the following paragraphs address the areas where refinement would have been helpful. 1. Trampling on Settled Expectations One hallmark of the rule of law is a reluctance to disrupt settled expectations. Because of this concern, legislatures, courts, and agencies often make changes in rules prospective, rather than retroactive. Retroactive application often does not allow parties relying on one legal regime a fair chance to conform their conduct to a successor regime.32 This failure of notice and opportunity can trigger constitutional concerns. Even when constitutional questions are not present, retroactive application can work needless hardships. The retroactivity of the supreme court’s application of the comprehensive model is a case in point. a. The Pre-Ferrey Tribunal Option Regime in Rhode Island Problems with retroactivity emerge from the supreme court’s application of the comprehensive model because Rhode Island custom and practice formerly resembled a tribunal option model.

31. See Model Rules of Prof’l Conduct R. 3.3 (2001) (stating, inter alia, that a lawyer shall not knowingly “make a false statement of material fact or law to a tribunal”). 32. See, e.g., INS v. St. Cyr, 533 U.S. 289 (2001) (interpreting immigration statute prospectively to avoid trampling on expectations of aliens who pleaded guilty to criminal charges in reliance on reasonable likelihood of securing waivers of deportation).

Individual tribunals, including state boards and agencies, would independently receive and adjudicate applications for pro hac vice admission. Inferior courts, such as the superior court, had specific rules providing for the admission of out-of-state attorneys.33 However, the supreme court asserted in Ferrey that it possesses “sole authority to determine who may, and who may not, engage in the practice of law in this state.”34 The court’s lengthy silence on these issues prior to Ferrey, in the face of published superior court rules to the contrary, suggested an acquiescence to the tribunal option system. b. The Harshness of the Ferrey Remedy In light of the tribunal option system in place in Rhode Island prior to the supreme court’s recent rulings, the court’s remedy in Ferrey seems particularly severe. The court precluded Ferrey, who by all accounts had acted competently and in good faith, from receiving compensation from his client for his months of work prior to the supreme court’s decision.35 However, the court was in no way obliged to reach this harsh result. As the court noted, the statutes governing admission pro hac vice do not speak to the timing of the application made by the attorney, or to the necessity of making an application to cover matters before an administrative or other non-judicial tribunal.36 While there are good policy reasons, discussed above, for a comprehensive approach that makes the supreme court a clearinghouse for all such applications, such an approach is not required by the statute. As the Ferrey court conceded, its authority came not from a statute, but from its inherent authority to govern the admission of lawyers in Rhode Island.37 Logic and practice suggest, however, that this inherent power extends to incidental matters, such as the timing of applications. Nothing in the statute barred approval

33. See R.I. Super. Ct. R. Crim. P. 50(c) (1997) (“No person, who is not an attorney and counsellor of the Supreme Court of the State of Rhode Island, shall be permitted to act as attorney or counsellor for any defendant in any proceeding, hearing or trial in the Superior Court unless granted leave to do so by the Superior Court.”). 34. See In re Ferrey, 774 A.2d at 65. 35. Id. at 64. 36. Id. at 65. 37. Id. at 64 (noting the court’s “unquestioned inherent right to permit an out-ofstate attorney to [practice] upon a timely pro hac vice request”).

of an application nunc pro tunc, dating back to Ferrey’s application to the Energy Facility Siting Board. The court’s decision to deprive attorney Ferrey of all the fruits of his labor should be judged, like any exercise of inherent authority, from the standpoint of reason and equity. Viewed through this lens, the court’s decision is unconvincing. The court’s justification for denying Ferrey’s motion boils down to its argument that granting the motion would be “tantamount to affixing an ex post facto imprimatur of approval on . . . the unauthorized practice of law.”38 The court clearly has an important functional and symbolic role in maintaining lawyer competence. It remains unclear, however, why depriving Ferrey of any compensation for his months of work was the only means to achieve this goal, particularly in light of the pervasive perception prior to Ferrey that the tribunal option model governed pro hac vice admissions. Surely, the court could have devised a sanction less harsh that would have still sent the firm message that out-ofstate lawyers must seek supreme court approval for practice before Rhode Island tribunals. Devising an appropriate remedy would not have been unduly difficult. The court could have fashioned a remedy that took into account the virtues of a comprehensive approach but also considered Ferrey’s apparent competence and good faith, as well as the material change to long-established practice in Rhode Island wrought by the court’s holding. For example, the court could have granted the motion nunc pro tunc and sanctioned Ferrey by taking away a portion of his compensation, while leaving him with some remuneration for his work. Such a balanced ruling would have avoided unjust enrichment of the client and collateral litigation by the client’s adversary.39 It would also have sent an abundantly clear message that a pro hac vice application should in the future be timely filed with the supreme court. Moreover, it would have avoided the uncertainty now reigning in other significant litigation before Rhode Island tribunals, such as class actions to determine liability for exposure to lead paint. Under Ferrey, any fees awarded to prevailing 38. See id. at 65; but see id. at 65 (Flanders, J., dissenting) (arguing that R.I. Gen. Laws §11-27-13, which authorizes practice by “visiting attorneys . . . temporarily in this state on legal business,” was a sufficient legal basis for Ferrey’s appearance before the Energy Facility Siting Board). 39. See id. at 66 (Flanders, J., dissenting).

plaintiffs’ counsel may have to be reduced to account for the period before counsel filed a pro hac vice application with the supreme court. Assuming counsel filed such an application pre-Ferrey with the superior court, and performed competently, such a result also seems unduly harsh. A more balanced decision by the supreme court could have minimized such harshness at no cost to the Rhode Island statutory scheme or the competence value. 2. Inconsistent Results The disruption of settled expectations in the court’s application of the comprehensive model dovetails with the lack of consistency in the court’s recent decisions. Consistency is a prized virtue in judicial decisionmaking, promoting guidance for those who rely on the courts and discipline for adjudicators swayed by momentary tempests.40 Of course, courts are not automatons, and Emerson was certainly correct in observing that a mechanical uniformity bespeaks not justice but a narrow mind. Nevertheless, all other things being equal, a court should reach similar results in cases where the facts converge in most material respects. Unfortunately, the supreme court’s application of the comprehensive model does not meet this test. The core of the consistency problem is the discontinuity between the court’s order in In re Small and its other decisions and pronouncements. In Small, the court denied a motion by the Rhode Island Ethics Commission for the pro hac vice admission of Daniel Small, a reputable Massachusetts attorney.41 The Commission had hired Small to investigate whether a lobbyist who sat on the Commission had behaved ethically in voting on a proposal to allow members of the legislature to accept more gifts. The problem is that Small cannot be reconciled with the past or present precedents of the Rhode Island Supreme Court. Op-ed pieces written by supreme court justices to set forth the reasoning behind the unpublished order in Small42 suggest that the basis of the court’s concern was Small’s receiving payment for legal work prior to filing of the pro hac vice application.43 If one 40. Indeed, the doctrine of stare decisis itself indicates a fundamental concern for consistency in the legal system. 41. In re Small, No. 01-79 M.P.; see Bogus, supra note 29. 42. I discuss the benefits and drawbacks of judges’ media explanations infra notes 50-59 and accompanying text. 43. See Lederberg, supra note 28; Frank J. Williams, Protocol is Important: Ethics

looked at Small’s case in a vacuum, the issue raised by the justices in their op-eds might be persuasive. However, courts function not in a vacuum, but in a continuum of past and present precedent. Examination of this precedent reveals that the supreme court had never before, and has not since, revoked or denied pro hac vice status for lawyers whose behavior was indistinguishable from that of Small. Moreover, the court denied Small’s application despite the fact that the Ethics Commission’s retention of Small clearly fulfilled one of the criteria set out in the court’s own rules. First, consider how snugly Small’s facts fit within past and present supreme court cases granting out-of-state attorneys pro hac vice status. In both relevant decisions, In re Ferrey and In re Healey,44 the out-of-state attorney received or maintained pro hac vice status, despite seemingly being paid prior to filing the pro hac vice application. In Healey, the petitioner began working for the Ethics Commission in July, 1993, but did not file a pro hac vice application until October of that year.45 There is no suggestion that Healey worked for the Commission without a fee for those three months. Furthermore, Healey’s work as a prosecutor for the Commission was indistinguishable from Small’s. Yet, the supreme court declined to revoke Healey’s pro hac vice admission. Similarly, in Ferrey, the petitioner worked for months for his client prior to filing an application with the supreme court. While Ferrey, too, may have worked pro bono for this period, such philanthropy is nowhere evident from the recitation of facts in the opinion. In Ferrey, while the court ruled that Ferrey was not entitled to fees for this work, the court nevertheless granted the attorney’s pro hac vice petition. The court’s singling out of Small for harsher treatment seems out of step with the case law. The singling out of Small is particularly puzzling because the Commission’s hiring of Small, an experienced out-of-state attorney, to investigate an influential Rhode Island lobbyist clearly satisfied one of the court’s criteria for granting pro hac vice status. The court’s own rules provide, inter alia, that granting of a pro hac vice application may be appropriate in light of a “lack of local counsel with expertise in the field involved.”46 Because of

Flap is Mr. Healey’s Fault, Prov. J. Bull., Mar. 25, 2001, at B7. 44. 654 A.2d 705 (R.I. 1995). 45. Id. 46. See R.I. Sup. Ct. R. art. II, R. 9 (2000).

the tightly-knit nature of the legal community in Rhode Island and the fact that Goldberg was both a well-known lobbyist and the spouse of a supreme court justice,47 finding Rhode Island lawyers to take on this prosecution was a challenging task.48 According to the supreme court’s own rules, therefore, Small should have been a textbook case for pro hac vice admission. However, the op-ed articles written by supreme court justices after issuance of the order summarily denying admission in Small fail to acknowledge the wisdom in the court’s own criteria.49 The values of access and competence underlying pro hac vice admission demand a higher level of consistency. 3. The Failure to Provide Adequate Reasons The op-ed articles written by justices of the supreme court after issuance of the order in Small demonstrate the third and final problem with the court’s implementation of the comprehensive model: the failure to provide adequate reasons contemporaneous with results. The need to articulate reasons for a given result imposes a valuable discipline on decisionmakers.50 Decisionmakers with an obligation to provide reasons must measure a proposed result against a rationale. They must consider the paradigm cases that such rationales embody, and endeavor to discern the paradigm case that most closely resembles the case at hand. When decisionmakers are free to give results first, and advance reasons later or not at all, discipline suffers. Unfortunately, the failure to give contemporaneous reasons in Small is a case in point. Reasons are particularly important when a case has high stakes and, when the result is a departure from the ordinary course of business. Small met both of these criteria. In a democracy, disputes about the ethics of persons in public life are 47. See Lederberg, supra note 28. 48. See Bogus, supra note 29. 49. It does not follow from raising such issues that one believes the court is engaged in some kind of vast conspiracy. Cf. Williams, supra note 43 (rejecting conspiracy theories). Those who see pervasive conspiracies in the courts are just as simplistic as those who view law as the “brooding omnipresence in the sky” ridiculed by Holmes. See S. Pac. Co. v. Jensen, 244 U.S. 205, 222 (1917). To understand Small, one needs no theory of judges as conspirators—only a theory of judges as human beings. 50. See SEC v. Chenery Corp., 318 U.S. 80, 87 (1943) (“The grounds upon which an administrative order must be judged are those upon which the record discloses that its action was based.”).

always high stakes matters. In addition, since courts routinely approve most pro hac vice applications,51 a denial like the one in Small is a rare event. The very novelty of the outcome in such a high stakes matter naturally triggers questions about why this case is different from the rest. To answer this question, the supreme court owed one modest gesture to the public and the legal profession: the articulation of reasons at the time of the decision. The court did not see fit to extend this gesture. Instead, it provided its reasons some time later, on the editorial page of the Providence Journal.52 Giving reasons in the media should not be a substitute for giving reasons in judicial decisions. The wisdom of the comprehensive approach is that the public and the profession are served by having one definitive source—the decisions of the supreme court—for attorney admissions. Requiring the public to peruse the Journal and sundry other media outlets for nuggets of guidance from the court undercuts the logic of the comprehensive model.53 The op-ed pieces may have served a useful purpose in one respect. As the justices asserted, their newspaper articles supplied a rationale for the Small decision that contravened the conspiracy theories gaining currency in the media.54 In particular, as Chief Justice Williams observed, the court’s

51. See In re Ferrey, 774 A.2d at 66 n.4 (Flanders, J., dissenting). 52. See Lederberg, supra note 28; Williams, supra note 43. Of course, Justice Lederberg is accurate in pointing out that the court writes hundreds of opinions every year featuring extended analysis. See Lederberg, supra note 28. My only point here is that a high stakes matter where the court reached an unusual result, such as Small, should have received comparable treatment. Justice Lederberg argues in her op-ed that the court’s failure to provide reasons is justified by the Ethics Commission’s failure to seek a full hearing. Id. However, the court owes its duty to provide reasons—a duty, like its authority over attorney admissions, that is inherent rather than statutory—not only to the parties, but to the public and members of the bar. Parties should not possess the power to waive substantial public interests. Granting parties such power reinstalls the market regime that the court rightly rejected in Ferrey. 53. Although the court did not handle Small as well as it could have, the court continues to be a strong voice for appropriate conduct by Rhode Island lawyers. See, e.g., Tracy Breton, High Court Censures Traffic-Tribunal Judge, Prov. J. Bull., Oct. 30, 2001, at B1 (reporting supreme court’s censure of lawyer who misrepresented to client that she had filed defamation suit on his behalf; while the client continued to rely on the lawyer’s assurances, which continued after she became a magistrate of the Traffic Tribunal, the statute of limitations ran on his claim). 54. See Lederberg, supra note 28.

apparent harshness in Small emerges as perhaps justifiable impatience with the cavalier attitude demonstrated by thenDirector of the Ethics Commission, Martin Healey of In re Healey fame.55 Healey had encountered some difficulty with his own pro hac vice status because of his arguably engaging in the practice of law without appropriate authorization.56 Although the court had ultimately allowed him to continue his work57—a dispensation that the court declined to accord Small on similar facts58— perhaps Healey should have taken his own difficulties into account when he retained Small.59 The perspective offered by the justices in their articles does not deal with all of the issues raised in this section. In particular, the justices’ perspective focuses unduly on the failures of Healey as Ethics Commission Director, without addressing the public interest in having a disinterested lawyer like Small conduct the investigation of such a politically charged case. The public’s interest is undimmed by Healey’s distractions. Nevertheless, the justices’ reasons at least provide an antidote to the worst case scenarios of political cronyism that this unfortunate episode has generated. Such scenarios would have gained little purchase in the first place, however, if the court had provided reasons in its decision. III. THE FUTURE OF THE COMPREHENSIVE MODEL

Criticizing the court’s implementation—or, for that matter, praising its choice of the comprehensive model—can only take one so far. At the end of the day, one must still consider the questions left unanswered by the court’s new pro hac vice jurisprudence.60 55. See Williams, supra note 43. 56. See In re Healey, 654 A.2d at 705. 57. Id. at 708. 58. See supra notes 29-31 and accompanying text. 59. See Williams, supra note 43. 60. The Supreme Court has appointed an Ad Hoc Committee on procedures for pro hac vice admission. The Committee’s Report is a thoughtful hybrid, balancing the accountability promoted by the comprehensive approach with the flexibility of the tribunal option method. See Report of Ad Hoc Committee to Review Article II, Rule 9 on Pro Hac Vice Admissions, December 2001. It clearly states that the Supreme Court is the final arbiter of rules governing in-state practice. With that as a premise, the Report proposes authorizing courts in each county of the state to decide motions for pro hac vice admission, and authorizing the court to which an appeal is taken to decide motions regarding practice before state administrative agencies. The Ad Hoc Committee also recommends a consolidated procedure for attorneys prosecuting or

This section seeks to resolve some of those issues. A. Criteria for Future Pro Hac Vice Admissions One fundamental issue outstanding after Ferrey is the substantive test for pro hac vice admission. The supreme court has commenced a rulemaking proceeding to arrive at meaningful criteria for pro hac vice admissions. Sensible criteria should borrow from the court’s current Rule 9,61 which includes a number of factors that are useful. However, deliberation about the applicable criteria should also refine the current test. In its current Rule, the court cites five factors: a) a showing that the cause involves a complex field of law in which the nonresident attorney is a specialist, b) a long-standing attorney-client relationship, c) lack of local counsel with expertise in the field involved, d) the existence of legal questions involving the law of the foreign jurisdiction, e) the need for extensive discovery in the foreign jurisdiction.62 While the court acknowledges that these criteria are not exhaustive, when taken together they nevertheless unduly restrict client access. For example, if one reads the criteria narrowly, they suggest that an attorney with a substantial but not necessarily long-standing relationship with a client may have to show extraordinary competence. The court should not require such a showing, as long as some pre-existing attorney-client relationship prevails. Justifications for admission, such as a pre-existing relationship with the client or a paucity of in-state practitioners in a given specialty, should be disjunctive. Other conditions, such as basic experience in the subject matter, disclosure to all parties of out-of-state status, and membership in good standing in each bar to which the attorney has previously been admitted, should be conjunctive. Consistency in the application of each criterion should be a hallmark of adjudication. The following paragraphs

defending large numbers of mass tort cases. The Ad Hoc Committee’s hybrid approach deals with a number of the pressing problems identified in this Article. However, it does not fully address the problem of inconsistency in results because it does not require findings when a motion is denied. The Ad Hoc Committee also does not address the broader issue of multijurisdictional practice identified here. 61. See R.I. Sup. Ct. R. art. II, R. 9 (2000). 62. Id.

offer greater detail on these factors.63 1. Justifications (Disjunctive) a. The Attorney’s Relationship with the Client The length of a client’s relationship with an attorney is clearly a significant factor in an assessment. Access values are promoted when a client is not forced to choose between pursuing or defending a cause of action on the one hand, and on the other maintaining a relationship with a trusted attorney. In addition, permitting clients to maintain relationships in such cases also serves competence goals. An attorney who has a long-time relationship with a client should have knowledge about the client’s needs that will be helpful in the representation. Moreover, a preexisting relationship helps promote ethical representation, by giving the attorney a stake in a client’s welfare that an attorney with no previous acquaintance with the client may not share. b. The Lack of Competent In-State Practitioners The Rhode Island Supreme Court already includes the paucity of in-state practitioners in a given specialty among its factors justifying pro hac vice admission.64 This requirement reflects both access and competence values. Clearly a client, even lacking a pre-existing relationship with an out-of-state lawyer, should have recourse to such a lawyer if in-state counsel lack the necessary experience. 2. Conditions a. The Adequacy of the Attorney’s Disclosure If a matter is before a court or agency, the out-of-state lawyer should also be required to make full and timely disclosure to the supreme court, to his or her client and to any other party to the 63. The ABA has recently drafted a proposed model pro hac vice rule that is broader than the approach taken here. See ABA Commission on Multijurisdictional Practice (2001). The proposed model rule basically provides for pro hac vice admission absent a demonstration of prejudice to the client. The ABA approach offers tribunals substantial flexibility. For tribunals seeking more guidance, the approach taken here may be useful. 64. Id.

dispute or transaction. Such a timely disclosure demonstrates the attorney’s good faith, and also ensures that both the client and any other party have some opportunity to inquire about the consequences of the attorney’s participation and whether the attorney fulfills the other standards outlined in this subsection. b. The Acquaintance of the Lawyer with the Subject Matter at Issue The client and the public interest in competence is served most clearly when attorneys have significant experience in the subject matter of the litigation. An attorney with substantial experience in family law, for example, is more likely to grasp the central issues in a custody case, and even to be familiar with the general tenor of proceedings in the relevant tribunal, than would an attorney whose main experience is in federal securities law. Conversely, clients have a much less compelling claim about access when the attorneys they seek to enlist have no demonstrable expertise in the domain of the instant dispute. c. The Extent of the Attorney’s Previous Pro Hac Vice Admissions in the State The court has a legitimate interest in limiting the number of pro hac vice appearances by an individual attorney.65 An attorney who has a proliferating number of such admissions may in effect be holding herself out as a member of the bar in that state. When pro hac vice admissions become an ally of attorney marketing efforts, instead of a safety valve for clients, competence suffers. An attorney representing a substantial number of clients on state law matters in a given state should become a member of the bar in that state, instead of relying on extraordinary measures such as pro hac vice admission. Indeed, an attorney who fails to take such steps is more likely to lack the time management skills and discipline that are essential to competence. d. The Attorney’s Disciplinary Record This criterion also goes to the interaction of competence and

65. See Brookens v. Comm. on Unauthorized Practice of Law, 538 A.2d 1120 (D.C. 1988) (citing District of Columbia court rule limiting attorneys admitted pro hac vice to appearances in no more than five actions or proceedings in any calendar year).

ethics. An attorney who has violated the rules of ethics in one jurisdiction should not be able to use pro hac vice admission as a safe haven for practice in another jurisdiction. Similarly, the court should revoke the pro hac vice admission of an attorney who has engaged in misconduct in the case for which she was admitted. However, the standard for misconduct should be the same for attorneys admitted generally to the state and those admitted pro hac vice. A more demanding standard for the latter group would put them at a disadvantage in adversarial proceedings with the former group. Clients of attorneys admitted pro hac vice would be the ultimate losers. Such a result clearly contravenes the public purpose in assuring competent, vigorous representation through pro hac vice admissions. 3. Summary Out-of-state attorneys who meet these standards should be able to practice on a pro hac vice basis. Out of concern for access, a court should not require that an out-of-state lawyer, who meets these criteria, to associate with in-state counsel. Local counsel requirements offer little meaningful protection for clients and impinge on access by forcing clients to pay more lawyers.66 Focusing on the attributes of out-of-state lawyers, without the fig leaf of local counsel, is necessary to detach pro hac vice admissions from vestiges of protectionism. B. Procedure and Public Access Procedure is just as important as substance in vindicating access and competence values. Consider one issue: What should an attorney admitted pro hac vice do to preserve her status if she appeals an adverse decision received by a client? Once the supreme court has approved a pro hac vice application, no further filings should be required of the lawyer for the pendency of the matter, absent a material change of circumstances. The court, of course, retains authority to revoke an attorney’s pro hac vice admission if the attorney engages in misconduct in the case in which she was admitted,67 or if changes occur with respect to

66. See Rhode, supra note 1, at 154. 67. See In re Bailey, 273 A.2d 563 (N.J. 1971) (revoking pro hac vice admission of attorney F. Lee Bailey upon finding that he committed misconduct by sending out a mass mailing designed to influence the jury pool in the case).

other factors material to her application, such as her standing in jurisdictions to which she is admitted to practice.68 Attorneys admitted pro hac vice should have a continuing duty, like law students seeking initial admission to the bar or like parties to discovery under federal and Rhode Island rules of civil procedure, to disclose changes in material facts to the supreme court.69 In addition to procedure, public access to pro hac vice decisions is important. Public access is both a virtue and a necessity under the comprehensive approach. All pro hac vice decisions should be available online, for perusal by both lawyers and the general public. Through such a database, both the profession and the public can inform themselves about the numbers of attorneys admitted pro hac vice, the qualifications of such attorneys and the matters in which they have been admitted. If patterns reveal themselves, for instance in specific kinds of matters in which clients are turning most readily to out-of-state attorneys, the Rhode Island bench, bar and legal academy should take such trends into account when training and encouraging the professional development of Rhode Island attorneys. C. Other Unanswered Questions 1. Legal Work Prior to Filing a Complaint Consider also the issue of preparing a complaint for an action. The out-of-state attorney may plan to file a motion for admission pro hac vice along with her complaint. However, this begs the issue of whether the attorney’s work on the complaint, prior to her motion, constitutes the unauthorized practice of law. Relevant authorities seem mixed on this issue. The proposed revisions to the American Bar Association’s Model Rules of 68. See In re Rubin, 675 A.2d 1115 (N.J. 1996) (attorney barred from pro hac vice admission in New Jersey after being disbarred in New York for making false statements). 69. The supreme court has also recently ordered that an attorney must file a new pro hac vice application upon commencing an appeal for a matter in which she appeared below. See Jonathan D. Rockoff, High Court Clarifies Rules for Out-of-State Lawyers in R.I., Prov. J. Bull. Oct. 3, 2001, at B1. The new application rule seems designed to address the issue of changed circumstances, such as new disciplinary proceedings not disclosed in a previous application. However, requiring a new application for an appeal is costly and cumbersome for both the lawyer and the supreme court. The “continuing duty” approach advanced in the text addresses the changed circumstances problem, while minimizing unnecessary cost and effort.

Professional Conduct suggest an answer in the negative.70 However, the Rhode Island statute seems to indicate that preparation of a complaint by an out-of-state attorney may constitute the unauthorized practice of law. The Rhode Island statute includes within its definition of the practice of law “the preparation of pleadings or other legal papers incident to any action or other proceeding of any kind . . . .”71 On balance, the ABA’s revisions embody the better position. To understand why the ABA’s proposed revision is superior, we should return to our consideration of access and competence. Barring the out-of-state attorney from any role in preparing pleadings does violence to the access value, while doing little to promote competence. If it seems likely, based on factors noted above,—such as length of the professional relationship with the client, experience with the subject matter of the litigation, etc.— that the court will grant the pro hac vice motion, little is added in the way of promoting competence by barring the lawyer from participating in the preparation of the pleadings. Moreover, representation prior to filing a complaint is, by definition, limited in terms of time. It lasts only for the period from the several weeks to the two to three month period when the complaint is being written. Since the complaint articulates the theory of the case, precluding the lawyer’s participation affects the client’s choice of tactics not merely at the complaint stage, but throughout the pendency of the litigation. The better view, which may require a statutory amendment in Rhode Island, is to allow the out-ofstate lawyer to participate in drafting and negotiation. 2. Transactions Another issue is the scope of both unauthorized practice prohibitions and pro hac vice admission for transactional representation. Much legal practice today is transactional in nature, involving drafting, counseling and negotiation. Indeed, the Rhode Island Supreme Court recognized as much decades ago when it noted that, “practice of law under modern conditions consists in no small part of work performed outside of any

70. See Model Rules of Prof’l Conduct R. 5.5 (Proposed 2000) (allowing a lawyer to act when she is “preparing for a proceeding in which the lawyer reasonably expects to be . . . authorized [to appear by a tribunal]”). 71. See R.I. Gen. Laws § 11-27-2(1) (1956) (2000 Reenactment).

court.”72 While enforcement of unauthorized practice rules is relatively rare in transactional cases, some statutes and judicial decisions take a restrictive view of what out-of-state lawyers may do. The Rhode Island statute defining unauthorized practice describes the practice of law as “services of a legal nature . . . pertaining to any action or proceeding” in any judicial or administrative tribunal, or “for the preparation of any legal instrument.”73 This definition seems to encompass much transactional work, including drafting contracts. In addition, at least one influential state, California, has held that out-of-state lawyers engage in the unauthorized practice of law when they negotiate in California on behalf of California clients and on matters governed by California law.74 However, other states take a more flexible view of transactional work, at least when it involves merely incidental or brief contact with a jurisdiction or with clients from that state.75 The proposed revisions to the Model Rules of Professional Conduct take this more flexible tack.76 A sound analysis should start with the premise that issues regarding transactional work feature the same interaction of access and competence that drives the debate about out-of-state attorneys in litigation. To regulate transactional work by out-ofstate attorneys, the supreme court should adopt the same standards set out above for pro hac vice admission: extent of the previous relationship with the client, availability of in-state lawyers practicing in a particular specialty, adequacy of the 72. See In re Ferrey, 774 A.2d at 64 (citing R.I. Bar Ass’n v. Auto. Serv. Ass’n, 179 A. 139, 144 (R.I. 1935) (quoting In re Opinion of the Justices to the Senate (Mass.), 194 N.E. 313, 317 (Mass. 1934))). 73. See R.I. Gen. Laws § 11-27-6 (1956) (2000 Reenactment). 74. See Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 949 P.2d 1 (Cal.), cert. denied, 525 U.S. 920 (1998); cf. D’Attomo, supra note 12, at 454-55 (discussing California Supreme Court’s analysis of test to determine if lawyer’s contact with client rises to level of practicing law in California). 75. Cf. In re Jackman, 761 A.2d 1103 (N.J. 2000) (suggesting that passing or isolated contact with a jurisdiction might not violate unauthorized practice rules, while holding that the practice of corporate law in New Jersey for seven years was more than merely passing or isolated). For commentary urging a flexible approach, see Stephen Gillers, Conflict of Laws: Real-World Rules for Interstate Regulation of Practice, 79 A.B.A. J. 111 (Apr. 1993). 76. See Model Rules of Prof’l Conduct R. 5.5 (Proposed 2000) (permitting multistate practice by in-house counsel and lawyers acting in matters reasonably related to practice on behalf of pre-existing clients, in jurisdictions where the lawyer is admitted to practice).

lawyer’s disclosure to all relevant parties, acquaintance with the subject matter, number of previous appearances or transactions within the state and the state of the attorney’s disciplinary record. Application of these factors will preserve clients’ access and subject out-of-state attorneys’ work to built-in safeguards for competence. Consider a core transactional case involving a multistate business deal. Clients participating in such transactions typically have in-house counsel or ties to outside firms that the law should not lightly disrupt. Requiring staffing by attorneys licensed with each state for large multistate transactions would impose significant financial costs. Such costs could impair the client’s ability to engage in transactions viewed as economically beneficial or necessary. The involvement of such “repeat players” is also an important safeguard for competence. Corporate clients can effectively monitor counsel’s performance. Counsel retained in this setting have an incentive to maintain their competence to attract repeat business from clients who can readily transfer their legal business elsewhere if they are dissatisfied.77 On the other hand, states have a legitimate interest in prohibiting out-of-state lawyers from holding themselves out to the public in those states as fully competent to perform the full range of legal work. Consider here a lawyer’s role in a house closing. Some elements of such a real estate transaction are common to many jurisdictions, or required by federal law. However, “local knowledge” gleaned from statutes, regulations and case law within the jurisdiction is often helpful, on issues such as the seller’s obligation to deal with property damage between the signing of sales agreement and the closing. Contacts with major banks and other “repeat players” within the state are crucial for arrangements that facilitate transactions, such as escrow accounts.78 At the same time, the close communication facilitated by a long-standing attorney-client relationship may trump these factors even in the real estate setting. A trusted attorney’s 77. See Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (1970) (discussing the implicit threat of “exit” as a means of ensuring quality). 78. Professor Gillers, while generally favoring liberalization of rules governing multistate practice, argues against authorizing out-of-state lawyers’ work on transactions concerning real property. See Gillers, supra note75, at 111.

knowledge of her client’s tolerance for uncertainty, for example, may be a crucial element of competence in ensuring a real estate transaction that does not create undue anxiety for a client. So here too, allowing for the maintenance of attorney-client relationships preserves access and competence. 3. Plenary Admission for Out-of-State Attorneys The bench, bar and legal academy should consider whether standards for plenary admission to practice for out-of-state attorneys should change. States like Massachusetts and New York have long had liberal admissions practices which do not require experienced out-of-state attorneys in good standing to take all or part of the bar exam. Rhode Island has recognized the benefits of this trend with its decision to spare attorneys admitted elsewhere the task of sitting for the Multistate Bar Exam, yet it still requires attorneys to take the Rhode Island portion. In this age of overlapping commerce and client needs, Rhode Island should investigate whether requiring passage of the Rhode Island Bar for admitted attorneys materially furthers the competency goal outlined above. It may be that taking the Bar serves this goal, particularly in light of the essay questions on Professional Responsibility and on Rhode Island Civil Practice featured on the examination. However, more study of what taking the bar adds to the competence of out-of-state attorneys would be worthwhile. This is particularly true if a reasonable argument exists that allowing multistate practice for experienced attorneys would establish a more favorable business climate for large consumers of legal services, such as corporations, thereby yielding opportunities for developing new competencies in Rhode Island for attorneys admitted both in this state and elsewhere. CONCLUSION

Out-of-state practice is a reality fed by economic and technological change. Often, out-of-state practice enhances the value of access, thereby allowing a client to retain the attorney of her choice. However, the interest in enhancing attorney competence and ethics is an important supplement to conceptions of access. Competency and ethics require some regulation of outof-state practice, including pro hac vice admissions. The two most prominent regulatory models for pro hac vice

admissions are the market and tribunal option approaches. Those viewing clients as adequate guardians of their own interests argue that a market approach is the best regulation—arguing in effect that government governs best when it governs least. Those who argue that the market model can sometimes fail often argue for a tribunal option model, giving particular courts authority over admissions pro hac vice. Each of these approaches, however, has problems with vindicating either client interests or the broader public interest. A comprehensive approach is the best remedy for the flaws of the market and tribunal option models. By using the state’s highest court as a source of both information and decisionmaking authority, the comprehensive model can vindicate both competence and access concerns. The Rhode Island Supreme Court’s recent pro hac vice rulings are a welcome step in this direction. To fulfill the promise of the comprehensive approach, however, the court’s implementation must be as sound as its underlying rationale. Thus far, unfortunately, the court’s implementation of the comprehensive model reflects three significant flaws: disruption of settled expectations, inconsistency in results, and failure to provide adequate reasons. The court disrupted expectations by making its application of the comprehensive model retroactive, despite a long-standing tribunal option system. In Ferrey, this retroactive application yielded the harsh and unnecessary result of denying an attorney compensation for work done competently and in good faith. It also introduced uncertainty into many other pending matters, including the important lead paint litigation now proceeding through Rhode Island courts. In addition to disrupting expectations, the court was inconsistent in denying pro hac vice status to attorney Daniel Small, whom the Ethics Commission had retained to investigate a prominent lobbyist, while granting such status to attorneys Ferrey and Healey in factually similar cases. By denying Small’s petition in an unpublished order, the court failed to give adequate reasons for its decision, despite the public importance of investigating government ethics issues and the novelty of such denials. Justices who subsequently wrote op-ed pieces explaining the outcome in Small failed to acknowledge the importance of giving reasons when a decision is made. Although the justices’ op-eds succeeded in rebutting conspiracy theories about the role of the court in the

case, their clarifications would have been more effective in a judicial opinion accompanying their ruling. The state rulemaking proceeding mandated by the court may remedy some of these problems and offer sound guidance for the future. To avoid harsh results, a comprehensive model would allow out-of-state attorneys who acted competently and in good faith to keep a portion of the fees they earned prior to the supreme court’s change to a comprehensive model. In addition, the supreme court should adopt the following common sense standards for pro hac vice admission, some of which are currently articulated in Rule 9 of the supreme court rules: the extent of the previous relationship with the client, availability of in-state counsel in a particular specialty, adequacy of the lawyer’s disclosure to all relevant parties, acquaintance with the subject matter, number of previous appearances or transactions within the state, and the status of the attorney’s disciplinary record. Out-of-state attorneys who meet these standards should also be able to do legal work incident to filing a complaint in an action, and work on transactions. Sound implementation of the comprehensive model also requires attention to procedural issues. Out-of-state attorneys should apply to the supreme court prior to their first appearance in a matter before any Rhode Island agency or court. However, out-of-state lawyers should not have to file a new petition on appeal, but rather should be subject to a continuing obligation to disclose changes in material facts. All pro hac vice decisions by the supreme court should be accessible to the public and the legal profession online. When denying a petition, the court should take care to state reasons, to guide attorneys filing future petitions. The supreme court should also appoint a task force to consider whether current requirements for plenary admission of out-ofstate attorneys, such as taking the Rhode Island Bar Exam, are necessary. A comprehensive approach will not blunt the economic and technological imperatives driving multistate practice. These imperatives are here to stay. However, a comprehensive model can place these imperatives in a framework that honors both access and competence. In this fashion, a comprehensive model serves both the public and the legal profession.

Notes and Comments Re-evaluating the Effectiveness of the Intangible Rules under Section 197 INTRODUCTION

Before the enactment of the Omnibus Budget Reconciliation Act (OBRA) of 1993,1 each intangible asset2 was valued and amortized individually. There were many disagreements between the Internal Revenue Service (IRS) and taxpayers regarding valuations, appropriate useful lives and deductibility. In order to alleviate the backlog of cases in front of the Tax Court regarding these issues, Congress found the middle road. They passed Title XIII § 13261(a) of OBRA.3 This section of the act made intangible assets meeting certain requirements amortizable over a fifteenyear life.4 I intend to argue that this is patently unfair to taxpayers in a technological economy. The tax law met the goals of Congress, which included producing a predictable outcome on recovering the cost of intangible assets and reducing the number of cases in front of the courts on this issue. I intend to propose a method using the current tax code to achieve the same objectives, but to do so without causing taxpayers to wait fifteen years to amortize technology that will be obsolete in three to five years. I will start out by analyzing the pre-enactment treatment of intangible assets. There are several types of intangible assets. They include goodwill, covenants not to compete, trademarks, workforce, computer software, franchises and licenses.5 I will 1. Pub. L. No. 103-66 Title XIII § 13261(a) 107 Stat. 312 (1993) (codified in scattered sections of 26 U.S.C.). The sections that are of concern to this topic are located in 26 U.S.C. § 197 and 26 U.S.C. § 167. 2. An intangible asset is an asset that is not a physical object, such as a patent, a trademark, or goodwill. Black’s Law Dictionary 113 (7th ed. 1999). 3. Pub. L. No. 103-66 Title XIII § 13261(a) 107 Stat. 312 (1993). 4. Id. at 237. 5. See id. at 212-24.

237

address some, but not all, of these. I will then analyze the postenactment treatment utilizing the same intangible assets as discussed in the pre-enactment section. The goal is to highlight the similarities and differences in the methodology of taxation. I will then propose a method utilizing a structure similar to the modified accelerated cost recovery system (MACRS) used for depreciating tangible fixed assets. This method will allow for reduced debates regarding useful lives. I will argue that the new accounting rules issued by the Financial Accounting Standards Board (FASB) will allow for reduced disputes over valuations. This comment recognizes that Congress has met their stated goals. However, it concludes by suggesting a different methodology that will meet the same objectives, but with less economic hardship to taxpayers. BACKGROUND

Prior to 1993 tax act Prior to OBRA of 1993,6 each intangible asset had a different tax treatment. The tax treatment was dependent upon the type of intangible asset and the useful life.7 Since the amortization deduction was calculated utilizing the value of the intangible asset and the useful life of the asset, these factors became critical to determining the appropriate taxable income. Amortization was on a straight-line basis, meaning the value of the intangible asset was generally divided by the number of years in the useful life of the asset.8 This methodology generally stemmed from the matching principle. The Internal Revenue Code “endeavors to match expenses with the revenues of the taxable period to which they are properly attributable, thereby resulting in a more accurate calculation of net income for tax purposes.”9 Each factor (life and valuation) for each intangible asset had to be determined

6. Id. 7. 26 C.F.R. § 1.167(a)-3. 8. Built in to the system of amortization is a pro-ration for any year that the asset was not owned for the entire twelve months of the taxable year. See 26 U.S.C. § 167. For example, assume a covenant not to compete was purchased for $100,000. If it were a four-year contract, the amortization expense would be 25,000 per year. The first and last year would be pro-rated if the contract were purchased on any date other than January 1. 9. Indopco Inc. v. Comm’r, 503 U.S. 79, 84 (1992).

on an asset-by-asset basis.10 Intangible assets are created in three general types of transactions: self-created for a taxpayer’s own use; purchase of individual assets; or the purchase and sale of a trade or business.11 In prior law, the method of acquisition, in most cases, did not impact the life or the deductibility of the intangible asset. The value of the intangible asset was determined, in part, by the method of acquisition.12 For self-created intangible assets, the value of the asset was the cost incurred in creating the asset.13 Utilizing this method, there is no value that can be allocated to goodwill. Goodwill cannot be valued as it is created because the theory of goodwill was, and still is, that goodwill equals the excess of the fair market value of the business over the net assets owned.14 Since goodwill reflects the excess value over the assets, there was generally no way to know how much goodwill was created with each dollar spent. The expenditures that generally helped to create goodwill included customer service, advertising and marketing.15 These expenses were usually deducted as the costs were incurred under the necessary and ordinary business

10. 26 U.S.C. § 1001(a) (1992), 26 U.S.C. § 167 (1993). The cost is determined based on the purchase price. Id. § 1001(a). The life is based on the determination of the limited useful life of the asset. Id. § 167. 11. See id. § 197 (1994). 12. Id. § 1012, § 1060, § 338, § 1031. If the asset was purchased in a tax-free exchange, then the value is determined by the value of the property given up. Id. § 1031. If the property is purchased in a taxable exchange the purchase price determines the cost. Id. § 1012. When a trade or business is purchased, the purchase price allocation rules must be utilized to determine the value of each individual asset. Id. § 1060, § 338. 13. See 26 U.S.C. § 1012 (1992). 14. Congress had not defined goodwill. The Courts have used various definitions. One such definition is by Justice Story defining goodwill as: The advantage or benefit, which is acquired by an establishment, beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers, on account of its local position or common celebrity, or reputation for skill or affluence, or punctuality, or from other accidental circumstances or necessity or even from ancient partialities or prejudices. Metropolitan Bank v. St. Louis Dispatch Co., 149 U.S. 436, 446 (1893) (quoting J. Story, Partnerships § 99 (1841)). 15. The definition of goodwill makes it difficult to identify exactly which expenditures create goodwill. However, since goodwill is generally related to repeat customers, the items that draw customers in are assumed to generate goodwill.

expense rules.16 One of the driving forces behind the expenditure was the current need to get the customers in the door in the first place. A secondary need was the development of repeat business. A covenant not to compete, another example of an intangible asset, could have been created in a transaction between an employer and an employee: generally the contract is signed before the employee left the company (often the contract was signed at the time the employee was hired) and was effective after This asset was generally separation from the company.17 amortizable over the life of the covenant; the value of the asset was determined by the contract between the employer and the employee.18 The contract was not controlling in instances where the company and the employee were not acting with adverse tax interests.19 In such a case, the courts had strictly scrutinized the transaction for accuracy in the valuation.20 Even though the value of the contract was challenged, the life of the contract was generally respected. Software that is self-created could have been deducted over sixty-months.21 However, there were some exceptions to this. If the software had a useful life of less than one year, the cost of developing the software was deducted as an ordinary and necessary business expense.22 Under specific circumstances, the expenses might have been deductible as research and development expenses.23 The incremental research credit may

16. See 26 U.S.C. § 162 (1992). 17. See Beaver Bolt, Inc. v. Comm’r of Internal Revenue, 70 T.C.M. (CCH) 1364 (1995) (analyzing the value of a covenant not to compete between a former employee and employer). 18. Id. 19. Id. 20. Id. 21. See Rev. Proc. 69-21, 1969-2 C.B. 303. In 1993, 26 U.S.C. § 167(f) was codified as part of OBRA. This section allows software to be amortized over a thirtysix month period, as opposed to the five years required by the earlier revenue procedure. See id. 22. See 26 U.S.C. § 162 (1992). An example would be tax form software where each of the forms is good only for the tax year in question. Each year a new version of the software would be needed and therefore the cost of the software could be deducted in the year incurred. See id. 23. Id. § 174. This is a complex area of the law and is beyond the scope of this comment. For the purposes of this comment, I bring this to the attention of the reader, only so that the reader realize there is another area of which to be cognizant in making tax decisions related to software.

also be available for self-developed software.24 If assets were purchased independently from a trade or business, then the value of each asset purchased was determined by the fair market value.25 Fair market value of the asset was determined by “the price at which property. . .chang[ed] hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having [had] reasonable knowledge of the facts.”26 As indicated earlier, there were certain assets that could not be purchased independently, such as goodwill and going concern value.27 A covenant not to compete, other than between an employer and an employee, was generally entered into during the purchase and sale of a trade or business. It could not have been purchased independently, unless it was upon termination of employment.28 Software that was purchased independently was amortized over a sixty-month period.29 There were several items to consider in a transaction regarding the purchase and sale of a trade or business.30 The valuation method to be used for tax purposes was the residual method.31 This method required that the purchase price be allocated among the assets acquired.32 The IRS created four classes of assets that the taxpayer utilized to allocate the purchase 24. Id. § 41. See Norwest Corp. and Subs. v. Comm’r, 110 T.C. 454 (1998) (explaining the additional requirements for the research credit for internal use software). This area of the law is in a state of flux at the present time, mostly over the additional tests created for internal use software in the opinion. 25. Id. § 1001(b). 26. Willow Terrace Development Co., Inc. v. Comm’r, 345 F.2d 933, 936 (1965). 27. See Red Wing Malting Co. v. Willcuts, 15 F.2d 626, 629-630 (1926) (indicating that goodwill is not separable from the underlying business and it cannot be sold separately). 28. It is logical that someone will not purchase just a covenant not to compete. It would usually have no value outside the trade or business, or the employment, relationship. 29. See Rev. Proc. 69-21, 1969-2 C.B. 303. 30. This comment discusses only those items related to intangible assets purchased in a taxable transaction. There are many other considerations that need to be reviewed. These include: will this be stock for stock transaction, a cash for stock transaction, if a stock transaction, will an election be made under 26 U.S.C. § 338 to treat it as an asset acquisition. This list is definitely not exhaustive. 31. See 26 U.S.C. § 1060 (1992). Prior to codification of § 1060 taxpayers tried, somewhat unsuccessfully, to use the second tier allocation method. This method would generally cause less of the purchase price to be allocated to goodwill than the residual method. See Banc One Corp. v Comm’r, 84 T.C. 476 (1985) (residual method chosen over second tier allocation). 32. 26 U.S.C. § 1060 (1992).

price.33 Class I included cash, demand deposits and liabilities assumed.34 Class II included marketable securities and certificates of deposit.35 Class III assets were those assets, including tangible and intangible assets that were not Class I, II or IV.36 Class IV assets were goodwill and going concern value.37 The residual method required, first, that the purchase price be allocated to Class I based on the value of the assets in the class.38 After that first allocation; the remaining purchase price was to be allocated to the remaining classes in sequential order.39 Each class was allocated a portion of the purchase price based on its fair market value as of the date of purchase.40 Each class had to be allocated the entire fair market value of that class before the next class was allocated any of the remaining unallocated purchase price.41 If the purchase price could not cover all of the assets in the class, the amount was allocated to each individual asset in the class on the basis of its fair market value in relation to the total fair market value of that class.42 Any remaining purchase price after the allocation to Classes I through III was allocated to Class IV, goodwill and going concern value.43 The intangible assets that were allocated to Class III had to meet certain requirements. The assets needed to be separately identifiable, valuable, and have a determinable useful life that can be reasonably estimated.44 Any intangible assets that did not

33. Id. Note that the regulations increased the number of classes after the passage of OBRA of 1993. 34. 26 C.F.R. § 1.1060-1T(d)(1) (1992). 35. Id. § 1.1060-1T(d)(2)(i). 36. Id. § 1.1060-1T(d)(2)(ii). 37. Id. § 1.1060-1T(d)(2)(iii). 38. 26 C.F.R § 1.1060-1T(d)(2) (1992). 39. Id. 40. Id. 41. Id. § 1.1060-1T(d). 42. 26 C.F.R. § 1.1060-1T(d)(2) (1992). For example, assume 2 assets are in Class III. These are Asset A with FMV of ten and Asset B with FMV of five. Assume that the unallocated purchase price after Class I and Class II allocations is twelve. Asset A would have an allocated price of eight (10/(10+5)*12) and Asset B would have an allocated a price of four (5/(10+5)*12). Nothing would be allocated to Class IV (goodwill or going concern value). 43. Id. § 1.1060-1T(d)(2). 44. See Newark Morning Ledger Co v. United States, 507 U.S. 546, 566 (1993) (holding that paid customer lists are separate from goodwill, even though it appears to reflect the expectancy of continued patronage. These lists were customers who had

meet these requirements were considered part of the residual, meaning they were goodwill and/or going concern value. Once the purchase price had been allocated to the assets that were purchased as part of the trade or business, a determination had to be made regarding the useful life and whether or not the asset was amortizable. “If an intangible asset [was] known. . .to be of use. . .for only a limited period, the length of which can be estimated with reasonable accuracy, [it] may be the subject of a depreciation allowance. . . .”45 Shortly prior to OBRA of 1993,46 the Supreme Court clarified that the intangible must be determinable separately from any goodwill.47 Prior to the Supreme Court decision, there was a two-prong test to determine if an asset is goodwill or a separate intangible asset.48 The two prongs were a separate and ascertainable value and a limited useful life, which can be determined with reasonable accuracy.49 This test was an attempt at diminishing the controversies.50 The court noted that cases revolve “on the precise nuances of its facts.”51 The burden is on the taxpayer to establish these facts.52 Goodwill was defined as the continuous earning capacity and continued patronage of a business.53 Going concern value was defined as the ability of the trade or business to continue as a profitable business after a merger or acquisition.54 Even though the concepts were similar, they were different intangible assets. papers delivered to their specific addresses. They did not pay in advance and the relationship was terminable at will by either party. The IRS stipulated the valuation of the paid list and therefore the burden for Newark was much easier as they only had to prove that the list was separately identifiable with a determinable useful life than it would be under a different fact scenario.). 45. 26 C.F.R. § 1.167(a)-3 (1992). 46. Pub. L. 13-66 Title XIII § 13261(a) 107 Stat. 312 (1993). 47. See Newark at 566. A taxpayer able to prove that a particular asset can be valued and that it has a limited useful life may depreciate its value over its useful life regardless of the fact that its value is related to the expectancy of continued patronage. The significant question for purposes of depreciation is not whether the asset falls within the core concept of goodwill. 48. See Hous. Chronicle Pub. Co. v. United States, 481 F.2d 1240, 1250 (1973). 49. Id. 50. Id. 51. Id. 52. Id. 53. See Welch v. Comm’r, T.C.M. (RIA) 97,120 (quoting Wilmot Fleming Engineering Co v. Comm’r, 65 T.C. 847, 861 (1976)). 54. Id. (quoting Computing & Software Inc. v. Comm’r, 64 T.C. 223, 235 (1975)).

Neither goodwill nor going concern value was deductible prior to the 1993 act.55 During the purchase and sale of a business specific identification of intangible assets was a point of contention between taxpayers and the IRS.56 The three main arguments concerned: value, life and deductibility of any amortization.57 The main reason for the arguments was that taxpayers wanted to be able to deduct the cost of the intangible assets in the same manner that they could deduct the cost of the tangible assets purchased in the same transaction. Tangible assets purchased in these transactions were deductible over the IRS determined life.58 For property placed in service after 1980, Congress modified the depreciation rules to eliminate discussions over the useful life and salvage value of tangible assets.59 First, Congress introduced the Accelerated Cost Recovery System (ACRS), then for property placed in service after 1987, the system was changed to the Modified Accelerated Cost Recovery System (MACRS).60 One idea of ACRS was to reduce the number of arguments between the taxpayers and the IRS over the depreciable life of tangible fixed assets.61 One reason for the change to MACRS was to determine a life for a group of assets.62 A table was created that employed the industry as well as the type of fixed asset to dictate the tax useful life of an asset.63 Taxpayers then utilized that table to figure out the tax life and methodology of depreciating the tangible asset. The methodology was derived from the useful life of the asset.64 Addressing the concerns for tangible assets was 55. 26 C.F.R. § 1.167(a)-3 (1992). 56. See Staff of the Joint Comm. on Taxation, 103d Cong., Technical Explanation of the Tax Simplification Act of 1993, Title V Treatment of Intangibles (Comm. Print July 8, 1993) at 147-171. 57. Id. 58. See 26 U.S.C. § 168 (1992). 59. See Senate Rep. No. 97-144, 97th Cong., H.J. Res. 266 (stating the rules are too complex and result in unproductive controversies). 60. See Report of the Comm. on Finance, Senate Rep. No 99-313, 99th Cong. H.R. 3838 (indicating modifications were to make up for the loss of the investment credit). 61. See Senate Rep. No. 97-144, 97th Cong., H.J. Res. 266. 62. See Report of the Comm. on Finance, Senate Rep. No 99-313, 99th Cong. H.R. 3838. 63. See 26 U.S.C. § 168 (1992). Publication 946 has an example of the table issued by the IRS for taxpayers to use in preparing their tax returns. 64. Id. (indicating that shorter lived assets are depreciated with a double declining methodology, mid lived assets are depreciated with 150% declining balance, and long lived assets are depreciated on a straight line basis).

easier than for intangible assets because a taxpayer could touch and feel the tangible ones. A taxpayer could have looked at the asset and determined what it was, knowing the industry in which the taxpayer would use the asset. These two factors coupled with the MACRS tables as published enabled the majority of taxpayers to calculate the correct depreciation allowed.65 In the case of intangible assets it was more difficult for taxpayers to determine the value and the life of the asset.66 Experts could have been hired to determine the value of the intangible assets acquired during the transaction. The definition of the intangible asset being valued was important, for example goodwill is not deductible even if the parties do not call the intangible goodwill.67 Prior to the 1993 tax act,68 the Class III assets could have different lives for each transaction.69 For example, computer software had a sixty-month amortization period, but a covenant not to compete had a life that varied depending on the duration of the contract. If multiple covenants were contracted, then each covenant could potentially have a different life. The taxpayer would generally argue for the shorter 65. MACRS is a depreciation method that allows taxpayers to recapture the cost of tangible fixed assets over their useful lives. The tables developed by Congress identify which life each asset falls into. The basic groupings are three, five, seven, ten, fifteen, twenty-seven and a half and thirty–nine year assets. Three, five and sevenyear assets are depreciated over a 200% declining balance method. The ten and fifteen-year assets are depreciated using the 150% declining balance method. Twentyseven and a half and thirty-nine year property are depreciated over a straight-line method. This is due in part to the fact that the assets in this group are real estate. Therefore the nature of the asset, and the life determine the methodology. The taxpayer looks up on one table the type of asset. That table will identify the life of the asset. Using that life the taxpayer then looks at the depreciation rate tables to see how much depreciation to take in the current year for that asset. For example, assume a computer cost 1,000. Looking up computers, a taxpayer would see that the life of a computer is five years. Then looking at the depreciation rate tables, the taxpayer would see that the rates for five year property are: year one = twenty percent, year two = thirty-two percent, year three = nineteen point two percent, year four = eleven point fifty-two percent, year five = eleven point fifty-two percent and year six = five point seventy-six percent. Each year a taxpayer would multiply the cost times the appropriate depreciation percentage to calculate the amount of depreciation deductible. (year one would be 200 (1,000 x 20%)). 66. See Hous. Chronicle, 481 F.2d at 1245-47 (listing various issues taxpayers have had with meeting the burden to prove the value and/or life of intangible assets). 67. Id. at 1247 (quoting Winn-Dixie Montgomery, Inc. v. United States, 444 F.2d 677, 681-82 (1971)). 68. Pub. L. No. 103-66 Title XIII § 13261(a) 107 Stat. 312 (1993). 69. See Hous. Chronicle 481 F.2d at 1246 (suggesting that the burden is on the taxpayer to prove the duration of each intangible asset).

life, the IRS would argue for a longer life. The IRS could even argue, that although the taxpayer allocated the purchase price, they did not do so to the appropriate level of detail.70 One goal of the IRS appeared to be to shift the value from the deductible items to non-deductible goodwill or going concern value. Depreciation or amortization deductions were taken over the life of the assets.71 When assets were disposed, then gain or loss was calculated on the disposal.72 The cost less the amortization taken to date was the adjusted tax basis of the assets for the calculation of the tax gain or loss.73 If the asset became worthless during the period of ownership, it was possible to abandon74 the asset or take an obsolescence or worthlessness deduction.75 These were “separate and distinct concepts;” therefore taxpayers could use either for deductions as long as all requirements were met for the chosen deduction.76 The requirements for abandonment were that the taxpayer had the intent to abandon the asset and took an affirmative step to indicate such intent.77 Prior to OBRA of 1993,78 these deductions applied to purchased intangible assets.79 However, goodwill was not subject to obsolescence even if purchased, because obsolescence was an expansion of the depreciation concept. Since goodwill was not depreciable, then obsolescence could not apply to it.80 Before taking any deduction, the taxpayer must satisfy the “all events test”.81 There were two prongs to this test.82 The first 70. See Realty Loan Corp. v. Comm’r, 54 T.C. 1083 (1970) (holding that the allocation to a business should have been broken down further to goodwill and future income). 71. See 26 U.S.C. § 167 (1992). 72. Id. § 1012. Depending on various factors, the gain may be capital or ordinary. The capital gain may have special treatment. 73. Id. § 1016. 74. Id. § 165(a). 75. See 26 C.F.R. § 1.167(a)-8. These deductions are considered ordinary losses. The difference between capital gain and loss and ordinary income and loss is beyond the scope of this comment, but it is an item that tax professionals should take into consideration when assessing the options available. 76. Echols v. Comm’r, 950 F.2d 209, 211 (1991). 77. See Middleton v. Comm’r, 77 T.C. 310, 320 (1981). 78. Pub. L. No. 103-66 Title XIII § 13261(a) 107 Stat. 312 (1993). 79. See, Appeal of Manhattan Brewing Co., 6 B.T.A. 952, 961 (1918) (holding selfcreated goodwill cannot get an obsolescence deduction). 80. Id. 81. See 26 C.F.R. § 1.446-1(c)(1)(ii) (1992).

was that “all the events have occurred which fix the right to receive such income.”83 For an actual disposal, this prong was generally easily met. If the taxpayer sold the item to a third party and the third party had control of the asset, then generally the first prong of the all events test was satisfied. The second prong was that the amount “can be determined with reasonable accuracy.”84 Again in a disposal, this is generally easy to calculate.85 Therefore actual disposals of assets to third parties generally met the all events test and the gain or loss was a taxable event to the taxpayer when it took place.86 It was more difficult to meet the requirements of this test for abandonment and worthlessness write-offs. For abandonment, the amount of what was being abandoned may have been difficult to determine. Where there was a complete abandonment of the intangible asset the test could be satisfied. The value in that case would be the adjusted tax basis at the time of abandonment.87 For worthlessness or obsolescence, the issue was one of timing. It may have been difficult for a taxpayer to prove that the obsolescence took place in year X and not in year Y.88 The accounting rules during this period were diametrically opposed to the tax rules. Goodwill was amortizable over the life determined under the Financial Accounting Standards Board (FASB) rules.89 The amount of expense for general accounting purposes each year was determined by the useful life calculated under generally accepted accounting principles (GAAP). If the goodwill became impaired before it was completely expensed through annual expensing, an impairment charge could have been

82. Id. 83. Id. 84. Id. 85. The sales price less the adjusted tax basis is the gain or loss amount. When dealing with third parties in a straight disposal transaction, these numbers can generally be calculated with reasonable accuracy. 86. 26 U.S.C. § 1001(a) (1992). 87. See 26 U.S.C. § 1012 (1992). 88. It is possible that these requirements could have been met. The better the records, the better chance the taxpayer had of proving that the deduction meets the all events test. A thorough discussion of the all events test in the various transactions is beyond the scope of this comment. The burden is on the taxpayer to prove that all events have taken place in the year of deduction. See 26 C.F.R. 1.446-1 (1992). 89. See Financial Accounting Standards Board, Financial Accounting Series, Statement of Financial Accounting Standards No. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed of ¶¶ 4-11 (1995).

recorded on the books, which allowed the company to write off the remainder of the unamortized balance for financial accounting purposes.90 Post 1993 tax act In 1993 Congress passed OBRA.91 The internal revenue code section 197 relating to intangible assets was part of the act.92 Congress’ stated purpose in passing this section is to reduce the number of cases in front of courts regarding the value and amortization of intangible assets.93 Congress has used this methodology on other occasions in the past to reduce the number of cases where taxpayers and the government had regularly litigated the same types of fact-based disputes.94 This section governs the treatment of intangible assets.95 Specific intangible assets are included in the definition of a section 197 intangible.96 There are also some specific items excluded.97 Once an intangible asset is included in the definition of section 197, the asset is amortized over a fifteen-year period.98 Amortization begins on the first day of the month that the intangible is acquired.99 Since the enactment of the new section, most self-created assets are treated identically as they were before the enactment of section 197, as specific self-created assets are excluded from the definition of a section 197 intangible.100 For example, goodwill is not amortizable as a section 197 intangible when self-created; 90. Id. 91. Pub. L. No. 103-66 Title XIII § 13261(a) 107 State. 312 (1993) (codified in scattered sections of 26 U.S.C.). The sections that are of concern to this topic are located in 26 U.S.C. § 197 and 26 U.S.C. § 167. 92. 26 U.S.C. § 197 (1994). 93. See Staff of the Joint Comm. on Taxation, 103d Cong., Technical Explanation of the Tax Simplification Act of 1993, Title V Treatment of Intangibles (Comm. Print July 8, 1993) at 147-71. 94. H.R. Conf. Rep. 99-841 pt. III, at 310-14 (1986) (stating “the conferees are aware that treatment of independent research and development is presently a subject of controversy”), S. Rep. 96-1036 (1980) at 11 (indicating the goal of the bill is to “to decrease controversy and litigation arising under present law”), H.R. Rep. 105-817 at 62 (1998) (defining what qualifies as specified loss liability to reduce controversies). 95. 26 U.S.C. § 197 (1994). 96. Id. § 197(d). 97. Id. § 197(e). 98. Id. § 197(a). 99. See 26 C.F.R. § 1.197-1T (1994). 100. 26 U.S.C. § 197(c)(2) (1994).

however many of the expenses incurred to create the goodwill may be deductible as ordinary and necessary business expenses, just as they were before the act.101 A covenant not to compete that is between an employer and an employee is not “entered into connection with an acquisition. . .of an interest in a trade or business.”102 Therefore the covenant will be amortized over the life of the covenant.103 Computer software under section 197 has special rules.104 If software is self-created, purchased independently, or readily available for purchase by the general public, subject to a non-exclusive license, and has not been substantially modified then it falls outside of the definition of a section 197 intangible.105 The assets that are purchased independent of a trade or business have varied treatment. Some intangible assets are included in the definition of a section 197 intangible, subject to fifteen-year amortization; some are excluded from the definition.106 Again, if the asset is included in the definition, fifteen-year amortization is applicable.107 If it is not included, then prior rules apply.108 Almost all intangible assets that are purchased as part of a trade or business fall under the definition of a section 197 intangible. The section specifically includes goodwill and going concern value.109 As such, goodwill and going concern are now amortizable over a fifteen-year period, just like any other section

101. Id. § 162 (1992). See the discussion infra Part IIA to see examples of expenses that may create goodwill. 102. Id. § 197(d)(1)(E) (1994). 103. As the covenant does not meet the definition of a section 197 intangible, then section 197 does not apply to it. Once an asset is determined not to fall into 26 U.S.C. § 197, other rules apply. Therefore section 167 would apply which looks at the useful life of the underlying asset. 26 U.S.C. § 167 (2001). 104. Id. § 197(e)(3) (1994). 105. Id. 106. This requires that the taxpayer take special care in reading and understanding the definition of a section 197 intangible asset because it is easy to run afoul of the depreciation rules. This is important because the depreciation that is needed for the gain or loss calculation is depreciation or amortization that is allowed or allowable. See 26 U.S.C. § 1016 (1992). If the wrong amortization is taken and the tax year closes, when the assets are later sold, the taxpayer can possibly permanently lose a deduction for tax amortization that should have been taken in a closed year. 107. See 26 U.S.C. § 197 (1994). 108. Id. § 167. 109. Id. § 197(d)(1)(A)-(B) (1994).

197 intangible.110 The purchase price allocation rules under section 1060 of the internal revenue code still apply in the same manner as prior to OBRA of 1993.111 This section has recently been updated to include cross-references to section 197.112 The changes to section 1060 include expanding the number of classifications to seven.113 This expansion helps give the IRS more information regarding the valuation of the assets purchased;114 it also effects the allocations to specific groups of assets where the purchase price is less than the fair market value of all of the assets purchased.115 The methodology of this section has not been changed by the passage of section 197, only the specifics regarding which assets fall into each class have changed.116 Once the value of the individual intangible assets has been determined, it is amortized over the fifteen-year period demanded by Congress.117 If any one of these intangible assets is disposed of, any loss realized cannot be deducted until all intangible assets purchased in the same transaction, or series of transactions, are disposed of.118 This means that when a trade or business is purchased, and the purchaser has decided to sell off a portion of that business, the investment is tied up for the remainder of the fifteen-year period from the date of purchase.119 Abandonment and worthlessness deductions are still a part of the internal

110. Id. § 197(a) (1994). 111. Pub. L. 13-66 Title XIII § 13261(a) 107 Stat. 312 (1993). 112. See 26 C.F.R. § 1.1060-1 (amended Feb. 13, 2001). 113. Id. § 1.1060-1 114. One of the new classes created is Class VI. This class is for all section 197 Intangible assets other than goodwill and going concern value. See 26 C.F.R. § 1.338-6 (2001). The IRS will now have information at a glance regarding what was purchased for each transaction in which a Form 8594 is required to be filed. 115. Assume a taxpayer has the following assets. Also assume, that due to other business reasons, the assets are not being sold at fair market value, but are being sold at the seller’s basis in the property. This is called a bargain purchase. See Table 1. The overall purchase price has not changed. However in the bargain purchase realm, the price allocated to the current assets is higher under the new regulations. This is beneficial to the taxpayer as equipment is a capital asset and will take longer to recover for tax purposes than the current assets. 116. The major difference upon a reading of each code section is the number of classes. However, 26 U.S.C. § 1060 (2001) does state that the Class information can now be found in 26 C.F.R. § 1.338-6 (2001). 117. 26 U.S.C. § 197(a) (1994). 118. 26 C.F.R. § 1.197-2(g)(1) (2001). 119. Id.

revenue code and apply to purchased intangible assets as well as most tangible fixed assets.120 However, the code specifically states that the term “disposed” includes abandonment.121 Therefore it is impossible to get any sort of deduction for purchased intangible assets when purchased as part of a trade or business, when any of the intangible assets purchased together are still owned by the taxpayer, for a period of up to fifteen years.122 Taxpayers will not have to allocate any of the loss on any disposals of other intangible assets purchased in the same transaction or series of transactions to any intangible that the taxpayer has abandoned, or they can prove worthlessness or obsolescence.123 In fact, the net tax value of such abandoned or obsolete intangible assets should be allocated to the remaining intangible assets in the same manner, as a loss on disposal.124 The one exception to this is covenants not to compete.125 These assets shall not be deemed to be worthless, abandoned or disposed unless the entire interest of the trade or business that was purchased with the covenant not to compete is disposed.126 Note that the all events test is still part of the Internal Revenue Code.127 A third prong is added to the requirements of the test. It requires that “economic performance. . .occu[r] with respect to the liability.”128 “Except as otherwise provided in [the Internal Revenue Code], if the liability of a taxpayer arises out of the providing of services or property to the taxpayer by another person, economic performance occurs as the services or property is provided.”129 Again for disposals, this is an easy test to meet. Abandonment and worthlessness deductions would have the same issues associated with them as they did prior to the change in the law.130 120. 121. 122.

26 U.S.C. § 165(a) (2000); 26 C.F.R. § 1.167-8(a) (2000) 26 C.F.R. § 1.197-2(g)(1) (2001). Id. (distinguishing between intangible assets purchased as part of a trade or business and those purchased independently). 123. See 26 C.F.R. § 1.197-2(g)(1) (2001). 124. Id. 125. 26 U.S.C. § 197(f)(1)(B) (1994). 126. Id. 127. Id. § 1.446-1(c)(1)(ii) (2000). 128. Id. 129. Id. § 1.461-4(d)(2) (2001). 130. A thorough discussion of economic performance is beyond the scope of this comment. The point is that when an item is sold to a third party in a corporate context, it is very, very rare that the tax law would completely prohibit the recognition

When the intangible assets are disposed, a gain or loss is calculated.131 The loss disallowance section only disallows the loss.132 Therefore any gain that is realized on the transaction must be recognized for tax purposes as the transaction occurs.133 ANALYSIS

Once Congress changed the treatment for intangible assets, it appears that the number of court cases was reduced.134 Some scholars believed that this was a good treatment of intangible assets.135 I take a contrary view. In this economy where a large number of software, or “dot com”, companies are being purchased mainly for software, the purchasing taxpayer is potentially ending up in a costly tax situation. This is true especially in the New England area where technology is one of the leading industries.136 It is virtually indisputable that being able to deduct goodwill is beneficial for taxpayers. There is also a benefit to knowing that the valuation placed on intangible assets, although important, will not be challenged as ferociously because the impact on the deductibility is limited due to the standardization of amortization. However, due to the elongated amortizable lives and the loss disallowance rules, the change in the tax law has some detrimental effects to the taxpayer that have not previously been

of that loss. It may be deferred until there is a gain to use the loss against (as in the capital loss recognition rules). 26 U.S.C. §§ 1211-1212 (2001). 131. This is the same calculation as discussed supra notes 71-2 and accompanying text. 132. See 26 C.F.R. § 1.197-2(g)(1) (2001). 133. See M. Charles Collins, Note, New Section 197 of the Internal Revenue Code: Simplifying the Amortization of Intangibles in the Wake of Newark Morning Ledger Co. v. United States 25 U. Tol. L.Rev. 815, 842 (1994) (stating that Congress may have been trying to recover revenue lost due to excluding certain kinds of software from the application of section 197). 134. A search based on section 197 and intangible assets only yielded a handful of cases, while a search before 1993 based on goodwill yielded hundreds of hits. 135. See Gregory M. Beil, Comment, Internal Revenue Code Section 197: A Cure for the Controversy Over the Amortization of Acquired Intangible Assets, 49 U. Miami L. Rev. 731 (1995) (concluding “Section 197 will substantially eliminate disputes between taxpayers and the IRS with respect to allocation of purchase price and useful life”). 136. See Massachusetts Division of Employment and Training Manual (1998) (demonstrating that between 1993 and 1998 13% of all jobs created in MA were high tech jobs. The computer software industry accounted for 76% of these jobs. The pamphlet also indicates that high tech was the biggest industry in 1998 for MA. A chart included shows a similar trend for the Northeast.).

analyzed.137 Prior to the act, when a taxpayer purchased a company, the purchase price was allocated to each asset and each intangible was amortized over their individual useful life. For example, software was written off over a thirty-six month period. If the taxpayer could prove that the asset was disposed of, abandoned or worthless an immediate write-off was allowed. Therefore, intangible assets and tangible assets were treated the same. If the taxpayer continued to use a portion of the software for the next generation of software it is more likely that the taxpayer would be willing to continue amortizing the software over the tax life, as it was only a delay of up to three years. Under the new code section, the intangible assets are still allocated a portion of the overall purchase price.138 All intangible assets that fit within the definition of a section 197 intangible are then amortized over a fifteen-year period.139 Even if the taxpayer can prove that the asset was disposed, abandoned, or worthless, the deduction cannot be recognized by the taxpayer. The taxpayer must allocate the loss to the other intangible assets that are purchased in the same transaction or series of transactions; covenants not to compete cannot be allocated in this manner.140 Congress could have achieved the results they were looking for by utilizing already existing code sections. One alternative that they could use is the same methodology employed for tangible fixed assets.141 Create a table indicating what life each intangible asset would have based on the type of intangible and the industry in which the asset is used.142 Congress could then allow taxpayers to use the disposal, abandonment and worthlessness rules that apply to the tangible fixed assets. This methodology 137. In the discussion of section 197 to this point, the focus has been on the goodwill. However, the loss disallowance rules have not been mentioned. In at least one article software has been treated as if it had been exempted from these rules. Catherine L. Hammond, Comment, The Amortization of Intangible Assets: Section 197 of the Internal Revenue Code Settles the confusion 27 Conn. L. Rev. 915, 914 (Spring 1995) (stating “excluded assets are . . . computer software . . .). However purchased software that has not been exempted is still subject to these rules. 26 U.S.C. § 197(d)(1)(C)(ii) (1994). 138. 26 U.S.C. 1060 (2001), 26 C.F.R. 1.338-6 (2001). 139. 26 U.S.C. 197(a) (1994). 140. Id. § 197(f)(1)(B). 141. 26 U.S.C. § 168 (2001). 142. For example, software could be amortized over thirty-six months, while covenants not to compete can be governed by the contract and goodwill could remain at fifteen years.

would allow consistency among the tax laws for all types of capitalized fixed assets. The biggest issue arising under this methodology is that the valuation methods would again be debatable. This could possibly mean increased taxpayer and IRS controversy. However, there is a new development at this time that will allow these controversies to be minimized. The FASB has developed new rules for the treatment of goodwill and intangible assets purchased as part of a trade or business. The new FASB rules no longer allow for goodwill or going concern value to be amortized.143 As such, the accounting rules and the tax rules have now been completely transposed. The accounting rules also state that if there is a separately identifiable asset that can be sold, then that asset has to be valued separately from goodwill.144 Those assets are amortizable over the life of the intangible asset for book purposes.145 We should take it as a given that the accounting life of the intangible may very well be different from the tax life ascribed to the same intangible asset. The financial rules try to clearly reflect the financial condition of the corporation for Securities and Exchange Commission reporting.146 The tax rules are looking to reflect economic reality.147 However, the tax rules are often implemented for policy reasons such as to spur investment or to reduce controversies between taxpayers and the IRS. These competing goals can, and often do, cause the useful lives of capital assets to be different for each set of calculations. This should have no impact on the reasonableness of this discussion, because the accounting lives for most assets, including tangible fixed assets, 143. See Financial Accounting Standards Board, Financial Accounting Series, Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets (2001). 144. See Financial Accounting Standards Board, Financial Accounting Series, Statement of Financial Accounting Standards No. 141 Business Combinations ¶ 39 (2001). 145. FAS No. 142 ¶¶ 10-14 (2001). For purposes of this comment, I am addressing only taxable purchases of corporations. Therefore, the separately identified assets listed in FAS No. 141 will be amortizable for tax purposes as well. 146. This is demonstrated by the use of the unqualified audit opinion. Independent auditors when completing an audit can express their opinion in many ways. The desired opinion is an unqualified opinion which states that “the financial statements . . . present fairly, in all material respects, in the financial position of . . . .” 10-K Oracle Corporation 2001. 147. See Indopco, 503 U.S. at 79 (explaining the matching principle).

are different from the tax lives. Congress can leverage off the new accounting rules because it is now necessary for the purchase transactions to be valued at fair market and have the price allocated for financial accounting and Securities and Exchange Commission (SEC) reporting.148 Any remainder will be allocated to goodwill.149 These rules are very similar to the allocation of purchase price under the tax rules.150 If Congress accepts the accounting rules as appropriate, the arguments regarding valuation can be diminished. Public companies registered with the SEC must have their annual financial statements audited by independent public accountants.151 In order for auditors to express an opinion on the financial statements they must test the books and records during the audit.152 The audits are performed in accordance with generally accepted auditing standards (GAAS), to verify that the accounting records are in compliance with GAAP.153 This testing and inspection mandates documentation for any valuation of the The tension between the financial allocations made.154 accountants and the tax specialists will allow for reasonableness in the valuation. The tension will be created because the financial accountants will want the purchase price to be allocated to goodwill.155 Goodwill can no longer be expensed for book purposes,156 and therefore cannot affect earnings per share, a primary concern for corporate accountants. The tax specialists would prefer to have less allocated to goodwill, which would have a fifteen year life, and more allocated to software, or covenants not to compete, etc, to be able to get a faster deduction for tax purposes. This tension will benefit the IRS because each group will try to support its position. In theory, the best supportable

148. 149. 150. 151. 152.

FAS 141 ¶¶ 35-46. Id. ¶ 43. See 26 U.S.C. § 1060 (2001). See 15 U.S.C. § 77aa(25)-(26) An audit is defined as the systematic inspection of accounting records involving analysis, tests and confirmations. Black’s Law Dictionary 126 (7th ed. 1999). 153. Black’s Law Dictionary 226 (7th ed. 1999). 154. The auditors review the audit trail to verify that the books are in compliance with GAAP. The audit trail is the documentation that links the original accounts to the presentation in the financial statements. Black’s Law Dictionary 226 (7th ed. 1999). 155. This tension can be likened to the requirements that parties to the transaction must have adverse tax interests for allocations. See Beaver Bolt, 70 T.C.M. at 1364. 156. FAS 142 ¶ 18 (2001).

number will be utilized.157 Once these allocations are made pursuant to the accounting rules, I propose that Congress use a table developed similarly to the modified accelerated cost recovery tables. Since Congress has already decided that thirty-six months would be an appropriate useful life for computer software, that life can be used for amortization purposes. The table can indicate by industry the proper life for each type of intangible asset. Using this method a taxpayer can use one allocation of purchase price and not have different cost basis for tax and for book purposes. While different lives for book and tax is common for assets, the cost basis is generally the same.158 While there are times that items that are not capitalizable for accounting purposes will be capitalizable for tax purposes,159 the cost is often the same. This method will allow for consistency in the disposal, abandonment and worthlessness rules. The documentation needed would also allow taxpayers to generally be in a position to support the cost basis. After all, the accounting rules require allocation based on fair market value. Taxpayers would be able to get a deduction over a reasonable life for assets. For example, computer software would be deducted over a thirty-six month life as opposed to a fifteen-year life.160 If during this transaction or series of transactions, the taxpayers found that software did not fit with the overall purpose of the purchase and decided to sell the software while they were consolidating their core competencies, they would be allowed the benefit of the tax deduction when the event took place. In this downturn of the economy, many businesses are downsizing while concentrating on their core competencies. Many of these same businesses in the last several years have been

157. The ultimate agreement by the external auditors for GAAP and SEC reporting strongly supports the theory. Currently there is much in the newspapers about Arthur Andersen LLP and their role in the collapse of Enron. The backlash of this event can have several side effects. One of these side effects, already taking place, is increased testing by independent auditors with the hopes of overcoming the lack of trust of the investing public. 158. Since the cost is determined by the purchase price, it is very difficult to get a different cost basis. The difference mainly arises when an item is expensed for book purposes, but capitalized for tax purposes. The expenditure for the item still has not changed. 159. See Indopco, 503 U.S. at 79; 26 U.S.C. § 195 (2000); 26 U.S.C. § 248 (2000). 160. Very little software, if any, is not obsolete after three years.

buying smaller companies for specific assets, tangible and/or intangible. Many companies, for financial accounting purposes, are taking restructure or special charges and are writing off many of the assets they have purchased in these types of transactions. However, for tax purposes, since they are possibly retaining at least one intangible related to the asset, then no current tax benefit will be allowed.161 Under the current rules, the individual or small number of intangible assets being retained will have the remaining unamortized cost allocated directly to it. For example: Assume a taxpayer purchased a “dot com” company for $3,000,000. As a “dot com” company, the tangible fixed assets are usually minimal, assume a value of $10,000. Imagine a workforce worth approximately $50,000, non-compete agreements valued at $500,000, trademarks worth $100,000, computer software with a value of approximately $1,000,000. The remainder of the purchase price – $1,340,000 – would be allocated to goodwill. Assume that the taxpayer could prove that the workforce was laid off. Assume the non-compete covenants are worthless because the people who signed the agreements have decided to retire from the industry and become the greeter at the local Wal-Mart store. Assume that the software is currently being sold at a loss to an unrelated third party. Assume the loss on disposal would be deductible but for the section 197 loss disallowance rules. Assume, that the trademark has been abandoned and the business has continued, but under the stronger mark of the purchasing corporation. In this case, the covenant not to compete and goodwill would be allocated the remaining unamortized value of the worthless, disposed or abandoned assets. Assuming that these transactions occur seven years from the date of purchase, the value of the covenants would be $433,336 and the value of the goodwill would be $1,161,333.162 The value of the covenant not to compete actually exceeds the fair market value of the same covenant at the time of the purchase. This is apparently the intended result of Congress, demonstrated by the intentional language that covenants not to compete shall not be disposed, 161. A deferred income tax benefit may be allowed. These rules, Financial Accounting Standards Board Series, Financial Accounting Standard No. 109 Accounting for Income Taxes, is beyond the scope of this comment. 162. Ntv is the net tax value of the asset. This is calculated as cost less amortization allowed for tax purposes. See Table 2.

abandoned or deemed worthless.163 This is a very harsh result that contradicts the underlying premise of the purchase price allocation rules under section 1060 requiring the purchase price to be allocated to an asset, but not in excess of its fair market value on the date of purchase.164 While it is possible for the market value of assets to increase over time, our tax code is based on historical cost. The cost is determined at the time of acquisition.165 Cost is then adjusted upwards for additional expenditures that increase the life of the asset, or downwards for depreciation and/or amortization.166 If Congress wants taxpayers to adjust the cost to fair market value, separate legislation should be passed.167 Since Congress has not passed this legislation, the historical cost rules should apply. However, they are being bypassed by function of the loss disallowance rules in section 197. It appears that Congress, in wanting to eliminate the number of controversies between the IRS and taxpayers, has managed to undercut the other tax rules that interact with the amortization rules, leaving taxpayers in a difficult tax position in a worsening economy. Allowing the loss on disposal to be taken in the year of the economic loss would free-up resources of the taxpayer to utilize in other areas of its business enterprise. CONCLUSION

The pre section 197 law was difficult to administer because each determination of useful life, value and amortization had to be determined on a case-by-case basis. This caused many arguments between taxpayers and the IRS. To help solve this problem, Congress enacted 26 U.S.C. § 197. This internal revenue code section modified the treatment of intangible assets. While applying to several types of intangible assets, the biggest changes related to the intangible assets acquired during the purchase and sale of a trade or business. 163. 164. 165. 166. 167.

26 U.S.C. § 197(f)(1)(B) (1994). See 26 U.S.C. § 1060 (2001). See 26 U.S.C. § 1012 (2000). Id. § 1016. An example of this is the mark to market rules for certain investments. In these transactions, each year taxpayers must recognize gain or loss based on the fair market value of the asset as of the last day of the tax year. This is to be calculated even if the taxpayer did not dispose of the asset. It is very rare that this type of calculation will be mandated. Congress, to date, has not passed legislation that will cause this calculation for intangible assets.

In this instance, all intangible assets were now to be amortized over a fifteen-year period starting with the first day of the month the intangible was acquired. This change allowed goodwill and going concern value to be amortized and deducted. Until this point no amortization for either was allowed as a deduction for tax purposes. The best the taxpayer could hope for in relation to the purchased goodwill or going concern was a capital loss on disposal. While taxpayers saw the change in the goodwill as a beneficial change, the extension of the tax lives of some of the other intangible assets was detrimental to many taxpayers. Software, which had a relatively short amortizable life, five years, and covenants not to compete which had a life that was usually governed by the contract, were both extended to a fifteenyear amortization period. This would be more acceptable if the regulations stopped there. However, Congress added an additional wrinkle. They included a loss disallowance rule. Therefore, even if the taxpayer sold, abandoned, or proved obsolescence of the intangible, no loss is allowed unless all intangible assets purchased in the same transaction or series of transactions were also sold, abandoned or proved obsolete. In the case of covenants not to compete, the law is even harsher: no loss is allowed unless the entire interest in the trade or business that was purchased in the same transaction is disposed of. This section of the law makes the law egregiously unfair to business taxpayers. I have provided an alternative. Congress can create tables, similar to those used in MACRS, to calculate a tax life for intangible assets. The tables should be based on the type of intangible and the industry the intangible is to be used in. This would meet Congress’ goal of limiting controversies between taxpayers and the IRS because the tables would be established as law. Taxpayers would not be able to utilize any life they may choose, but must use the life mandated by the tables. The types of intangibles used in the tables would closely correlate with the new FASB accounting rules. Taxpayers would be able to use shortened lives for some intangible assets, and longer lives for others such as goodwill and going concern. This leads to the question of how would one allocate purchase price among the various assets. Recent changes in accounting rules already provide a workable answer to that same question.

In the most recent FASB rules, that went into effect for purchases of companies after July 31, 2001, goodwill and going concern value are no longer amortizable. However, intangible assets that have a determinable useful life and that are identifiable as separate from goodwill can be amortized and must be stated separately from any goodwill or going concern value. This means that corporations that are subject to GAAP must have valuations of intangible assets upon purchase of a trade or business. These valuations can be prepared in house, or by external experts. However, the valuations must be supportable enough to provide the external auditors the ability to determine the accuracy of the valuations. Using the valuations needed for GAAP reporting, and the tax lives mandated by Congress, the controversies between taxpayers and the IRS will be minimized. Taxpayers will be allowed to use a more appropriate life (i.e., not have to amortize software that is obsolete in three years over a fifteen year life). Taxpayers will also be allowed to match the loss on disposal with the actual economic event of disposing the asset. This is a better application of core underlying tax concepts such as the matching principle and the all-events test. In a downturn of the economy, the tax savings may allow taxpayers to invest in replacement assets that they may have to postpone under the current tax law. Marjorie A. Connelly

TABLE 1 Asset

Basis

FMV

Cash

1,000

1,000

Land & Equipment

2,500

3,000

Accounts Receivable

200

200

Inventory

300

350

Goodwill Totals

450 4,000

5,000

Allocations: Pre-OBRA

Post-OBRA

Class I

1,000

1,000

Class II

3,000

Class III (Accounts Receivable)

200

Class IV (Inventory)

350

Class V (Land & Equipment) Total purchase price

2,450 4,000

Allocation within Class II Land & Equipment

2,535

Accounts Receivable

169

Inventory

296

Total Class II

3,000

4,000

TABLE 2

Cost Allocation Price

Amortization per year

Amortization for 7 years

ntv

loss

reallocated

Adjusted ntv

3,000,000

Fixed assets

10,000

Workforce

50,000

3,333

23,331

26,669

Covenant

500,000

33,333

233,331

266,669

Trademarks

100,000

6,667

46,669

53,331

(53,331)

-

1,000,000

66,667

466,669

533,331

(533,331)

-

Software Goodwill

1,340,000

89,333

625,331

714,669

Totals

3,000,000

199,333

1,395,331

1,594,669

237

(26,669)

166,667

(613,331)

433,336

446,664

1,161,333

613,331

1,594,669

Stiring up the Debate in Rhode Island: Should Lead Paint Manufacturers Be Held Liable for the Harm Caused by Lead Paint? On October 12, 1999, Rhode Island (the State) became the first state in the nation to sue lead paint manufacturers1 (the lead industry) for the harmful effects of lead poisoning.2 Rhode Island health officials claim that dust and flakes from lead-based paints have poisoned thousands of children and have cost Rhode Islanders millions of dollars for health care, special education programs and building repairs.3 In fact, there are so many poorly maintained houses in Providence that some activists have dubbed it “the lead paint capital of the country.”4 In its complaint against the lead industry, the State alleges an extensive history of defendants’ conduct, consisting of misrepresentations and concealment of evidence regarding the hazards of lead.5 The parties do not dispute the fact that lead paint has harmful effects. Rather, the controversy centers around who is to blame for the lead poisoning problem in Rhode Island. The lead 1. The named defendants include: Lead Industry Ass’n, Inc., American Cyanamid Co., Atlantic Richfield Co., E.I. Dupont DeNemours Co., The O’Brien Co., Conagra Grocery Products Co., The Glidden Co., NL Industry, Inc., SCM Chemicals, The Sherwin-Williams Co. and John Doe Corps. 2. See State v. Lead Indus. Ass’n, Inc., No. 99-5226, 2001 WL 345830, at *1 (R.I. Super. Ct. Apr. 2, 2001). 3. Peter B. Lord, Are Lead Paint Firms Liable For Damages?, Prov. J. Bull., June 18, 1999, at A-1. 4. Id.

5. The State claims that it has been damaged because it has incurred, and continues to incur, substantial costs related to discovering and abating lead, detecting lead poisoning, providing (i) medical care for lead-poisoned residents, providing, (ii) education programs for children suffering injuries as a result of lead exposure and providing (iii) education programs for state residents. Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1.

237

industry contends that the main causes of the lead poisoning problem are the State’s weak and poorly enforced lead paint laws and the negligence of Rhode Island landlords in repairing peeling paint when necessary.6 According to the Environmental Protection Agency (EPA), most lead poisoning in young children today occurs from the ingestion of lead paint chips and the handling of contaminated dust and soil via hand-to-mouth behavior.7 Furthermore, the EPA claims that lead paint in good condition typically is not a hazard.8 Defendants ultimately conclude that if landlords had maintained their properties properly, lead poisoning in Rhode Island would not have reached such alarming levels. Thus, the question begs: In Rhode Island, should lead paint manufactures be held liable for the harm that lead paint has caused or is the State simply jumping on the tobacco settlement bandwagon?9 The State’s original complaint listed ten causes of action for which it sought relief, however, the State’s chances for victory essentially rested on two theories: strict products liability and public nuisance.10 On April 2, 2001, the State suffered a serious setback when the Rhode Island Superior Court dismissed the State’s strict liability claim and eight of the nine remaining tort claims.11 Only the public nuisance claim survived and it currently 6. Peter B. Lord, Lead Paint Makers Draw Landlords into Legal Fray, Prov. J. Bull., June 26, 2001, at A-1. 7. Office of Pollution Prevention & Toxics, U.S. EPA, Pub. No. 747-R-97-006, Risk Analysis to Support Standards For Lead in Paint, Dust, and Soil 3-10 (1998) [hereinafter Risk Analysis]. 8. U.S. EPA, Protect Your Family from Lead In Your Home 5 (1999). 9. Defs.’s Mot. to Dismiss the Pl.’s Compl. at 3, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1. 10. The ten causes of action pleaded in the State’s complaint include: (i) public nuisance; (ii) violation of the Rhode Island Unfair Trade Practice and Consumer Protection Act; (iii) strict liability; (iv) negligence; (v) negligent misrepresentations and omissions, (vi) fraudulent misrepresentations and omissions; (vii) civil conspiracy; (viii) unjust enrichment; (ix) indemnity and (x) equitable relief to protect children. Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1. 11. The court based its decision on the remoteness doctrine ruling that “because the State’s claims were derived from damages to others [the State’s citizens], the claims were too remote to be recoverable by the State.” Id. at *14. The court explained that “the doctrine of remoteness bars recovery in tort for indirect harm suffered as a result of injuries directly sustained by another person.” Id. The court also ruled that the State is unable to recover for injuries to its residents allegedly caused by lead paint and unable to recover for lead related special education costs. Id. The State’s other tort claims that were dismissed include negligence, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions. Id.

remains the State’s last hope to be compensated for the detrimental effects of lead poisoning. In dismissing the strict products liability claim, the court did not answer the question of whether the lead industry should be held strictly liable for the harm caused by lead paint. In fact, no U.S. court has ever decided this issue. Consequently, this Comment will focus on whether, under Rhode Island law, lead paint manufacturers should be held strictly liable for the defective design of lead paint and for the failure to warn of the dangers of lead paint. The State’s remaining public nuisance claim will also be discussed. Part I of this Comment discusses the medical effects of lead exposure on our health. Part II analyzes the doctrine of strict liability and the rationales behind imposing strict liability on product manufacturers. Part III discusses the history of lead paint litigation in the United States. Whether lead paint is unreasonably dangerous as a result of a defective design and whether lead paint is unreasonably dangerous as a result of the manufacturers’ failure to warn of the dangers of lead paint will be discussed in parts IV and V respectively. Part VI analyzes the State’s public nuisance claim. Part VII addresses two other reasons why the lead industry may not be liable for the harm caused by lead paint. Finally, this Comment will conclude that in Rhode Island, holding the lead industry accountable for the harm caused by lead paint is unlikely to occur. I. THE EFFECTS OF EXPOSURE TO LEAD

Effects of Lead on Adults Lead is a toxic metal with no known function in the human body.12 In fact, all recorded effects of lead on living organisms are detrimental.13 Lead is a particularly dangerous health threat because people exposed to harmful levels of lead usually do not show immediate or clear symptoms of such exposure.14 Exposure to lead in adults can damage the peripheral nervous system, affecting memory, vision, muscle coordination, and can cause 12. U.S. EPA, Technological Information Packages: Lead Phase-Out (2001), available at http://www.epa.gov/oia/tips/lead2.htm [hereinafter Lead Phase Out]. 13. Id. 14. Id.

weakness in the fingers, wrists or ankles.15 High levels of lead can damage kidneys, resulting in anemia and miscarriage, and can decrease fertility in both men and women.16 Effects of Lead on Children Lead poisoning in children is a major health problem in the Unites States, yet it is one of the most common preventable pediatric health problems.17 According to the Centers for Disease Control (CDC), as many as one in eleven U.S. children under the age of six might have elevated levels of lead in their blood.18 Because children differ physiologically from adults, the effects of exposure to lead differ accordingly.19 Children are more vulnerable than adults to the hazards of lead exposure because of their small body size and their rapid development.20 In fact, children between one and two years of age absorb forty to fifty percent of ingested lead, whereas adults absorb only ten to fifteen percent of ingested lead.21 Because of the continuing problem of lead poisoning in children, the CDC has lowered the acceptable blood lead level three times over the past twenty years, setting the current standard at ten micrograms of lead per deciliter of blood (ten ug/dL) in 1991.22 How Are Humans Exposed to Lead? There are a variety of environmental sources and reservoirs of lead that can contribute to overall lead exposure in a child.23 These sources are both natural, such as crustal weathering, and resulting from human activity, such as auto and industrial emissions, paint and industrial dusts, solder and lead glazes.24 Because this Comment focuses on the hazards caused by lead paint, this section will only discuss how humans are exposed to lead through lead paint and through dust and soil.25 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Id. Id. Id. Id. Id. Id. Id. Id. Risk Analysis, supra note 7, at 3-4. Id. The other sources of lead exposure are: (1) Airborne Lead; (2) Lead in

Lead in Paint While there are many sources of lead in the human environment, lead-based paint hazards in residential housing are

Drinking and Cooking Water; and (3) Lead in Food. See id. (1) Airborne Lead Major contributions to airborne lead levels have been attributed to emissions from lead smelters, battery manufacturing plants, solid waste incinerators and automobiles. Id. Historically, leaded gasoline was a major source of lead exposure in the United States, however, leaded gasoline has been phased out dramatically over the last twenty years, leading to a ninety percent reduction in emissions of lead. Lead Phase Out, supra note 12. While leaded gasoline is still used in most countries, amendments to the U.S. Clean Air Act of 1990 called for a ban on the manufacturing, sale or introduction of engines that required leaded gasoline after 1992, and for the prohibition of all leaded gasoline for highway use after 1995. Id. This reduction in lead-consumed gasoline has corresponded to a dramatic decrease in the average lead concentration in children’s blood. Id. Lead concentrations in gasoline range from 0.1 grams of lead per gallon (0.1 g/gal) of gasoline in the United States to 0.84 g/L of gasoline in economically developing nations, particularly in Africa. Id. (2) Lead in Drinking and Cooking Water Detectable levels of lead are rarely found in surface and ground water that serve as sources of drinking water in this country. Risk Analysis, supra note 7, at 3-6. Rather, lead contamination of drinking water occurs after water leaves the treatment plant and travels within service lines and household plumbing coming into contact with lead pipes, connectors and solder. Id. Water can also become contaminated at a residence by the lead or brass components of water fountains, coolers, faucets and other fixtures. Id. at 3-6-7. “The EPA has estimated that twenty to forty percent of the average blood lead in U.S. children may come from lead in drinking water.” Lead Phase Out, supra note 12. By enacting The Safe Water Drinking Act, 42. U.S.C. § 300 j-21 (1996), Congress banned the use of lead materials and solders in new plumbing and plumbing repairs and, as a result, drinking and cooking water from municipal and other large drinking water distribution systems are generally not a predominant source of lead exposure among lead poisoned children. Risk Analysis, supra note 7, at 3-7. However, because of the high absorption rate of lead in drinking water, lead in drinking water is still considered an important exposure source when it is present. Id. (3) Lead in Food Lead particles can enter the food supply through a number of routes by being deposited onto fruits and vegetables during harvesting, processing and distribution. Lead Phase Out, supra note 12. There are some agricultural pesticides that contain lead-based compounds which might remain as residue on crops. Id. Lead solder in canned goods can also result in food contamination, however the phase-out of these types of cans in 1989, along with public education on proper food storage and cooking techniques, have made large contributions to reducing the amount of lead ingested with food. Risk Analysis, supra note 7, at 3-7. However, the largest source of lead in food in the United States is lead-glazed ceramics such as mugs, plates and bowls. Lead Phase Out, supra note 12. Thus, while lead exposure through food ingestion has declined considerably in recent years, these exposures can still be a problem if proper precautions are not taken. Risk Analysis, supra note 7, at 3-7.

considered the primary source of lead exposure for children.26 Exposure to lead from air, food and drinking water have declined in the United States, however, the exposure to lead paint has increased.27 Lead paint is widely viewed as the main cause for elevated lead blood levels over the limit of ten ug/dL.28 While lead paint has not been sold in the United States for more than twenty years, peeling paint and lead contaminated dust in older homes exposes children to the dangers of lead.29 Those children who are at the greatest risk are typically from low-income families who live in dilapidated housing or those children from families who are renovating older homes.30 Lead in Dust and Soil The fallout of atmospheric lead over time has resulted in a continued exposure route through soil even though the enforcement of national air quality standards continues to reduce the threat of lead exposure via air from point sources.31 Also, soil can become contaminated by deteriorated lead paint or improper removal of lead-based paint.32 Once exterior lead paint chips have contaminated the soil, the soil can then be tracked indoors, exposing children to lead during typical hand-to-mouth activities.33 Indoors, normal activity where friction occurs, particularly around windows and doors, can contaminate interior dust.34 The Financial Effects of Lead Exposure In addition to adversely affecting the health of our children, the presence of lead paint often leads to substantial financial 26. Several lead exposure studies have concluded that the pathway of lead contaminated soil and dust to children’s blood is a significant means by which young children are exposed to lead from lead-based paint hazards. Risk Analysis, supra note 7, at 3-1. The Baltimore Repair and Maintenance Study and the Rochester Lead in Dust Study conclude that elevated lead levels in paint, dust and soil continue to exist in residential environments, particularly in older homes. Id. Even at low to moderate levels, lead in residential dust can effect children’s blood-lead concentration. Id. 27. Lead Phase Out, supra note 12. 28. Id. 29. Id. 30. Id. 31. Risk Analysis, supra note 7, at 3-8. 32. Id. 33. Id. 34. Id. at 3-8-9.

burdens on property owners.35 These financial burdens include both the cost of discovering lead paint through property inspections, as well as the substantial maintenance cost in reducing lead paint exposure. The two most common methods for reducing lead poisoning in children are abatement and encapsulation.36 Abatement is defined as a “set of measures designed to permanently eliminate lead-based paint hazards or lead-based paint,”37 while encapsulation, often referred to as containment, is “any covering or coating that acts as a barrier between lead-based paint and the environment.”38 Several states such as Massachusetts and Maryland require abatement or containment procedures throughout any residence where a child under six is permanently on the premises.39 The costs of abatement can be between $7,500 and $15,000 for one house.40 One Rhode Island realtor estimates that 30,000 homes in Rhode Island pose a high risk for children.41 Accordingly, the Rhode Island Housing and Mortgage Finance Corporation recently announced a $3,000,000 program to help combat lead problems.42 While the cost of encapsulating lead is less burdensome than the cost of abatement, the presence of lead in paint has forced property owners to repair peeling paint more frequently and more extensively than if the paint were lead free. A second financial effect of lead paint is the increasing 35. The State claims, in its complaint, that it has suffered substantial damages as a result of the presence of lead paint including the costs of discovering and abating lead, the expenditure of state funds to detect lead poisoning and provide medical and/or other care of lead poisoned residents of Rhode Island, the costs of education programs for children of Rhode Island due to the dangers present as a result of lead in Rhode Island, and the costs of education programs for residents of Rhode Island due to the dangers present as a result of lead in Rhode Island. State v. Lead Indus. Ass’n, Inc., No. 99-5226, 2001 WL 345830, at *1 (R.I. Super. Ct. Apr. 2, 2001). 36. Amy E. Souchuns, Old Paint, New Laws: Achieving Effective Compliance With the Residential Lead-Based Paint Hazard Reduction Act, 47 Cath. U. L. Rev. 1411, 1430 (1998). 37. Id. 38. Id. 39. Id. 40. Peter B. Lord, Are Lead Paint Firms Liable For Damages?, Prov. J. Bull., June 18, 1999, at A-1. 41. Id. 42. Id.

exposure of landlords to negligence lawsuits by tenants who suffer from lead poisoning as a result of exposure to lead paint in rental property.43 In a lead paint poisoning claim based on negligence, a plaintiff must prove that: (1) the landlord had actual knowledge or reason to know of chipping, peeling and flaking lead paint on the premises and that such a condition was hazardous; and (2) the landlord was given a reasonable opportunity to correct the hazard.44 While a landlord may reduce his chances of being sued by timely maintenance of his property, his exposure to lawsuits is clearly greater than those landlords who own lead-free property. Lastly, under the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X),45 property owners may be subject to civil and/or criminal penalties for failure to disclose the existence of lead paint. Title X requires the mandatory disclosure of lead hazards in essentially all dwellings built prior to 1978. As a result, the EPA and the Office of Housing and Urban Development have developed guidelines to enforce Title X, and the government may impose criminal and civil penalties of a $10,000 fine per violation for those who knowingly violate the statute.46 II. THE HISTORY OF LEAD PAINT LITIGATION IN THE UNITED STATES

Both private individuals47 and public entities48 have sued the lead industry, however the lead industry has yet to lose or settle a single case.49 Private individuals who have sued the lead industry claim to suffer from lead poisoning as a result of exposure to lead paint from three general exposure pathways: (1) living in dwellings where lead paint existed;50 (2) working with lead pigments in an industrial setting;51 and (3) working with lead

43. See, e.g., Brown v. Wheeler, 675 A.2d 1032 (Md. Ct. Spec. App. 1996). 44. Id. at 1035. 45. 15 U.S.C. §§ 2601-90 (1992). 46. Souchuns, supra note 36, at 1425. 47. See, e.g., Jefferson v. Lead Indus. Ass’n, Inc., 106 F.3d 1245 (5th Cir. 1997); Brenner v. Am. Cyanamid Co., 699 N.Y.S.2d 848 (N.Y. App. Div. 1999); Skipworth v. Lead Indus. Ass’n, Inc., 690 A.2d 169 (Pa. 1996); Swartzbauer v. Lead Indus. Ass’n, Inc., 794 F. Supp. 142 (E.D. Pa. 1992). 48. See, e.g., City of Philadelphia v. Lead Indus. Ass’n, Inc., 994 F.2d 112 (3d Cir. 1993); City v. Lead Indus. Ass’n, 222 A.D.2d 119 (N.Y. App. Div. 1996). 49. Understanding Lead Pigment Litigation, at http://www.leadlawsuits.com/bckgrnd_former.htm (last visited June 8, 2002). 50. See, e.g., Skipworth v. Lead Indus. Ass’n, Inc., 690 A.2d 169 (Pa. 1996). 51. See, e.g., Whitehead v. St. Joe Lead Co., Inc., 729 F.2d 238 (3d Cir. 1984).

paint.52 Typically, plaintiffs claiming injuries from lead exposure allege disabilities such as cognitive defects, speech problems, learning disabilities and lowered IQ.53 Public entities such as Philadelphia and New York have also brought suit against the lead industry.54 These plaintiffs claimed damages similar to those that Rhode Island claimed in its complaint, seeking relief for costs related to discovering and abating lead, detecting lead poisoning, providing medical care for lead-poisoned residents and providing lead poisoning education programs. The Theory of Market Share Liability Products liability lawsuits against the lead industry have failed for a variety of reasons, the most common of which is the plaintiffs’ inability to identify the defendants who supplied the Many lead products that caused the alleged injuries.55 jurisdictions, including Rhode Island, have refused to relax the causation element by recognizing the theory of market share liability, a controversial concept that attempts to hold a group of manufacturers responsible for harm caused by their products even though the plaintiff cannot identify the individual manufacturer who supplied the product that caused the harm.56 The concept of market share liability was first developed in Sindell v. Abbot Laboratories, a case dealing with the harmful effects of the miscarriage prevention drug DES.57 While the theory of market 52. See, e.g., Swartzbauer v. Lead Indus. Ass’n, Inc., 794 F. Supp. 142 (E.D. Pa. 1992). 53. Jennifer Wriggins, Genetics, IQ, Determinism, and Torts: The Example of Discovery in Lead Exposure Litigation, 77 B.U. L. Rev. 1025, 1057 (1997). 54. City of Philadelphia v. Lead Indus. Ass’n, Inc., 994 F.2d 112 (3d Cir. 1993); City v. Lead Indus. Ass’n, Inc., 644 N.Y.S.2d 919 (N.Y. App. Div. 1996). 55. See Gorman v. Abbot Labs., 599 A.2d 1364 (R.I. 1991) (rejecting market share liability under Rhode Island law). 56. See Hurt v. Philadelphia Hous. Auth., 806 F. Supp. 515 (E.D. Pa. 1992) (rejecting market share liability under Pennsylvania law); Jefferson v. Lead Indus. Ass’n, Inc., 106 F.3d 1245 (5th Cir. 1997) (rejecting market share liability under Louisiana law); Brenner v. Am. Cyanamid Co., 699 N.Y.S.2d 848 (N.Y. App. Div. 1999) (rejecting market share liability under New York law). 57. 607 P.2d 924 (Cal. 1980). In Sindell, the plaintiff Judith Sindell brought an action against eleven drug companies who manufactured the drug diethylstilbesterol (DES), which is a synthetic compound of the female hormone estrogen. DES was administered to pregnant women for the purpose of preventing miscarriage. In her complaint, Mrs. Sindell claimed that she suffered from a form of cancer as a result of her exposure to DES when her mother was pregnant with her. The form of cancer that the plaintiff suffered from had a latency period of ten to twelve years. From 1941 to

share liability may apply well to cases involving drugs such as DES, there are two reasons why the adoption of market share liability in the context of lead pigment cases would unacceptably distort liability.58 First, the relevant time period in question is far more extensive than the relevant time period in a DES case.59 In lead paint cases, the plaintiffs can rarely identify any particular application, or applications of lead paint which caused the plaintiff’s injuries.60 For example, in Skipworth v. Lead Industries Ass’n, Inc.,61 the plaintiffs were only able to “pinpoint” a more than one hundred year period, from the date the house was built until the lead paint ceased being sold for residential purposes, as the relevant time period.62 In contrast, the relevant time period in a DES case is necessarily limited to the nine months that the patient ingesting the product was pregnant.63 The problem with such an expansive time period is that several of the lead pigment manufacturers could have entered and left the 1971, the defendants manufactured DES. In 1971, the Food and Drug Administration ordered defendants to cease marketing and promoting DES for the purpose of preventing miscarriages, and to warn physicians and the public that pregnant women, because of the danger to their unborn children, should not use the drug. Because the plaintiff in Sindell could not identify the specific defendant who manufactured the DES that her mother took while pregnant, she could not prove that the defendant’s product caused her injury under traditional tort liability theory. The court ruled that because DES was produced from an identical formula, the plaintiff could prove liability upon a showing that the manufacturers produced a substantial percentage of the drug in question, with each manufacturer being held liable for the proportion of the judgment represented by its share of the drug market unless it demonstrated that it could not have made the product which caused the plaintiff’s injuries. Id. at 936. In other words, each defendant will be held liable for the proportion of the judgment represented by its share of that market unless it demonstrates that it could not have made the product that caused plaintiff’s injuries. Id. at 937. The justification for the court’s ruling was based on the notion that “in an era of mass production and complex marketing methods the traditional standard of negligence was insufficient to govern the obligations of manufacturer to consumer, so should we acknowledge that some adaptation of the rules of causation and liability may be appropriate in these recurring circumstances.” Id. Restatement (Second) Torts § 402A sets out the public policy view that the manufacturer is in the best position to discover and guard against defects in its products and to warn of harmful effects; thus, holding it liable for defects and failure to warn of harmful effects will provide an incentive to product safety. Restatement (Second) Torts § 402A, 349-50 (1965). 58. Skipworth, 690 A.2d at 172. 59. Id. 60. Id. 61. Id. 62. Id. at 173. 63. Id.

paint market.64 Thus, application of the market share liability to this situation would virtually ensure that certain pigment manufacturers would be held liable where they could not possibly have been a potential tortfeasor.65 The second reason that the adoption of market share liability is inappropriate to lead paint litigation is because lead paint, as opposed to DES, is not a fungible product.66 All of the DES used to treat pregnant women was manufactured with an identical formula and presented an identical risk of harm.67 In contrast, it is undisputed that lead pigments had different chemical formulations, contained different amounts of lead and differed in toxicity.68 Thus, differing formulae of lead paint have a direct bearing on how much damage a lead paint manufacturer’s product would cause.69 In such a scenario, holding each manufacturer liable for damages in proportion to the amount that each sold would distort liability.70 City of Philadelphia v. Lead Industries Ass’n, Inc. Public entities like the City of Philadelphia have not faired much better than individuals in holding the lead industry liable for the harm that lead paint has caused. In City of Philadelphia v. Lead Industries Ass’n, Inc.,71 the City of Philadelphia and the Philadelphia Housing Authority (PHA) brought an action against lead pigment manufacturers and their trade association to recover the costs of abating hazardous lead-based paint in public housing which plaintiffs must incur pursuant to newly promulgated federal regulations.72 The abatement was ordered by the U.S. 64. Skipworth, 690 A.2d at 173. 65. Id 66. Id. 67. Id. 68. Id. 69. Id. Lead, mercury, cadium and chromium were commonly used in paint as pigments and preservatives and are now found in paint on older buildings. Wash. State Dep’t of Ecology, Hazardous Waste and Toxic Reductions Program: Demolition Debris Res.-Paint & Coatings (2002) [hereinafter Paint & Coatings], available at http://www.ecy.wa.gov/programs/hwtr/demodebris/pages2/demopaint.html. The amount of lead in pigment may be very high, up to forty percent (or 400,000 parts per million) of dry old paint (prior to the 1960s), is composed of white lead. Id. 70. Skipworth, 690 A.2d at 173. 71. 994 F.2d 112 (3d Cir. 1993). 72. City of Philadelphia v. Lead Indus. Ass’n, Inc., 994 F.2d 112, 115 (3d Cir. 1993).

Department of Housing and Urban Development pursuant to regulations promulgated under the Lead-Based Paint Poisoning Prevention Act.73 The lower court granted the defendants’ motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). On appeal, the court affirmed the order of dismissal, holding that the city’s action was time-barred.74 The court also affirmed the dismissal of PHA’s complaint because the State of Pennsylvania did not recognize any of the theories advocated for recovery, such as market share liability.75 City of New York v. Lead Industries Ass’n, Inc. In City of New York v. Lead Industries Ass’n, Inc.,76 plaintiffs City of New York, New York Housing Authority and New York City Health and Health and Hospitals Corporation sought damages against lead pigment manufacturers and their trade association for injuries incurred by plaintiffs because of the presence of poisonous lead in buildings throughout the city. The court granted the defendants’ motion to dismiss the negligence claims because the statute of limitations had lapsed.77 The court agreed with the defendants’ argument that a cause of action accrues from the time of the injury.78 In this case, the injury occurred when the paint was applied, or alternatively, when the plaintiffs learned of the hazards associated with lead paint, which the court ruled was evidenced by the city’s promulgation of certain regulations in 1959 proscribing the use of lead paint.79 73. 42 U.S.C. §§ 4821-48 (1988 & Supp. II 1990). 74. City of Philadelphia, 994 F.2d at 114. 75. Id. at 115. As to plaintiff housing authority, the statute of limitations did not run against it, because it was a commonwealth entity, and thus, was exempt from the statute of limitations under the doctrine of nullum tempus. Id. Under the doctrine of nullum tempus, statutes of limitations are not applicable to actions brought by the Commonwealth or its agencies unless a statute expressly so provides. Id. at 118. Therefore, by establishing that the statute of limitations only applies to the city of Philadelphia and does not apply to the state of Pennsylvania or its accompanying entities, the court has established that the City of Philadelphia may not bring suits against lead paint manufacturers. Id. at 114. The court further reasoned that a federal court sitting in diversity was not the proper venue to significantly expand state law without a clear indication that the Pennsylvania Supreme Court would do the same. Id. 76. 644 N.Y.S.2d 919 (N.Y. App. Div. 1996). 77. City v. Lead Indus. Ass’n, Inc., No. 89-14365, 1991 WL 284454, at *1 (N.Y. Sup. Ct. Dec. 23, 1991). 78. Id. 79. Id.

III. THE DOCTRINE OF STRICT LIABILITY

Prior to the twentieth century, a plaintiff who was injured from using a defective product was not entitled to recovery unless he was in contractual privity with the manufacturer.80 This privity requirement continued to protect negligent manufacturers until well into the twentieth century.81 In 1916, MacPherson v. Buick Motor Co.82 essentially abolished the privity requirement.83 In MacPherson, the plaintiff was injured when a tire fell off of the new car he had just purchased. The plaintiff bought the car from a retailer and therefore, was not in privity with the manufacturer. Ordinarily, the plaintiff would have been precluded from recovery, but Judge Cardozo permitted the claim against the manufacturer to proceed. The court ruled that “[i]f [the manufacturer] is negligent where danger is to be foreseen, a liability will follow.”84 After MacPherson, injured plaintiffs could recover against manufacturers for negligence, but this became difficult to prove. In Greenman v. Yuba Power Products,85 the court held that strict liability would be imposed upon manufacturers of defective products. Strict liability was to be imposed as a matter of tort law and not by implied warranty as a matter of contract law; therefore, privity was not required. In 1965, the Restatement Second of Torts officially adopted the ideas from Greenman and incorporated them into the newly created § 402A. Section 402A provides that if a product is defective and the defect causes harm, liability will be imposed upon the manufacturer and distributors, regardless of fault or privity with the plaintiff. Rationales For Imposing Strict Liability One of the reasons for imposing strict liability on manufacturers is that they are in a better position to bear losses. For example, manufacturers can pass the losses on through insurance and increased prices.86 Perhaps a better argument for

80. 81. 82. 83. 84. 85. 86.

Dan B. Dobbs, The Law of Torts 973 (West Group 2000). Id. 111 N.E. 1050 (N.Y. 1916). Dobbs, supra note 80, at 973. MacPherson, 111 N.E. at 1051. 59 Cal. 2d 57 (Cal. 1963). Perhaps the court’s decision in Nesselrode v. Executive Beechcraft, Inc., 707

strict liability is that manufacturers will tend to make safer products if strict liability is imposed. The underlying theory is that strict liability serves an essential regulatory function in the marketplace because manufacturers will be deterred from making unsafe products out of a fear of financial liability.87 IV. IS LEAD PAINT DEFECTIVE AND UNREASONABLY DANGEROUS BECAUSE OF A DESIGN DEFECT?

Although some writers have argued that product manufacturers should be liable for harms caused even by perfectly made and designed products,88 section 402A imposes strict liability only for harm caused by products that are defective and unreasonably dangerous.89 There are three types of product defects: (1) manufacturing defects; (2) design defects; and (3) information or warning defects, also called marketing defects.90 A design defect occurs when the intended design of the product line itself is inadequate and

S.W.2d 371 (Mo. 1986), best summarizes the reasons for imposing strict liability: Strict tort liability recognizes that in today’s world consumers can do little to protect themselves from risk of serious injury caused by defects in the products they purchase. And, the more complex the product, the less opportunity there is for the consumer to guard against deleterious defects. To this extent, the consumer must rely upon the integrity and competency of the business community. History, however, has taught us that negligence liability alone provides an inadequate tort remedy for injured consumers and does little to stimulate greater care in the manufacturing process. Strict tort liability is rooted in these realities. The imposition of strict tort liability is justified on the grounds that the manufacturer or seller is almost always better equipped than the consumer to endure the economic consequences of accidents caused by defective products. Everything in the marketplace has a price, including profits. Economic responsibility for the debilitating consequences of injuries caused by defective products is but one of the many costs associated with doing business and earning profits. All things considered, we find no unfairness in holding manufacturers and sellers economically and socially responsible for injuries actually caused by the products they place for profit in the stream of commerce. Id. at 383. 87. See generally Carl T. Bogus, Why Lawsuits Are Good For America: Disciplined Democracy, Big Business, and Common Law (N.Y. Univ. Press 2001). 88. See Virginia E. Nolan & Edmund Ursin, Understanding Enterprise Liability 168 (1995) (stating that a common law of enterprise liability should dispense with the defect requirement and limit recoverable damages). 89. Restatement (Second) of Torts § 402A (1965). 90. Dobbs, supra note 80, at 979.

needlessly dangerous.91 Defective designs can include entire product lines such as in the production of automobiles and chemical formulations such as asbestos and drugs.92 However, a design that is harmful is not necessarily defective. Courts have adopted two tests in analyzing whether a harmful design is also defective: the risk-utility test and the consumer expectation test. Although Rhode Island employs the consumer expectation test, it has also indicated that, in some instances, a risk-utility analysis is appropriate.93 The Consumer Expectation Test The consumer expectation test seeks to protect the consumer or user who was unaware of the danger involved in using a product in a way it was intended to be used.94 If some aspect of the product was more dangerous than the consumer contemplated, then it is defective regarding that particular aspect.95 There are several criticisms of the consumer expectation test. First, the victim cannot recover for harm suffered as a result of a design hazard that was open or obvious, or one with respect to which the purchaser was adequately informed, because under these conditions, he could not have been deceived about what he was buying.96 Second, this test can result in the identification of products as being defectively dangerous which clearly are not, particularly where the product is a drug.97 Third, sometimes the consumer has no definite expectations regarding the safety or danger about what he is purchasing. Instead, his decision to purchase is based on other values such as price, beauty or function. Fourth, the test also fails to take into account the cost of additional safety features.

91. Id. at 980. 92. Id. 93. Guilbeault v. R.J. Reynolds Tobacco Co., No. 98-035L, 1999 WL 362985, at *15 (D.R.I. June 8, 1999). 94. Dobbs, supra note 80, at 979. 95. W. Page Keeton, The Meaning of Defect in Products Liability Law- A Review of Basic Principles, 45 Mo. L. Rev. 579, 589 (1980). 96. Id. 97. Id. at 590. There are often unknown side effects to new drugs when they enter the market. However, because the benefits of some drugs are so substantial, consumers are willing to assume the risk of a potential hazard. Penicillin is an example of drug that was not a defective product even though some were victimized by it. Id. at 590-91.

The term “unreasonably dangerous” means that the defect in the product establishes a strong likelihood of injury to the user or consumer, where the likelihood of injury takes into account the consumer’s or user’s knowledge of danger.98 In Jackson v. Corning Glass Works,99 the court ruled that the consumer expectation test “does not protect the consumer who uses the product in a different way than that intended nor does it protect the consumer or user when he uses a product in a way in which he knows requires certain precautions be taken to make the product safe in such a use.”100 In Jackson, the plaintiff Kenneth Jackson lost the sight in his right eye as a result of being struck by a shard of glass from a shattered glass bowl cover manufactured by the defendant, Corning Glass Works. The plaintiff’s wife had stacked eleven glass bowls and lids on the second shelf of the plaintiff’s kitchen cupboard. When the plaintiff closed the cupboard door, the stack of bowls fell to the ground and shattered resulting in the plaintiff’s injury. A jury awarded damages in favor of the plaintiff, however, the Supreme Court of Rhode Island reversed holding that the cooking ware, as delivered to the plaintiff, was not unreasonably dangerous. The court precluded imposition of strict liability based on the consumer expectation test stating: We consider it even more obvious that a consumer or user should be aware of the potential hazards of stacking glass or cookware objects in a pyramid as described in the case at bar. Such a hazard ought to be well known to the average consumer, who would be aware of the patent dangers of such a stacking operation and would therefore be charged with the necessity of taking suitable precautions to ensure the stability of the pyramid and to guard against the application of lateral force. There is, in the case at bar, no evidence that would support the proposition that a manufacturer of cookware and Pyrex glass lids could have anticipated such a use and guarded against it in any manner that would have been either

98. Ritter v. Narragansett Elec. Co., 283 A.2d 255, 263 (R.I. 1971) (citing Drummond v. Gen. Motors Corp., No. 771098 (Cal. Super. Ct. filed July 29, 1966)). 99. 583 A.2d 666 (R.I. 1988). 100. Jackson v. Corning Glass Works, 583 A.2d 666, 668 (R.I. 1988) (quoting Ritter v. Narragansett Elec. Co., 283 A.2d 255, 263 (R.I. 1971)).

feasible or practicable.101 Another case that is factually similar to Jackson and which also precluded imposition of strict liability based on the consumer expectation test is Metal Window Products Co. v. Magnusen.102 In Magnusen, the plaintiff suffered a personal injury when she collided with a sliding glass door while running into her house under the perception that the sliding glass door was open. The plaintiff claimed that failure to place decals on the door rendered it invisible and therefore defective. The court ruled that the door was not defective and unreasonably dangerous stating: In light of the extensive use of glass doors and common knowledge as to the possibility and frequent occurrence of collisions with them, a reasonable user must be held to appreciate the risk inherent in them. The danger posed is not a hidden or latent one but on the contrary, is perceptible. The fact that glass can be invisible is itself the clue to the public that glass doors are a potential hazard.103 Sometimes, courts do not agree that the dangers of using a certain product are common knowledge to the consumer. Ironically, this is the scenario that pertains to cigarettes.104 101. Id. at 669. 102. 485 S.W.2d 355 (Tex. Civ. App. 1972). 103. Jackson, 583 A.2d at 669 (quoting Metal Window Prods. Co. v. Magnusen, 485 S.W.2d 355, 358 (Tex. Civ. App. 1972)). 104. For example, in Paugh v. R.J. Reynolds Tobacco Co., 834 F. Supp. 228 (N.D. Ohio 1993) and Roysdon v. R.J. Reynolds Tobacco Co., 849 F.2d 230 (6th Cir. 1988), plaintiffs brought defective design claims against R.J. Reynolds claiming that cigarettes were unreasonably dangerous. The Roysdon court held that cigarettes were not defective and unreasonably dangerous because “the knowledge that cigarette smoking is harmful to health is widespread and can be considered part of the common knowledge of the community.” Roysdon, 849 F.2d at 236. The court limited its holding by stating that the dangers of smoking were common knowledge during the time period following 1974. Id. The Paugh court agreed with the Roysdon decision, but expanded its holding by finding that “knowledge of the dangers of smoking may have been common for a much longer time.” Paugh, 834 F. Supp. at 231. However, in Rhode Island, the question of whether the dangers of cigarettes are unreasonably dangerous remains open. In Guilbeault v. R.J. Reynolds Tobacco Co., No. 98-035L, 1999 WL 362985, at *1 (D.R.I. June 8, 1999), the U.S. District Court for the District of Rhode Island refused to dismiss the defective design claim on the grounds that cigarettes are not unreasonably dangerous due to the common knowledge of the dangers of cigarette smoking. Id. at *10. The court reviewed the cases cited by the defendant, none of which were binding on the court, and held that “there has been no consensus on whether the dangers of cigarette smoking are common knowledge of if they are, when

Applying the Consumer Expectation Test to Lead Paint The primary question in applying the consumer expectation test to lead paint is whether the defect, which is the presence of lead in paint, establishes a strong likelihood of injury to the user or consumer taking into account the consumer or user’s knowledge of the dangers of lead. Furthermore, we must consider whether lead paint is used in a different way than that intended and whether the user or consumer used the product in a way in which he knows requires certain precautions be taken in order to make the product safe. Under this analysis, it is important to differentiate between three types of injured plaintiffs: (1) house painters and factory workers who were injured while mixing or applying lead pigments; (2) home improvement contractors who were injured by lead contaminated dust from coming into contact with lead paint; and (3) children who were injured by exposure to lead paint from living in dwellings where lead paint exists. A strong argument may be made that lead paint is defective and unreasonably dangerous for those house painters and factory workers who suffered injuries as a result of working with lead pigments. But first, it is important to understand how paint technology evolved, and how it has changed.105 Clearly, a painter

such dangers became common knowledge.” Id. at *9. 105. According to an article in the Northeast Journal: The original protective coatings found on most buildings up until the late 1960’s were all based on a Dutch lead process that started with hand-mixed paints before 1800. These paints eventually developed into the massproduced canned paints that gradually became popular starting in the mid19th century. The basic ingredients were: (1) white lead - a powdered oxidized metal; (2) linseed oil - a vegetable oil; (3) a ‘drier’ - a chemical agent that caused the oil to harden on exposure to air; and (4) pigments to color the paint base. What resulted was a tinted ‘cladding,’ a coating of metal (lead), held in place by a stabilized, water-resistant carrier medium - the linseed oil. These coatings required periodic refreshing or replacement, but they were very durable and worked well to protect wood surfaces from damage by water, excessive drying, fungus and molds, insects and ultraviolet light. . . . buildings from the mid-19th century whose oil paint, though checked and oxidized, was still clinging to the walls with a beautifully mellow patina. Starting in the 1960s, a growing understanding of the dangers of lead in the environment - and particularly the risk lead in paint posed to children- as well as to painters - led to the eventual withdrawal of this time-tested formula from the market. The paint industry struggled to find a replacement that would offer

who mixed, poured and applied the paint he purchased was using the product for its intended purpose. Consequently, if the manufacturer failed to provide an adequate warning regarding the dangers of lead, lead paint was more dangerous than the consumer contemplated and therefore, defective and unreasonably dangerous.106 Unfortunately, since approximately fifty years have passed since painters last applied lead paint, it is likely that the statute of limitations in most states precludes these claims.107 Also, workers who were injured while handling lead pigments are likely to be limited to workers’ compensation remedies.108 Home improvement contractors who were injured from scraping, sanding or burning dried lead paint may have more difficulty proving that lead paint is defective and unreasonably dangerous. As stated previously, the term “unreasonably dangerous” means that the defect in the product establishes a strong likelihood of injury to the user or consumer, where the likelihood of injury takes into account the consumer’s or user’s knowledge of danger. If the consumer or user was aware of the danger or hazard inherent in a product and failed to take the proper precaution to eliminate the danger, then the product is not unreasonably dangerous. Glass cook ware109 and sliding glass doors110 are examples of products that courts have held not to be

similar characteristics. Many chemical combinations were tried, and a whole new series of coating options was developed, including titanium dioxide and oil as well as water-borne polymer resins. Ned Depew, The Northeast Journal, The Right Paint-Selecting the Best for 19th Century Homes (Apr. 2001), available at www.northeastjournal.com/LeadingStories/April2001/therightpaintApril2001.htm. 106. The lead industry admits that it did not warn of the dangers of lead. Rather, the lead industry argues that it was unaware of the dangers of lead because of the lack of available medical technology at the time. See Part V of this Comment for a discussion of the state of the art defense. 107. In Rhode Island, the statute of limitations for products liability claims is three years beginning from the time the injury is discovered. “R.I. Gen. Laws § 9-1-14(b) (1985 Reenactment) governs all suits to recover damages for personal injuries, whether the action sounds in negligence, strict products liability, failure to warn, or any other theory of liability.” Napels v. Acer Am. Corp., 970 F. Supp. 89, 95 (D.R.I. 1997) (citing Pirri v. Toledo Scale Corp., 619 A.2d 429, 431 (R.I. 1993)). 108. See Whitehead v. St. Joe Lead Co., 729 F.2d 238 (3d Cir. 1984) (holding that New Jersey Workers’ Compensation Act bars third party recovery for injured worker in a strict liability claim against manufacturer). 109. See, e.g., Jackson v. Corning Glass Works, 583 A.2d 666 (R.I. 1988). 110. See, e.g., Metal Window Prods. Co. v. Magnusen, 485 S.W.2d 355 (Tex. Civ. App. 1972).

defectively designed because of the consumers’ failure to take proper precaution to eliminate the danger. Therefore, the pertinent issue to consider is whether the dangers of working with lead are common knowledge to home improvement contractors. Clearly, there is an abundance of information available to consumers regarding the hazards of working with lead paint and how to avoid injury when working with lead. This information is available on EPA websites111 and has been available in medical journals112 for quite some time. However, the availability of this information does not necessarily translate to the conclusion that the hazards of working with lead paint are common knowledge to consumers. For example, in Guilbeault v. R.J. Reynolds Tobacco Co.,113 the court refused to accept the defendant’s argument that cigarettes are not defectively designed because the dangers of cigarette smoking are common knowledge. The court based its decision on the fact that there was no general consensus on the matter among other courts.114 Statistics show that injuries from cigarette smoking are much more severe and prevalent than are injuries from exposure to lead paint.115 If there is no general consensus among the courts regarding whether the dangers of cigarette smoking are common knowledge, then it is foreseeable that courts will not agree that the dangers of lead paint are common knowledge. However, a strong argument can be made that home improvement contractors, by virtue of their occupation, have a duty to discover all potential hazards when working on a project, and that the dangers of working with lead paint should be common knowledge to them. 111. See, e.g., EPA/Office of Pollution, Prevention and Toxics, Lead in Paint, Dust and Soil, at http://www.epa.gov/lead (last visited May 18, 2002). 112. See Gerald Markowitz & David Rosner, Cater to the Children: The Role of the Lead Industry in a Public Health Tragedy, 1900-1955, in American Journal of Public Health No.99-1 (Jan. 2000), available at www.mindfully.org/Health/Lead-IndustryPublic-Health.htm (discussing the availability, in the early twentieth century, of medical information regarding the hazards of lead paint). 113. No. 98-035L, 1999 WL 362985, at *1 (D.R.I. June 8, 1999). 114. Id. at *8. 115. For example, more than 500,000 North Americans die every year from smoking related illnesses such as lung cancer, heart disease and emphysema, while lead encephalopathy and death from lead poisoning have virtually been eliminated over the past 20 years. Compare Nicotinekills.com at http://www.nicotinekills.com/deathstat.htm (last visited June 2, 2002), with N.Y. State Dept. of Health, Physicians’ Handbook on Childhood Lead Poisoning Prevention Ch. One (2002), available at http://www.health.state.ny.us/nysdoh/lead/handbook/phc1.htm.

The next issue to address is whether the danger of lead poisoning is common knowledge to those who live in dwellings where lead paint exists. A strong argument can be made that children who ingest or handle lead paint chips or who chew on surfaces covered with lead paint have misused the product for its intended purpose, which is to provide a protective coating for a surface, not a source of food or a toy. The idea that strict liability for defective design does not apply when the user misuses the product for its intended purpose was first developed in Ritter v. Narragansett Electric Co.,116 the landmark Rhode Island products liability case. In Ritter, two minor children were injured when an electric range toppled onto them scalding them with boiling water. While the children were playing in the kitchen, one of them attempted to look into a pot of boiling water atop the range in order to ascertain what they were going to have for dinner. In order to get a closer look at the pot of boiling water, one of the children opened the oven door and stood on it using it as a platform. The child’s weight caused the range to topple over resulting in injuries to both children.117 The children’s parents brought suit against the manufacturer claiming that they were strictly liable for defective design because the range should have been bolted down. Although a verdict was returned in favor of the plaintiff, the Supreme Court of Rhode Island reversed, holding that it was error to refuse to instruct the jury that the improper or abnormal use of an electric range or use not intended by its manufacturer would result in a verdict that the product was not defectively designed.118 Clearly, almost any type of commercial or chemical product would be harmful to children if it were ingested or handled by them. Lead paint is no different in that lead paint manufacturers never intended for their products to be ingested, chewed or handled by children. Therefore, lead paint manufacturers can successfully argue under the consumer expectation test that lead paint is not defectively designed. A stronger argument, and consequently the topic of the next section, is whether lead paint is defective because manufacturers failed to warn of the dangers of lead paint.

116. 117. 118.

283 A.2d 255 (R.I. 1971). Id. at 257. Id. at 260.

The Risk Utility Test The theory behind the risk utility test is that virtually all products have risks and benefits.119 Under this test, courts attempt to balance the risks of the product as designed against the costs of making the product safer.120 If a large reduction in risk can be achieved at a relatively small cost, then courts will find the product to be defective.121 However, if a product’s utility, as designed, outweighs its risk, then the product’s design is not defective. Courts often refer to six factors for guidance in the application of the risk-utility test: (1) the usefulness and desirability of the product; (2) the probability and magnitude of potential injury; (3) the availability of substitutes; (4) the manufacturer’s ability to eliminate the unsafe character; (5) the user’s ability to avoid danger; and (6) the user’s probable awareness of the danger.122 Applying the Risk-Utility Test to Lead Paint In order to find that lead paint is defectively designed under the risk utility test, a court must find that a user’s risk of suffering from lead poisoning outweighs the benefits he gains from using lead paint. There is evidence to suggest that lead paint had substantial benefits. According to the Northeast Journal, lead paint coatings were “very durable and worked well to protect wood surfaces from damage by water, excessive drying, fungus and molds, insects and ultraviolet light.”123 The Usefulness and Desirability of the Product The evaluation of the utility of a product also involves the relative need for that product; some products are essentials, while others are luxuries.124 A product that fills a critical need and can be designed in only one way should be viewed differently from a luxury item.125 Still, other products, including some for which no

119. 120. 121. 122. 123. 124. (1974). 125.

See Dobbs, supra note 80, at 985. Id. Id. Id. at 985-86. Depew, supra note 105. Jerry J. Phillips, Products Liability in a Nutshell 194-95 (West Group 1998) Id.

alternative exists, are so dangerous and of such little use that under the risk-utility analysis, a manufacturer would bear the cost of liability of harm to others.126 That cost might dissuade a manufacturer from placing the product on the market, even if the product has been made as safely as possible.127 For centuries, lead paint was an ingredient in numerous consumer products such as cosmetics, food cans, water pipes, gasoline and house paint.128 Early in the twentieth century, the lead industry began advertising lead paint’s beneficial aspects such as its durability, its cost and ironically, it’s “healthful” qualities.129 Furthermore, because of its durability, lead-based paint was the preferred product for both interior and exterior house painting from colonial times until well into the twentieth century.130 Clearly, manufacturers who produced a more durable paint coating than their competitors provided a substantial benefit to their customers by reducing the frequency of re-painting, thereby saving them money. Similarly, homeowners, landlords and property management companies, eager to lower their maintenance costs, fueled the demand for lead paint. In fact, National Lead Industry’s131 advertisements in The Modern Hospital assured readers that walls covered with National Lead paint “do not chip, peel or scale.”132 In addition to promoting lead paint’s durability, the lead industry also promoted lead paint’s “healthful” qualities.133 As stated, one of lead paint’s attractive features was its durability. This characteristic made lead paint very washable and highly resistant to chipping, thus making lead paint ideal for interior, high traffic areas such as kitchen cabinets, doors, windowsills and baseboards. As a result, lead paint was recommended for use in schools and hospitals.134 A 1930 advertisement for lead paint

126. Id. 127. Id. 128. Understanding Lead Pigment Litigation at http://www.leadlawsuits.com/bckgrnd_former.htm (last visited June 8, 2002). 129. Markowitz & Rosner, supra note 112. 130. Understanding Lead Pigment Litigation at http://www.leadlawsuits.com/bckgrnd_former.htm (last visited June 8, 2002). 131. National Lead Industries is referred to as NL Industries in the State’s complaint. 132. Markowitz & Rosner, supra note 112. 133. Id. 134. Id.

suggested, “Every room in a modern hospital deserves a [leadbased paint] quality paint job.”135 As early as 1923, National Lead advertisements in National Geographic Magazine promoted the idea that “lead helps to guard your health.”136 Another National Lead advertisement appeared in The Modern Hospital referring to their tinted lead paint as “the doctor’s assistant” because of its cheerful color and the fact that it could be washed with soap and water.137 Another consumer benefit to lead paint was its low cost. In a 1938 article, the Lead Industry Association’s (LIA) head magazine promoted an economic rationale for using lead paint for the lowcost construction of residential housing.138 In its July, 1939 issue, the magazine continued to promote white lead for interiors of lowcost homes.139 Lastly, lead paint had the ability to “level” to an attractive, These superior leveling smooth, glass-like finish.140 characteristics made lead paint desirable for applying to interior walls and to porch floors and stairs. Consequently, a strong argument can be made that lead paint was a useful and desirable

135. Id. 136. Id. 137. Id. 138. Id. 139. Id. 140. According to an article written by Sara B. Chase for the National Park Service on how to paint historic interiors: Brush Marks. Early paints did not dry out to a flat, level surface. Leveling, in fact, was a property of paint that was much sought after later, but until well into the 19th century, oil paints and whitewashes showed the signs of brush marks. Application, therefore was a matter of stroking the brush in the right direction for the best appearance. The rule of thumb was to draw the brush in its final stokes in the direction of the grain of the wood. Raisedfield paneling, then, required that the painter first cover the surface with paint and afterward draw the brush carefully along the vertical areas from bottom to top and along the top and bottom bevels of the panel horizontally from one side to the other. In the 19th and early 20th centuries, for very fine finishes, several coats were applied with each coat being rubbed down with rotten stone or pumice after drying. A four to five coat application was typical; however nine coats were not uncommon at the end of the century for finishes in some of the grand mansions. Generally, they were given a final glaze finish. Though expensive, this type of finish would last for decades and give a rich, smooth appearance. Sara B. Chase, Nat’l Park Serv., Preservation Briefs: Painting Historic Interiors Ch. 28 (1992), available at http://www2.cr.nps.gov/tps/briefs/brief28.htm.

product when it was produced.141 The Probability and Magnitude of Potential Injury According to the EPA, most lead poisoning in young children today occurs from the ingestion of lead paint chips and the handling of contaminated dust and soil via hand-to-mouth behavior.142 However, the EPA also claims that lead paint that is in good condition is typically not a hazard.143 The issue then becomes whether it is more likely that children will come into contact with lead paint chips, lead contaminated soil or lead contaminated dust before peeling lead paint can be repaired, abated or encapsulated. EPA studies have concluded that a high percentage of children with lead poisoning reside in environments such as urban centers, older housing or within low-income households.144 In these areas, the risk of exposure to lead paint hazards increases. One of the reasons that peeling lead paint is a hazard in rental properties and in low-income housing is because there is usually no urgency to repair peeling lead paint in these properties because aesthetic appearance is not often a high priority for landlords and housing authorities. Therefore, children who reside in rental property or low-income housing will have a greater chance of suffering from lead poisoning than those children who do not reside in these properties. Conversely, peeling lead paint in medium to high-income properties is more likely to be repaired in a timely manner. It stands to reason that these properties tend to be owner-occupied, where owners usually have a greater interest in maintaining the cosmetic appearance of their properties. Therefore, lead paint does not pose a high probability and magnitude for harm on all consumers. The unfortunate reality is that the probability and magnitude for harm is greater for those who live in low-income properties. Another difficult issue to consider is whether it is reasonable to expect a parent to be able to reduce her child’s exposure to lead paint by preventing the child from putting paint chips in her

141. Of course, this conclusion assumes that lead paint’s benefits, which the lead industry attempted to promote, were based on truthfulness. 142. Risk Analysis, supra note 7, at 3-10. 143. U.S. EPA, Protect Your Family from Lead In Your Home 5 (1999). 144. Risk Analysis, supra note 7, ES 12-16.

mouth or her fingers in her mouth, or by keeping the child from chewing on lead painted surfaces. Most parents will agree that it is difficult, if not impossible, to follow a child from room to room in an effort to prevent hand-to-mouth activity or to prevent a child from chewing on surfaces. Furthermore, it is probably easier to prevent the ingestion of lead paint chips either by repairing the peeling paint or by sweeping up the paint chips. Nonetheless, even the most responsible and caring parents may not be able to protect their child entirely from the dangers of lead exposure. The Availability of Substitutes An enormous growth of the paint industry began in the 1860’s, stimulated by the invention of the paint can.145 Prior to this time, painters were forced to mix dry colors with lead and oil.146 In the 1960s, the growing understanding of the dangers that lead paint posed to children, as well as to painters, led to the eventual withdrawal of this time-tested formula from the market.147 The paint industry struggled to find a replacement that would offer similar characteristics that lead offered.148 Many chemical combinations were tried, and a whole new series of coating options was developed, including titanium dioxide and oil, as well as water-borne polymer resins.149 Today, leadless latexbased paints provide a superior paint coating for almost any type of surface.150 The central issue, however, is whether or not there was a suitable substitute to lead paint at the time that lead paint was manufactured. 145. Chase, supra note 140. 146. According to excerpts from A New Look at an Old Neighborhood: Historic Homes of Buffalo’s Linwood Avenue Preservation District 1820-1982: The growing railroad network help to speed this process. It connected large urban manufacturers with distant markets. In addition to these more sophisticated architectural books, new developments in the printing field flooded America with colorful paint advertisements. Tempered by post-Civil War technological innovations which were sweeping the nation, pigment and containers in which to ship the ready-made product were developed. A New Look at an Old Neighborhood: Historic Homes of Buffalo’s Linwood Avenue Preservation District 1820-1982 (Susan M. Pollack, ed., Linwood-Oxford Ass’n 1992). 147. Depew, supra note 105. 148. Id. 149. Id. 150. The Sherwin Williams corporate website at http://www.sherwinwilliams.com (last visited May 24, 2002).

Lead paint litigants can make a very persuasive argument that safer alternatives to lead paint existed at the time that lead paint was manufactured. For example, as early as 1914, the director of the scientific section of the Paint Manufacturers’ Association approved of the development of “sanitary leadless” paints, predicting that lead poisoning would be done away with entirely.151 In 1933, an article appeared in the Journal of the American Medical Association entitled, Load [sic] Poisoning in Children.152 In this article, Robert Kehoe, one of the nation’s leading experts on lead poisoning, concluded that “strenuous efforts must be devoted to eliminating lead from [children’s] environment, especially since safer alternatives to lead, specifically titanium and zinc based paints, existed throughout the late nineteenth and early twentieth centuries.”153 Further proof that there were safer alternatives to lead paint could be made by showing that many European countries enacted bans or restrictions on the use of white lead for interior paint.154 After banning lead paint for interior use, common sense dictates that these countries must have used something to meet consumers’ painting needs, namely leadless paint. Therefore, there is strong evidence that a substitute to lead paint was available when lead paint was manufactured. The Manufacturer’s Ability to Eliminate the Unsafe Character In theory, the lead industry could have eliminated the unsafe character of lead paint simply by removing the lead from the paint. However, removing the lead from lead paint would have diminished lead paint’s chief benefits mentioned earlier.155 It is also unclear whether consumers, who perceived lead paint to be a quality product, would have embraced the removal of lead from lead paint. Furthermore, there is no guarantee that had U.S. lead paint manufacturers removed lead from paint, foreign paint

151. Markowitz & Rosner, supra note 112. 152. Id. 153. Id. 154. France, Belgium and Austria in 1909; Tunisia and Greece in 1922; Czechoslovakia in 1924; Great Britain and Sweden in 1926; Poland in 1927; Spain and Yugoslavia in 1931; and Cuba in 1934; Id. 155. Lead paint’s chief benefits were its durability and its ability to protect wood surfaces from damage by water, excessive drying, fungus and molds, insects and ultraviolet light. Depew, supra note 105.

manufacturers would have refrained from selling lead paint in the United States in order to meet consumers’ demands. The User’s Ability to Avoid Danger Once again, it is important to differentiate between three types of users who were exposed to the dangers of lead paint: (1) house painters or factory workers who were injured while mixing or applying lead pigments; (2) home improvement contractors who were injured from lead contaminated dust while repairing or removing dried lead paint; and (3) children who were injured by exposure to lead paint from living in dwellings where lead paint exists. If the dangers of lead were not common knowledge at the time of the activity, and the lead industry failed to provide an adequate warning of the dangers of working with lead pigments, it may have been impossible for house painters who were injured while mixing or applying lead paint to avoid the dangers of lead paint. Similarly, home improvement contractors who were injured from lead contaminated dust while repairing or removing dried lead paint may not have had the ability to avoid danger depending upon when their activity occurred. If their activity occurred before the dangers of lead were common knowledge, then it was impossible for these users to avoid danger. On the other hand, if their activity occurred after the dangers of lead were common knowledge, then they could have avoided the danger. However, the issue of whether the dangers of lead are common knowledge has yet to be decided. Today, the availability of modern safety equipment gives home improvement contractors a greater ability to avoid danger than in the past. Also, it can be argued that home improvement contractors, by virtue of their trade, have a greater responsibility to avoid lead safety hazards. Adults who live in dwellings where lead paint exists may have the ability to avoid danger to their children, although not entirely.156 The lead industry contends that the main cause of the lead poisoning problem in the United States is the negligence of property owners in failing to repair deteriorating paint when 156. The most severely affected children with lead poisoning have consumed paint chips, but that can be avoided through proper hygiene, home maintenance (including re-painting) and other abatement (like drywall application). Michael I. Krauss, Painting the Town . . . with Lawsuits, The Independent Institute (Jan. 30, 2001), available at http://www.independent.org/tii/news/010130Krauss.html.

necessary.157 “Human exposure to lead from lead-based paint is believed to be higher when the paint is in a deteriorated state or is found on accessible, chewable, impact or friction surfaces.”158 If this deteriorating paint is repaired in a timely manner, it will reduce the chances of children ingesting or handling lead paint chips, though not completely.159 The User’s Probable Awareness of the Danger The issue of whether the danger of lead paint exposure is common knowledge has yet to be decided by any U.S. court. A strong argument may be made that house painters and factory workers, who handled lead pigments, were not aware of the dangers of lead at the time because of the failure of the lead industry to provide an adequate warning.160 The same argument may be made for parents and children residing in dwellings where lead paint exists. However, home improvement contractors, particularly those who were injured after 1978 when Congress prohibited the use of lead in paint,161 probably have a weaker argument since the demands of their trade should alert them to acknowledge developments in the industry, as well as to follow certain safety precautions.162

157. Peter B. Lord, Lead Paint Makers Draw Landlords into Legal Fray, Prov. J. Bull., June 26, 2001, at A-1. 158. Risk Analysis, supra note 7, at 3-8. 159. Krauss, supra note 156. 160. Despite the medical evidence concerning the dangers to children of lead-based paint, the reports from Baltimore and other cities of lead poisoning of children, occasional articles in the popular press concerning the dangers of lead-based paint, and internal correspondence from leading lead authorities around the country acknowledging that lead paint was a serious hazard, the industry neither removed lead from paint nor warned consumers of its danger until very late in the game. Markowitz & Rosner, supra note 112. 161. See Lead-Based Paint Poisoning Prevention Act of 1971, 42 U.S.C. § 4851(7) (1994). 162. Before undertaking any project involving paint removal, applicable State and Federal laws on lead paint abatement and disposal must be taken into account and carefully followed. State and Federal requirements may affect options available to owners on both paint removal and repainting. These laws, as well as any requirements prohibiting volatile organic compounds (VOCs), should be requested from the State Historic Preservation Officer in each State. Work to remove lead paint such as scraping and dry sanding releases the lead—a highly damaging heavy metal—in dust. Lead dust then enters the human system through pores of the skin and through the lungs.

The risk-utility test provides a valuable tool in determining whether lead paint is defective and unreasonably dangerous because of a defective design. Painters who were injured using lead paint have the strongest argument that lead paint is defective and unreasonably dangerous because of their inability to avoid the danger, since evidence shows that the lead industry did not warn them of the dangers of lead. Those who were exposed to lead paint from living in dwellings where lead paint exists also have a strong argument that lead paint is defective and unreasonably dangerous because of their inability to completely avoid danger. Their inability to avoid danger is based on the fact that it is difficult to keep children from handling lead contaminated dust, soil and lead paint chips. Conversely, home improvement contractors who were injured from exposure to lead paint have the weakest argument that lead paint is defective and unreasonably dangerous because the dangers of lead paint should be common knowledge to those who work with it on a regular basis. V. IS LEAD PAINT DEFECTIVE AND UNREASONABLY DANGEROUS BECAUSE OF A FAILURE TO WARN?

A product that is not defectively designed may still be defective as marketed because of a failure to adequately warn, or a failure to use proper means to warn about a risk or hazard related to the way the product was designed.163 Under this view, the The use of heat for stripping also creates toxic lead fumes which can be inhaled. To mitigate the hazards of lead paint ingestion, inhalation, or contact, it is extremely important to prevent the dust from circulating by masking room openings and removing all curtains, carpeting, and upholstered furniture. Drop cloths and masking containing lead dust should be carefully enclosed in tight plastic bags before removal. Workers and others in the room should wear High Efficiency Particulate Air (HEPA) filters for lead dust (fume filters if heat stripping is being used), change clothing just outside the room leaving the work clothes inside, and avoid any contact between bare skin (hands) and the paint being removed. Workers should also not eat, drink, or smoke where lead dust is present. Finally, anyone involved in lead paint removal should undergo periodic blood testing. After work, ordinary vacuuming is not enough to remove lead dust; special HEPA vacuums are essential. The surfaces of the room must also be given a final wash with a solution of trisodium phosphate and water, changing the washing solution often and rinsing well. Chase, supra note 140. 163. Keeton, supra note 95, at 586.

product is allegedly defective as marketed because of the failure to properly present it to purchasers and users. In other words, the seller may be required to give directions or a warning in order to prevent the product from being unreasonably dangerous. The lead industry does not dispute the claim that they failed to warn of the dangers of lead paint during the time their products were marketed.164 Rather, the lead industry argues that it did not warn of the dangers of lead paint because it was unaware that exposure to lead paint was a major cause of lead poisoning in the United States until 1955.165 According to the lead industry, once the harmful nature of its products was discovered, it voluntarily removed lead paint from the market.166 Furthermore, the lead industry contends that its ability to discover the cause of lead poisoning prior to 1955 was limited by the medical technology available at the time.167 Because of the limits of medical technology available at the time, the lead industry argues that it did not know, nor reasonably could it have known of the dangers of lead paint. In essence, the lead industry is asserting the “state of the art” defense. State of the art is a term that is used often in products liability and the term is used to mean different things at different times.168 When state of the art is defined as that which is feasible in light of the technology, which existed at the time the product was designed, consideration must be given to what was reasonably capable of being done technologically and economically to reduce the risk of hazard. A defendant’s compliance with what was technologically and economically feasible does not necessarily mean that his product is not defective. Rather, a product’s design should normally be measured in terms of whether it was feasible to do a better job in light of the technology that was available at the time. In failure to warn cases, the courts are divided over whether the state of the art defense should be allowed when state 164. Understanding Lead Pigment Litigation at http://www.leadlawsuits.com/bckgrnd_former.htm (last visited June 8, 2002). 165. Id. 166. Id. 167. Id. 168. There are three different usages for the term state of the art: (1) the customary practices employed in designing a product; (2) that which is feasible in light of the technology which existed at the time the product was designed or (3) the technological capability of an industry to discover a risk or hazard in a product. Keeton, supra note 95, at 594-95. For the purpose of this analysis, only the second and third usages will be discussed.

of the art is defined to mean the technological capability of an industry to discover a risk or hazard in a product.169 The leading case on the state of the art defense is Beshada v. Johns-Manville Products Corp.170 A majority of courts, however, have rejected the 169. See Bernier v. Raymark Indus., 516 A.2d 534 (Me. 1986) (allowing the state of the art defense under Maine law); Anderson v. Owens-Illinois, Inc., 799 F.2d 1 (1st Cir. 1986) (allowing the state of the art defense under Massachusetts law); cf. Beshada v. Johns-Manville Prods. Corp., 447 A.2d 539 (N.J. Sup. Ct. 1982) (rejecting state of the art defense under New Jersey law); Anderson v. Owens-Corning Corp., 266 Cal. Rptr. 204 (Cal. Ct. App. 1990) (rejecting state of the art defense under California law). The commentary to section 402A makes it clear that in determining whether a product is defective because of a failure to warn, the manufacturer is only required to warn of dangers about which he knew or should have known. Restatement (Second) Torts § 402A (1965). However, several courts have refused to adopt the Restatement’s position. See Beshada v. Johns-Manville Prods. Corp., 447 A.2d 539 (N.J. Sup. Ct. 1982) (rejecting state of the art defense under New Jersey law); Anderson v. OwensCorning Corp., 266 Cal. Rptr. 204 (Cal. Ct. App. 1990) (rejecting state of the art defense under California law). 170. 447 A.2d 539 (N.J. Sup. Ct. 1982). In Beshada, the plaintiffs were workers, or survivors of deceased workers, who claim to have been exposed to asbestos for varying periods of time. Beshada v. Johns-Manville Prods. Corp., 447 A.2d 539 (N.J. Sup. Ct. 1982). The plaintiffs alleged that as a result of exposure to asbestos, they contracted asbestos-related illnesses. The plaintiffs claimed that the asbestos manufacturer was strictly liable for failure to warn. Prior to the 1960’s, defendants’ products allegedly contained no warning of their hazardous nature. The defendants’ asserted the state of the art defense, alleging that no one knew or could have known that asbestos was dangerous when it was marketed. The main issue was whether the medical community’s presumed unawareness of the dangers of asbestos was a defense to the plaintiffs’ claims. The court held that the state of the art defense should not be allowed in a failure to warn case. Id. at 546. The main point that Beshada stands for is that in strict liability cases, culpability is irrelevant. Id. The court explained its decision as follows: Essentially, state-of-the-art is a negligence defense. It seeks to explain why defendants are not culpable for failing to provide a warning. They assert, in effect, that because they could not have known the product was dangerous, they acted reasonably in marketing it without a warning. But in strict liability cases, culpability is irrelevant. The product was unsafe. That it was unsafe because of the state of technology does not change the fact that it was unsafe. Strict liability focuses on the product, not the fault of the manufacturer. If the conduct is unreasonably dangerous, then there should be strict liability without reference to what excuse defendant might give for being unaware of the danger. When the defendants argue that it is unreasonable to impose a duty on them to warn of the unknowable, they misconstrue both the purpose and effect of strict liability. By imposing strict liability, we are not requiring defendants to have done something that is impossible. In the sense, the phrase “duty to warn” is misleading. It implies negligence concepts with their attendant focus on the reasonableness of defendant’s behavior. However, a major concern of strict liability—ignored by defendants—is the conclusion that if a product was in fact defective, the distributor of the

principles set forth in Beshada, instead relying on commentary j of Section 402A.171 While these cases all involved asbestos products, the question of whether the state of the art defense should be allowed in lead paint cases has yet to be decided in the United States. In fact, Rhode Island has yet to decide whether the state of the art defense should be allowed in strict liability failure to warn claims. Because Rhode Island has adopted Section 402A, Rhode Island is unlikely to allow the state of the art defense. However, Rhode Island’s neighbor, the State of Massachusetts, allows the state of the art defense.172 This may influence how Rhode Island decides this issue. Even if Rhode Island were ultimately to recognize the state of the art defense, the lead

product should compensate its victims for the misfortune that it inflicted on them. Id. 171. See, e.g., Jackson v. Johns-Manville Sales Corp., 727 F.2d 1314 (5th Cir. 1985) (applying Mississippi law); Hardy v. Johns-Manville Sales Corp., 681 F.2d 334 (5th Cir. 1982) (applying Texas law); Karjala v. Johns-Manville Sales Corp., 523 F.2d 155 (8th Cir. 1975) (applying Minnesota law); Borel v. Fireboard Paper Prods. Corp., 493 F.2d 1076 (5th Cir. 1973) (applying Texas law); Bernier v. Raymark Indus., Inc., 516 A.2d 534 (applying Maine law); Commentary j to Section 402A states: Directions or warning. In order to prevent the product from being unreasonably dangerous, the seller may be required to give directions or warning, on the container, as to its use. The seller may reasonably assume that those with common allergies, as for example to eggs or strawberries, will be aware of them, and he is not required to warn against them. Where, however, the product contains an ingredient to which a substantial number of the population are allergic, and the ingredient is one whose danger is not generally known, or if known is one which the consumer would reasonably not expect to find in the product, the seller is required to give warning against it, if he has knowledge, or application of reasonable, developed human skill and foresight should have knowledge, of the presence of the ingredient and the danger. Likewise, in the case of poisonous drugs, or those unduly dangerous for other reasons, warning as to use may be required. But a seller is not required to warn with respect to products, or ingredients in them, which are only dangerous, or potentially so, when consumed in excessive quantity, or over a long period of time, when the danger, or potentiality of the danger, is generally known and recognized. Again, the dangers of alcoholic beverages are an example, as are also those of foods containing such substances as saturated fats, which may over a period of time have a deleterious effect upon the human heart. Where warning is given, the seller may reasonably assume that it will be read and heeded; and a product bearing such a warning, which is safe for use if it is followed, is not in defective condition, nor is it unreasonably dangerous. Restatement (Second) Torts § 402A (1965). 172. See, e.g., In re Massachusetts Asbestos Cases, 639 F. Supp 1 (D. Mass. 1985) (adopting the state of the art defense).

industry may still have difficulty convincing a jury that limits in medical technology made it impossible to learn of the dangers of lead paint until 1955. Evidence available to plaintiffs suggests that the lead industry had both constructive and actual knowledge of the dangers of lead-based paint. According to some researchers, the knowledge of the dangers of lead poisoning to workers and children can be traced back into the nineteenth century, and that in the first third of the twentieth century, a broad scientific literature on the subject accumulated in Australia, England and the United States.173 In 1908, lead hazards were documented among American workers in the pigment manufacturing, battery, painting, plumbing, ceramics, pottery and other industries.174 In 1921, the President of the National Lead Company wrote to the Dean of Harvard Medical School, stating: . . . [L]ead manufacturers, as a result of fifty to sixty years experience, agreed that lead is a poison when it enters the stomach of man—whether it comes directly from the ores and mines and smelting works or from the ordinary forms of carbonate of lead, lead oxides, and sulfate and sulfide of lead.175 Clearly, there are strong arguments that both support and undermine the state of the art defense. The State must eventually choose between public policy considerations and economic realities by balancing consumers’ needs with manufacturers’ needs. Perhaps this decision is best left for the State legislature. VI. DOES THE PRESENCE OF LEAD PAINT CREATE A PUBLIC NUISANCE?

The State’s last chance for relief against the lead industry lies in proving that the presence of lead paint in properties throughout the state has created a public nuisance.176 Rhode Island case law 173. Markowitz & Rosner, supra note 112. 174. See id. (citing Alice Hamilton, Industrial Diseases, With Special Reference to the Trades in Which Women Are Employed, 20 Charities and the Commons 655-58 (1908)). 175. Markowitz & Rosner, supra note 112. 176. The State alleges that the lead industry has created an environmental hazard that continues and will continue to unreasonably interfere with the health, safety, peace, comfort or convenience of the residents of the State, thereby constituting a public nuisance. Compl. at 16, State v. Lead Indus. Ass’n, Inc., No. 99-5226, 2001 WL 345830, at *1 (R.I. Super. Ct. Apr. 2, 2001). The State seeks relief ordering the lead industry to detect and abate lead in all residences, schools, hospitals, and private and public buildings within the State accessible to children. Id. at 25.

defines a public nuisance as “an unreasonable interference with a right common to the general public: it is behavior that unreasonably interferes with the health, safety, peace, comfort or convenience of the general community.”177 Unlike the nine dismissed tort claims, it is virtually undisputed that the State has standing to bring an action to abate a public nuisance under Rhode Island General Laws § 10-1-1.178 In fact, “[t]he Rhode Island Supreme Court has recognized for almost a century that public nuisance provides a cause of action in environmental contamination and pollution cases.”179 The Rhode Island Superior Court denied the lead industry’s motion to dismiss the public nuisance claim, stating that the State adequately asserted an action for public nuisance.180 In determining whether the defendants had unreasonably interfered with the health, safety, peace, comfort or convenience of the general community, the court held that reasonableness was a question of fact.181 Accordingly, there are several important questions that must be answered: (1) whether the defendant must have control over the properties upon which the nuisance is alleged to exist; (2) whether the manufacture and sale of products may give rise to a nuisance claim; and (3) whether the presence of lead paints in individual private properties interferes with a public right. The lead industry argues that it should not be held liable for creating a public nuisance because it does not control the 177. Citizens for Preservation of Waterman Lake v. Davis, 420 A.2d 53, 59 (R.I. 1980) (quoting Copart Indus., Inc. v. Consol. Edison Co. of New York, 362 N.E.2d 968, 971 (N.Y. 1977)). 178. R.I. Gen. Laws § 10-1-1 (1956) provides that: Whenever a nuisance is alleged to exist, the attorney general or any citizen of the state may bring an action in the name of the state, upon the relation of the attorney general or of an individual citizen, to abate the nuisance and to perpetually enjoin the person or persons maintaining the nuisance and any or all persons owning any legal or equitable interest in the place from further maintaining or permitting the nuisance either directly or indirectly. The complaint shall be duly sworn to by the complaining party, unless brought by the attorney general, and shall set forth the names of the parties, the object of the action, a description of the place complained of, and a statement of the facts constituting the alleged nuisance. 179. See Pl.’s Mem. in Opp’n to Def.’s Mot. to Dismiss the Compl. at 39, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1 (quoting Payne & Butler v. Providence Gas Co., 77 A. 145 (R.I. 1910)). 180. Lead Indus. Ass’n., Inc., 2001 WL 345830, at *8. 181. Id.

properties upon which the nuisance is alleged to exist, and therefore, the lead industry does not have the power to abate the nuisance.182 The lead industry further contends that “[t]he paramount question is whether the defendant was in control of the instrumentality alleged to have created the nuisance when the damage occurred.”183 Conversely, the State argues that individuals or entities who either created or contributed to the creation of a public nuisance may be liable for that nuisance despite the fact that they are not in physical control of the real property in question.184 While the State makes a strong argument that there need be no physical control over the property in order to create a public nuisance, the State fails to take into account that there must be some control over the instrumentality alleged to have created the nuisance.185 In the present case, the lead industry cannot be held liable for a public nuisance because they gave up control over the instrumentality, the lead paint, when it was sold. Next, the lead industry argues that public nuisance law does not apply to product manufacturers because “to hold manufacturers, sellers or installers of products liable in nuisance ‘would significantly expand, with unpredictable consequences, the remedies already available to persons injured by products.’”186 Furthermore, a public nuisance claim is based on the wrongful use of property, not products.187 The State contends that a public nuisance involves behavior that unreasonably interferes with the health, safety, peace, comfort or convenience of the general

182. Def.’s Mot. to Dismiss the Pl.’s Compl. at 24-25, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1. 183. Id. at 25 (quoting Friends of the Sakonnet v. Dutra, 738 F. Supp. 623, 633-34 (D.R.I. 1990)). 184. Pl.’s Mem. in Opp’n to Def.’s Mot. to Dismiss the Compl. at 41, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1 (quoting Payne & Butler v. Providence Gas Co., 77 A. 145 (R.I. 1910)). 185. Most public nuisance cases brought against landowners usually involve some type of environmental contamination. See id. at 42. For example, one who dumps toxic waste onto land that causes groundwater to become contaminated has created a public nuisance even though they controlled neither the land nor the groundwater that was contaminated. See id. In such a case, the party exercised control over the instrumentality, the hazardous substance, that created the public nuisance. See id. 186. Def.’s Mot. to Dismiss the Pl.’s Compl. at 27-28, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1 (quoting Detroit Bd. of Educ. v. Celotex Corp., 493 N.W.2d 513, 521 (Mich. Ct. App. 1992)). 187. Id. at 28.

community.”188 The State claims that this behavior consists of the defendants’ misconduct, which was calculated to mislead the public concerning the hazards of lead and to promote the use of lead paint on thousands of homes and buildings throughout Rhode Island.189 The State’s position is consistent with case law from around the country showing that courts have found manufacturers of hazardous products liable under nuisance law for injuries caused by their products when the manufacturers’ conduct created a public nuisance.190 The State correctly points out that if its claim were based on the inherent dangerous nature of lead paint, then products liability law, not public nuisance, would apply to lead paint. However, the State has alleged the defendants’ wrongful conduct constitutes behavior that “unreasonably interferes with the health, safety, peace, comfort or convenience of the general community.”191 Therefore, the State is not barred from asserting a public nuisance claim because the defendants are product manufacturers. Lastly, the lead industry claims that the presence of lead paint in individual properties does not interfere with a public right because the existence of lead paint in individual homes and buildings, if it affects anyone, affects persons on the premises and not the general public.192 Defendants argue that in typical public nuisance cases such as air, water and noise pollution, there must be some interference with a right common to the general public. Conduct that interferes with the rights of only a large number of

188. Citizens for Preservation of Waterman Lake v. Davis, 420 A.2d 53, 59 (R.I. 1980) (quoting Copart Indus., Inc. v. Consol. Edison Co. of New York, 362 N.E.2d 968, 971 (N.Y. 1977)). 189. Pl.’s Mem. in Opp’n to Def.’s Mot. to Dismiss the Compl. at 49, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1. 190. Id. at 46; see, e.g., Chase Manhattan Bank, N.A. v. T&N PLC, 905 F. Supp. 107 (S.D.N.Y. 1995) (finding that the manufacturer of an asbestos fire-proofing spray could be held liable under public nuisance); New York v. Fermenta ASC Corp., 616 N.Y.S.2d 702 (N.Y. Sup. Ct. 1994) (finding that the manufacturer of a pesticide could be liable under public nuisance for contamination of groundwater caused by the product); Page County Appliance Center, Inc. v. Honeywell, Inc., 347 N.W.2d 171, 177 (Iowa 1984) (finding the manufacturer of a computer system that emitted radiation materially participated in the creation of the nuisance and could be liable). 191. Citizens for Preservation of Waterman Lake v. Davis, 420 A.2d 53, 59 (R.I. 1980) (quoting Copart Indus., Inc. v. Consol. Edison Co. of New York, 362 N.E.2d 968, 971 (N.Y. 1977)). 192. Def.’s Mot. to Dismiss the Pl.’s Compl. at 29, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1.

persons does not constitute a public nuisance.193 However, in Pine v. Kalian,194 the Rhode Island Supreme Court ruled that the presence of lead paint in a rental property was a public nuisance “constitut[ing] a continuing, persistent hazard of lead poisoning to members of the public who occupy such premises, especially to children of tender years.”195 Furthermore, the State claims that lead poisoning affects almost twenty percent of kindergartners in Rhode Island and up to thirty percent in some urban areas.196 Although the State suggests that the presence of lead paint interferes with a public right, Kalian is distinguishable from the present case for two reasons. First, the defendants in Kalian were landlords who exercised control over the instrumentality, the lead paint that created the nuisance. Once again, since the lead industry does not control the properties upon which the nuisance is alleged to exist, it does not have the power to abate the nuisance. Second, and more importantly, the defendants in Kalian knowingly and deliberately refused to comply with court orders. In fact, the trial justice at the lower level described the defendants as “obstructive” and “noncompliant. . .to the point of outright defiance.”197 This defiant behavior may have contributed to the court’s ruling in the form of a punishment. In the present case, despite the State’s accusations that the lead industry intentionally misled the public as to the hazards of lead paint, an argument can be made that the lead industry voluntarily banned lead paint once its harmful effects were discovered. VII. OTHER REASONS WHY THE LEAD INDUSTRY MAY NOT BE LIABLE

There are two other arguments that the lead industry may raise, both of which allege that a plaintiff has failed to establish that the defendants’ products were the proximate cause of his injuries. First, the lead industry may argue that because there are alternative exposure pathways by which children can be exposed to lead other than lead paint, the State has failed to prove

193. State v. Waterloo Stock Car Raceway, Inc., 409 N.Y.S.2d 40, 43-44 (N.Y. Sup. Ct. 1978). 194. No. 96-2673 (R.I. Super. Ct. Feb. 1998); aff’d 723 A.2d 804 (R.I. 1998). 195. Pl.’s Mem. in Opp’n to Def.’s Mot. to Dismiss the Compl. at 50, Lead Indus. Ass’n, Inc., 2001 WL 345830, at *1 (quoting Pine v. Kalian, No. 96-2673 (R.I. Super. Ct. Feb. 1998)). 196. Id. at 50 (quoting 2000 R.I. Kids Count Fact Book, Apr. 2000). 197. Pine v. Kalian, 723 A.2d 804, 805 (R.I. 1998).

that lead paint was the proximate cause of its citizens’ injuries.198 While it is true that exposure to lead paint contributes to lead poisoning in children, it is not the only source of lead exposure to children. For example, the EPA has estimated that twenty to forty percent of the average blood lead in U.S. children may come from lead in drinking water alone.199 Since lead in its purest form is not changed by exposure to sunlight, air or water, once it becomes embedded in something, such as in soil or in plumbing, it stays there forever, unless intentionally removed by humans.200 Similarly, lead comes into contact with soil from a variety of sources, such as lead dust created during home improvement renovations, from deteriorated lead paint chips and from airborne lead from leaded gasoline emissions.201 While lead exposure from leaded gasoline emissions has essentially been eliminated in the United States today, lead exposure from this source was a significant problem in the past.202 In fact, it has been estimated that twice as much lead was used in leaded gasoline from 1940 to 1989 than was used in white lead pigmented paints from 1910 to 1989.203 Seventy-five percent of lead from gasoline went into the environment and settled in soil and on buildings.204 Therefore, soil that was contaminated twenty years ago by leaded gasoline emissions can still be harmful to children today. As a result, a plaintiff who suffers from lead poisoning may have difficulty pinpointing which source of lead has actually caused his injury. Second, the lead industry may argue that a plaintiff’s injuries such as cognitive defects, speech problems, learning disabilities, and lowered IQ may not be injuries caused by exposure to lead. Rather, these defects may be attributable to genetics and environment and may have little to do with lead exposure. For example, the defendants in Campbell v. Bonner,205 a lead

198. Part I of this Comment discusses in detail how humans are exposed to lead. 199. Lead Phase Out, supra note 12. 200. Id. 201. See generally Risk Analysis, supra note 7; see Part I of this Comment. 202. Historically, leaded gasoline was a major source of lead exposure in the United States, however, leaded gasoline has been phased out dramatically over the last twenty years leading to a ninety percent reduction in emissions of lead. Lead Phase Out, supra note 12. 203. Paint & Coatings, supra note 69 (quoting Journal of Coatings Technology, Lead Based Paint and the Lead Abatement Issue in the United States, July 1994). 204. Id. 205. No. 92-7771 (D.C. Super. Ct. Jan. 7, 1994).

exposure case, argued that IQ is genetically inherited and that children’s IQ’s tend to correlate with their mother’s IQ through child rearing practices that are IQ related.206 The defendants argued that a child’s IQ may be deficient either because his mother had a deficient IQ herself or because his mother’s child rearing activity contributed to his deficient IQ. The defendants’ expert witness stated in her affidavit that: . . . [T]he relative contribution of genetic and child rearing factors to IQ is not material . . . . What matters is that parent IQ is a major determinant of child IQ whether for genetic or child-rearing reasons. Information about parent IQ is thus necessary to make a meaningful judgment about the purported causation of observed deficits in child IQ.207 In Campbell, the judge ordered the non-party relatives of a lead-exposed child to submit to IQ tests and clinical interviews. Critics claim that this expansion of discovery broadens the scope of litigation and is unnecessarily intrusive to the injured plaintiff’s family.208 However, while there are privacy issues and racial overtones to this defense, defendants may still argue that the plaintiff’s defects are not the result of lead exposure, but due to either her genetic or environmental heritage.209 VIII. CONCLUSION

In Rhode Island, the chances of holding the lead industry accountable for the harm caused by lead paint seem bleak. Without market share liability to use as a weapon, a plaintiff will be unable to identify the manufacturer who caused his injury, an essential element of any tort claim. Therefore, the same proximate cause issues will arise whether the claim is one for strict products liability or one for public nuisance. Also, proving that lead paint is defective and unreasonably dangerous will be a 206. Wriggins, supra note 53, at 1042. 207. Id. at 1043. 208. Id. at 1060. 209. According to a study of lead poisoning in children in the Washington area and Charlottesville, Va., elevated lead levels are found mainly among urban children. Facts About Lead at http://www.leadinfo.com/FACTS/facts1.html (last visited May 12, 2002). The CDC report identifies children aged 1-5 years more likely to have elevated blood levels as “those who were poor, non-Hispanic black, living in metropolitan areas, or living in older housing.” Id.

difficult task because there are many intervening factors that can contribute to lead poisoning. These factors include the negligence of landlords in maintaining their property and the negligence of home improvement contractors in creating dust when working with lead paint. Furthermore, a majority of U.S. courts have allowed the state of the art defense, thus giving the lead industry greater maneuverability in escaping liability. On the other hand, some courts have ruled that the dangers of cigarette smoking are not common knowledge, improving the likelihood that a court may rule that the dangers of lead exposure are not common knowledge. Essentially, a ruling that the dangers of lead exposure are not common knowledge would preclude an assumption of the risk defense by the lead industry. This would also strengthen the argument under the risk utility test that lead paint is defectively designed because users cannot avoid dangers of a product if the dangers are not common knowledge. Perhaps a plaintiff’s best chance for relief of a lead paint related injury is in a negligence lawsuit against a landlord. In a lead paint poisoning claim based on negligence, a plaintiff must prove that: (1) the landlord had actual knowledge or reason to know of chipping, peeling and flaking lead paint on the premises and that such a condition was hazardous; and (2) the landlord was given a reasonable opportunity to correct the hazard.210 Meeting the burden of proof on this claim should be a much easier road to travel. Mark P. Gagliardi

210.

Brown v. Wheeler, 675 A.2d 1032, 1035 (Md. Ct. Spec. App. 1996).

Remarks Thinking Like A Lawyer and a Human Resources Professional∗ ∗∗

Stewart J. Schwab∗∗

Our task today is to celebrate, inaugurate, and educate. Lawyers demanded the education part of the talk because they love double counting whenever possible. The lawyers in our audience get Continuing Legal Education credits for attending. That’s just one illustration of how to think like a lawyer–kill as many birds with as few stones as possible. Lawyers are often accused of talking in an arcane language that no one else can understand. Labor-relations people are sometimes thought to be either pie-in-the-sky optimists or Marxist-inspired anarchists. Human-relations professionals are sometimes said to be hypocrites giving a fake smile to employees while looking solely at the bottom line. But these are just insults. Instead, I come to you tonight as someone who has been through a joint degree program myself. At times it is frustrating. At the very least, it teaches one how to deal with university bureaucracy. But at its best, someone who has advanced professional training in both law and in labor and human relations gets something

∗

This paper is based on remarks given by Professor Schwab for the ceremony to mark the creation of a joint J.D./MS program between the Roger Williams University School of Law and the University of Rhode Island Labor Research Center. It is dedicated to the memory of Terry Thomason, the late director of the Labor Research Center and a former graduate student of mine. He had a gentle, inquiring spirit. Thanks to Michael Yelnowski and Ted Eisenberg for comments. ∗∗ Professor of Law, Cornell Law School. B.A., 1975, Swarthmore; Ph.D. (economics), 1981, University of Michigan, J.D.; 1980, University of Michigan.

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better than what either can teach alone. I. THE CHALLENGES OF A J.D./M.S. PROGRAM

The obvious first question that prospective students should ask is: what are the benefits of enrolling in a joint degree program? The correct first answer is: the double counting. A J.D. degree normally takes three years of fulltime study. A master’s degree takes two years. A combined J.D./M.S. takes four years; in other words, the first thing students learn under this program is that three plus two equals four. The University of Rhode Island will give credit to several Roger Williams Law School courses. These include administrative law, employment law, and labor law. Roger Williams, in turn, will give law school credit to several URI courses. These include labor relations and human resources, labor economics, international labor relations, labor relations, and a professional seminar. But despite the close meshing of courses, inevitably students in the program will face two different experiences in methodology, style of teaching, and overall “feel.” Let us examine the schizophrenia experience of these joint-degree students. The joint J.D./M.S. training might give students a certain feeling of schizophrenia. The legal training imbibes a love of distinction, a mistrust of sweeping generalizations, a recognition that the law has gray areas, and a mistrust or even fear of statistics. Close attention to facts is a key part of thinking like a lawyer. Reasoning by analogy1 and the use of hypotheticals is also an important part of law school pedagogy. The danger from the law side is that students will develop a cynical attitude about their subjects. Arguments and counter-arguments are always possible, and the lawyer is simply a hired gun whose task is to provide the best possible argument with little concern for the “truth.” The skills and instincts of the human resource professional are quite different. They are taught to understand the history and sociology of the workplace, and they strive to obtain an understanding of what works and what does not work in the workplace. The good student will also be well-versed in statistics. They will have examined and perhaps conducted surveys, and in 1. For an interesting essay on analogical reasoning in law, see Emily Sherwin, A Defense of Analogical Reasoning in Law, 66 U. Chi. L. Rev. 1179 (1999).

general be far more comfortable with data than the typical law student. The danger of a human-resources education, however, is that it leads to fuzzy “feel good” thinking. Students get a dab of labor economics, a dose of labor history, and an element of business school offerings. This may create students who appreciate trends and fads, but may not have a real methodology to serve them over a professional career. For example, consider teaching the well-known Soroka case.2 The professor’s questions may involve the precise issue in the case and arguments for its resolution. Student Smith might suggest that the issue in Soroka is whether an employer unlawfully invaded the job applicants’ right to privacy. The professor might ask student Jones to represent the applicants and summarize the key arguments on their behalf. “Are there analogous cases the applicants can use for support,” the professor continues. The professor might then ask another student how the employer might respond. Further questions suggest weaknesses in the applicants’ position: “Would the employer ever see answers to individual questions? If not, is this in fact favorable to the employer? Is the mere asking of the question an invasion of privacy, even if one does not hear the response?” The law professor might then continue the Soroka analysis by altering the facts. “What if a test was given to incumbent workers, on pain of dismissal? Doesn’t this weaken the employer’s interest in having the test?” Alert students may see that an employer has direct experience with incumbent employees, and therefore has less need of a test to judge employee’s character. “On the other hand,” the professor continues, “isn’t the workers’ claim strengthened when the test is given to incumbents? Compared to job applicants who can say ‘take this job and shove it’ if the interview questions become offensive, can incumbent employees easily walk away and lose their job rather than submit to an offensive test?” After this peek at a law school class, let me make some general observations from it. First, we see how arguments and 2. Soroka v. Dayton Hudson Corp., 1 Cal. Rptr. 2d 77 (Cal. Ct. App. 1991). Soroka dealt with a psychological screening test that was administered to applicants for security positions at a department store. Id. at 79. The Soroka test included a number of creepy questions, including such yes/no questions as “My soul sometimes leaves my body,” “I believe there is a Devil and a Hell in afterlife,” and “I have never indulged in any unusual sex practices.” Id. at 80.

counter-arguments are central to the pedagogy in a law school class. Second, the key legal issue was whether the employer had a legal right to give the test. Little attention was given to whether it was a good idea for employers to give the test. Third, which side won this case is of modest pedagogical interest. Notice that the outcome was not even mentioned in the sketch above.3 Particular facts were so important that a single overall rule is unlikely to arise from one case. This is especially so in a common-law subject like privacy rights in employment law, where each state court in our fifty-state federal system could, in theory at least, have its own rule. Because a clear rule is unlikely to come from a single case, there is little need to focus on the outcome of the single case. Now let’s contrast how a human resources class on psychological testing might be conducted. First, the professor would begin with the lecture on testing. The background reading (which students often will not read until after the class, in contrast to law school) could be a textbook article on testing. There would be no pretense of grilling questions, even by professors that encourage discussion. Topics for discussion would emphasize how prevalent the tests are. Much of the class discussion would focus on how well the test works. Is the test able to spot bad workers, and how often does the test label good workers as bad workers? In other words the discussion would focus on type-1 versus type-2 error. Evidence that the test might hurt workplace morale would be a central concern for the human-resources class. The professor would likely sketch the history of testing in the workplace, and would emphasize any available statistical studies of the effect of testing in the workplace. Now the goal of the program we celebrate tonight is that the jointly trained student can provide a synthesis. This student recognizes the pros and cons of including a large disclaimer that 3. For readers desperate to know the outcome, the court of appeals in Soroka reversed the trial court’s order denying a preliminary injunction and remanded the matter to the trial court for further proceedings on class certification. After additional wrangling, the parties eventually settled the case for over $2 million. The 2,500 applicants who had taken the invasive test split $1.3 million; $60,000 went to the four named plaintiffs; and the rest went for attorney’s fees. See 89 Ind. Emp. Rts (BNA) No. 16 (July 20, 1993) and No. 22 (Oct. 12, 1993). The California Supreme Court then dismissed the case as moot pursuant to stipulation by the parties. 862 P.2d 148 (Cal. 1993). Perhaps this recounting of the convoluted outcome itself demonstrates why law school classes are more interested in issues than outcomes.

states: “THE COMPANY CAN FIRE YOU FOR A GOOD REASON OR A BAD REASON.” This student understands the tradeoff involved: motivating the workforce and staying out of court. An advantage of being a lawyer is that one knows when the law is not important. A good lawyer knows that not everything that is lawful should be done (even assuming that business lawyers can agree that what is unlawful should not be done). For example, most workers in this country are employed at will, meaning they can be fired for a good reason, bad reason, or no reason at all. But this legal presumption does not mean that employers should fire workers for a bad reason or no reason at all. Too often, non-lawyers have a vision of the work world that the law constrains all choices, even when it does not. To further examine the contrast between the human-resource professional and the employment lawyer, let us take the related example of the steps an employer takes before firing a worker. The lawyer representing the company wants clear documentation of awful ratings of the worker. Ideally, from the lawyer’s perspective, employees will have signed a waiver of all rights and the employer will refuse to give an explanation for termination. By contrast, the human resource manager wants to give a faltering worker a pep talk, emphasizing that the worker is improving and still has a great future with the company. The human-resource manager’s instinct is always to give one more chance to the worker. The J.D./M.S. synthesis recognizes the tradeoffs involved. Most importantly, this synthesis states that the legal right to fire a worker does not mean that it is a good idea to fire the worker. II. THE APPROPRIATE FOCUS OF THE JOINT PROGRAM: STATE, REGIONAL, OR NATIONAL

One issue for this new joint program is how it should position itself. In particular, should it envision itself as a program focusing on workforce issues in the state of Rhode Island? Or should it broaden its vision somewhat and emphasize regional issues affecting New England workplaces? Or should it look nationally or even, in the fashion of the day, globally? I have no final answers to this question of focus, but in part the answer depends on two questions of fact: First, where are the students coming from and going to? Second, how different is Rhode Island from the northeast region and from the nation? A

new program cannot definitely answer the first question of where students are coming from and going to, although the program certainly has hopes and expectations. I will give a few bits of data relating to the second question of the uniqueness of Rhode Island and New England From a labor relation’s perspective, Rhode Island is more unionized than the rest of the United States. This is especially true in the public sector. Like the rest of the nation, but perhaps somewhat later, Rhode Island has been undergoing a shift from manufacturing to services. This suggests that a joint program in Rhode Island should spend somewhat more time on union-related issues (labor law) than a more nationally focused program might do. But rather than discuss further industrial relations in Rhode Island, I want to focus on legal issues: to what degree is Rhode Island’s employment law similar to or distinct from New England or the nation? But to illustrate the schizophrenic method of someone involved in a joint J.D./M.S. program, I propose to address this question of legal issues by presenting a bunch of statistics. A. Erosions of Employment-at-Will One of the major issues in employment law over the last quarter century has been the legal inroads on the traditional employment-at-will rule–that is, the doctrine that the employer has the legal right to fire a non-union worker for a good reason, bad reason, or no reason at all. Courts have carved out three categories of exceptions to the at-will doctrine. In most states, the earliest erosion was the recognition of the tort of wrongful discharge in violation of public policy. A classic case is recognizing a tort claim for an employee fired because he refused to perjure himself when a government agency was investigating his employer.4 A second at-will exception involves implied contracts. These can take two forms. Sometimes, courts protect an ostensibly atwill employee who has worked hard for the company for a long time, rising from a low position to one of considerable responsibility. Along the way, the employee received the usual 4. See Petermann v. International Brotherhood of Teamsters, 344 P.2d 25 (Cal. Ct. App. 1959).

commendations, pats on the back, and assurances that he had a future with the company. When the employee is suddenly discharged after many years of this service, a court might determine that an implied-in-fact contract existed that the employee would not be fired without good cause.5 A second type of implied-in-fact contract comes from a company handbook describing the grounds and procedures for dismissal. A number of courts in recent years have considered these handbooks to be legally enforceable contracts. The third erosion of employment-at-will comes from courts that have implied into employment contracts a covenant of good faith and fair dealing. When, for example, an employer fires a sales person who has done all the work for a large sale shortly before his commission is due, courts have held this violates the covenant of good faith and fair dealing.6 Rhode Island is in a distinct minority in the nationwide trend to erode the at-will employment rule. Only three states have not adopted any of these exceptions, and Rhode Island is one of them (Florida and Georgia are the other two). Forty-three states have adopted some version of the implied contract exception, a different set of 43 states has adopted the tort of wrongful discharge and violation of public policy, and 11 states now recognize the tort of covenant in good faith and fair dealing. B. Rhode Island Employment Discrimination Cases Another way to look at the distinctiveness of Rhode Island is to look at federal court data gathered by the administrative office of the U.S. courts.7 The main lesson I want to glean from these data is the degree in which Rhode Island differs from the rest of the northeast region and from the country as a whole. These data come from official data collected by the Administrative Office of the U.S. Courts. The database covers all civil cases terminated between 1988 and 2000.8 My strategy is to compare cases from the District of Rhode Island with other cases 5. The classic illustration of this implied-in-fact doctrine is Pugh v. See’s Candies, Inc., 171 Cal. Rptr. 917 (Cal. Ct. App. 1981). 6. This was the fact pattern in the classic good-faith case of Fortune v. National Cash Register Co., 364 N.E.2d 1251 (Mass. 1977). 7. All the data presented here are available at http://teddy.law.cornell.edu:8090\questcv3.htm 8. The data limited to trials are available for a longer period, from 1978-2000.

in the New England region (Maine, New Hampshire and Massachusetts)9 and the nation as a whole. Figure 1 is designed to show the prevalence of various types of labor employment cases with a share of the entire federal civil docket. The administrative office places each civil case into one of about 100 categories, including seven different types of labor employment categories. The most prevalent employment category is what the administrative office calls “Other Civil Rights: Jobs” (Category No. 442), which I will call discrimination cases. Most of the cases in this category raise claims under Title VII (covering race and sex discrimination), under the Americans with Disabilities Act (covering disability discrimination), or under the Age Discrimination in Employment Act (covering age discrimination). Nationally, over six percent (6.01%) of the federal civil docket comes from this category. The New England region has substantially fewer discrimination cases, comprising less than four percent (3.98%) of its docket. Rhode Island has even fewer discrimination cases, comprising only 3.32% of its federal civil docket. The next most prevalent category of employment cases is ERISA cases, which cover claims involving health insurance, pension and other employer-provided benefits. As Figure 1 shows, Rhode Island (3.03%) trails the nation (3.70%) in the percentage of federal civil cases involving ERISA claims. The rest of New England, by contrast, has a higher proportion of ERISA cases (4.17%) than does the nation. Each of the other five categories of employment cases comprises less than one percent of the docket, both locally and nationally. No clear trend emerges on whether Rhode Island has proportionally more or fewer cases than the region or nation. Rhode Island has relatively fewer Labor Management Relations Act cases (union claims) than the nation or region, but relatively more Fair Labor Standards Act cases (minimum wage, overtime hours, and child labor) than the nation. The succeeding figures look more closely at the largest 9. Another possibility would be to compare Rhode Island to the five other states in what is traditionally called New England, i.e., include Vermont and Connecticut. I chose not to do this because Vermont and Connecticut are district courts in the Second Circuit, while Maine, New Hampshire, Massachusetts and Rhode Island (along with Puerto Rico, which I also did not include for comparison) are districts in the First Circuit.

category of employment cases, those involving discrimination claims, and limit the focus from all terminated cases to those terminated after a judge or jury trial. Figure 2 shows the plaintiffs win rate at trial. Overall, Rhode Island plaintiffs are significantly more successful than plaintiffs regionally or nationally. Rhode Island plaintiffs win nearly half (49.1%) of their trials, compared to 43.5 percent for other New England plaintiffs and 44 percent for plaintiffs nationwide. In discrimination cases, plaintiffs are substantially less successful. Nationwide, discrimination plaintiffs win only 28.1 percent of their trials. Discrimination plaintiffs are somewhat more successful in Rhode Island and New England (winning 32.6% and 33.8% of their trials, respectively), but even in Rhode Island the gap in win rates at trial between discrimination and other plaintiffs is large. Figure 3 shows the mean awards in cases where plaintiffs have won an award at trial. Here, Rhode Island plaintiffs stand out, obtaining far higher awards than the region or nation. Looking at all civil cases, the mean award for Rhode Island plaintiffs is $4,642,000. This is more than double the mean award for other plaintiffs in the region ($1,730,000), which is itself considerably higher than the nationwide average award of $1,302,000. The pattern of higher awards in Rhode Island holds true for discrimination trials as well. On average, discrimination plaintiffs in Rhode Island receive more than twice the award than plaintiffs regionally, and four times the national average. Figure 4 compares median awards in Rhode Island, the region, and the nation. Again, the median discrimination plaintiff and the median plaintiff overall receives a far higher award in Rhode Island than elsewhere. A few caveats about the award data are in order. First, while most of the Administrative Office data are consistent with actual courthouse records, the award data in the Administrative Office database are notoriously inaccurate.10 Second, the highest award recorded in the database is $9,999,999. Thus, all awards of $10 million or more are under-reported. Third, the Rhode Island awards data are based on relatively few trials. In the period 1978-

10. See Stewart J. Schwab, Theodore Eisenberg, Explaining Constitutional Tort Cases: The Influence of the Attorney Fees Statute and the Government as Defendant, 73 Cornell L. Rev. 719 (1988) (comparing administrative office data with courthouse records in three districts).

2000, the Administrative Office recorded an award in only 274 Rhode Island trials, and only 12 of these trials were in discrimination cases.11 Several experienced Rhode Island lawyers in the audience expressed skepticism at the high awards reported in discrimination cases. To check the accuracy of the Administrative Office awards data in Rhode Island, I gave the law review editors assisting this piece the docket numbers of the 12 Rhode Island discrimination trials, and asked them to go to the clerk’s office in the federal district court in Rhode Island and ask for the record. They were able to do so in every case. The results are reported in Table A. The Administrative Office award amount cannot be checked in one case (#83-0099), because the docket sheet indicates an order for money damages but does not show the amount. In the other 11 cases, the A.O. amounts were accurate in seven cases and essentially accurate in an eighth case (#75-0036), apparently including the compensatory damages but not the liquidated damages. In four cases, however, the Administrative Office vastly overstated the award. In two cases, the Administrative Office recorded an award of 9999, meaning $9,999,000—the largest award that can be awarded under the Administrative Office coding scheme. The docket sheets in these two cases show modest awards that were later dismissed as part of a settlement. Perhaps the clerk meant simply to indicate an unusual procedure by entering 9999, although the directions say that 9999 should be used to indicate an award of $9,999,000 or higher. In the other two cases, the Administrative Office overstated the award by exactly 100 times (two zeros), suggesting a confusion with recording the amount in thousands of dollars, or perhaps a confusion in the digits involved with dollars and cents. The overstatement in these four cases cause the Administrative Office data to seriously overstate the mean and median awards.

11. The ratio of discrimination trials in Rhode Island reporting awards to all trials in Rhode Island reporting awards, 12/274 = 4.4%, is roughly comparable to the fraction of discrimination trials to all trials, 43/875 = 4.9%. Thus, no obvious distortion appears in the fraction of discrimination and overall trials in Rhode Island that report awards. However, in Rhode Island a far higher percentage of winning discrimination trials report awards (12 awards reported out of 14 successful trials = 85.7%) than do winning trials overall (274 out of 430 = 63.7%).

This quick check of Administrative Office data leads to two tentative suggestions. First, perhaps the Administrative Office should ask personnel to record actual dollar amounts of the awards, rather than truncating to thousands of dollars, which can introduce mistakes. In our survey, the only serious mistakes occurred when the Administrative Office recorded a four-digit award (indicating a supposed award of millions of dollars). Researchers should be particularly cautious about giving credibility Administrative Office indications of multi-million dollar awards. Interestingly, however, the awards were not overstated by a factor of 1,000, which might suggest a failure to truncate by 1,000. Rather, the awards were off by a factor of 100, perhaps indicating a problem with including cents in an award. Second, Administrative Office personnel should be warned about the use of 9999 as a monetary award. Both cases with this A.O. coding were highly inaccurate. In sum, what should we make of these figures? The basic point is that Rhode Island tracks the nation and region in some respects. In particular, both in Rhode Island and the region and nation, discrimination plaintiffs win less often at trial than other plaintiffs do. In other respects, Rhode Island appears distinctive. Its federal docket is less dominated than the nation’s docket is by discrimination cases. Further, the success rate of Rhode Island plaintiffs is higher than the national success rate. Finally, according to the Administrative Office, awards to successful plaintiffs at trial appear far higher in Rhode Island than elsewhere, both in discrimination and other cases. A check of docket sheet shows that we should be skeptical of this finding, however, at least for discrimination cases. What this ultimately means, I leave to the future students in the joint J.D./M.S. program, and wish them successful studies and exciting careers.

Book Note Why Lawsuits are Good for America, Disciplined Democracy, Big Business, and The Common Law. By Professor Carl T. Bogus. Pp. 265. Arlene Violet*

You’ve all heard the one about the runaway jury who gave a humongus award to a woman who sued McDonald’s because she spilled coffee on herself. You probably even chuckled at Ronald Reagan’s anecdote about a cat burglar who fell through the skylight of a home he was burglarizing, only to successfully sue the homeowner for his injuries.1 No wonder so-called tort reform has gained momentum in the United States. But propagandists beware! Professor Carl Bogus exposes the origins of these urban legends and the motives of those who created them. In Why Lawsuits are Good for America, Professor Bogus debunks the myths surrounding these and other headline grabbing cases and exposes the political motives behind the creation of these legends. Professor Bogus contends that political motives are the impetus for the tort reform movement. As an example, just prior to a vote on restrictive federal products liability legislation, Senator John C. Danforth, a Republican and Yale Law graduate, spoke on the senate floor. Senator Danforth, speaking favorably for the restrictive legislation, recounted an incident where an

* In 1984 Arlene Violet was the first woman elected Attorney General in the United States. While currently practicing law in Rhode Island, she was recently named one of the fifty most influential women in law. An honor shared with Justices Sandra Day O’Conner and Ruth Bader Ginsberg. In 1996 she was inducted into the Rhode Island Heritage Hall of Fame. 1. The real case turns out to be about a high school student who was sent to retrieve some athletic equipment stored on the roof of the school. The boy fell through a skylight that had been painted black.

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elderly gentleman received a $127 million jury award after losing an eye that was injected with a defective drug manufactured by the Upjohn Company. Surely something had to be done to prevent such outrageous jury awards from occurring in the future. That “cock and bull” story, as Bogus relays, was inherently deceiving. Upon closer examination, large jury awards do not merely compensate for an injury, the standard tort remedy, but also punish companies for wrongdoing. Bogus’s point is that that is a good thing. Companies should be punished by juries because it is socially useful; it helps protect consumers and forces companies to make better, safer products. Tort reform does not address that issue, but it does serve as a right-wing, big business tool to keep jury awards down . . . and profit margins up. Thus, Bogus proposes that those who support tort reform are primarily Republicans with a hidden agenda: appeasing big business and corresponding campaign contributions, as well as winning over voters who fall prey to the distortion of the truth behind jury awards. This book also looks deeper into the evidence presented during those legendary cases, either revealing the true context of cases, like the McDonald’s litigation, or exposing the so-called cases as apocryphal. His tome of the McDonald’s case analyzes the facts. McDonald’s served its coffee between 180-90 degrees Fahrenheit. In contrast, home-brewed coffee is served between 130-40 degrees. During the previous decade, McDonald’s received over 700 reports of the scalding of patrons. In this case, the plaintiff’s burns required numerous skin grafts, leaving 16% of her body with permanent scarring. While the trial judge reduced the award, he nonetheless agreed with the jury that McDonald’s was guilty of “willful, wanton and reckless behavior.” Professor Bogus suggests that the trial judge’s remittitur demonstrates that, indeed, the jury system worked as it should. Professor Bogus supports this conclusion, in part, by citing research studies documenting that judges agree with jurors approximately 78% of the time. Most importantly, the McDonald’s verdict led to other food chains reducing the temperature of the beverages they serve to prevent the scalding of future customers. The impact on other competitors’ businesses to promote public safety is a central theme of Professor Bogus’s book. With rapiered argument, he builds the case that the dramatic improvements in automobiles and other

areas of product safety are a direct result of common law litigation, which works to supplement regulatory efforts. He makes the compelling point that administrative agencies alone cannot get the job done for the benefit of the public. He describes the process of “ossification” wherein agencies decline to make a ruling for fear that a court will overturn its rulemaking, consequently relinquishing their initiative to regulate on behalf of the public. Further, some agencies twist in the special interest wind. Even if an agency was to aggressively pursue its mission, it can find itself facing congressional backlash in the form of cooption or the withdrawal of funds, stifling the ability of an agency to act. In this day and age, given the number of dollars pouring into congressional campaign warchests, the common law must supplement regulatory efforts to curb abuses by runaway industries. Professor Bogus is at his best when he champions the jury system. Noting that funds are now pouring into the coffers of elected judged at various levels in forty-one states, he deftly argues that the jury is critically important, but undervalued. The ballot box, he argues, is not the only place where the public’s will is done. Democracy also occurs when a jury votes on what is fundamentally consistent with American values. I cast a favorable vote for that theory. Never one to duck an issue, Professor Bogus turns to the growth of litigation involving the manufacture and sale of tobacco and guns. One of the hottest debates today concerns the role of personal responsibility in the use of the two items. At first, jury after jury repudiated claims against the tobacco industry on the basis that it was the person’s choice to smoke when he should have known smoking was harmful to his health. It was only when arguments akin to comparative negligence were made that jurors began to allocate responsibility to the tobacco industry. This binary obligation, as Professor Bogus calls it, opened the door to successful litigation. Professor Bogus argues that binary obligation is consistent with already established law, such as state dram shop acts that make bars, along with drunken drivers, liable. This independent responsibility is consistent with public policy that there can be more than one person responsible for an act. Similarly, the professor argues that litigation involving gun manufacturers is even more compelling than the cases holding tobacco

manufacturers responsible. Shooting victims, unlike smokers, are generally not the end users of the product. Holding gun manufactures responsible is an inherent, externalized cost of gun sales, and thus, a by-product of gun sales is some degree of responsibility. Why Lawsuits are Good for America is a well-reasoned, articulate book. Like a good trial attorney, Professor Bogus anticipates the counter points and discharges the opposing point of view. Hopefully this work will act as an antidote to those who aim to poison the well of the common law with the telling of tall tales begging unneeded and counterproductive reform.

2001 Survey of Rhode Island Law

CASES Civil Procedure Martin v. Howard, 784 A.2d 291 (R.I. 2001) Tinney v. Tinney, 770 A.2d 420 (R.I. 2001) Conflict of Law Najarian v. National Amusements, Inc., 768 A.2d 1253 (R.I. 2001) Constitutional Law Brennan v. Vose, 764 A.2d 168 (R.I. 2001) Contract Law Bjartmarz v. Pinnacle Real Estate Tax Service, 771 A.2d 124 (R.I. 2001) Tateosian v. Celebrity Cruise Service, Ltd., 768 A.2d 1248 (R.I. 2001) Criminal Law Hampton v. State, 786 A.2d 375 (R.I. 2001) State v. Contreras-Cruz, 765 A.2d 849 (R.I. 2001) State v. Gomes, 764 A.2d 125 (R.I. 2001) State v. O’Brien, 774 A.2d 89 (R.I. 2001) State v. Smith, 766 A.2d 913 (R.I. 2001) State v. Spencer, 783 A.2d 413 (R.I. 2001) State v. Verrecchia, 766 A.2d 377 (R.I. 2001) Criminal Procedure City of Warwick v. Adams, 772 A.2d 476 (R.I. 2001) State v. Lynch, 770 A.2d 840 (R.I. 2001) Damages McFarland v. Brier, 769 A.2d 605 (R.I. 2001) Evidence Paolella v. Radiologic Leasing Associates, 769 A.2d 596 (R.I. 2001) Raimbeault v. Takeuchi Manufacturing, 772 A.2d 1056 (R.I. 2001) State v. Barrett, 768 A.2d 929 (R.I. 2001) State v. Dorsey, 783 A.2d 947 (R.I. 2001) State v. Medina, 767 A.2d 655 (R.I. 2001) State v. Pacheco, 763 A.2d 971 (R.I. 2001) State v. Oliveira, 774 A.2d 893 (R.I. 2001) Family Law Janson v. Janson, 773 A.2d 901 (R.I. 2001) Rubino v. Rubino, 765 A.2d 1222 (R.I. 2001) Federal Civil Procedure Payphone LLC v. Brooks Fiber Comm., 126 F.Supp.2d 175 (D.R.I.

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2001) Judgments Allstate Ins. Co. v. Lombardi, 773 A.2d 864 (R.I. 2001) Webster v. Perrotta, 774 A.2d 68 (R.I. 2001) Land Use and Planning Sciacca v. Caruso, 769 A.2d 578 (R.I. 2001) Legal Malpractice Richmond Square Capitol Corporation v. Mittleman, 773 A.2d 882 (R.I. 2001) Municipal Law Mercado v. City of Providence, 770 A.2d 445 (R.I. 2001) Property Law Finnegan v. Seaside Realty Trust, 777 A.2d 548 (R.I. 2001) Regulation of the Legal Profession In re Ferrey, 774 A.2d 62 (R.I. 2001) Tax Law DeBlois v. Clark, 764 A.2d 727 (R.I. 2001) Tort Law Barone v. The Christmas Tree Shop, 767 A.2d 66 (R.I. 2001) Flanagan v. Wesselhoeft, 765 A.2d 1203 (R.I. 2001) Martinelli v. Hopkins, 787 A.2d 1158 (R.I. 2001) Ohms v. State Dept. of Trans., 764 A.2d 725 (R.I. 2001) Trusts and Estates In re Estate of Gervais, 770 A.2d 877 (R.I. 2001) LEGISLATION Business Law An Act Relating to the Uniform Commercial Code – Revised Article 9, 2000 R.I. Pub. Laws ch. 420. Financial Institutions An Act Relating to Financial Institutions, 2001 R.I. Pub. Laws ch. 233 An Act Relating to Mutual Holding Companies, 2001 R.I. Pub. Laws ch. 183 Public Health and Safety An Act Relating to Public Health and Safety – Carbon Monoxide Detectors, 2001 R.I. Pub. Laws ch. 177 State Employee Benefits Act Relating to Public Officers and Employees – Insurance Benefits, 2001 R.I. Pub. Laws ch. 110, § 1 Worker’s Compensation Law

An Act Relating to Labor and Labor Relations – Workers’ Compensation Benefits, 2001 R.I. Pub. Laws ch. 355.

Civil Procedure. Martin v. Howard, 784 A.2d 291 (R.I. 2001). The Rhode Island Supreme Court held that the trial court did not abuse its discretion in staying discovery pending ruling on a statute of limitations issue. The supreme court also held that plaintiff’s claims accrued when the sexual relationship ended and that her claims were not tolled until she appreciated the full nature and extent of her injuries. Furthermore, the court held that the personal injury statute of limitations governed the plaintiff’s contract, fiduciary duty and fraud claims and that the defendants were not estopped from invoking the statute of limitations. FACTS AND TRAVEL During a six-month period, beginning in September of 1994 and ending in February of 1995, Joan Martin (Martin or plaintiff) engaged in a sexual relationship with her pastor, the Reverend Evan D. Howard (Howard or defendant).1 Ultimately, in 1999, Martin filed a complaint against Howard in superior court accusing him of what amounted to clergy malpractice by engaging in an extramarital affair with her.2 Martin alleged that Howard engaged in this relationship without her valid or knowledgeable consent to do so.3 Martin also alleged that in February of 1995, a church official from the American Baptist Churches of Rhode Island (ABCORI), also a defendant in this case, contacted Martin informing her that Howard admitted having a sexual relationship with the plaintiff, and that the church defendants would resolve the situation through the process of an internal church mediation.4 Martin further alleged that a church official notified her on or about May 30, 1995 that Howard was placed on a sixmonth paid leave of absence and that the church had asked him to take the necessary steps to address his admitted misconduct.5 Martin further contended that Howard, before taking his leave, denounced her to the other parishioners, blaming her for causing him to stray from his marital vows.6 As a result of the church 1. 2. 3. 4. 5. 6.

Martin v. Howard, 784 A.2d 291, 294 (R.I. 2001). Id. Id. Id. at 295. Id. Id.

allowing Howard to resume his duties in January of 1996 without taking any further action to remedy his alleged wrongdoing or to redress Martin’s injuries, Martin averred that the church allowed Howard to defame her and to blame her for his own misconduct, leading to her constructive removal from the church.7 Moreover, Martin alleged that because of Howard’s conduct, she suffered grievous emotional and psychological injuries for which she sought an award of money damages from the defendants.8 In response to Martin’s amended complaint, the defendants moved for dismissal under Rule 12(b)(6) of the Superior Court Rules of Civil Procedure.9 The motion was granted on the grounds that Martin had failed to commence suit on her claims within the applicable three-year statute of limitations for filing personalinjury actions.10 ANALYSIS AND HOLDING Stay of Discovery On appeal, plaintiff argued that the motion justice improperly prohibited her from conducting discovery pending adjudication of the defendants’ dismissal motion, and that this stay of discovery hindered her from effectively defending against the pending motion to dismiss.11 Martin alleged that she needed to engage in discovery to “flesh out the facts in her complaint”.12 However, a trial court possesses the discretion to stay discovery in a civil case and prevent litigants from engaging in “fishing expeditions” until one or more potentially dispositive issues have been decided.13 The supreme court held the motion justice acted well within her discretion when she stayed discovery pending her ruling on the statute-of-limitations issue.14 Failure to Convert the Motion to Dismiss to a Summary Judgment 7. Id. 8. Id. 9. Id. at 296. 10. Id.; see R.I. Gen. Laws § 9-1-14(b) (2001). 11. Id. 12. Id. at 297. 13. Id. (citing Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. 689, 694 (1933); Coia v. Stephano, 511 A.2d 980 (R.I. 1986); Smith v. Johns-Manville Corp., 489 A.2d 336 (R.I. 1985)). 14. Id.

Motion The plaintiff also challenged the motion justice’s dismissal of all counts of her amended complaint under Rule 12(b)(6), arguing that the justice should have converted the motion to one for summary judgment under Rule 56 of the Superior Court Rules of Civil Procedure.15 Because the sole function of a motion to dismiss is to test the sufficiency of the complaint, the court has permitted a statute-of-limitations defense to be raised by a motion to dismiss under Rule 12(b)(6) so long as the defect appears on the face of the complaint.16 However, when the motion justice receives evidentiary matters outside the complaint and does not expressly exclude them in passing on the motion, then Rule 12(b)(6) specifically requires the motion to be considered as one for summary judgment.17 In this case, the supreme court concluded that the factual matters argued on the motion extraneous to the complaint were not presented in proper form for the court to consider and, as a result, the motion justice did not err by not converting the motion to one for summary judgment.18 Martin alleged that the motion justice erred by making findings of fact beyond the allegations in her complaint: specifically, that the motion justice found that the conduct Martin alleged to have caused her injuries occurred on or before February 1995.19 Martin argued that the date of her injury was a question of fact that could not be determined by the face of the complaint alone.20 However, the supreme court held that, on the face of the complaint, the motion justice’s reading of the complaint was the only reasonable conclusion that could be drawn from the sexualmisconduct allegations.21 The complaint revealed that Martin’s alleged injury occurred during a six-month period beginning in 1994 and ending in February of 1995, while she and Howard engaged in a sexual relationship.22 Moreover, during 1995,

15. Id. 16. Id. (citing Boghossian v. Ferland Corp., 600 A.2d 288, 290 (R.I. 1991); Rhode Island Affiliate, ACLU, Inc. v. Bernasconi, 557 A.2d 1232, 1232 (R.I. 1989); McDonald v. Rhode Island General Council, 505 A.2d 1176, 1178 (R.I. 1986)). 17. Id. at 298 (citing R.I. Super. Ct. R. Civ. P. 56). 18. Id. 19. Id. 20. Id. 21. Id. 22. Id. at 299.

Martin knew that the church mediation process had not led to the termination of Howard’s employment with the church or any other significant disciplinary measure.23 Therefore, it was apparent within the four corners of the complaint that Howard’s conduct which allegedly led to Martin’s injuries occurred more than three years before Martin filed her complaint in January of 1999.24 Because Martin was bound to file her personal-injury claims arising from her relationship with Howard within three years after their relationship ended and she failed to do so, her claims were all time-barred.25 The Accrual of Martin’s Claims Martin sought to toll the statute of limitations for her personal-injury claims beyond the time when both the alleged injury itself and the wrongful conduct causing that injury should have been discovered in the exercise of reasonable diligence.26 The court noted that in some situations, when the fact of an injury is unknown to the plaintiff when it occurs, the statute of limitations is tolled until, in the exercise of reasonable diligence, the plaintiff should have discovered the injury or the wrongful conduct that caused the injury.27 The court also noted that the “reasonable diligence standard is based upon the perception of a reasonable person placed in circumstances similar to the plaintiff’s, and also upon an objective assessment of whether such a person should have discovered that the defendants’ wrongful conduct had caused him or her to be injured.”28 In this case, Martin argued that because of Howard’s sexual abuse, she did not appreciate the full nature and extent of her injuries at the time she first knew she had suffered harm.29 However, this court held that even if Martin was initially uncertain about the impropriety of Howard’s conduct at the end of their relationship in February of 1995, church officials from ABCORI made it very clear to Martin at the end of May of that same year that they considered Howard’s conduct to be 23. 24. 25. 26. 27. 28. 29.

Id. Id. Id. Id. at 300. Id. at 299. Id. at 300. Id.

improper.30 Therefore, Martin should have known by the end of May about the existence and nature of her alleged injuries and the defendant’s role in causing them.31 Contract Breach, Violation of Fiduciary Duties, Bad Faith, and Fraud Claims Also on this appeal, Martin argued that the defendants breached their agreement to mediate her claims against Howard and violated the fiduciary duties that they owed to her as a parishioner.32 Martin alleged that the statute of limitations for such claims is ten years.33 In addition, she argued that the defendants should be equitably estopped from invoking the personal-injury statute of limitations to dismiss her cause of action because the church defendants had, in bad faith, misrepresented the church’s mediation process to her.34 In determining Martin’s breach of agreement claim, the court first had to find whether, based on the face of the complaint, an enforceable contract to mediate ever existed.35 Although Martin’s counsel suggested that a document may exist that shows the existence of the agreed-upon terms of the mediation, the supreme court found that no averment in the complaint described or alluded to any such signed document.36 The court, citing Solomon v. Progressive Casualty Insurance Co.37, held that even if the agreement to mediate was in writing, the breach of the alleged agreement fails to state a claim for which relief can be granted.38 The court next had to decide whether or not the injuries Martin complained of derived from the prior existence of the personal-injury claims, or whether the asserted breach of contract, bad faith, fraud, and violation-of-fiduciary-duty claims gave rise to The court held that the contract Martin these injuries.39

30. Id. at 301. 31. Id. 32. Id. 33. Id. 34. Id. 35. Id. 36. Id. at 301-02. 37. 685 A.2d 1073, 1074 n.2 (R.I. 1996) (holding that the only recourse would be to petition the superior court for an order to enforce the terms of the agreement). 38. Martin, 784 A.2d at 302. 39. Id.

attempted to create out of the defendant’s alleged promise derived from and depended upon the prior existence of the personal-injury claims themselves.40 The court also noted that the breach of contract claim produced no new or different injuries other than the personal injuries for which Martin already was seeking damages.41 Therefore, the court held that because the only injuries alleged were those to Martin’s person, the three year statute of limitations for personal-injury suits applies.42 Martin further alleged that the defendants gulled her into failing to act.43 However, the court stated that the complaint did not allege that Martin had been contemplating suit but that the church defendants promised her that mediation would render moot any need for her to resort to litigation.44 Finally, the supreme court noted that even if Martin had filed her complaint before the three-year statute of limitations had elapsed, it would be unlikely that the superior court would have been able to review and adjudicate the defendants’ alleged failure to conduct a fair and impartial internal church mediation as allegedly promised.45 The supreme court held that such judicial inquiry into a matter of “ecclesiastical cognizance” would offend both the free exercise clause of the First Amendment to the United States Constitution as well as article I, section 3 of the Rhode Island Constitution.46 CONCLUSION The Rhode Island Supreme Court affirmed the superior court’s dismissal of Martin’s complaint, holding that Martin had failed to initiate her suit within the applicable three-year statute of limitations for filing personal-injury claims. In addition, the court held that the motion justice did not err in staying discovery until challenges regarding the statute of limitations had been resolved. Michelle M. Alves 40. 41. 42. 43. 44. 45. 46.

Id. Id. Id. Id. Id. at 303. Id. Id.

Civil Procedure/Undue Influence. Tinney v. Tinney, 770 A.2d 420 (R.I. 2001). Undue influence is a fact-specific inquiry, determined by examining the totality of the circumstances. FACTS AND TRAVEL At the heart of this appeal from a decision of the superior court is a famous Newport landmark, Belcourt Castle, located on Bellevue Avenue in Newport, Rhode Island.1 Built by the renowned architect Richard Morris Hunt, Belcourt Castle was falling into disrepair until it was purchased by Harold and Ruth Tinney in 1956.2 The Tinneys visualized Belcourt Castle as a museum open to the public.3 Aided by their son Donald and his new wife Harle, the Tinney’s vision slowly became reality.4 In 1974 the Tinneys hired a handyman, Kevin Koellisch (Kevin) to repair the plumbing at Belcourt.5 By 1984, this handy man had become Belcourt’s general manager.6 In 1989, Ruth Tinney’s husband Harold passed away.7 Ruth was crushed by her loss, having been married for nearly sixty years of marriage. His death left Ruth Tinney depressed, devastated and inconsolable.8 Coincidentally, during this trying time for the matriarch of the Tinney family, witnesses recounted Kevin’s efforts to curry favor with Ruth9 and described his attitude toward her as “overly solicitous” and “oleaginous.”10 Kevin took Ruth on overnight trips, took her dancing and was seen “rubbing”11 and kissing her in public.12 Witnesses who knew Ruth described this behavior as extremely out of character for her.13 As these attentions progressed, Kevin made clear his desire to be adopted as Ruth’s son, and threatened to leave Belcourt if 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Tinney v. Tinney, 770 A.2d 420, 423 (R.I. 2001) Id. Id. at 424. Id. Id. Id. Id. Id. Id. Id. Id. Id. Id. at 429.

this demand was not met.14 Apparently, these efforts paid off. In 1990, the eighty-four year old Ruth adopted the thirty-seven year old Kevin as her son.15 The adoption prompted Kevin’s natural mother to comment that people would think Kevin had “sold his name for a buck.”16 Approximately six months after his adoption, Kevin was deeded a one-fourth interest in a parcel of Belcourt and became a joint tenant together with Ruth, Donald and Harle.17 In 1995, with Ruth’s health deteriorating, the Tinneys and Kevin put Belcourt up for sale.18 Before the property sold however, Ruth passed away, and one-third interests in the property vested in Kevin, Donald and Harle.19 Kevin’s relationship with the remaining Tinney family members worsened. By 1997, the relationship had so deteriorated that Donald and Harle felt the need to keep the Belcourt property from falling into Kevin’s hands.20 By a series of quitclaim transactions, Donald and Harle became tenants by the entirety.21 As a result of these conveyances, Kevin began threatening Donald and Harle Tinney with lawsuits and accusations of mismanagement with regard to the operation of Belcourt Castle.22 Kevin’s actions caused Donald and Harle so much grief that in April of 1997 they executed another quitclaim deed which reinstated Kevin as a joint tenant.23 The appeasement did not last long. In November of the same year, Donald and Harle once again re-conveyed Belcourt to themselves as tenants by the entirety and Kevin followed through on his threats by bringing suit against the Tinneys for embezzlement of Belcourt funds.24 In their answer to the complaint, the Tinneys asserted that Kevin had procured his interest in the property by undue influence.25

14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Id. Id. at 425. Id. Id. Id. Id. Id. Id. at 426. Id. Id. Id. Id.

The trial court found that the Tinneys had met the burden of proving Kevin had acquired his interest in Belcourt Castle by undue influence.26 The trial court was particularly persuaded by the testimony of Harle and another of the Tinney’s witnesses, but found Kevin’s testimony to be unpersuasive and not credible.27 Factors in the trial court’s decision included Ruth’s extreme depression and loneliness following the death of her husband Harold; that Ruth became entwined in “a very intimate relationship”28 with Kevin; that Kevin used this relationship to his advantage going so far as threatening to leave Ruth after he had “gained her confidence and dependency.”29 Kevin was labeled a “bounder and a con-artist”30 who also took advantage of Donald and Harle and the control that Ruth exerted over them.31 These factors led the trial court to find, by clear and convincing evidence, that undue influence had been exerted on the Tinney family and consequently, Kevin’s interest in the Belcourt parcel was set aside.32 Following the decision of the superior court, Kevin filed a timely appeal, asserting among other things, that the trial court had incorrectly applied the law and had overlooked important evidence showing that Kevin had not asserted undue influence over the Tinneys.33 ANALYSIS AND HOLDING The supreme court noted that undue influence is not susceptible to any one definition.34 Any effort to restrict undue influence to a specific set of circumstances might provide a framework for evading liability.35 The supreme court held that undue influence is “the substitution of the will of the [dominant] party for the free will and choice [of the subservient party].”36 It

26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36.

Id. at 430. Id. at 431. Id. Id. Id. Id. Id. Id. at 432. Id. at 438. Id. Id. at 437-38 (quoting Caranci v. Howard, 708 A.2d 1321, 1324 (R.I. 1998)).

is necessarily a fact-specific inquiry determined on a case-by-case basis.37 The totality of the circumstances must be explored, with reference to factors such as the opportunity of the dominant party, the mental state of the subservient party and the relationship between those parties.38 On appeal, Kevin argued that Ruth had consulted the family attorney prior to deeding him a parcel of Belcourt; a circumstance which he believed discounted any showing of undue influence.39 The court disagreed, holding that the consultation was only one of many factors the court considered to determine if undue influence had been asserted.40 Further, to support his argument that the court had misapplied the law, Kevin asserted that the court had only relied on cases which tended to support a finding of undue influence, while ignoring a pair of cases which would reach the opposite result.41 The supreme court disagreed, pointing out that the two cases posited by the plaintiff were not factually similar to the Tinney case.42 Kevin’s last argument on appeal was that the court erred in finding that there was evidence to support undue influence in the execution of the deed to Kevin.43 The supreme court first noted that the findings of a trial justice sitting without a jury are due substantial deference.44 The court would not overturn the trial justice’s decision unless the findings of fact were clearly erroneous, that evidence was overlooked or misunderstood or the ultimate decision failed to do substantial justice between the parties.45 In a forceful rebuke, the court found strong and compelling evidence on the trial court record to find that Kevin’s actions toward Ruth surpassed mere “kindness or consideration” in his quest for an interest in the Belcourt property.46 Additionally, the court upheld the trial justice’s finding that Kevin had also 37. 38. 39. 40. 41. 42. 43. 44. 45. 46.

Id. at 438. Id. Id. Id. Id. Id. Id. Id. at 431. Id. Id. at 440.

asserted undue influence against Donald and Harle Tinney, using Donald’s vulnerable physical condition and the Tinney’s devotion to Ruth to his advantage in his efforts to procure a deeded parcel of Belcourt.47 CONCLUSION In light of the specific facts of the case and by a totality of the circumstances, the supreme court upheld the trial court’s finding that undue influence had been exerted upon the Tinneys to procure a parcel of Belcourt Castle.48 The Rhode Island Supreme Court denied plaintiff’s appeal and affirmed the decision of the superior court.49

Jill A. Taft

47. 48. 49.

Id. Id. Id.

Conflict of Laws. Najarian v. National Amusements, Inc., 768 A.2d 1253 (R.I. 2001). In personal injury actions, the law of the state where the injury occurs determines the rights and responsibilities of the parties unless the law of another state has a more significant relationship to the issue. FACTS AND TRAVEL In July, 1994, Hope L. Andersen (Andersen), a resident of East Providence, Rhode Island, went to the Showcase Cinema in Seekonk, Massachusetts with her sister and brother-in-law to see a matinee movie.1 The group purchased their tickets and proceeded to the theatre in which their movie was showing. When the group arrived at the theatre, Andersen looked in and “was amazed at the utter darkness.”2 The group stepped into the theatre and Andersen moved to a small standing room area to her left while her brother-in-law searched the theatre for vacant seats.3 Shortly thereafter, as Andersen was about to proceed to a group of empty seats that her brother-in-law had located, she attempted to steady herself by leaning on a wall that she mistakenly thought was to her left. There being no wall where she thought there was one, Andersen fell to the ground and broke her hip and left elbow.4 Andersen filed a negligence suit against National Amusements, Inc. and Showcase Cinemas 1-10 (collectively, Showcase) in Rhode Island Superior Court.5 Andersen alleged that Showcase failed to maintain its premises in a reasonably safe manner thereby causing her fall and injury.6 Specifically, Andersen alleged that Showcase was negligent in failing to provide adequate lighting, adequate signs and personnel to assist patrons entering the theatre.7 Prior to trial, Showcase filed a motion in limine seeking to

1. Najarian v. Nat’l Amusements, Inc., 768 A.2d 1253, 1254 (R.I. 2001). Andersen died in December 1995 and Carol Najarian, as executrix of Andersen’s estate, was substituted as the plaintiff. 2. Id. 3. Id. 4. Id. 5. Id. 6. Id. 7. Id.

apply Massachusetts law to the case.8 Under Massachusetts law, recovery would be barred if Andersen’s negligence exceeded Showcase’s.9 Conversely, “Rhode Island applies ‘pure’ comparative negligence under which there is no such cut-off limitation to recovery.”10 The trial judge denied Showcase’s motion and applied Rhode Island’s pure comparative negligence law.11 After trial, the jury returned a verdict finding Showcase forty percent negligent and Andersen sixty percent negligent.12 Showcase appealed for a new trial claiming, among other things, that the trial judge erred in applying Rhode Island law rather than Massachusetts law.13 The appeal was denied and judgment was entered accordingly.14 Thereafter, Showcase appealed to the supreme court.15 BACKGROUND Rhode Island courts apply an “interest-weighing” approach in deciding choice of law questions.16 Under this approach, a court looks to the particular facts and applies the law of the state that bears the most significant relationship to the event and the parties.17 In personal injury actions, the law of the state where the injury occurs determines the rights and responsibilities of the parties unless the law of another state has a more significant relationship to the issue.18 Factors relevant to that inquiry are “(1) predictability of result; (2) maintenance of interstate and international order; (3) simplifcation of the judicial task; (4) advancement of the forum’s governmental interests; and (5) application of the better rule of law.”19 In applying these factors

8. Id. 9. Id. (citing Mass. Gen. Laws Ann. ch. 231, § 85 (West 2000)). 10. Id. (citing R.I. Gen. Laws § 9-20-4 (2001)). 11. Id. 12. Id. 13. Id. at 1254-55. 14. See id. at 1255 (vacating the judgment of the superior court). 15. Id. 16. Id. (citing Woodward v. Stewart, 243 A.2d 917, 923 (R.I. 1968)). 17. Id. 18. Id. (quoting Blais v. Aetna Cas. & Sur. Co., 526 A.2d 854, 856-57 (R.I. 1987) (quoting Restatement (Second) Conflict of Laws § 146)). 19. Id. (quoting Pardey v. Boulevard Billiard Club, 518 A.2d 1349, 1351 (R.I. 1986)).

to tort cases, contacts to be considered are “‘ (a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.’”20 ANALYSIS AND HOLDING The supreme court applied the above listed factors when it considered the choice of law question presented by Showcase. Although Andersen was a Rhode Island domiciliary and Showcase both advertised and registered as a foreign corporation in Rhode Island, the court held that Massachusetts had the most significant interest in this case.21 The injury and alleged negligent conduct causing the injury occurred in Massachusetts. The relationship between Andersen and Showcase was entered into in Massachusetts. The headquarters of National Amusements and the place of business at issue were Massachusetts. Moreover, the parties might reasonably have expected Massachusetts law to apply to an injury that occurred at a Massachusetts movie theatre.22 Further, Massachusetts has a significant interest in regulating premises liability for Massachusetts premises.23 Thus, concerns with predictability and maintenance of interstate order weigh in favor of Massachusetts.24 Accordingly, the trial judge erred in applying Rhode Island law rather than Massachusetts law.25 Because Massachusetts law denies recovery in personal injury cases where the plaintiff’s negligence exceeds the defendant’s negligence, as was found in this case, the supreme court vacated the judgment of the superior court and the case was remanded with instructions to enter judgment for defendant based on the application of Massachusetts law.26

20. Id. (quoting Brown v. Church of the Holy Name of Jesus, 252 A.2d 176, at 179 (R.I. 1969)(quoting Restatement (Second) Conflict of Laws, § 145(2) (1971))). 21. Id. 22. Id. 23. Id. 24. Id. (citing Pardey, 518 A.2d at 1351). 25. Id. 26. Id. at 1255-56.

CONCLUSION In personal injury actions, the applicable substantive law is determined by location where the injury occurred unless there are other factors showing that the laws of another state have a more significant relationship to the issues. In Najarian, Rhode Island law did not bear a significant relationship to the issues such that its application was required. Rather, concerns with predictability and maintenance of interstate order called for the application of Massachusetts law. Michael J. Daly

Constitutional Law. Brennan v. Vose, 764 A.2d 168 (R.I. 2001). Appeal from the denial of an application for postconviction relief on the grounds of ineffective assistance of counsel and the denial by the hearing justice to grant a new trial based upon a claim of newly discovered evidence. The Rhode Island Supreme Court explicitly refused to create a new rule requiring trial justices to inquire into whether or not a defendant has willingly and knowingly given up their right to testify on their own behalf. FACTS AND TRAVEL In January of 1984 an elderly resident of Providence was brutally murdered and his apartment ransacked.1 The defendant, Mr. Michael Brennan and his brother Thomas were arrested, tried separately and convicted for felony murder.2 The Rhode Island Supreme Court upheld both convictions.3 The defendant subsequently applied for and was denied post conviction relief leading to the instant appeal.4 ANALYSIS The defendant’s appeal alleged two primary points of error.5 First, that he was deprived of a fair trial by the ineffective assistance of his trial counsel.6 Second, that the post-conviction relief court erred by not granting a new trial upon newly discovered evidence.7 Ineffective Assistance of Counsel 1. Brennan v. Vose, 764 A.2d 168, 170 (R.I. 2001). 2. Id. 3. Id. 4. Id. 5. The defendant raised a third point of error claiming that the post-conviction hearing judge should have corrected an error of fact that arose during the direct appeal of his conviction in the supreme court. The superior court held that it lacked the authority to correct a finding of fact made by the supreme court. The supreme court quickly dismissed this claim of error on procedural grounds. The court found that the defendant failed to file a motion for rehearing in the supreme court within five days of its ruling as required under Rule 25 of the S. Ct. R. of App. P. By not requesting a rehearing in the supreme court, the defendant waived his right to correct the alleged error. Id. at 174. 6. Id. at 170-73. 7. Id. at 173-74.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 The Rhode Island Supreme Court stated that an ineffective assistance of council claim will be evaluated under the two-part test laid out by the United States Supreme Court in Strickland v. Washington, and adopted by the Rhode Island Supreme Court in Barboza v. State.8 The first prong of the Strickland test requires that the defense counsel be so deficient as to have violated the constitutional protections of the Sixth Amendment.9 Satisfying this prong requires “that counsel’s representation [fall] below an objective standard of reasonableness,” given the facts of the specific situation.10 If this test is met, then the second prong requires that the deficient performance by counsel be shown to be so prejudicial that the defendant’s right to a fair trial was jeopardized.11 In this case, the defendant asserted that his counsel was ineffective for three reasons, (1) his counsel failed to adequately prepare the case, (2) his counsel refused to allow him to testify on his own behalf and (3) that he was denied the opportunity to assist in jury selection. The court dismissed each of these assertions.12 The court found that Mr. Brennan’s attorney was an experienced trial attorney and that there was no indication that he failed to properly prepare the case; that the defendant was involved in the jury selection process and that the defendant was in fact offered the opportunity to testify but voluntarily chose not to.13 The most significant development from this portion of the case is the court’s refusal to adopt a rule requiring a trial justice to inquire whether or not the defendant has knowingly and voluntarily waived his/her right to testify.14 The court noted that while some jurisdictions require this proactive inquiry, the majority of jurisdictions do not.15 The supreme court has affirmatively decided to follow the majority position, leaving the burden of advising a defendant of their rights on the defence counsel and not the trial justice.16 8. 9. 10. 11. 12. 13. 14. 15. 16.

Id. at 171 (citing Barboza v. State, 484 A.2d 881, 883 (R.I. 1984)). Id. Id. Id. Id. at 170-73. Id. See id. at 171-72. Id. Id. at 172.

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Newly Discovered Evidence The court also reiterated that motions for a new trial based upon newly discovered evidence are evaluated under the two-part test found in McMaugh v. State.17 The first part of this test requires the trial justice to carefully examine the proffered new evidence to determine if, under the circumstances, the evidence is in fact new evidence.18 This inquiry includes evaluating whether or not the defendant actively sought to uncover the evidence during the primary trial; whether the evidence is material to the actual issue and not simply cumulative or impeaching and that it would likely change the outcome of the trial.19 If this first requirement is satisfied then the hearing justice must determine if he/she feels the evidence is credible and warrants granting relief.20 In this case, the alleged new evidence was a sworn affidavit from the defendant’s brother stating that he had committed the murder.21 This confession came about after the brother had already been convicted of the murder and his chances for postconviction relief were all but gone.22 As such, the supreme court found that the hearing justice did not abuse his discretion when it determined that the confession was unreliable and thus not worthy of consideration.23 CONCLUSION In Brennan v. Vose, the Rhode Island Supreme Court reiterated that the two part Strickland test will be applied to claims of ineffective assistance of council and that the two-part test found in McMaugh will be applied to claims for relief arising from newly discovered evidence. Further, the court definitively declined to require the trial court to actively investigate whether a 17. Id. at 173 (citing Fontaine v. State, 602 A.2d 521, 524 (R.I. 1992); State v. Lanoue, 366 A.2d 725, 731 (R.I. 1976)). 18. Id. 19. Id. (citing McMaugh, 612 A.2d at 731 (citing Fontaine, 602 A.2d at 524; State v. Brown, 528 A.2d 1098, 1104 (R.I. 1987))). 20. Id. (citing McMaugh, 612 A.2d at 732). 21. Id. 22. Id. at 173-74. 23. Id. at 174.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 defendant has knowingly and willingly chosen to waive their right to testify in their own defense. Christopher A. Anderson

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Contract Law. Bjartmarz v. Pinnacle Real Estate Tax Service, 771 A.2d 124 (R.I. 2001). When a party claims fraud in inducement of a contract containing an arbitration clause, the trial court must resolve predicate facts to the invocation of the contract summarily via trial or through an evidentiary hearing that would be limited to issue of alleged fraud in inducement before allowing the matter to go to arbitration. FACTS AND TRAVEL In September 1997, National Information Group purchased American Realty Tax Services and changed its name to Pinnacle Real Estate Tax Services. In that same month, Pinnacle asked its employees in its Rhode Island office to sign application and employment agreements.1 Pinnacle employee James E. Bjartmarz, who was originally hired by American Realty Tax Services, originally refused to sign the agreements because he disagreed with the arbitration clause in the application agreement because it specified that arbitration disputes would be resolved in California.2 He also disagreed with various other provisions contained in the agreements, such as the biweekly schedule of payments and the offering of regular pay for working on holidays.3 Despite his objections, Bjartmarz signed the employment agreement on March 19, 1998. According to Pinnacle, it no longer required Bjartmarz to sign the application agreement.4 Pinnacle still required Bjartmarz to sign the employment agreement for him to receive a pay raise.5 Unlike the application agreement, however, the employment agreement’s arbitration clause did not specifically require arbitration in California, but simply stated that all employment disputes shall be resolved by binding arbitration.6 On October 21, 1998, Bjartmarz filed a pro se complaint against Pinnacle in the superior court.7 His complaint included counts for failure to make weekly payments, failure to 1. 2. 3. 4. 5. 6. 7.

Bjartmarz v. Pinnacle Real Estate Tax Serv., 771 A.2d 124, 125 (R.I. 2001). Id. Id. Id. Id. Id. Id. at 126.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 furnish an accurate statement of earnings and violation of the Rhode Island Whistleblowers’ Protection Act.8 At the hearing, Bjartmarz asserted fraud in the inducement. Specifically, that he had signed the employment agreement because Pinnacle had told him that it would then fax him back the requested changes to the agreement. These changes were to include removal of the arbitration clause, the holiday-pay provision, and the biweekly pay provision.9 Thereafter, the motion justice denied both Pinnacle’s motion to dismiss and its motion for a stay, as well as its later-filed motion for reconsideration.10 Pinnacle, on certiorari, argues that the motion justice erred in denying its motion for a stay.11 It contends that the superior court must stay proceedings, pursuant to section10-3-3, if the matter is referable to arbitration.12 It further contends that the motion justice should not have relied on unsworn statements by Bjartmarz on the day of the hearing concerning what the parties allegedly discussed before Bjartmarz signed the agreement.13 Pinnacle additionally argues that any belated claim of fraud in the inducement can be handled at arbitration because it was asserted against the agreement as a whole, and not specifically against the arbitration clause and therefore, this claim should be decided via arbitration.14 ANALYSIS AND HOLDING The Rhode Island Supreme Court stated that under section 10-3-3, “if any suit or proceeding be brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the suit is pending, upon being satisfied that the issue involved in the suit or proceeding is referable to arbitration under such an agreement, shall . . . stay the trial of the action until the arbitration has been had. . . .”15 However, the court stated, if one is induced to enter into a

8. Id.; see The R.I. Whistleblower’s Protection Act – Protection, R.I. Gen. Laws § 28-50-3 (2000). 9. Bjartmarz, 771 A.2d at 126. 10. Id. 11. Id. 12. Id. 13. Id. 14. Id. 15. Id. at 126 (quoting R.I. Gen. Laws § 10-3-3 (1997)).

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contract based upon a fraudulent statement from another party to the contract, then the party who has been fraudulently induced is not bound by the contract.16 Citing Prima Paint Corp. v. Flood & Conklin Mfg.,17 the court pointed out that while a fraud in the inducement claim is still referable to arbitration, the court went on to say that a claim for fraud in the inducement specifically pertaining to the acceptance of an arbitration provision in a contract may be adjudicated by a court.18 Bjartmarz’s responses to the motion justice’s questions that alleged fraud were not made under oath or in furtherance of any claim in the complaint for fraud in the inducement.19 Thus, ordinarily, the motion judge should not have allowed those statements to defeat the defendant’s motion to stay.20 However, if the motion judge was inclined to overlook this in light of the plaintiff’s pro se status, the judge should have proceeded to trial on the fraud in the inducement claim or scheduled an evidentiary hearing on that issue.21 If it is determined that the plaintiff’s claim is groundless, the issue should go to arbitration. CONCLUSION In Bjartmarz v. Pinnacle Real Estate Tax Service, the Rhode Island Supreme Court held that when an arbitration clause is at issue in a fraud in the inducement claim, the trial judge should summarily decide the issue of fraud in the inducement or hold an evidentiary hearing to determine the issue. If allegations of fraud are determined to be groundless, the matter must then go to arbitration. Betsy Wall

16. 17. 18. 19. 20. 21.

Id. at 127. 388 U.S. 395 (1967). See Bjartmarz, 771 A.2d at 127. Id. Id. Id.

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Tort/Contract. Tateosian v. Celebrity Cruise Serv. Ltd., 768 A.2d 1248 (R.I. 2001). Cruise ticket that contained a time limitation for bringing cases and a forum selection clause was held valid due to timely notice and acceptance of the terms by payment. FACTS AND TRAVEL This is an appeal from a summary judgment ruling dismissing the negligence claim on the grounds that under the cruise contract there was a one year limitation for commencement of litigation and this case was not bought in one year.1 The motion justice concluded that the forum selection clause was reasonable and valid.2 The plaintiffs received the embarkation coupon with a two page document that set forth the important contract clauses.3 The plaintiffs did not have to pay until they signed the embarkation coupon.4 The embarkation coupon would not be valid if the two page document had been detached before boarding.5 The plaintiffs purchased tickets for a cruise to begin on March 29, 1997.6 While aboard the ship, the plaintiff became ill from food poisoning.7 She was hospitalized for ten days and missed several weeks of employment.8 The plaintiffs filed suit in October 1998, alleging negligence in food preparation for passenger meals.9 On September 1999 Celebrity filed a motion for summary judgment.10 The district court judge concluded that the issue of notice in forum selection clause cases is a question of law, and therefore there was no question of material fact remaining.11

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Tateosian v. Celebrity Cruise Serv. Ltd., 768 A.2d 1248, 1249 (R.I. 2001). Id. Id. at 1251. Id. Id. Id. at 1250. Id. Id. Id. Id. Id. at 1249-50.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.7:584 ANALYSIS AND HOLDING While forum selection clauses are subject to judicial scrutiny for fundamental fairness,12 the court found that they are considered prima facie valid.13 The challenger to the fundamental fairness of the forum selection clause has a heavy burden of proof to meet.14 A cruise line can shorten the time-limitation to not less than one year from date of injury.15 The court recited a two-prong test to the fundamental fairness of the forum selection clause.16 The first prong is facial clarity of the clause on the ticket.17 The next prong is that the passenger has the opportunity to become informed about the clause.18 In this case, the plaintiff did not have to pay until after signing the embarkation coupon and reading the material regarding limits on the right to sue. This was clear notice to the plaintiffs that such limitations existed. The court went on to explain that even if the plaintiffs did not read the limitation at the time they purchased the ticket, they should have once they realized they had a cause of action.19 If they did not have a copy, then they should have contacted the cruise line to obtain a copy of the limitations.20 The cruise line, in a response to the notice of suit, notified the plaintiffs that their rights were limited by the cruise ticket.21 The plaintiffs then should have followed up and found out what those limitations were.22 CONCLUSION The plaintiffs had the opportunity to read the limitations on their rights before paying for the tickets and the tickets clearly stated that there were limitations. Based on these two factors the

12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Id. at 1250. Id. Id. (quoting Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 592 (1991)). Id. (referring to 46 U.S.C.S. Appx. § 183(a)). Id. at 1251. Id. Id. Id. Id. Id. Id.

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court up held the summary judgment. Marjorie A. Connelly

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Criminal Law. Hampton v. State, 786 A.2d 375 (R.I. 2001). Probation revocation justice did not violate the defendant’s right to due process by failing to advise the defendant of his right to appeal the revocation adjudication because Rule 32 of the Superior Court Rules of Criminal Procedure does not apply to probationviolation adjudications. Furthermore, the defendant’s attorney was not ineffective because the defendant was not prejudiced when his attorney failed to inform him of his right to appeal. FACTS AND TRAVEL In 1991, the defendant Claude E. Hampton (“Hampton”) was convicted of assault with intent to commit first-degree sexual assault, which resulted in a fifteen year suspended sentence and fifteen years probation.1 In August 1992 Hampton was arrested and charged with first-degree sexual assault after a brutal attack on a woman in Newport.2 At the defendant’s probation-violation hearing, Hampton’s attorney attempted to persuade the judge to hold off lifting the suspended sentence until the underlying criminal charges were resolved. Hampton’s attorney believed that the lack of evidence in the underlying charge would be a mitigating factor in determining the length of the suspended sentence that Hampton would have to serve.3 Hampton’s attorney failed in this attempt and the hearing justice found that Hampton had violated his terms of probation and ordered him to serve the fifteen years of his previous suspended sentence.4 At no time during the hearing did Hampton’s attorney or the hearing justice inform him of his right to appeal the probation-violation adjudication.5 Hampton was never indicted on the first-degree sexual assault charge.6 Six years later the defendant sought to vacate the finding of a probation violation and the fifteen year sentence on the grounds that he was deprived of both due process and effective assistance of counsel because the hearing justice and his attorney failed to 1. 2. 3. 4. 5. 6.

Hampton v. State, 786 A.2d 375, 378 (R.I. 2001). Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 advise him of his right to appeal pursuant to Rule 32(a)(2) of the Superior Court Rules of Criminal Procedure.7 The post conviction relief (“PCR”) hearing justice held that the probation-violation justice had no obligation to inform Hampton of his right to appeal under Rule 32(a)(2), because the rights described in that rule do not apply to probation-revocation hearings.8 The PCR hearing justice also rejected Hampton’s ineffective assistance of counsel claim because the attorney did not have a duty to inform his client of the right to appeal the probation-violation adjudication.9 Furthermore, the PCR hearing justice was unable to reduce Hampton’s sentence because he failed to request such reduction within 120 days of imposition as required by Rule 35 of the Superior Court Rules of Criminal Procedure.10 Hampton appealed from the PCR ruling.11 BACKGROUND Rule 32(a)(2) of the Superior Court Rules of Criminal Procedure states that after imposing sentence in a case, which has gone to trial on a plea of not guilty, the court shall advise the defendant of his or her right to appeal.12 In addition, Rule 32(f) of the Superior Court Rules of Criminal Procedure states that the court shall not revoke probation or revoke a suspension of sentence or impose a sentence previously deferred except after a hearing at which the defendant shall be afforded the opportunity to be present and apprised of the grounds on which such action is proposed.13 ANALYSIS AND HOLDING The Rhode Island Supreme Court conducted a de novo review of this case because the defendant alleged constitutional violations.14 The court held that a probation-violation hearing is 7. 8. 9. 10. 11. 12. 13. 14. 2001)).

Id. (citing R.I. Superior Ct. R. Crim. P. 32(a)(2)). Id. at 378. Id. at 379. Id. Id. R.I. Superior Ct. R. Crim. P. 32(a)(2). R.I. Superior Ct. R. Crim. P. 32(f). Hampton, 786 A.2d at 379 (citing Carillo v. State, 773 A.2d 248, 252 (R.I.

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not part of the criminal-prosecution process, and is instead civil in nature. Thus, all the rights that are normally guaranteed to defendants in a criminal case do not apply.15 To establish a probation violation, Rule 32(f) of the Superior Court Rules of Criminal Procedure only requires a showing that the defendant failed to keep the peace and remain on good behavior.16 Furthermore, the state’s burden of proof is only to adduce reasonably satisfactory evidence of the defendant’s violation of one of the terms of his probation, not evidence establishing a violation beyond a reasonable doubt.17 Also, it is not the hearing justice’s duty to determine the defendant’s criminal guilt for any of the conduct triggering the violation.18 Because a probation-violation hearing is not a criminal proceeding the court held that the rights under Rule 32(a)(2) of the Superior Court Rules of Criminal Procedure are not applicable.19 Hampton argued that although Rule 32(f) does not specifically provide for notification to the accused of his or her right to appeal from a probation-violation adjudication, the rule should be interpreted to afford a defendant minimal due process.20 Hampton cited State v. Lawrence,21 where the defendant was held without bail for over ten days while awaiting a probation-violation hearing, violating a statute instituting a 10-day maximum. In that case the court held that the 10-day maximum was clearly within the legislative intent as a requirement of minimum due process.22 However, in the case at bar there was no statutory violation; therefore the court rejected Hampton’s argument that notice of appeal from probation-violation hearings should be a minimal due process right.23 Furthermore, the court asserted that because a probation-violation hearing is not a criminal proceeding a defendant is not afforded the same due process guarantees.24 Finally, the court held that the United States 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

Id. (citing State v. Znosko, 755 A.2d 832, 834 (R.I. 2000)). Id. (citing State v. Gautier, 774 A.2d 882, 887 (R.I. 2001)). Id. (citing State v. Kennedy, 702 A.2d 28, 31 (R.I. 1997)). Id. at 380 (citing Gautier, 774 A.2d at 887). Id. Id. 658 A.2d 890, 892 (R.I. 1995); see also R.I. Gen. Laws § 12-19-9 (2001). Hampton, 786 A.2d at 380 (citing Lawrence, 658 A.2d at 892). Id. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Constitution does not provide any such guarantee.25 Regarding the defendant’s ineffective assistance of counsel claim, the court held that in Rhode Island, a defendant who is faced with the possible loss of liberty after a probation-violation hearing at which the court may order him or her to serve all or a portion of a previously suspended sentence, has the right to effective assistance of counsel with respect to this hearing.26 In determining whether there is ineffective assistance of counsel the United States Supreme Court established a two-prong test.27 First, the defendant must demonstrate that counsel’s performance was deficient to the point that it “so undermined the proper functioning of the adversarial process that the hearing cannot be relied on as having provided a just result.”28 Second, that defendant must show that counsel’s deficient performance was prejudicial to the defense and that counsel’s errors were so serious that the defendant was deprived of a fair hearing.29 The court applied this test to the facts of the case at bar and held that Hampton was not deprived of his right to effective assistance of counsel.30 Regarding the first prong, the court was not convinced that, in light of the circumstances of the case, failure to disclose the right to appeal was so deficient as to deprive the supreme court of any confidence in the justice of the probationviolation hearing and his decision.31 However, the court noted that even if this first prong was satisfied, Hampton did not prove the second prong.32 Hampton did not demonstrate that he was prejudiced by the attorney’s actions in failing to notify him of a right to appeal.33 The court held that even if the probationviolation hearing justice agreed to delay sentence, the outcome of the hearing would have been the same.34 The lack of indictment 25. Id. 26. Id. (citing State v. Chabot, 682 A.2d 1377, 1379 (R.I. 1996) (citing O’Neill v. Sharkley, 268 A.2d 720, 722 (R.I. 1970))). However, this guarantee is not recognized on the federal level. Id. 27. Id. at 381 (citing Strickland v. Washington, 466 U.S. 668 (1984)). 28. Id. (citing Toole v. State, 748 A.2d 806, 809 (R.I. 2000) (quoting Tarvis v. Moran, 551 A.2d 699, 700 (R.I. 1988))). 29. Id. (citing Brennan v. Vose, 764 A.2d 16, 174 (R.I. 2001)). 30. Id. 31. Id. at 382. 32. Id. 33. Id. 34. Id.

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on the underlying wrongdoing was not relevant to the applicant’s culpability as a probation violator and it would not affect the amount of the suspended sentence that the defendant would be required to serve.35 The court found that this was most likely the reason why the delay was denied.36 Furthermore, the court noted that it was not unreasonable for Hampton’s attorney to be primarily concerned about his client facing a potential felony indictment and subsequent criminal trial, and that the failure to indict was not an occurrence that Hampton’s lawyer was bound to have anticipated.37 Finally, the court held that the defendant could still seek relief by petitioning the supreme court for a writ of common-law certiorari.38 In addition, Hampton failed to advance any arguments that might have been successful in reducing his sentence.39 CONCLUSION The Rhode Island Supreme Court affirmed the superior court’s judgment holding that the hearing justice did not violate Hampton’s right to due process by failing to notify him of his right to appeal from the order finding him to be a probation violator. Furthermore, Hampton was not the victim of ineffective assistance of counsel at the violation hearing when his counsel failed to inform him of a right to appeal because the defendant was not prejudiced. Camille A. McKenna

35. 36. 37. 38. 39.

Id. at 383. Id. Id. at 382-83. Id. at 383. Id.

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Criminal Law. State v. Contreras-Cruz, 765 A.2d 849 (R.I. 2001). The Rhode Island Supreme Court held that a victim’s bedroom was a “dwelling” within the meaning of the law of burglary because it had a lock on the door, and defendant can be convicted of burglary after breaking and entering such private dwelling room without permission, despite having permission to enter the home. FACTS AND TRAVEL On October 23, 1993, a young woman (Tess) accompanied her boyfriend (Eddie), defendant, who is also Eddie’s half-brother (defendant), and several friends on a night of football games, fastfood restaurants, and parties.1 Tess had been drinking throughout the evening, ultimately succumbing to vomiting, extreme intoxication, and unconsciousness in the back of the car in which she was riding.2 Defendant was aware that Tess was inebriated, having spoken with her through the night and witnessing her illness.3 On one occasion he had expressed an interest in leaving the party alone with Tess.4 While Tess was still in this drunken state, Eddie drove her home, carried her to her room, and put her to bed before returning to the party.5 Eddie and Tess occupied a bedroom in this Coventry, Rhode Island home, in the context of an intimate relationship. This room was on the first floor of his mother’s home, where other siblings also lived; the defendant did not reside here.6 After spending time back at the party, Eddie returned home, believing Tess would be alone in her room asleep as he had left her.7 He was alarmed to find the door to their bedroom bolted from the inside. By Tess’ account, she was awakened by a banging on the door and Eddie calling her name from outside the locked door.8 She found defendant engaged in sexual intercourse with her as she came to

1. 2. 3. 4. 5. 6. 7. 8.

State v. Contreras-Cruz, 765 A.2d 849, 850 (R.I. 2001). Id. Id. at 850-51. Id. at 851. Id. Id. at 850. Id. at 851. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 and realized what was happening.9 Eddie beat down the door and struggled with defendant before defendant exited through the window and escaped.10 Tess denied letting defendant into the room or ever consenting to his acts.11 Eddie’s testimony confirmed that of Tess’, adding that defendant left the party just prior to the sexual assault with an indication that he wished to be alone.12 Eddie also testified that defendant generally had permission to go to their home, but that Eddie’s mother did not want him around.13 Throughout the trial for burglary and first-degree sexual assault, defendant moved various times for acquittal or dismissal of the charges.14 First, following the presentation of the state’s case, defendant moved for a judgment of acquittal.15 Before presentation of the defendant’s case, defendant moved to dismiss the sexual assault on the grounds that the statute was unconstitutional.16 These motions were denied. After defendant’s case was argued, he again moved for a judgment of acquittal.17 At this point, the trial justice denied the motion with respect to sexual assault but reserved ruling on the burglary count until after the jury’s verdict.18 The jury returned a guilty verdict on both charges. The trial justice then denied the motion for judgment of acquittal on the burglary count.19 Defendant’s motion for a new trial was also denied.20 Defendant was sentenced to forty years, with fifteen years to serve and twentyfive years suspended on each of the sexual assault and burglary convictions, both to be served concurrently.21

9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Id. Id. Id. Id. Id. at 855-56. Id. at 851-52. Id. at 851. Id. (arguing that R. I. Gen. Law § 11-37-2 (1) (2000) was unconstitutional). Id. at 852. Id. Id. Id. Id.

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ANALYSIS AND HOLDING On appeal, defendant first argued that the trial justice erred in denying his motion for judgment of acquittal on the burglary charge.22 He argued that the prosecution failed to present legally sufficient evidence to establish beyond a reasonable doubt that he entered Tess’ dwelling place with the intent of sexually assaulting her, and that any inference of felonious intent was impermissibly speculative.23 In rejecting this argument and upholding the denial of the motion, the Rhode Island Supreme Court applied the same standard that the trial justice uses in considering a motion for judgment of acquittal.24 Therefore, the court viewed the evidence in the light most favorable to the state, without weighing the evidence or assessing credibility of witnesses, but giving full credibility to the state’s witnesses, and drawing all reasonable inferences consistent with guilt. If the totality of the evidence and reasonable inferences therefrom would justify a reasonable juror in finding defendant guilty beyond a reasonable doubt, the lower court’s denial of such a motion must be upheld, as it was here.25 After the court applied the definition of burglary26 to the facts of this case, it found that the evidence was clear that defendant was aware of Tess’ intoxication, was intent on sexually assaulting her, and that Tess in no way gave her consent to entry or to sexual intercourse.27 A reasonable juror might infer this from the evidence. Despite defendant’s contentions that the evidence of intent was too weak to support a conviction, the court found sufficient evidence that defendant had the requisite mental state at the critical time of breaking and entering and that the evidence was compelling.28 The court discounted defendant’s allegations 22. Id. 23. Id. 24. Id. at 852 (citing State v. Snow, 670 A.2d 239, 243 (R.I. 1996)). 25. Id. (using the same reasoning to uphold the trial justice’s denial of defendant’s motion for acquittal on the sexual assault count) Id. at 856. 26. Id. (citing State v. O’Rourke, 399 A.2d 1237, 1238 (1979) (stating that the crime of burglary in violation of R.I. Gen. Law § 11-8-1 (2000) incorporates the common law definition of the crime); State v. Hudson, 165 A. 649, 50 (R.I. 1933) (defining burglary at common law as “the breaking and entering the dwelling-house of another in the nighttime with the intent to commit a felony therein, whether the felony be actually committed or not.”)). 27. Id. at 852-53. 28. The court distinguished the facts of this case with those defendant cited to

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 that a finding of guilt would constitute an impermissible pyramiding of inferences.29 In fact no “pyramid” existed at all here; felonious intent could be inferred from unambiguous facts capable of providing proof of guilt beyond a reasonable doubt.30 Next, defendant claimed that the trial justice erred in denying his motion for judgment of acquittal because he did not violate the scope of his permission to enter the house and because he could not be convicted of burglary since Tess’ room was not a “dwelling house.”31 This argument failed. The court noted that while one may have permission to enter parts of a dwelling, entry into a room within that dwelling that a person does not have permission to enter can constitute burglary.32 Several courts have held that a room within a house can constitute a “dwelling house” for the purposes of a burglary prosecution.33 Additionally, this court previously has held a dormitory room to be an “apartment” within the meaning of a burglary statute similar to the one at issue in this case, G.L.1956 § 11-8-3.34 The policy behind such findings evidences recognition that there are often several dwelling houses, or places of abode, under the same roof and that everyone should be afforded some degree of security in their abode no matter the unconventional nature of the layout.35 The court found that Tess’ bedroom was a “dwelling” within the law of burglary and that this law protects not only the house but the private quarters of each person living there.36 Evidence that Tess’ bedroom door had a lock on the knob and a dead-bolt lock afforded this room the same level of security and protection as a dormitory room or a private

support his position: State v. Moran, 699 A.2d 20 (R.I. 1997); State v. Williams, 461 A.2d 385 (R.I. 1983); State v. Woods, 821 P.2d 1235 (1991). 29. The use of pyramiding of inferences was present in the following cases: State v. Dame, 560 A.2d 330, 334 (R.I. 1989); In re Derek, 448 A.2d 765, 768 (R.I. 1982); State v. Alexander, 471 A.2d 216, 218 (R.I. 1984). 30. Contreras-Cruz, 765 A.2d at 852. 31. Id. at 853. 32. Id. at 854 (citing United State v. Bowen, 24 F.Cas. 1207 (D.C. Cir. 1835) (No. 14, 629)). 33. See State v. Descant, 42 So. 486, 488 (La. 1906). 34. See State v. Riely, 523 A.2d 1225 (R.I. 1987). 35. Contreras-Cruz, 765 A.2d at 854-55 (citing Riely, 523 A.2d at 1226). The same policy was demonstrated recently in State v. Turner, 746 A.2d 700, 703 (R.I. 2000) (finding that a private apartment of an on-site manager within a bed-and breakfast was a ‘dwelling house’ within the meaning of R. I. Gen. Law § 11-8-2(a) (1956)). 36. Id. at 854-55.

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apartment.37 Defendant’s third contention on appeal was that the trial justice erred in permitting hearsay testimony to establish that he did not have permission to enter the premises at the time of the crime.38 Additionally defendant argued that this hearsay was prejudicial in showing him to be a “bad guy.”39 At trial, Eddie had been allowed to testify that his mother didn’t want the defendant around their house.40 The court defended the admissibility of such testimony, finding it to fall under R.I. R. Evid. Rule 803(3), the “[t]hen Existing Mental, Emotional, or Physical Condition” exception to the hearsay rule in which the statement is not excluded under particular circumstances, even when the declarant is available.41 Here, Eddie described his mother’s “state of mind” concerning the scope of defendant’s permission to enter the house.42 The statement was not highly prejudicial because there was ample other evidence to draw the conclusion that defendant was a “bad guy.”43 Also, R.I. R. Evid. 404(a) only limits evidence offered to show action in conformity with character or a particular trait, however this evidence was offered for the purpose of demonstrating the scope of defendant’s permission to enter the house.44 Defendant’s fourth argument attacked the denied motions at trial on the sexual assault charge.45 Defendant argued that Tess was not “physically helpless” at the time of penetration, and that she consented to sexual intercourse under the mistaken belief that defendant was her boyfriend.46 He believed this would place him in jeopardy of a crime of sexual assault by concealment, but not

37. Id. at 855. 38. Id. at 855-56. 39. Id. at 855. 40. Id. 41. Id. at 856. R.I. R. Evid. 803(3) allows a statement if it is a “statement of the declarant’s then existing state of mind, emotion, sensation, or physical condition (such as intent, plan, motive, design, mental feeling, pain, and bodily health), but not including a statement of memory or belief to prove the fact remembered or believed . . . .” Id. 42. Id. at 855-56. 43. Id. at 856. 44. Id. 45. Id. 46. Id.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 first-degree sexual assault as charged. These arguments failed.47 With respect to defendant’s new trial motion, the court noted that the trial justice must exercise independent judgment to decide whether the evidence from trial is sufficient for the jury to conclude guilt beyond a reasonable doubt.48 The supreme court will reverse the ruling on the motion only if it finds that the trial justice overlooked or misconceived material evidence or was otherwise clearly wrong.49 After looking at the definition of “physically helpless” within the context of the charge against defendant as a violation of section 11-37-2 and section 11-37-3, the court found that the trial justice did not overlook or misconceive material evidence.50 The trial justice made clear that Tess’ state of mind was a question of fact on which the jury could find that Tess was asleep and thus physically helpless during intercourse.51 Lastly, defendant claimed that the trial justice erred in restricting his cross-examination of Tess.52 By precluding defense counsel from questioning Tess about her boyfriend’s affair with another woman, defendant claims that the trial justice quashed any chance of establishing that she consented to sex for purposes of revenge.53 The court found that the trial justice did not abuse his discretion under the circumstances of this case that showed Tess too drunk to carry out such a scheme.54 Limiting the extent and scope of cross-examination is within the sound discretion of the trial justice and will be left undisturbed absent a showing of abuse of discretion.55 Defendant’s efforts here failed.

47. Id. 48. Id. at 856-57 (writing that according to Snow, 670 A.2d at 243, the trial justice ‘has at least three analyses to perform when ruling on a motion for a new trial . . . . First, the trial justice must consider the evidence in light of the charge to the jury; second, the trial justice must determine his or her own opinion of the evidence; third, the trial justice must determine whether he or she would have reached a different result from that of the jury.’). 49. Id. at 856 (citing State v. Scurry, 636 A.2d 719, 725 (R.I. 1994)). 50. Id. Section 11-37-1(6) defines “physically helpless” as “a person who is unconscious, asleep, or for any other reason is physically unable to communicate unwillingness to an act.” Id. 51. Id. at 857. 52. Id. 53. Id. 54. Id. 55. Id. (citing State v. Veluzat, 578 A.2d 93, 95 (R.I. 1990)).

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CONCLUSION An appeal of a first-degree sexual assault and burglary conviction was dismissed and judgment was affirmed. The Rhode Island Supreme Court held that the evidence was sufficient to uphold a finding that defendant entered victim’s home with the intent of sexually assaulting her, as necessary for a burglary conviction. Victim’s bedroom was a “dwelling” within the meaning of the law of burglary and permission to enter the home did not extend to a private room capable of being locked. The trial judge properly allowed hearsay evidence based upon a “state of mind” exception, and used sound discretion to limit cross-examination. Based upon clear and ample evidence, defendant was not entitled to a judgment of acquittal or a new trial on either charge against him. Christy Hetherington

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Criminal Law. State v. Gomes, 764 A.2d 125 (R.I. 2001). Reliable hearsay may be used to established reasonable suspicion or probable cause. A sufficient match between an individual and a description of a suspect broadcast over police radio provides reasonable suspicion. A trial judge has discretion to admit evidence under Rule 404(b) and leading questions. FACTS AND TRAVEL At approximately 1 a.m., on November 25, 1997, Robert Wray (Wray), was shot and killed on the doorstep of his mother’s apartment in Providence, Rhode Island.1 Shortly before Wray was killed, Wray and his friend, Tavell Yon (Yon) were watching television in the living room when someone knocked on the rear door of the apartment.2 Yon answered the door and encountered a man whom he had never seen before.3 The man asked to speak with Wray.4 Yon called Wray to the door and then returned to the living room. From the living room, Yon overheard the man ask for “Frankie.”5 Wray replied: “you know who I am, I’m Frankie’s cousin.”6 Wray then told the man that Frankie was not there, and the man left.7 Several minutes later, Yon answered another knock at the door.8 Yon observed that it was the same man that was at the door minutes earlier.9 This time the man asked to speak with Wray.10 Again, Yon called Wray to the door and went back inside the apartment.11 Within seconds, Yon heard a gunshot, looked over to the doorway and saw Wray lying on the ground.12 Wray’s younger brother, who was also in the apartment at the time,

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

State v. Gomes, 764 A.2d 125, 129 (R.I. 2001). Id. Id. Id. Id. Id. Id. Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 called 911.13 When the police arrived, Yon explained what had happened and described the man at the door as: “a short black male with Jerry curls and a moustache.”14 He had craters and pimples in his face and he was wearing a black leather jacket.”15 This description, along with a warning that the suspect could be armed and dangerous, was immediately transmitted over the police broadcast system.16 Hearing the broadcast, Patrolman Jose Deschamps (Officer Deschamps), responded to the scene of the murder.17 After assisting in securing the crime scene, Officer Deschamps proceeded to search for the suspect.18 Approximately ten to fifteen minutes after the shooting, Officer Deschamps went to a nearby convenience store to alert the employees that a murder had just been committed and that the suspect was at large and believed to be dangerous.19 As Officer Deschamps entered the store, he noticed a man using a pay phone outside the store but could not see his face.20 As he left the store, Officer Deschamps noticed the same man still using the phone.21 This time, however, he looked more closely and was able to see the man’s face.22 He observed the man to be a black male, five foot four to five foot six inches in height, with a “crater face, or pimples,” and “slicked, very greasy” hair with “Jerry curls.”23 He also observed that the man appeared nervous and, despite the cold weather, was sweating and not wearing a jacket.24 Comparing the police broadcast with his observation of the man using the phone, Officer Deschamps’ suspicions were aroused.25 He then approached the man and began asking rapid questions about the man’s identity and what he was doing out so

13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Id. Id. Id. Id. Id. Id. Id. at 129-30. Id. at 130. Id. Id. Id. Id. Id.

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late.26 As Officer Deschamps was asking the questions, the man appeared to become more nervous and began stuttering and mumbled his words while attempting to answer.27 Officer Deschamps attempted to place his right hand on the man’s left shoulder to initiate a protective pat-down search for weapons.28 At that point, the man jerked back and Officer Deschamps’ arm accidentally slid down the man’s side.29 Believing that he had felt a gun, Officer Deschamps lifted the man’s shirt and observed a loaded 9-millimeter pistol in the man’s waistband.30 Officer Deschamps immediately pulled out the pistol and observed it to be cocked and ready to fire.31 He then placed the gun on the ground, secured it with his foot, and radioed for assistance in placing the man under arrest.32 Patrolman Charles Matracia (Officer Matracia), who had just left the murder scene and was driving Wray to the Providence police headquarters to be interviewed, heard Officer Deschamps’ call for assistance.33 Within seconds, Officer Matracia and Wray arrived at the scene where Officer Deschamps was detaining the man.34 Upon seeing the man, Yon exclaimed: “that’s him right there” and, he “was the guy that came to the door.”35 The man, later identified as Gomes, was placed under arrest. Shortly thereafter, Yon was interviewed and reiterated that Gomes was the man that had come to the door.36 After a jury trial, Marc Gomes (Gomes), was convicted of firstdegree murder and one count of carrying a pistol without a license.37 Gomes claimed that the trial judge made various evidentiary and constitutional errors by admitting certain pieces of evidence at his trial and appealed to the Rhode Island Supreme

26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37.

Id. Id. Id. Id. Id. Id. Id. Id. Id. Id. Id. at 130-31. Id. at 128-29.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Court seeking reversal of his convictions and a new trial.38 ANALYSIS AND HOLDING The Police Broadcast Gomes argued that Yan’s description of the murder suspect given to Officer Calabro and broadcast over the police radio was hearsay and its admission into evidence at his trial constituted prejudicial error.39 The court rejected Gomes’ argument for two reasons.40 First, the description of the suspect was not hearsay because it was used to show why Officer Deschamps apprehended Gomes rather than to prove Gomes’ guilt.41 Reliable hearsay may be used to establish probable cause to arrest or secure a warrant.42 Thus, the proper inquiry for the court was whether the description was sufficiently reliable when relayed by Officer Calabro to Officers Deschamps and Matracia.43 In its silence on the issue, the court presumably held that the description was sufficiently reliable. Second, Rule 801(d)(1) of the Rhode Island Rules of Evidence provides that out-of-court statements are not hearsay “if the declarant testifies at the trial or hearing and is subject to crossexamination concerning the statement, and the statement is . . . (C) one of identification of a person made after perceiving the declarant.”44 Yon, the declarant, gave his description of the suspect within minutes of the shooting.45 He testified under oath and was subject to cross-examination and confirmed the accuracy of the description that was broadcast by Officer Calabro.46 Accordingly, Yon’s statement fell within the purview of Rule 801(d)(1) and was not hearsay.47

38. 39. 40. 41. 42. 43. 44. 45. 46. 47.

Id. at 129. Id. at 131. Id. Id. Id. Id. at 131-32. Id. at 131 (quoting R.I. R. Evid. 801(d)(1)). Id. Id. Id.

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The Seizure of the Gun Gomes also argued that that Officer Deschamps lacked reasonable suspicion to approach and detain him outside the convenience store.48 He further argued that Officer Deschamps had no right to conduct a pat-down search before arresting him and that there was no probable cause later to arrest him.49 Accordingly, Gomes argued that the trial justice erred in allowing Officer Deschamps to testify to the gun seized form Gomes’ waistband.50 A police officer may conduct an investigatory stop of an individual if specific articulable facts would lead reasonable officer to suspect that the individual is engaged in criminal activity.51 An officer acting with reasonable suspicion may conduct such a stop to investigate either completed or ongoing crimes.52 Relevant to the reasonable suspicion inquiry are the time and location at which the suspicious conduct occurred, the suspicious conduct or appearance of the suspect and the personal knowledge or experience of the detaining officer.53 To establish reasonable suspicion, an officer comparing an individual to a description of a suspect, may take into consideration a change in circumstances or a suspect’s attempt to conceal his identity.54 ‘“An investigatory stop differs from a full arrest and search both in the duration of the detention and in the quantum of suspicion necessary to conduct it.”55 During an investigatory stop of an individual whom the officer reasonably believes is armed and dangerous to the officer or others, the officer may conduct a limited, self-protective patdown search of the suspect’s outer clothing.56 Officer Deschamps’ actions at the convenience store were proper in light of the information available to him. 57 Although Gomes was not wearing a jacket as the subject had been 48. Id. 49. Id. at 132. 50. Id. 51. Id. 52. Id. at 133 (citing United States v. Hensley, 469 U.S. 221, 227 (1985)). 53. Id. (citing State v. Abdullah, 730 A.2d 1074, 1077 (R.I. 1999)). 54. Id. at 132 at n.2 (citing State v. Clark, 721 So.2d 1202, 1205 n.2 (Fla. Dist. Ct. App. 1998)). 55. Id. (quoting In re John N., 463 A.2d 174, 176 (R.I. 1983)). 56. Id. at 133 (quoting State v. Black, 721 A.2d 826, 829-30 (R.I. 1998)). 57. Id. at 133-34.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 described, Gomes otherwise perfectly matched the description of the suspect that was broadcast over the police radio. When Gomes was questioned by Officer Deschamps, he became nervous and began stuttering and mumbling.58 The court held that those facts provided not only reasonable suspicion to detain Gomes, but also probable cause to arrest and, incidental to that arrest, search him.59 Thus, Officer Deschamps’ testimony regarding the seizure of the gun was proper.60 Opinion Evidence Gomes also argued that the trial judge improperly allowed expert testimony to establish his guilt at trial.61 At trial, Officer Robert Badessa testified about his investigation of the crime scene and his collection and documentation of evidence.62 Specifically, Officer Badessa testified as an expert regarding the dissipation of gunshot residue found on certain articles of clothing.63 For the first time on appeal, Gomes argued that Officer Badessa was not qualified to offer expert testimony in this area. Because Gomes never raised this argument at trial, court considered that argument waived.64 Even if Gomes had raised that issue at trial, the decision to qualify an individual as an expert is soundly in the trial justice’s discretion.65 Officer Badessa had been a member of the Providence Police Department for twenty-five years, and of that, he had spent the previous seven years with the BCI unit.66 He had handled approximately thirty homicides.67 He had received training regarding bullet holes and impact. He had experience testing gunshot residue on clothing.68 With this experience, the trial justice would not have abused his discretion by admitting the

58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68.

Id. at 133. Id. at 134. Id. Id. Id. Id. Id. at 135. Id. Id. Id. Id.

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evidence.69 Further, even if the admission of Officer Badessa’s testimony had been error, it would be harmless beyond a reasonable doubt because another well-regarded expert had testified without objection about the same opinion evidence.70 Rule 404(b) Challenge Gomes also argued that the trial judge allowed the state to use improper character evidence to obtain his conviction.71 At trial, a former prison cellmate of Gomes’, Ralph Mosley (Mosley), testified that Gomes had referred to his cousins as good “boosters.”72 Thereafter, over Gomes’ objection, Mosley defined the term “booster” to mean “thief.”73 Gomes argued that such testimony was both prejudicial and irrelevant and should have been excluded pursuant to Rule 404(b) of the Rhode Island Ruled of Evidence.74 Rule 404(b) excludes evidence of prior criminal acts only if such evidence is both prejudicial and irrelevant.75 Questions of relevance, including whether probative value is outweighed by the danger of undue prejudice, are left to the sound discretion of the trial judge.76 Trial judge’s relevancy determinations will not be disturbed unless that determination was an abuse of discretion and the admission of the irrelevant information was prejudicial to the defendant’s rights.77 When considering whether a remark is prejudicial, the judge must evaluate the potential prejudice of the remark on the outcome of the case by examining the statement in its factual context.78 Prejudice exists when a remark so enflames the passions of the jury as to prevent their calm dispassionate examination of the evidence.79 To show prejudice, there must exist a reasonable 69. Id. 70. Id. 71. Id. at 136. 72. Id. at 135-36. 73. Id. at 136. 74. Id. 75. Id. (citing State v. Garcia, 743 A.2d 1038, 1050 (R.I. 2000)). 76. Id. (quoting Garcia, 743 A.2d at 1050, quoting State v. Gordon, 508 A.2d 1339, 1347 (R.I. 1986)). 77. Id. (quoting State v. Robertson, 740 A.2d 330, 345 (R.I. 1999)). 78. Id. (quoting State v. Fernandez, 526 A.2d 495, 498 (R.I.1987)). 79. Id. (quoting Fernandez, 526 A.2d at 498 (quoting State v. Brown, 522 A.2d 208, 211 (R.I. 1987))).

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108 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 probability that the improper evidence contributed to a defendant’s conviction.80 To determine whether a reasonable probability exists, a reviewing court must decide what probable impact the improper evidence would have had on an average jury.81 The admission of prejudicial evidence is harmless if it is not reasonably possible that such evidence would influence an average jury on the ultimate issue of guilt or innocence.82 The admission of impermissible evidence need not be prejudicial in a case in which there is independent overwhelming evidence of a defendant’s guilt.83 The court held that Mosley’s reference to the words “booster” and “thief” were neither irrelevant nor prejudicial.84 The trial judge’s finding of relevance was not an abuse of discretion because the term “boosters” had already been put before the jury without objection and an explanation of the term would assist the jury.85 Further, Mosley’s testimony prejudice Gomes’ rights for two reasons.86 First, Mosley’s testimony referred to Gomes’ cousins rather than Gomes.87 Therefore, the challenged testimony did not contribute to Gomes’ convictions.88 Secondly, an eyewitness had identified Gomes as being at the scene of the murder seconds before the gunshots; within ten to fifteen minutes of the murder and within only a few blocks of the scene, the defendant was found in possession of the murder weapon; and, the defendant had confessed that Wray’s murder was a “sanctioned hit” and that he went to the door to draw the victim out of the house.89 Consequently, in light of the overwhelming evidence of Gomes’ guilt, even if it was error to admit Mosley’s challenged testimony, such error was harmless beyond a reasonable doubt.90

80. Id. (quoting Robertson, 740 A.2d at 336). 81. Id. (quoting Robertson, 740 A.2d at 336). 82. Id. at 136-37 (quoting State v. Burns, 524 A.2d 564, 568 (R.I. 1987) (quoting State v. Poulin, 415 A.2d 1307 1311 (R.I. 1980))). 83. Id. at 137 (citing Robertson, 740 A.2d at 337). 84. Id. 85. Id. 86. Id. 87. Id. 88. Id. 89. Id. 90. Id.

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Leading Questions Finally, Gomes argued that the trial justice erred by admitting leading questions over his objection during the State’s redirect of Mosley.91 Leading questions are generally prohibited However, the trial justice has on direct examinations.92 considerable latitude in ruling on objections to leading questions.93 Such ruling will be overturned upon an abuse of discretion or substantial injury to defendant.94 While the State’s questions were leading and improper, they merely elicited facts that had already been put in evidence during Mosley’s direct examination.95 Therefore, Gomes was not injured by the leading questions.96 CONCLUSION In State v. Gomes, the defendant was denied neither constitutional nor statutory rights at trial. Reasonable suspicion may be based on reliable hearsay or a sufficient match between an individual and a suspect’s description broadcast over police radio. Furthermore, the trial judge did not abuse his discretion is allowing certain evidence in or in permitting leading questions. Accordingly, Gomes’ appeal was denied and his conviction affirmed. Michael J. Daly

91. 92. 93. 94. 95. 96.

Id. Id. Id. Id. Id. Id.

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Criminal Law. State v. O’Brien, 774 A.2d 89 (R.I. 2001). The audio portion of a videotape recorder is “an intercepting device” under statute prohibiting willful interception of wire or oral communications. Jury instructions are not improper when the jury finds facts that are so closely related to the omitted element that no rational jury could find those facts without also finding the omitted element. This exercise amounts to the functional equivalent of the omitted element. Therefore, the trial justice’s failure to define for the jury the term “intercept” is not reversible error. FACTS AND TRAVEL During the early morning of May 11, 1996, defendant, Jeffrey O’Brien, invited codefendant and fraternity brother Jordan Smith to videotape O’Brien and his girlfriend (hereinafter, the victim) having sex at the Alpha Epsilon Pi fraternity house at the University of Rhode Island.1 O’Brien instructed Smith to borrow a video camera and then wait in his bedroom closet.2 Smith waited in the closet for approximately a half hour until defendant reentered his room with his unsuspecting victim.3 Smith activated the camera when the couple moved from defendant’s couch onto the bed and began removing their clothing.4 At some point during the lovemaking, the victim suddenly observed “a camera lens coming from [the] closet” and a “bluish light coming from the camera itself.”5 The victim screamed, “Oh, my God, somebody is taping us!” and the defendant tried to calm her down by saying that she was seeing things.6 The victim pulled the curtain open revealing Smith squatting on a chair with the video camera in his hand.7 Smith and the victim struggled for possession of the camera and she ultimately gained control of it.8 The defendant denied having any prior knowledge of the

1. 2. 3. 4. 5. 6. 7. 8.

State v. O’Brien, 774 A.2d 89, 92 (R.I. 2001). Id. Id. Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 videotaping.9 Smith made several attempts to retrieve and destroy the tape, but these efforts were thwarted by the heroic efforts of the victim.10 Both defendant and Smith were indicted for conspiring to unlawfully intercept an oral communication and for intercepting an oral communication.11 Smith pled nolo contendere to the charges in the indictment and received an eighteen-month suspended sentence and probation.12 The defendant, however, opted for a trial and was found guilty on both of the counts charged in the indictment.13 The defendant was sentenced to a five-year suspended sentence with a concurrent probationary term.14 The defendant then filed this appeal.15 BACKGROUND In order to convict a defendant under the state’s wiretapping statute, section 11-35-21, the state must prove that the defendant wilfully intercepted, attempted to intercept, or procured any other person to intercept or attempt to intercept, any wire or oral communication.16 Section 12-5.1-1(5) of the Rhode Island General Laws defines the term “intercept” to mean “to acquire aurally the contents of any wire or oral communications through the use of any intercepting device.”17 Section 12-5.1-1(6) defines an “intercepting device” as “any device or apparatus which can be used to intercept wire or oral communications.” Section 12-5.11(8) defines “oral communications” as “any oral communication uttered by a person exhibiting an expectation that such communication is not subject to interception under circumstances justifying [such] expectation.”18

9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Id. at 93. Id. Id. Id. Id. Id. Id. Id. at 94. Id. Id.

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ANALYSIS AND HOLDING On appeal, defendant argued that the mere surreptitious recording of private oral communications does not constitute an “interception of a communication” under the Rhode Island’s wiretapping statute.19 The defendant argued that the audio recorder built into the video camera that Smith used was not an “intercepting device” as defined by section 12-5.1-1(5).20 Defendant contended that because the audio recorder was integrated into the video camera, it recorded only what already could be overheard by the hidden cameraman’s invited naked ear.21 Defendant further contended that because that audio recorder did not amplify the recorded sounds to make them more audible, it cannot be considered an “intercepting device.”22 Lastly, Defendant claimed that the trial justice erred by failing to instruct the jury that it had to find that defendant had procured an interception of an oral communication through the use of an intercepting device.23 In 1969, the Rhode Island General Assembly adopted the broad language of the federal wiretapping statute and adopted it as state law.24 The original version of the statute, which defendant relies on for his argument, provided that “it shall not be unlawful for a party to any wire or oral communication or a person given prior authority by a party to a communication to intercept such communication.”25 However, the amended statute, also adopted by the Rhode Island General Assembly, renders illegal one-party consensual recordings, like the one in this case, when they are intercepted “for the purpose of committing any criminal or tortuous act in violation of the Constitution or laws of the United States or of any State or for the purpose of committing any other injurious act.”26 By adopting the language of the federal statute, the General Assembly appreciated the significant difference between a third party merely overhearing private 19. 20. 21. 22. 23. 24. 25. 26.

Id. Id. Id. Id. Id. Id. at 96. Id. at 94. Id. at 95.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 communications and the surreptitious tape recording of that same overheard conversation.27 The General Assembly apparently intended to protect an individual’s expectation of privacy, not only from the technological innovations that increasingly expose our private communications to the uninvited bionic ear through the use of wiretapping, sound amplifying, and bugging devices, but also from those unseen devices such as tape recorders and other hidden transmitters.28 Therefore, the defendant’s first argument, that the mere surreptitious recording of private oral communications does not constitute an “interception of a communication” under the Rhode Island’s wiretapping statute, failed. In deciding what constitutes an “intercepting device,” the Rhode Island Supreme Court construed the federal and state wiretapping statutes to include a tape recorder or other recording devices.29 As a result, the audio portion of a video recorder is covered by the scope of the federal and state wiretap statutes.30 The video image captured by the surveillance camera is not what violates the wiretap laws, rather it is the interception of an oral communication that subjects the interceptor to liability.31 This broad interpretation of “intercepting device” gives effect to the General Assembly’s evident desire to protect individuals from “any device or apparatus” that might be used then or in the future to invade their privacy.32 The Rhode Island Supreme Court also did not find merit in Defendant’s argument that there was no “intercepting device” used in this case because the “simple, unadulterated [video] camera” used in this case was analogous to State v. Delaurier33 where an “ordinary, unadulterated AM radio” was used by police to overhear private cordless telephone conversations.34 However, the Delaurier court based its decision on an interpretation of the federal wiretapping statute and not on Rhode Island’s wiretapping

27. 28. 29. 30. 31. 32. 33. 34.

Id. at 96. Id. Id. at 96-97. Id. at 97. Id. Id. at 99. 488 A.2d 688 (R.I. 1985). O’Brien, 774 A.2d at 99.

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statute and its decision is therefore, not controlling in this case.35 Defendant next argued, without success, that the trial judge committed reversible error by failing to include the statutory definitions of “intercept” and “intercepting device” in the jury instructions.36 Defendant claimed that the trial justice should have given jury instructions defining the term “intercept” to mean “to acquire aurally the contents of any wire or oral communication through the use of any intercepting device.”37 In this case, the trial justice read the statute verbatim and attempted to summarize the elements in his own words, a practice that the Rhode Island Supreme Court has approved of for a long time.38 The trial judge also instructed the jury that the defendant could not be convicted of this crime unless there was an interception of an “oral communication.”39 “When the jury finds facts that ‘are so closely related’ to the omitted element ‘that no rational jury could find those facts without also finding the omitted element’, this exercise amounts to the functional equivalent of the omitted element.”40 Therefore, the trial justice’s failure to define for the jury the term “intercept” is not reversible error. Similarly, the trial judge did not commit reversible error for failing to define for the jury the term “intercepting device.” The trial justice ruled in limine that the video camera was an “intercepting device” as a matter of law and its use indisputably “acquire[d] aurally” the surrounding sounds and communications captured on the videotape.41 Therefore, it was not necessary for the trial judge to define the term “intercepting device” for the jury. The defendant also contended that the court erred by permitting the jury to view the videotape showing the sexual activity between the defendant and the victim because the videotape’s probative value was outweighed by its prejudicial value.42 However, the state had the burden under section 11-3535. Id. 36. Id. at 100. 37. Id. at 101. 38. Id. (citing State v. Durfee, 666 A.2d 407, 409 (R.I. 1995) (holding that “‘this court has long approved’ of the practice by which a trial justice ‘read[s] the statute and *** attempt[s] to summarize the elements in his own words’”)). 39. Id. 40. Id. (citing State v. Hazard, 745 A.2d 748, 753 (R.I. 2000)). 41. Id. 42. Id. at 106.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 21(c)(3) of proving to the jury that the communications in question were “intercepted for the purpose of committing [a]*** tortuous act.”43 In this case, the tortuous act was the defendant’s invasion of the victim’s privacy.44 Therefore, it was necessary for the jury to view the videotape so that it could determine whether or not the defendant had intercepted the communications between the victim and himself for the purpose of violating the victim’s right to privacy.45 The court concluded that the defendant’s remaining arguments were without merit and affirmed the judgment of conviction. CONCLUSION In order to convict a defendant under the state’s wiretapping statute, the state must prove that the defendant wilfully intercepted, attempted to intercept, or procured any other person to intercept or attempt to intercept, any wire or oral communication through the use of any intercepting device. The audio portion of a video recorder is covered by the scope of the state wiretap statutes. This broad interpretation of “intercepting device” gives effect to the General Assembly’s evident desire to protect individuals from “any device or apparatus” that might be used then or in the future to invade their privacy. The video image captured by the surveillance camera is not what violates the wiretap laws, rather it is the interception of an oral communication that subjects the interceptor to liability. In this case, the defendant was found guilty under the state’s wiretapping statute because his use of the video camera to videotape a sexual encounter was as a wilful interception of an oral communication through the use of an intercepting device that caused the victim harm. Mark P. Gagliardi

43. 44. 45.

Id. Id. Id.

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Criminal Law. State v. Smith, 766 A.2d 913 (R.I. 2001). The Rhode Island Supreme Court held: (1) There was sufficient evidence that defendant’s oral, written, and taped statements to police were voluntary. (2) The record supported a sentence of life imprisonment without possibility of parole. (3) The predicate sentences for the imposition of the habitual criminal penalty must occur sequentially, not on the same day as in the defendant’s case; thus the state failed to show that the defendant had two prior convictions and sentences that would qualify him for sentencing as a habitual criminal. FACTS AND TRAVEL On April 13, 1997 defendant Charles Smith was living in an apartment in Newport with Margaret Rose Benard, their threeyear-old daughter, Samantha, and two of Benard’s daughters from a previous marriage, Kristen and Toni Jorge, sixteen and fourteen years old, respectively.1 After an argument, Benard asked Smith to leave and give her the keys.2 Defendant left, but returned at approximately 5:00 a.m. the following morning to ask Benard for cigarette money. 3 She gave him two dollars and he left again.4 Sometime around 1:00 p.m. the same day, after Benard and the children had gone out, defendant returned to the apartment via a kitchen window to “change his clothing”; he reentered the apartment shortly after 1:30,5 taking a knife from the kitchen. Shortly thereafter Kristen returned to the apartment.6 Defendant hid in a bedroom until Kristen went out to walk the dog; he then attempted to leave but was surprised by Kristen who had returned.7 She said she was going to call the police on defendant; before she had a chance, defendant grabbed her, dragged her into a bedroom, and stabbed her to death.8 After he thought she was

1. 2. 3. 4. 5. 6. 7. 8.

State v. Smith, 766 A.2d 913, 915 (R.I. 2001). Id. Id. Id. Id. at 916. Id. Id. Id. at 917.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 dead, he “‘had sex with her.’”9 Smith was convicted in Superior Court of first degree murder, committed by means of torture and aggravated battery. His motion for a new trial was denied.10 He was sentenced to life imprisonment without the possibility of parole, and also sentenced to a consecutive fifteen-year sentence as a habitual offender.11 On appeal, defendant argued that the trial justice erred by admitting statements he made to police; that because of mitigating factors, the sentence of life imprisonment without parole was not warranted; and that it was error to impose the habitual criminal sentence upon him.12 ANALYSIS AND HOLDING The court first addressed defendant’s argument that his constitutional right against self-incrimination was violated by the admission at trial of both his oral and written confessions to police.13 The issue was raised for the first time on appeal, and no attempt had been made by defendant to suppress this evidence at trial.14 The general rule is that the court will not consider issues not raised at trial.15 However, under limited circumstances the court will review issues concerning basic constitutional rights.16 Those circumstances include, inter alia, whether the issue is “‘based upon a novel rule of law, of which counsel could not reasonably have known at the time of trial.’”17 Here, the issue of whether or not a confession had been made voluntarily is regularly considered in other courts.18 Thus, defendant’s counsel should have preserved the issue below for appeal.19 However, even if the issue had been properly presented below, it would have been “wholly without merit.”20 “The impeccable conduct of the 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Id. Id. at 915. Id. Id. at 918. Id. at 918-19. Id. at 919. Id. at 919 (quoting State v. Burke, 522 A.2d 725, 731 (R.I.1987)). Id. (citing Burke, 522 A.2d at 731). Id. (quoting Burke, 522 A.2d at 731). Id. (citations omitted). Id. Id.

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Newport officers, [including proper reading and explanation of Miranda warnings] would have precluded any finding of inadmissibility.”21 The court next addressed defendant’s contention that the trial justice erred in finding that none of the mitigating factors defendant asserted outweighed the aggravating factors established by the evidence and that a life sentence without the possibility of parole was not warranted in this case.22 The mitigating factors defendant asserted included an abusive father, absentee mother, mental illness, defendant’s failure to take his anti-psychotic medication, and that the murder was not premeditated.23 The court defined first-degree murder as “‘murder . . . perpetrated from a premeditated design unlawfully and maliciously to effect death of any human being. . . . ‘“24 The penalty for that crime is life imprisonment.25 Additionally, “every person guilty of murder in the first degree committed in a manner involving torture or an aggravated battery’” shall be sentenced to life in prison without possibility of parole.26 Furthermore, the trial judge has discretion to weigh aggravating and mitigating circumstances when determining whether to give a life sentence with or without possibility of parole.27 Moreover, the Rhode Island Supreme Court may ratify or reduce the sentence imposed by the trial court28 after exercising their “‘independent judgment in respect to the aggravating circumstances . . . together with any matter in mitigation . . . including personal history and character.29 The court began its analysis by quoting extensively from the record below: the trial justice imagined the murder from the point of view of Kristen Jorge, and the horror of her last few minutes; reviewed evidence that the defendant had made statements weeks in advance about exactly how he was going to kill Kristen Jorge; and a review of the defendant’s self-indulgent

21. 22. 23. 24. 25. 26. 27. 28. 29.

Id. at 920 (citing Colorado v. Connelly, 479 U.S. 157, 107 (1986)). Id. Id. Id. at 921 (quoting R.I. Gen. Laws § 11-23-1 (2000)). Id. (citing R.I. Gen. Laws § 11-23-2 (2000)). Id. (quoting R.I. Gen. Laws § 11-23-2 (2000)). Id. (quoting R.I. Gen. Laws § 12-19.2-1 (2000)). Id. (quoting R.I. Gen. Laws § 12-19.2-5 (1984)). Id. (quoting State v. Travis, 568 A.2d 316, 325 (R.I.1990)).

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 and parasitic existence.30 “[T]he murder of Kristen Jorge was one of premeditated and unmitigated violence and brutality.”31 The trial justice found defendant’s act of sexual intercourse on his victim after she was dead “‘disgustingly [reprehensible]. . . an act worthy only of the predatory vulture who satisfies their [sic] needs by feeding on dead flesh.’”32 The Rhode Island Supreme Court found the evidence “overwhelmingly supports the finding that the murder was committed in a manner involving torture and aggravated battery to the victim.”33 In addition, the court found evidence of premeditation: defendant “grabbed the large kitchen knife with which he would butcher Kristen not when he saw Kristen in the apartment, but immediately upon entering the home; and that he “had told at least two individuals, months prior to the murder, that he wanted to slice Kristen’s throat.”34 The court held that “defendant’s unfortunate childhood” could not override the aggravating factors in the case and it affirmed the lower court’s imposition of life imprisonment without parole.35 Lastly, the court addressed defendant’s contention that the imposition of the habitual criminal sentence was error because the predicate sentences had been imposed on the same day. The habitual criminals statute mandates that any person convicted of two or more felony offenses “‘arising from separate and distinct incidents and sentenced on two or more such occasions to serve a term in prison’” shall be deemed a habitual criminal if he is convicted in Rhode Island of another felony.36 Defendant had been previously convicted in Utah of two separate offenses, but the sentences were imposed together on the same date and he was ordered to serve those sentences concurrently.37 The court found 12-19-21(a) to be ambiguous and held that the predicate sentences for the imposition of the habitual criminal penalty must “occur sequentially.”38 Thus, because the predicate sentences in 30. Id. at 921-22. 31. Id. at 922. 32. Id. 33. Id. 34. Id. 35. Id. at 923. 36. Id. at 923-24 (quoting R.I. Gen. Laws § 12-19-21(a) (2000)) (emphasis in original). 37. Id. at 923. 38. Id. at 924.

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defendant’s case were imposed on the same day, they would not trigger 12-19-21(a).39 However, defendant also had previous convictions in Rhode Island, but the state had failed at trial to properly authenticate the docket face sheets as required in 12-1921(b).40 The state argued on appeal that the trial justice should have taken the Rhode Island convictions into account.41 The Rhode Island Supreme Court held that the trial justice was not in error as 12-19-21(b) required authenticated copies of former judgments, and that the imposition of the habitual offender sentence must be vacated.42 However, the state was not precluded from again seeking a sentence under 12-19-21(a) and the matter was remanded back to the Superior Court.43 CONCLUSION In State v. Smith, the Rhode Island Supreme Court held there was sufficient evidence that defendant’s oral, written, and taped statements to police were voluntary, and that the record supported a sentence of life imprisonment without possibility of parole, but that the state failed to show that defendant had two prior convictions and sentences that would qualify him for sentencing as a habitual criminal. Joseph M. Proietta

39. 40. 41. 42. 43.

See id. Id. at 925. Id. Id. Id.

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Criminal Law. State v. Spencer, 783 A.2d 413 (R.I. 2001). Standard for determining if waiver of counsel is knowing, intelligent and voluntary is a totality of the circumstances in light of the stage of the proceedings. FACTS AND TRAVEL On June 15, 1998 the owner of ABC Travel in Pawtucket, Rhode Island was robbed at gunpoint by a person subsequently identified as Lee Spencer.1 During the robbery, the victim’s screams alerted an occupant of a nearby shop who then attempted to help the victim.2 Though the victim was unable to positively identify Spencer, a person who came to the victim’s aid confirmed his identification from a photo array of six people.3 On December 11, 1998 a grand jury indicted Spencer with one count of first-degree robbery and two counts of felonious assault.4 On May 12, 1999 defense counsel entered appearance on Spencer’s behalf and the trial commenced on September 9, 1999.5 At the trial, following the state’s case in chief and during crossexamination of the victim, defense counsel informed the court that defendant Spencer wished to complete the rest of the victim’s cross-examination himself and desired to represent himself for the rest of the trial.6 A colloquy between the court and the defendant Spencer ensued.7 Spencer represented himself for the remainder of the trial with defense counsel remaining as standby counsel to assist and advise.8 Following Spencer’s conviction, defense counsel resumed representation of the defendant at a hearing on a motion for a new trial and at the sentencing.9 Motion for new trial was denied and Spencer was sentenced to thirty years at the Adult Correctional Institutions for robbery, fifteen to serve.10 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

State v. Spencer, 783 A.2d 413, 415 (R.I. 2001) Id. Id. Id. Id. Id. Id. Id. at 416. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Defendant appealed the conviction alleging that the trial justice had failed to properly inquire as to the waiver of counsel and failed to determine that his waiver was made knowingly, intelligently and voluntarily.11 Additionally, defendant argued that the grand jury indictment should be dismissed for prosecutorial misconduct.12 ANALYSIS AND HOLDING The Sixth Amendment to the Constitution of the United States permits a defendant to represent himself at trial, provided he has made a knowing and voluntary waiver of counsel.13 “The defendant must be made aware of the dangers and disadvantages of self-representation, so that the record will establish that he knows what he is doing and his choice is made with eyes open.”14 After briefly citing several accepted methods for determining when a waiver of counsel is knowing, voluntary and intelligent, the court held that its preferred method is to view the waiver in light of the totality of the circumstances with consideration given to which stage of the proceeding the waiver occurred.15 In finding that the trial judge correctly found Spencer’s waiver knowing, intelligent and voluntary, the court cited Spencer’s detailed pre-trial testimony reflecting his awareness of the gravity of his crime, his familiarity with the criminal justice system and his affirmative, assertive responses to questions of his capability to represent himself pro se.16 Additionally, the court found it important that Spencer had the benefit of counsel before his trial, during a significant portion of his trial, and following his trial during the sentencing phase.17 Lastly, noting the fact that defense counsel was directed to act as standby counsel following Spencer’s waiver provided the defendant the benefit of using standby counsel to advise him on matters of law with which he

11. Id. 12. Id. 13. Id. (citing Faretta v. California, 422 U.S. 806, 819 (1975)). 14. Id. (citing Faretta, 422 U.S. at 835 (quoting Adams v. United States, 317 U.S. 269, 279 (1942)(internal citations omitted))). 15. Id. at 417. 16. Id. 17. Id.

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was not familiar.18 The court was mildly critical of the trial justice for several reasons. First, the court felt the trial justice should have engaged in a more detailed colloquy with the defendant.19 Secondly, the court noted that the trial judge had been under the mistaken belief that there was no choice but to let the defendant waive counsel at that particular stage of the proceeding.20 However, these issues were not dispositive and did not affect the court’s finding that under a totality of the circumstances analysis; defendant Spencer’s mid-trial waiver was not defective.21 Turning to the defendant’s argument that prosecutorial misconduct during the grand jury proceeding justified a dismissal of his indictment, the court held that dismissal of an indictment was a remedy reserved for only the most extreme circumstances.22 The introduction of evidence to the grand jury that defendant Spencer failed a computerized voice stress analysis test was prejudicial and inappropriate, but not dispositive because other evidence introduced during the proceeding was sufficient to establish probable cause.23 Ultimately, the conviction and the fact that inadmissible evidence was not introduced during trial warranted affirmation of the indictment.24 CONCLUSION The Rhode Island Supreme Court affirmed the conviction of defendant who waived his right to counsel mid-trial holding that waiver was knowing, intelligent and voluntary based upon a totality of the circumstances analysis. Additionally, defendant’s decision to waive counsel in the middle of his trial led credence to the court’s finding that his pro se representation was chosen in full light of the possibility of negative consequences. Defendant’s appeal was dismissed. Jill A. Taft 18. 19. 20. 21. 22. 23. 24.

Id. Id. at 417-18. Id. at 418. Id. Id. Id. Id.

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Criminal Law. State v. Verrecchia, 766 A.2d 377 (R.I. 2001). The Rhode Island Supreme Court held that the defendant had established an objectively reasonable expectation of privacy in a leased garage unit by virtue of his status as sole leaseholder and requisite ability to exclude access to the garage area. The supreme court remanded the case to the superior court for a hearing on the merits of the defendant’s motion to suppress the guns and other evidence removed from the garage. FACTS AND TRAVEL The Defendant, Albert Verrecchia (Verrecchia) was arrested on May 19, 1996, charged with two counts of receiving stolen goods.1 Verrecchia was a member of a local crime syndicate known as the “Gold Nugget Group” (GNG), and his arrest was the product of a government sting operation.2 Michael Rossi (Rossi), another GNG member who was allegedly involved in earlier criminal activity with Verrecchia, had been previously arrested and incarcerated for other offenses.3 In exchange for better treatment, Rossi agreed to assist the police by arranging to have Verrecchia, whom Rossi described as the “custodian of GNG’s arsenal,” sell some of GNG’s stockpiled weapons to an undercover police detective.4 Since Rossi was incarcerated, the sting operation devised by the police began with Rossi meeting Verrecchia while in prison and asking him to sell different pieces of the GNG arsenal to a fellow inmate who would soon be released, nicknamed “The Ghost.”5 The individual posing as “The Ghost” was an undercover police detective.6 After Verrechia agreed to complete this transaction, the government moved into part two of their operation by having the undercover detective telephone Verrecchia and arrange to meet with him to buy GNG weapons.7 After Verrecchia’s meeting with “The Ghost,” the police arrested 1. 2. 3. 4. 5. 6. 7.

State v. Verrecchia, 766 A.2d 377, 380-81 (R.I. 2001). Id. Id. at 381. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Verrecchia for possessing two stolen guns.8 Verrecchia was eventually charged with an additional sixty-seven crimes as a result of both Rossi’s testimony and the evidence seized as a result of the sting operation.9 At least a portion of this evidence was contained in a rented garage, leased in Verrecchia’s name, which the police searched after obtaining a warrant.10 After going through seven different defense attorneys,11 Verrecchia’s case finally began on January 12, 1999, and concluded on February 9, 1999, with a guilty verdict found on twenty-nine out of sixty-six counts submitted to the jury.12 On appeal, Verrecchia’s primary argument13 was that the trial justice erred in denying his motion to suppress the guns and other evidence the police obtained in their search of Verrecchia’s rented garage.14 Specifically, Verrecchia challenged the trial justice’s ruling that he had no legitimate expectation of privacy in the leased garage.15 As a result of the trial justice’s determination on this issue, the justice did not reach the merits of Verrecchia’s motion to suppress.16

8. Id. 9. Id. 10. Id. 11. Id. Over the course of approximately thirty months that Verrecchia awaited trial he was represented by as many as seven different attorneys in succession one after another. For “sundry reasons” Verrecchia was unable to maintain a relationship with any of these different attorneys for more than a short period of time. Id. 12. Id. Although the original indictment included sixty-nine counts against Verrecchia, three counts were dismissed. Id. at 381-82, n. 2. 13. Verrecchia also asserted on appeal that the state deprived him of his constitutional right to a speedy trial, that the trial justice abused his discretion by failing to sever a large number of the different counts that Verrecchia faced, and that the trial justice erred in failing to instruct the jury on the affirmative defenses of entrapment and duress. Id. at 380-81. The Rhode Island Supreme Court rejected all three of these arguments. See id. at 384-86 (concluding that the delay Verrecchia experienced was of his own making through his decision to change counsel multiple times, that no cognizable prejudice to Verrecchia resulted, and holding that Verrecchia’s right to a speedy trial was not violated by the state); see also id. at 386-87 (holding that the trial justice did not abuse his discretion in declining to hold more than fifty separate trials in this matter); see also id. at 387-91 (holding that Verrecchia did not meet the necessary prerequisite burden of proof to be entitled to a jury instruction on the affirmative defenses of either entrapment or duress). 14. Id. at 380-81. 15. Id. 16. Id.

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ANALYSIS AND HOLDING In order for a defendant in a criminal proceeding to contest the seizure of evidence as unlawful, the defendant must have “enjoyed a reasonable expectation of privacy in the premises or property that was the subject of the search.”17 In this proceeding, Verrecchia had the burden of proving that his alleged expectation of privacy was such that society would be prepared to recognize that expectation of privacy as objectively reasonable.18 The Rhode Island Supreme Court identified several factors that it has historically considered in determining whether an asserted personal privacy expectation is objectively reasonable.19 These factors each relate to the amount of control a person exerts over the area searched and the exclusivity of that control. The supreme court agreed with the trial justice that Verrecchia was the legal tenant of the garage compartment in question, having rented it from its owner at a fee of $200 per month four years before the police searched the garage.20 The evidence showed that Verrecchia had paid his rent each month in either cash or services, and that Verrecchia was in possession of the only known key to the garage.21 The rented garage had two possible means of entry, a side door which could be opened with Verrecchia’s key, and large front doors. The trial justice found that while Verrecchia established that he possessed the only key

17. Id. at 382 (citing Rakas v. Illinois, 439 U.S. 128, 143 (1978); State v. Wright, 558 A.2d 946, 948 (R.I. 1989)). 18. Id. (citing California v. Greenwood, 486 U.S. 35, 39 (1988); State v. Briggs, 756 A.2d 731, 741 (R.I. 2000)). 19. In determining whether an asserted right of privacy is objectively reasonable, the Rhode Island Supreme Court has considered “whether the suspect possessed or owned the area searched or the property seized; his or her prior use of the area searched or the property seized; the person’s ability to control or exclude others’ use of the property; and the person’s legitimate presence in the area searched.” Id. at 382 (citing Briggs, 756 A.2d at 741; State v. Pena Lora, 746 A.2d 113, 118-19 (R.I. 2000); Wright, 558 A.2d at 949). 20. Id. at 382. 21. The owner of the garage testified that Verrecchia possessed the only key to the garage, and that the owner had not retained a set of keys when he rented the compartment. Further, the owner testified that since he had rented the space to Verrecchia he had not entered the garage at all, except on one occasion in Verrecchia’s presence to examine water damage. Id. In addition, the supreme court noted that the property owner later testified that he did not possess keys to the large front doors of the garage, and that, in fact, no such keys existed. Id. at 383.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 to the side door, the record was silent as to possible access into the garage space through the front doors.22 As a result, the trial justice inferred that the owners of the garage were able to enter the garage through these front doors and, by virtue of this means of entry, control access to the garage.23 Through this inference, the trial justice determined that the garage owners retained the ability to facilitate or exclude access to the garage, and that Verrecchia did not truly “posse[ss] the ability to exclude others from entering through the front doors.”24 In light of this conclusion, the trial justice held that Verrecchia did not possess an objectively reasonable expectation of privacy with respect to the garage, and as a result could not contest the seizure of property contained within the structure.25 The supreme court disagreed with the trial justice’s conclusion on this issue. The supreme court noted that as a commercial tenant in good standing, Verrecchia had a possessory interest in the garage that would enable him to exclude others from the garage during his tenancy, including the owners of the structure.26 Further, the supreme court stated that if the property owners had attempted to enter Verrecchia’s rented garage during his tenancy, Verrecchia could have either enjoined them from using the property or ousted them as trespassers.27 The court noted that Verrecchia’s legal ability to exclude trespassers applied not only to the property owners, but anyone else who might attempt to enter Verrecchia’s property during his tenancy.28 As a result, the Rhode Island Supreme Court held that Verrecchia had established an objectively reasonable expectation of privacy in the leased garage.29 This expectation of privacy was not undermined by the fact that Verrecchia admitted making four copies of his set of garage keys and distributing them to four different individuals.30 Because Verrecchia retained control over 22. 23. 24. 25. 26. 27. 28. 29. 30.

Id. at 382. Id. at 382-83. Id. at 383. Id. Id. (citing 42 Am. Jur. 2d Landlord and Tenant, § 485 at 402 (1985)). Id. Id. Id. at 384. Id.

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the garage as a sole tenant, and did not share his tenancy with the other key holders, he could terminate their access to the garage at any time. The supreme court emphasized that “‘an individual need not maintain absolute personal control (exclusive use) over an area to support his expectation of privacy’—as long as that individual retains some ability to control or exclude others from using the area.”31 The supreme court held that Verrecchia retained sufficient control over the garage to meet his burden of establishing an objectively reasonable expectation of privacy therein.32 CONCLUSION In State v. Verrecchia, the Rhode Island Supreme Court held that the defendant had established an objectively reasonable expectation of privacy in a leased garage unit, thereby enabling the defendant’s pre-trial motion to suppress evidence confiscated from this garage to be heard on the merits. The supreme court remanded the case to the superior court for a hearing on Verrecchia’s motion to suppress the guns and other evidence removed from the garage.33 Lucy H. Holmes

31. 32. 33.

Id. (quoting United States v. Horowitz, 806 F.2d 1222, 1226 (4th Cir. 1986)). Id. Id.

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Criminal Procedure. City of Warwick v. Adams, 772 A.2d 476 (R.I. 2001). The Rhode Island supreme court held that: (1) the statute that allows bail commissioners to accept pleas of not guilty in misdemeanor cases is valid and does not conflict with the district court’s rules; (2) the petitioner had a unilateral right to withdraw waiver of trial by jury before the expiration of the tenday period that began to run after his initial appearance before the district court or judge of that court, but not after his initial appearance before the bail commissioner; and (3) the absence of counsel during a proceeding before the bail commissioner constituted good cause to revoke waiver of jury trial after the expiration of the ten-day period. FACTS AND TRAVEL Petitioner Mark Adams waived his right to a jury trial during a preliminary hearing at the Warwick police station, where he was charged with assault.1 After consulting with an attorney, Adams attempted to revoke his waiver in district court within ten days of the preliminary hearing, but was not allowed to do so.2 Defendants charged with misdemeanors are usually given the opportunity to waive their right to a jury trial when they appear before a bail commissioner.3 According to the Attorney General, most district court judges are reasonable in allowing a defendant to withdraw a waiver of jury trial, before or after the ten days following the defendant’s initial court appearance, and that this instance was an anomaly.4 BACKGROUND Rhode Island General Laws section 12-10-2 enumerates the powers of bail commissioners.5 Under this section, they are authorized to “accept pleas of not guilty,” and then “schedule a pretrial conference date before a judge of the district court.”6

1 2 3 4 5 6

City of Warwick v. Adams, 772 A.2d 476, 477 (R.I. 2001). Id. Id. at 478. Id. R.I. Gen. Laws §12-10-2 (1997).

Id. at § 2-10-2(b).

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Further, an administrative order by the chief judge of the district court specifies the procedures bail commissioners must follow “when conducting arraignments in misdemeanor cases and initial appearances in felony cases.”7 Adams presented three issues in his request for certiorari from the Rhode Island Supreme Court. First, he argued that a bail commissioner may not conduct the arraignments set out in the administrative order, contending that the administrative order that grants bail commissioners “full-fledged power to arraign” is unauthorized.8 Therefore, he argues, there was a conflict between the statute and the administrative order.9 The petitioner argued that these initial proceedings before the bail commissioners should not be considered arraignments because they are not held in open court.10 Further, Adams contends that as a matter of public policy, defendants should not be allowed to waive jury rights outside of court.11 ANALYSIS AND HOLDING The state supreme court found that the administrative order does not extend the powers of bail commissioners beyond those provided in section 12-10-2.12 Relying on the fact that bail commissioners may only accept pleas of not guilty in misdemeanor cases (thus leaving discretion to the courts on pleas of guilty or nolo contendere), it states that “[a]lthough the administrative order refers to this process as a ‘special arraignment,’ it does not constitute an arraignment as that term is used in the district court’s Rules of Criminal Procedure because it does not occur ‘in open court.’”13 Further, the district court Rules leave room for statutory adjustment in the way in which the defendant can make an initial appearance after arrest as is provided in section 12-10-2, and, to

7 88-18). 8 9 10 11 12 13

Adams, 772 A.2d at 478 (citing District Court Administrative Order Id. at 478. Id. at 479. Id. Id. Id. at 478.

Id.

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obtain release on bail.14 Although the district court Rules do not specifically provide for all the bail commissioners’ authority given under section 12-10-2, the court found there was no necessary conflict between them.15 Finally, Adams requested that the state supreme court find that his initial appearance before the bail commissioner was invalid, that he had a unilateral right to revoke his waiver within the ten-day period after that appearance, and that absence of the opportunity to consult with counsel prior to executing the waiver constituted good cause to allow him to waive the right after ten days.16 The request to invalidate the bail commissioner proceedings was denied. The court did rule that Adams had the unilateral right to withdraw his jury trial waiver at any time before the ten day period began to run after his initial appearance before the district court, but not after the bail commissioner hearing. However, the court did find that the absence of counsel during the bail commissioner proceeding constituted good cause to revoke the jury trial waiver after the ten-day period.17 CONCLUSION In City of Warwick v. Adams, the Rhode Island Supreme Court held that the statute that allows bail commissioners to accept not guilty pleas in misdemeanor cases does not conflict with the district court’s rules and is therefore valid. The petitioner had a unilateral right to withdraw his jury trial waiver before expiration of ten-day period after an appearance before the district court but not after an appearance in front of the bail commissioner. The absence of counsel during a bail commissioner proceeding constituted good cause to revoke jury trial waiver after the expiration of the ten-day period. Betsy Wall

14 15 16 17

Id. at 479. Id. at 481. Id. Id.

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Criminal Procedure/Evidence. State v. Lynch, 770 A.2d 840 (R.I. 2001). The Rhode Island Supreme Court held that: (1) pretrial photo identification procedure was not unduly suggestive; (2) jury instruction on victim’s identification testimony was sufficient; (3) now-deceased declarant’s statement to police officer was admissible under excited utterance exception to the hearsay rule; (4) jury instruction on flight was sufficient; and (5) defendant was not entitled to a jury instruction on the use of force to retain property already peacefully taken. FACTS AND TRAVEL On September 19, 1994 at approximately 7:30pm, the defendant, David Lynch, attacked a young woman as she was leaving a gas station in Providence.1 Lynch held a knife to her throat and demanded that she give him her backpack.2 The victim, who was in shock, stared at the defendant for approximately 10-15 seconds before the defendant reached into the car and took the backpack.3 The victim then proceeded to chase the defendant on foot.4 At one point, the defendant turned and ran towards the victim before dropping the backpack and continuing to run.5 The victim stopped to pick up her belongings and waited for the police to arrive.6 An eyewitness to the events chased the defendant to a nearby post-office.7 During the struggle between them, the defendant stabbed the witness in the hand.8 When the police officer arrived at the scene, the witness explained what had happened.9 Because the defendant appeared almost unconscious from the struggle, the police officer put him in the back of the police car without handcuffs or restraints.10 The officer then proceeded to search the area for the knife the defendant had used in the robbery and 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

State v. Lynch, 770 A.2d 840, 842 (R.I. 2001). Id. Id. at 842-43. Id. at 843. Id. Id. Id. Id. Id. Id. at 843, 848.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 stabbing.11 At this point, the police officer got into the cruiser, and started the car with the intent of taking the defendant to a line-up for identification.12 Before he could leave, however, an ambulance arrived and the officer left his cruiser to speak with the paramedics.13 The defendant climbed into the front of the cruiser and fled the scene.14 The defendant hit the officer in the knee with the car, and the officer fired shots at the defendant.15 After crashing into a utility pole two-tenths of a mile from the post-office, the defendant was again apprehended and required hospitalization, and thus the victim did not have the opportunity to view a line-up at that time.16 The victim later identified Lynch as the man who attacked her from a photo array before she testified before the grand jury.17 Following a jury trial, Lynch was convicted of robbery in the first degree, assault with a deadly weapon against the officer, robbery of the officer in the second degree, and escape from lawful custody.18 ANALYSIS AND HOLDING The defendant raised several issues on appeal. First, he contends that the trial justice erred in denying his motion to suppress the victim’s identification testimony.19 The Rhode Island Supreme Court employed a two-pronged analysis to determine whether an out-of court identification violates a defendant’s due process rights.20 Relying on State v. Gardiner,21 the court stated that the first step is to determine “whether the identification procedure used was unnecessarily suggestive.”22 The court further stated that the procedure was not unnecessarily suggestive; the trial judge does not need to proceed to the second

11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Id. at 843. Id. Id. Id. Id. Id. at 843, 845. Id. at 844. Id. Id. Id. 636 A.2d 710, 715 (R.I. 1994). Lynch, 770 A.2d at 844.

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prong.23 The defendant claims that the photo array procedure was unnecessarily suggestive because it was made ten weeks after the incident and that the defendant was depicted with more facial hair than the other photos.24 This court ruled that the photo array was not unduly suggestive because the lapse of time between the incident and the identification goes to the weight given the identification, not to the suggestiveness.25 The court further stated that the photos were a fair comparison that in no way infringed upon Lynch’s due process rights.26 The court also noted that the victim had adequate opportunity to look at Lynch while he held the knife to her throat, and further that the defendant was unavailable for a line up because of his hospitalization.27 The defendant also claims that the instruction given to the jury regarding the identification was erroneous.28 The defendant objected because the trial justice did not include specifically requested language, which instructed the jury that it must take into account the victim’s level of certainty that Lynch was the perpetrator.29 The court stated that under Rhode Island law, there is no requirement for particular language to be used in jury instructions.30 The law only requires the trial justice to instruct the jury on the applicable law in the case, regardless of the words he or she chooses to do so.31 As a result, the court concluded that the trial justice’s instruction was sufficient.32 The next issue on appeal is the statement that the eyewitness, who died before trial, made to the police officer at the post office.33 The defendant claims admission of this statement amounted to reversible error because the statement lacked reliability.34 The trial court relied on Rule 804(c) of the Rhode

23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34.

Id. Id. Id. at 845. Id. Id. Id. Id. Id. at 846 (citing R.I. Gen. Laws §8-2-38 (1997)). Id. at 846. Id. at 846-47. Id. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Island Rules of Evidence,35 and allowed the statement in as a declaration.36 The court found that the statement contained adequate reliability because it satisfied the requirements of an excited utterance under Rule 803(2).37 The court relied on the testimony of the police officer, which described the witness as being excited and out of breath at the time he made the statement.38 Further, the defendant attempted to impeach the credibility of the declarant by introducing evidence of the declarant’s criminal record.39 Thus, the court stated, the jury had the benefit of this information in determining whether the statement was reliable, and the admission of the statement did not constitute reversible error.40 The next challenge brought by the defendant was against the jury instruction on flight with respect to his leaving the scene.41 Lynch contended that the trial justice committed reversible error for not explaining that consciousness of guilt is not the only potential reason for flight.42 The court rejected this argument, stating that the evidence of flight in this case was overwhelming.43 The court further stated that the instruction on flight was consistent with this evidence and that the jury was properly instructed that a permissible, but not mandatory, inference of consciousness of guilt could be drawn.44 Finally, the defendant argued that the trial justice erred in rejecting the defendant’s requested jury instruction regarding the robbery of the police car.45 The requested instruction stated, “a defendant’s use of force to retain property already peacefully

35. R.I. R. Evid. 804(c) (stating “A declaration of a deceased person shall not be made inadmissible in evidence as hearsay if the court finds that it was made in good faith before the commencement of the action and upon the personal knowledge of the declarant.”). 36. Lynch, 770 A.2d at 847. 37. Id. at 847 (citing R.I. R. Evid. 803(2), defining an excited utterance as “a statement relating to a startling event or condition made while the declarant was under the stress of excitement caused by the event or condition.”). 38. Id. at 847. 39. Id. 40. Id. at 847-48. 41. Id. at 848. 42. Id. 43. Id. 44. Id. 45. Id.

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taken, or attempt to escape, is not the force essential to satisfy the element of force required for robbery.”46 However, the trial justice rejected this instruction because they determined the car was not peacefully taken.47 Specifically, the trial court relied on the fact that despite his injuries, Lynch got into the front seat of the car, and drove toward the officer, hitting him in the process.48 The Rhode Island Supreme Court agreed that this was highly suggestive of the exertion of force necessary to satisfy the element of force in robbery.49 As a result, the defendant’s conviction was affirmed and his appeal was denied and dismissed. CONCLUSION Defendant was convicted of robbery in the first degree, assault with a deadly weapon against a police officer, robbery of the officer in the second degree, and escape from lawful custody of the Providence police. The Rhode Island Supreme Court held that: (1) the victims’ pretrial photo identification procedure was not unduly suggestive; (2) jury instruction on victim’s identification testimony was sufficient; (3) now-deceased declarant’s statement to police officer was admissible under the excited utterance exception to hearsay rule; (4) jury instruction on flight was adequate; and (5) defendant was not entitled to a jury instruction on the use of force to retain property already peacefully taken because the trial court determined the property was not peacefully taken. Betsy Wall

46. 47. 48. 49.

Id. Id. at 849. Id. at 848. Id. at 848-49.

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Damages. McFarland v. Brier, 769 A.2d 605 (R.I. 2001). When analyzing a case under the Uniform Trade Secrets Act the specific intent of the legislature concerning the imposition of punitive damages and award of attorney’s fees overrides the ordinary common law standards. Further, a corporation can be held libel under the Trade Secrets Act when the conduct of its employees constitutes a piercing of the corporate veil. FACTS AND TRAVEL The plaintiff, Mr. McFarland, was the owner of Read & Lundy, Inc. (R&L), an industrial supply business.1 McFarland hired the defendant, Mr. Bibeau as a sales representative.2 In 1990 the two men agreed that McFarland would finance Bibeau’s purchase of R&L.3 In 1995 Bibeau fell behind in his payments to McFarland and a new agreement was reached. This new agreement contained a reciprocal non-compete provision and reacquired a $700,000 down payment to be made by August 31, 1995.4 When Bibeau failed to make the down payment, McFarland required the company.5 During Bibeau’s time as president of R&L, Michael Brier and his accounting company, Brier and Company were hired to assist Bibeau in the financing and buyout of McFarland’s interest in R&L.6 Brier and his firm had access to all of R&L’s financial records, customer lists, billing histories and supplier information.7 Upon Bibeau’s departure from R&L in 1995, he and Mr. Brier formed Consigned Systems, Inc. (CSI), as a direct competitor with R&L.8 Brier and Company was a major investor in this new enterprise. Brier and Bibeau used R&L’s records to contact and attempt to steal R&L’s clients and also made some efforts to disguise their blatant violation of the non-compete clause.9

1. 2. 3. 4. 5. 6. 7. 8. 9.

McFarland v. Brier, 769 A.2d 605, 607 (R.I. 2001). Id. Id. Id. at 607-08. Id. at 608. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 McFarland prevailed in a series of lawsuits against Bibeau, Brier and CSI. The United States District Court for the District of Rhode Island upheld the non-compete clause and found that Bibeau had violated the Trade Secrets Act.10 The Rhode Island Superior Court found that CSI had misappropriated trade secrets from R&L and that Brier was guilty of tortious interference with the contractual relationship between McFarland and Bibeau.11 ANALYSIS AND HOLDINGS McFarland raised four issues on appeal. First, that the trial judge erred in finding that R&L failed to mitigate its damages by not rasing its prices after CSI was restrained from encroaching on R&L’s customer base.12 The court agreed with McFarland, finding that R&L did in fact mitigate their damages by lowering their prices since “[u]nder the circumstances . . . in an act of self preservation, plaintiffs mitigated their damages by reducing the markup in the first instance rather than increasing it.”13 Second, it was argued that the trial court erred in its determination that Brier and Company, as a corporate defendant, was not liable for damages under the Uniform Trade Secrets Act.14 In agreeing with McFarland, the supreme court found that while normally a corporation cannot be held libel for damages under the Trade Secrets Act, when, as in this case, “‘there is such a unity of interest and ownership’ that separate personalities of the individual and the corporation no longer exist in reality, ‘adherence to the principle of their separate existence would, under the circumstances, result in injustice.’”15 Under the facts in this case, the court held that the conduct of Brier was so closely intertwined with the corporate defendant, Brier and Company, as to be acting as alter egos and thus was held jointly and severely liable.16

10. 11. 12. 13. 14. (2001). 15. 1946)). 16.

Id. at 608-09. Id. at 609. Id. Id. at 610. Id. at 609; see Uniform Trade Secrets Act, R.I. Gen. Laws §6-41-1 et. seq. Id. at 613 (quoting Muirhead v. Fairlawn Enter., Inc., 48 A.2d 414, 419 (R.I. Id. at 614.

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McFarland’s third and fourth issues on appeal concerned the proper standard to be applied under the Uniform Trade Secrets Act for the imposition of punitive damages and attorney’s fees.17 McFarland argued that the court need only determine if a “willful and malicious” misappropriation of trade secrets occurred for punitive damages to be awarded rather than the customary common law standard of criminality that the superior court used.18 Again the supreme court agreed with McFarland. The supreme court acknowledged that normally punitive damages are restricted in Rhode Island, requiring evidence of criminality or conduct that should be punished.19 However, it is clear that when applying the Uniform Trade Secrets Act the legislature specifically established the lower standard of “willful and malicious misappropriation” when considering the imposition of punitive damages.20 Finding willful and malicious misappropriation in this case, the court awarded McFarland the statutory maximum of twice the compensatory award as punitive damages.21 Lastly, the court found that the award of attorney’s fees was specifically provided for in Rhode Island General Laws section 6-41-4.22 CONCLUSION The Uniform Trade Secrets Act provides that a “willful and malicious” standard will be applied when determining if the action of the defendant justifies the imposition of punitive damages in trade secret misappropriation cases. In passing the uniform act, the legislature has specifically overruled the common law standard that requires a finding of “criminality” on the part of the defendant before awarding punitive damages. The statute applies the same standard when determining an award of attorney’s fees. Further, a corporation can be held liable under the Trade Secrets Act when the actions of its employees have acted in such a way as to pierce the corporate veil.

17. 18. 19. 20. 21. 22.

Id. at 609. Id. Id. at 611. Id. at 612 (quoting R.I. Gen. Laws §6-41-3 (2001)). Id. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Christopher A. Anderson

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Evidence. Paolella v. Radiologic Leasing Associates, 769 A.2d 596 (R.I. 2001). The law-of-the-case doctrine does not apply if two motions for summary judgment do not present the same question in the identical manner to the motion justice. Also, the parolevidence rule provides that parol or extrinsic evidence is not admissible to vary, alter or contradict a written agreement. FACTS AND TRAVEL Plaintiff withdrew from a medical partnership with the defendants.1 At the same time, the plaintiff was terminated as shareholder in the medical practice of the partners. The plaintiff claimed that the termination was for cause under Article 20 of the partnership agreement (the agreement).2 As a result, the plaintiff argued that he was entitled to his share of the appraised value of the partnership pursuant to Article 22 of the agreement.3 The plaintiff subsequently filed a motion for summary judgment arguing that pursuant to Article 19 of the agreement, he was required to offer for sale his share of the partnership to the remaining partners and they were required to appraise the value of the shares and to purchase them.4 The motion was denied.5 Seven months later after additional discovery, the plaintiff filed a second motion for summary judgment pursuant to Articles 20 and 22 of the agreement.6 Using new evidence, the plaintiff showed that he had been terminated under the terms of Article 20 and therefore, the defendants were required to appraise the value of the partnership and to pay him his fair share as required by Article 22 of the agreement.7 Plaintiff argued that the second motion differed from the first in that the first motion was using Article 19, which dealt with the voluntary sale of his shares to the partners, and the second motion was based on Articles 20 and 22 which dealt with the required purchase of his shares following his

1. 2. 3. 4. 5. 6. 7.

Paolella v. Radiologic Leasing Associates, 769 A.2d 596, 598 (R.I. 2001). Id. Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 termination.8 The same motion justice who had denied the first motion granted the second motion for summary judgment.9 Additionally, the trial court barred the introduction of parol evidence offered by the defendants to show that there was an oral understanding among the partners that shares of the partnership’s appraised value would not be received by a terminated partner.10 By granting summary judgment, the trial court provided for judgment on the issue of liability, and defendants appealed.11 ANALYSIS AND HOLDING On appeal, the defendants argued that the law-of-the-case doctrine prevented the motion justice from granting the plaintiffs second motion for summary judgment.12 They asserted that the second motion was essentially the same as the first and that the motion justice was bound by the ruling of the first motion.13 They also argued that the motion justice erred by not allowing affidavits regarding the partners’ oral understanding of the agreement.14 They argued that the affidavits would aid in the interpretation of the agreement.15 The Rhode Island Supreme Court found that the law-of-thecase doctrine did not apply because the two motions for summary judgment did not present the same question in the identical manner to the motion justice.16 The court pointed out that the second motion for summary judgment relied upon a different provision of the agreement and used newly discovered evidence.17 The court also ruled that, while evidence can be used to aid in the interpretive process to assist in determining its meaning,18

8. Id. 9. Id. 10. Id. 11. Id. 12. Id. 13. Id. at 598-99. 14. Id. at 599. 15. Id. 16. Id. (noting that the law of the case doctrine should also not be used to perpetuate a clearly erroneous earlier ruling even if it otherwise might apply (citing In re Estate of Speight, 739 A.2d 229, 231 (R.I. 1999))). 17. Id. 18. Id. (citing W.P. Associates v. Forcier, Inc., 637 A.2d 353, 356 (R.I. 1994)).

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parol or extrinsic evidence is not admissible to contradict a written agreement.19 The court stated that the evidence offered by the defendants did not aid in determining the intent of the parties, but instead directly contradicted the written agreement.20 Therefore, the court ruled that based on the clear language of the agreement the motion justice correctly ruled in the plaintiff’s favor holding the defendants liable to the plaintiff for the value of his share of the partnership.21 The court denied the defendant’s appeal and affirmed the grant of summary judgment.22 CONCLUSION The law-of-the-case doctrine does not apply when two summary judgment motions, brought before the same judge months apart, presented different questions. The parol-evidence rule barred the use of the alleged partners’ oral understanding that directly contradicted the plain language of the written agreement. Joe H. Lawson II

19. 1954)). 20. 21. 22.

Id. (citing Supreme Woodworking Co. v. Zuckerberg, 107 A.2d 287, 290 (R.I. Id. at 600. Id. Id.

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Evidence. Raimbeault et al. v. Takeuchi Mfg. (U.S.), Ltd. et al., 772 A.2d 1056 (R.I. 2001). Reaffirming Daubert v. Merrell Dow Pharmaceuticals, Inc.,1 the supreme court held that the proposed expert witness lacked the requisite knowledge and skill, and that his testimony was irrelevant; thus, the plaintiff failed to establish a negligent design claim. Also, even though the manufacturer had a duty to warn of dangers, the plaintiff assumed the risk when he used the equipment. FACTS AND TRAVEL The plaintiff, Ronald Raimbeault (Raimbeault), owned a company that rented construction equipment.2 On January 14, 1991, Raimbeault demonstrated a track-driven Takeuchi compact excavator, Model TB 800, to a customer.3 Raimbeault got into the cab of the excavator, which could rotate 360 degrees—independent of the excavator’s track-drive system.4 Raimbeault backed the excavator to the edge of an embankment and rotated the cab several times.5 When the demonstration had concluded, the cab of the excavator was facing the backhoe looking out over the embankment. While the cab was in this position, Raimbeault pulled back on the levers that controlled the movement of the excavator, which caused the excavator to move towards the embankment.6 The excavator became unstable, so Raimbeault jumped out of the excavator to the bottom of the embankment.7 The excavator then fell down the embankment, landing on Raimbeault’s foot.8 Raimbeault, together with his wife and son (collectively “plaintiffs”), filed a products liability and negligence action against Takeuchi Manufacturing (U.S.), Ltd., et al.9 At trial,

1. 2. 3. 4. 5. 6. 7. 8. 9.

509 U.S. 579 (1993). Raimbeault v. Takeushi Mfg., 772 A.2d 1056, 1058 (R.I. 2001). Id. Id. Id. at 1059. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Raimbeault testified as to the events and admitted that he had told an investigator that “the accident was caused solely by my losing control of [the excavator] due to the icy conditions.”10 Marc Richman (Richman) testified as the plaintiffs’ expert witness.11 Richman was a retired professor from Brown University, where he had taught courses dealing with warnings on the operation of equipment.12 Richman held a doctor of science from MIT, where he had been an instructor in the metallurgy department.13 Richman testified that he had experience with track-driven machinery when he was in the army.14 Richman testified that he had driven the TB 800 in 1998 and stated that the TB 800’s warnings and instructions were inadequate and that the design of the TB 800 was flawed because it did not take into account memory lapses.15 The trial judge, however, decided to exclude Richman’s testimony. Moreover, the trial judge found that Raimbeault’s negligence in operating the excavator was the proximate cause of his injuries.16 The defendants then moved for a judgment as a matter of law, which the trial judged granted.17 The plaintiffs appealed the final judgment arguing that the trial judge erred both by excluding Richman’s testimony and by granting the defendants’ motion.18 ANALYSIS AND HOLDING The court first tackled the issue of the exclusion of the proposed expert’s testimony. Under Rule 702 of the Federal Rules of Evidence19 and as interpreted by the United States Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., trial

10. Id. 11. Id. 12. Id. 13. Id. 14. Id. 15. Id. at 1060. 16. Id. 17. Id. 18. Id. 19. “If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.” Fed. R. Evid. 702.

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justices are to act as “gatekeepers,” ensuring that proposed experts are qualified and that all scientific testimony is both relevant and reliable.20 Daubert is applicable in Rhode Island state courts in conjunction with Rhode Island Rule of Evidence 702.21 The court stated that scientific material may only be admitted if it is “relevant, appropriate, and of assistance to the jury.”22 The expert testimony must reflect scientific knowledge that is testable by scientific experimentation and it must materially advance some aspect of the plaintiff’s case.23 The court “will not disturb a trial justice’s ruling on the admissibility of expert testimony absent an abuse of discretion.”24 Here, the court found no such abuse of discretion.25 Regarding Richman’s “knowledge, skill, experience, training, or education,” the court stated that he had no experience with trackdriven machinery, no experience designing cabs for track-driven machinery, and only limited experience with warnings and instructions in general.26 The court also stated that Richman had never designed a warning for a commercially marketed product, nor had he any training in the area of human factors.27 Furthermore, the court stated that Richman’s testimony was not “relevant, appropriate, [or] of assistance to the jury.”28 Richman failed to elucidate any specific scientific reasons that supported his finding that the excavator was unreasonably dangerous, but rather testified in a conclusory manner as to those findings. 29 Thus, the court found that the trial judge did not

20. Raimbeault, 772 A.2d at 1061. 21. Id. (citing DiPetrillo v. Dow Chemical Co., 729 A.2d 677 (R.I. 1999)). R.I. R. Evid. 702 reads: Testimony by experts—If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of fact or opinion. R.I. R. Evid. 702. 22. Raimbeault, 772 A.2d at 1061 (quoting DiPetrillo, 729 A.2d at 686). 23. Id. 24. Id. at 1061 (quoting Gallucci v. Humbyrd, 709 A.2d 1069 (R.I. 1998)). 25. Id. 26. Id. 27. Id. 28. Id. (quoting DiPetrillo, 729 A.2d at 686). 29. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 abuse his discretion. Regarding the issue of the judgment as a matter of law, the court stated that it must consider the evidence in the light most favorable to the nonmoving party.30 The court may not weigh the evidence or evaluate the credibility of witnesses, but the court must consider all reasonable inferences supporting nonmoving party.31 If reasonable persons could reach different conclusions about factual issues then the motion must be denied.32 The court stated that in reviewing the trial justice’s decision, the court must abide by the same rules and standards as the trial justice.33 In order to succeed in a products liability action the plaintiff must prove that there was a defect in design or construction; that the defect existed when left possession of defendant; that the defect caused the product to be unreasonably dangerous (strong likelihood that one unaware of danger would get injured by normally using product); that the product was used as intended at time of accident; and, that the product was the proximate cause of the accident and injuries.34 Here, the court noted that Raimbeault’s testimony seems to suggest that the excavator was not in the same condition as it was when it left the defendants’ hands; it had been rented and had scrapes and dents.35 The court stated that the plaintiffs failed to produce any evidence indicating that the absence of warnings in the cab was the proximate cause of the accident/injuries.36 Furthermore, Raimbeault told an investigator that he was responsible for the accident.37 Regarding the plaintiffs’ negligent design claims, the fact that Richman’s testimony was properly excluded meant that the plaintiffs had not put forth any evidence that showed that the defendants had not met there standard of care—that the defendants had reason to know of a defective design or failed to 30. Id. (citing DeChristofaro v. Machala, 685 A.2d 258, 262 (R.I. 1996)). 31. Id. (citing DeChristofaro, 685 A.2d at 262). 32. Id. (citing DeChristofaro, 685 A.2d at 262). 33. Id. at 1063 (citing Hoffman v. McLaughlin Corp., 675 A.2d 404, 405 (R.I. 1996)). 34. Id. (citing Crawford v. Cooper/T.Smith Stevedoring Co., 14 F. Supp. 2d 202, 211 (D.R.I. 1998)). 35. Id. 36. Id. 37. Id.

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adequately test the product.38 The court stated that under strict liability the seller must warn buyer only of reasonably foreseeable dangers.39 Here, the court found that using the excavator on hills or near embankments was foreseeable, as was the fact that one might get disoriented in the rotating cab.40 However, Raimbeault assumed the risk. Raimbeault testified that he was aware that the levers were oriented towards the dozer blade; that he had given demonstrations with the excavator previously; and, that he knew he was on the edge of an embankment.41 Thus, the trial justice did not err in granting the motion. CONCLUSION The supreme court held that the proposed expert witness lacked the requisite knowledge and skill, and that his testimony was irrelevant; thus, the plaintiff failed to establish a negligent design claim. Also, even though the manufacturer had a duty to warn of dangers, the plaintiff assumed the risk when he used the equipment. Stan Pupecki

38. 39. 40. 41.

Id. (citing Thomas v. Amway Corp., 488 A.2d 716, 721 (R.I. 1985)). Id. (citing Thomas, 488 A.2d at 722). Id. Id.

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Evidence. State v. Barrett, 768 A.2d 929 (R.I. 2001). The Rhode Island Supreme Court held that the determination of a defendant’s alleged insanity or diminished capacity is a legal rather than a medical question that is left to the fact-finder or jury. The jury, in determining a defendant’s responsibility, is to consider volitional as well as cognitive impairments. The court also held that a lay witness may not offer an opinion on mental state, but may describe observed facts and descriptions of events upon which the witness has proffered his opinion and allow the jury to draw its conclusion from the recitation of those observations. FACTS AND TRAVEL On July 14, 1995, David Barrett, the defendant, (Barrett or defendant) had an altercation at a service station with the clerk, Michael Glynn, ending with Barrett’s threat to kill Glynn.1 On July 17, Barrett and two friends, decided to drive to the station where Glynn worked so Barrett could check out Glynn because he was “pissed off” at him.2 Barrett and his friends, upon arriving at the station, parked at a gas pump facing the inside of the station with his high-beaming lights shinning in at Glynn.3 Glynn came outside and apologized to Barrett for the previous altercation and Barrett told him to get away from his car.4 Barrett and his friends remained outside.5 Shortly thereafter, Joseph Silvia, while visiting Glynn at the station, learned of Barrett’s behavoir and subsequently drove his van along side of Barrett’s car.6 Silvia threatened to kill Barrett if he continued to bother Glynn, he and Barrett engaged in a heated verbal exchange and Barrett drew his gun.7 Barrett pointed his gun at Silvia and began to chase him around the station parking lot telling him at least thirty times to leave or he will shoot him.8 1. 2. 3. 4. 5. 6. 7. 8.

State v. Barrett, 768 A.2d 929, 932 (R.I. 2001). Id. Id. Id. at 932-33. Id. at 933. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Silvia then drove in front of Barrett’s car, put his van in reverse, and crashed into the front of Barrett’s car.9 Barrett then walked up to the van and shot Silvia point blank in the cheek through his open driver’s side window.10 Barrett then fired a second shot into Silvia, backed away from the van to see if there were any witnesses, and returned to the van to shoot Silvia a third time.11 Barrett then went to the front window of the station, emptied the remaining bullets from his gun, and placed the gun and bullets on the windowsill.12 He told one of his friends to go inside the station and call the police and Barrett returned to his car.13 Barrett then placed his gun on the dash of his car so it would be in plain view of the police so they would not shoot him when they arrived.14 He also removed his outer shirt so the police would not think that he was carrying a concealed weapon.15 He then took a bag of marijuana from his shirt pocket and told his friend to get rid of it because he was afraid the police would think that the marijuana use played a role.16 The police came shortly thereafter and took Barrett to the station, at which point he gave a detailed written statement regarding the shooting.17 At trial, a total of four medical experts testified to Barrett’s mental state; two expert opinions supported the defense’s theory while only one supported the state’s position.18 In addition to the medical experts, the defense offered three lay witnesses , Barrett’s father and two friends not involved in the incident, to testify about their personal opinions regarding Barrett’s mental condition.19 The trial justice refused to allow their opinion testimony as to Barrett’s mental condition.20 Barrett was convicted of second-degree murder.21 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Id. Id. Id. at 933-34. Id. at 934. Id. Id. Id. Id. Id. Id. at 937-38 Id. at 938-39. Id. Id. at 934.

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Barrett appealed his conviction contending that at the time of the shooting “he was of such diminished mental capacity as to be incapable of having formed the required intent and premeditation necessary for conviction of murder.”22 Barrett also contended that the trial court erred in barring testimony from his lay witnesses regarding his mental state.23 ANALYSIS AND HOLDING Diminished Capacity The Rhode Island Supreme Court held that Barrett’s claim that the trial jury erred in not accepting the defense’s expert medical opinions was without merit.24 In State v. Johnson,25 the court adopted the Model Penal Code standard for determining one’s ability to form the intent required to make one criminally culpable.26 The court found merit in the Model Penal Code test because it recognizes that the issue of determining a defendant’s mental capacity or insanity is an issue that is left to the jury.27 The test also recognizes that the issue is a legal question and not a medical question and the jury is permitted “to consider volitional as well as cognitive impairments in determining a defendant’s responsibility.”28 The court noted that “the Model Code permitted ‘a reasonable three-way dialogue between the law trained judges and lawyers, the medical trained experts and the jury.’ [And] [i]n Barrett’s trial in the Superior Court, that three-way dialogue was played out.”29 The court held that the trial jury had before it the various expert opinions presented by each side and the mere fact that two of the opinions supported Barrett’s defense of diminished capacity and only one expert opinion supported the state’s position is not “in itself dispositive of the issue of Barrett’s mental condition at the time of the shooting.”30 The court pointed out that the jurors 22. 23. 24. 25. 26. 27. 28. 29. 30.

Id. Id. Id. at 938. 399 A.2d 469 (R.I. 1979). Barrett, 768 A.2d at 934-35 (citing Johnson, 399 A.2d. at 476). Id. at 935. Id. Id. (quoting Johnson, 399 A.2d at 476). Id. at 937-38.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 are reminded that their evaluation of expert testimony should not depend on the number of experts that testify for one position or the other, but rather the quality of the testimony concerning that fact issue.31 The court went on to point out that it was obvious that the jurors chose to accept the testimony offered by one medical expert and to reject the testimony offer by two others.32 The court wrote, “that was the trial jury’s choice to make.”33 While the court recognized that there was evidence of Barrett’s mental illness, that evidence alone did not require the jury to conclude that Barrett did not have the mental capacity to conform his conduct to the requirements of the law.34 The court found “more than sufficient evidence” in the trial record to support the jury’s finding Barrett was not legally insane at the time he shot Silvia.35 Lay Witness Opinion The Rhode Island Supreme Court ruled that there were no “transgressions on the part of the trial justice in his rulings precluding the defendant’s attempt to elicit expert opinions from lay witnesses who were clearly not qualified to proffer those opinions.”36 Barrett contended that the trial justice erred by not allowing his lay witnesses to testify on his behalf regarding their opinions on the state of Barrett’s mental health.37 He claimed that state courts have traditionally allowed lay witnesses to testify regarding their opinion of a person’s mental health.38 The court found that the lay opinions of Barrett’s father and two friends who were not present at the time of the incident would not be rationally based upon their opinions of Barrett on the day of the shooting since they had not seen him that day.39 Barrett also asserted that the trial court erred by sustaining the prosecutor’s objections to questions posed during cross-

31. 32. 33. 34. 35. 36. 37. 38. 39.

Id. at 938. Id. Id. Id. Id. Id. at 943-44. Id. at 938-39. Id. at 939. Id. at 940.

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examination by his defense counsel seeking to elicit lay opinions from two prosecution witnesses.40 Evidence by lay witnesses regarding a defendant’s nonconforming or bizarre behavior is allowed when it is asserted that the defendant’s alleged diminished capacity prevented the formation of his intent to commit murder in the first or second degree.41 However, the court has interpreted that rule as permitting an opinion on a matter as it was observed by the witness, but generally, only when the witness is not able to describe the event or events as they appeared when the events took place.42 Where the lay witness is able to describe to the jury the events that took place from which the lay witness’s opinion was formed, the court has “generally precluded the lay opinion.”43 The court concluded that there is less justification to allow testimony from a lay witness regarding another sanity or diminished capacity at a time when that person was not being observed by the lay witness.44 The court pointed out that such lay witness opinions could “invade the fact-finding province of the jury and serve only to inject confusion into their deliberations.”45 The court wrote that the jury was as capable as the lay witnesses to draw their own opinions from the witnesses’ descriptions of Barrett’s behavior.46 The court ruled that there was no error or abuse of discretion on the part of the trial court in precluding defense counsel from eliciting lay opinions from the witnesses.47 CONCLUSION In State v. Barrett, the Rhode Island Supreme Court held that a jury’s decision to reject the two medical opinions in support of the defense’s theory and accept one medical opinion in support of the state’s position is entirely within the jury’s power so long as 40. Id. 41. Id. at 940. 42. Id. 43. Id. 44. Id. at 941. 45. Id. (pointing out that while Federal Rule 704(b) precludes both lay and expert witness opinion on a defendant’s mental condition, Rhode Island Rule 704 does not preclude all such opinions. Their admission is usually left to the discretion of the trial judge). 46. Id. 47. Id.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 there is evidence to support that finding. Furthermore, the court found that a lay witness my not offer an opinion on mental state, but may describe observed facts and descriptions of events upon which the witness has proffered his opinion and allow the draw its conclusion from the recitation of those observations. Joe H. Lawson II

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Evidence. State v. Dorsey, 783 A.2d 947 (R.I. 2001). Evidence to impeach a complaining witness needs to be probative, relevant and cannot be remote in time. FACTS AND TRAVEL This is an appeal from a criminal conviction for rape.1 The defendant wanted to use three separate facts about the complainant’s past to impeach her during cross-exam.2 These included: the paternity of the complainant’s oldest child, the complainant’s claim that she was raped when she was a teenager and her mental health history.3 The defendant claimed that the trial court’s refusal to allow such information constituted a violation of his Sixth Amendment rights, or in the alternative an abuse of the courts’ discretion.4 The complainant’s first child resulted from a relationship that happened before she and the defendant started dating.5 The complainant filed three paternity suits.6 She dropped two of these suits because blood tests have proven that it was impossible for two of the three men to be the biological father of the child.7 The third suit was still pending at the time of this criminal trial.8 The next fact that the defendant wanted to use occurred while the complainant was a teenager.9 When the complaining witness was fifteen years old, she alleged that a fourteen-year-old paperboy had raped her when she was seven years old.10 She did not tell the doctor, whom she told of the incident, the name of the paperboy.11 Her mother, upon hearing this, called the complaining witness a liar.12 The last set of facts that the defendant wanted to impeach the 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

State v. Dorsey, 783 A.2d 947, 949 (R.I. 2001). Id. Id. Id. Id. Id. Id. Id. Id. at 949-50. Id. at 950. Id. at 953. Id. at 950.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 complaining witness with was her mental health history.13 The complaining witness was hospitalized for several weeks when she was fifteen years old due to a suicide attempt.14 Also, when the complaining witness was twenty-one years old, she was treated for depression.15 The defendant was married to the complaining witness in 1994; they separated in 1996 and divorced in 1997.16 The alleged rape occurred after the separation but before the divorce.17 The state filed, and was granted, a motion in limine to exclude each of these pieces of evidence.18 Defendant appealed stating that the trial court granted each of these motions in error.19 He argues that the facts should have been allowed in order to allow the jury to determine the credibility of the witness.20 The constitutional issue in the case is whether the exclusion of the evidence violated the defendant’s right to cross-examine the witness.21 If this constitutional right was not violated, the next issue is whether the trial justice abused his discretion by excluding the evidence.22 BACKGROUND The Sixth Amendment to the United States Constitution is made applicable to the states through the Fourteenth Amendment.23 The Rhode Island Constitution in Article 1, Section 10, has the same guarantees.24 These provisions guarantee an individual accused of a crime the right to confront and cross-examine all adverse witnesses.25 This right is not completely unlimited, if the defendant is allowed to cross-

13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Id. Id. Id. Id. Id. Id. Id. Id. Id. at 951. Id. Id. at 950. Id. Id.

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examination the witness to test his or her credibility, the trial justice has discretion to limit the cross-examination in light of concerns for relevance, evidentiary and trial management.26 The standard used to determine the appropriateness of the exclusion is the clear abuse of discretion standard.27 If there is clear abuse, the harmless error rule will apply, meaning that if the error is harmless beyond a reasonable doubt, the trial justice will not be overturned.28 ANALYSIS AND HOLDING The court first looked at the Constitutional issue. It held that the exclusion of the evidence was not violative of defendant’s rights to cross-examination because the defendant was allowed to cross-examine the witness with respect to the present charges, as well as the events leading up to these charges.29 The court went on to say that evidence of the witness’s credibility is also protected by the Constitution.30 The evidence submitted to test the credibility must be related to the current charges against the defendant.31 Allegations of similar charges, even if later proven false, would be related to the current charges.32 The court determined the paternity test charges were irrelevant because the charges were substantially different from the current rape charges.33 The allegation of rape by the paperboy was so remote in time, so different in events, and potentially misleading to the jury, as to be prejudicial to the complaining witness.34 The defendant’s constitutional rights could not be infringed by exclusion of these pieces of evidence.35 The court next looked to determine if the trial justice abused his discretion by limiting the cross-examination.36 To determine if there was abuse, the court first looked at the earlier paternity 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36.

Id. Id. at 951. Id. Id. Id. Id. Id. Id. Id. Id. Id. at 952.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 suits.37 In concluding that these cases were irrelevant the court determined the similarity of the charges, if there was a history of intentionally false accusations, and if there were a pattern of falsely charging sexual assault or rape.38 As the paternity suits did not contain allegations of non-consensual sexual conduct, they could be excluded as irrelevant.39 The court held that the defendant had no right to impeach the witness through specific examples of bad character or bad acts.40 The court next reviewed the allegation that the fourteen-yearold paperboy raped the witness when she was seven.41 The court held that the trial justice did not err in excluding this evidence.42 The factors that led to this conclusion included: the remoteness in time, the difference in events surrounding the allegations, the difference in age of the complaining witness (i.e. tender age versus being an adult), and the possibility of consent as a defense in adulthood that would not have been available to the child molestation charge.43 The law applicable to such a determination is that the evidence rules are set up to allow victims to come forward without fear that their entire sexual history would be needlessly exposed to all in the courtroom.44 However, if the defense makes an offer of proof and the evidence is relevant, the trial justice must weigh the probative value against the prejudicial effect of the testimony.45 If the probative value outweighs the prejudicial, the evidence should be admitted; if the prejudicial outweighs the probative, then the evidence should be excluded.46 Lastly, the court analyzed the specific incidents of the The first incident complaining witness’s mental health.47 occurred when the complaining witness was fifteen, the second

37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47.

Id. Id. Id. Id. Id. at 953. Id. Id. Id. at 954. Id. Id. at 955. Id.

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occurred when she was twenty-one.48 The court held that in order for mental health to be relevant it must indicate the mental health of the complaining witness at the time of the alleged rape, or at the time of the testimony of the witness.49 Since neither of these applies, the court held that the trial justice did not err in excluding the evidence.50 CONCLUSION In a criminal suit that alleged rape, the defendant has a right to cross-examine any adverse witnesses. The right extends to the ability to impeach the complaining witness’s testimony. The evidence offered to impeach must be relevant, probative, and based on similar events or indicative of the mental health of the complaining witness at the time of the alleged crime, or at the time of the testimony of the complaining witness. Marjorie A. Connelly

48. 49. 50.

Id. Id. at 955-56. Id. at 956.

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Evidence. State v. Medina, 767 A.2d 655 (R.I. 2001). The Rhode Island Supreme Court sustained an appeal by the state, holding that although both the United States Constitution and the Rhode Island Constitution affords a criminal defendant the right to confront witnesses offered against him, hearsay evidence that falls within a well recognized exception can be used in lieu of a witness’s actual appearance without violating the defendant’s right to confrontation. The court also held that the trial justice erred in holding the complaining witness unavailable merely because she refused to testify. FACTS AND TRAVEL On May 25, 1998, Officer Scott Salois (Officer Salois) responded to a domestic dispute at 312 Middle Street in Pawtucket involving Alice Bigelow (Bigelow) and David Medina (Medina or Defendant).1 According to a Domestic Violence/Sexual Assault Reporting Form, Medina had had assaulted Bigelow several times over the previous four to five months.2 Based on Officer Salois’ statements, Bigelow met him at the door yelling and crying, stating that after pouring out the defendant’s beer, Medina threw the beer bottle at her, striking her in the back.3 Bigelow further told the officer that Medina threw her against the wall, causing her to strike the back of her head against the kitchen wall.4 Bigelow then told Officer Salois that subsequent to her hitting her head, she picked up a bat and swung at Medina.5 As a result of Bigelow’s statements, the defendant was charged with two felony counts; count one alleging that the defendant assaulted Bigelow after having been previously convicted of domestic assault and count two alleging that the defendant had assaulted Bigelow with a dangerous weapon.6 At the start of the trial, the trial justice conducted a personal voir dire of Bigelow at which time she informed the judge that she did not wish to testify and also recanted several of the statements 1. 2. 3. 4. 5. 6.

State v. Medina, 767 A.2d 655, 656 (R.I. 2001). Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 she had previously made to Officer Salois.7 Bigelow told the judge that though the defendant had thrown the beer bottle at her, it did not hit her as she stated earlier.8 She also told the judge that she assaulted Medina as well, and that she only called 911 to get the defendant in trouble, not because she feared him.9 After the examination of Bigelow, the trial justice granted defendant’s oral motion to dismiss.10 ANALYSIS AND HOLDING On appeal, the state argues that the trial justice erred in not ordering Bigelow to testify on pain of contempt for purposes of determining her unavailability.11 Rule 804 of the Rhode Island Rules of Evidence provides in part that an unavailable witness includes a witness who persists in refusing to testify despite an order of the court to do so.12 The supreme court stated that it is essential for a trial justice to apply all appropriate judicial pressures and exhaust the remedies available to compel a witness to testify in order to avoid the necessity of relying on out-of-court statements.13Accordingly, the supreme court held that the trial justice should have ordered to witness to testify for purposes of determining her unavailability.14 The State also contested the trial justice’s dismissal of Bigelow’s statements on the basis that the defendant would not have the opportunity to confront the witness presented against him.15 The supreme court stated that although the Sixth Amendment to the United States Constitution and article 1, section 10, of the Rhode Island Constitution affords a criminal defendant the right to confront the witness offered against him, hearsay evidence that falls within a well recognized exception can replace a witness’s actual appearance without violating the defendant’s Sixth Amendment right.16 The court noted that it had 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Id. Id. Id. Id. Id. Id. at 657. Id. (citing United States v. Oliver, 626 F.2d 254, 261 (2d Cir. 1980)). Id. Id. Id. (citing State v. Scholl, 661 A.2d 55, 58 (R.I. 1995)).

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rejected the Sixth Amendment claim of a defendant in a case factually similar to the instant case, holding that admissions of the wife’s excited utterances pursuant to Rule 803(2) did not violate the defendant’s right of confrontation under either the state or federal constitution.17 In the instant case, the court acknowledged that “any decision made by a trial justice concerning the admission of excited utterances shall not be overturned unless clearly wrong.”18 The court concluded that the trial justice erred in not determining whether Bigelow’s statements to Officer Salois constituted an excited utterance and whether they were sufficiently reliable and trustworthy to be admitted pursuant to Rule 803.19 CONCLUSION The Rhode Island Supreme Court sustained the state’s appeal, holding that a complaining witness who refuses to testify cannot be deemed unavailable unless the witness maintains her refusal after she has been ordered to testify by the trial justice. In addition, the court held that the trial justice erred in not making a determination as to whether the statements made by Bigelow to Officer Salois constituted an excited utterance. Michelle M. Alves

17. 18. 19.

Id. at 658. Id. (quoting State v. Perry, 574 A.2d 149, 151 (R.I. 1990)). See id. at 658-59.

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Evidence. State v. Pacheco, 763 A.2d 971 (R.I. 2001). The Rhode Island Supreme Court held that the defendant’s constitutional right to cross-examination was not offended by the admission of hearsay under Rule 804 since there were indicia of reliability despite the lack of confrontation. The supreme court also affirmed the sentence of life imprisonment without the possibility of parole because the evidence was sufficient to show that the victim suffered torture and aggravated battery. FACTS AND TRAVEL On November 18, 1995, the body of Jenny-Lee M. Bailey (Bailey or victim) was found on the shore of Gorton’s Pond in Warwick.1 John R. Pacheco, Jr. (Pacheco or defendant) had hired Jonathan Tretton (Tretton) to murder the victim.2 The defendant, Tretton, friend Christopher King (King) and the prosecution’s prime witness, Tretton’s girlfriend Tanya Casala (Casala) all resided together in West Warwick.3 Casala testified that on the evening before the victim’s body was found, the defendant had arrived at the house and asked whether Tretton was ready.4 She also testified that she watched for several minutes as the defendant sharpened a knife, and that the defendant told her that a window weight he was holding was “to bonk people over their heads.”5 Casala further testified that the defendant asked King for the victim’s phone number, which he called twice, once to instruct her to meet him where he fished, and the other to tell her not to tell anyone about their meeting.6 In addition, Casala testified that Tretton had told her that he had been hired to kill someone in return for $1,000, a car, and employment, but that he “intended only to ‘beat the person up.’”7 She also testified that she heard the defendant state that he would drop Tretton off at Gorton’s Pond while he visited his girlfriend. Moreover, she testified that the defendant and Tretton returned to their home 1. 2. 3. 4. 5. 6. 7.

State v. Pacheco, 763 A.2d 971, 974 (R.I. 2001). Id. Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 approximately an hour later, at which point she noticed that Tretton was now wearing the pink jogging pants that he had been carrying when he left the house, and heard the defendant ask King whether he had seen the blood on Tretton’s hands.8 She testified that she was very upset by the events and that after communicating those concerns to the defendant and Tretton, the defendant told her not to view Tretton as a murderer, that he was just doing a favor for a friend.9 She also testified regarding the conversation she had with Tretton that night detailing the murder.10 The defendant filed a motion to be tried separately from Tretton, which was granted.11 A jury found the defendant guilty of first-degree murder and was sentenced to life imprisonment without the possibility of parole.12 ANALYSIS AND HOLDING On appeal, the defendant argued that the trial justice erred in allowing Casala to testify about statements made by Tretton; specifically, that Tretton’s statements regarding what the defendant and Tretton had discussed before the murder and Casala’s testimony as to what Tretton said following the murder, were not against his penal interest and therefore should not have been admitted under Rule 804(b)(3) of the Rhode Island Rules of Evidence.13 In addition, the defendant also challenged Tretton’s statements to Casala after the conspiracy had ended on the basis that he was denied his right to cross-examination guaranteed by the Confrontation Clause of the United States Constitution and article 1, section 10, of the Rhode Island Constitution.14 The Rhode Island Supreme Court stated that this issue was not raised at trial and thus could not be raised on appeal for the first time.15 Nonetheless, the supreme court did comment on the issue, stating that Tretton’s statements made in Casala’s presence were clearly

8. 9. 10. 11. 12. 13. 14. 15.

Id. at 975. Id. Id. Id. Id. at 974. Id. at 976. Id. at 977. Id. (citing State v. Bettencourt, 723 A.2d 1101, 1107 (R.I. 1999)).

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against his own interest, and that although statements made by Tretton to Casala before the murder did not clearly inculpate the defendant when viewed individually, the defendant’s own statements and actions that evening provided more than sufficient evidence to support his conviction.16 The defendant also disputed the admission of testimony regarding a phone call received by Tretton.17 Pacheco argued that Casala’s testimony regarding the phone call violated his Sixth Amendment rights because Tretton had refused to testify at the defendant’s trial.18 The supreme court held that the trial justice, in considering the motion for mistrial, appropriately admitted the statement, concluding that “the reference to ‘Chico’ was not sufficiently inflammatory to distract the jury from the overwhelming evidence that defendant was directing Tretton’s actions on that evening.”19 The defendant also contested the trial justice’s instructions to the jury on statements made in furtherance of the conspiracy.20 The defendant did not object to these instructions at trial and, accordingly, cannot be argued for the first time on appeal.21 However, the supreme court did comment that if a timely objection had been made, it would have concluded that the trial justice did appropriately instruct the jury on the law of conspiracy.22 Also on this appeal, the defendant argued that the doctrine of collateral estoppel precluded the state from seeking a term of life imprisonment without the possibility of parole once the jury in the Tretton (defendant’s coconspirator’s) case had not made a finding of aggravating circumstances. On this issue, the court held that the defendant’s theory of collateral estoppel could not satisfy the requirement of identity of the parties, finding that Tretton and the defendant were distinct and separate parties with interests in opposition to each other.23 The court also found that the state had

16. 17. 18. 19. 20. 21. 22. 23.

Id. at 976-77. Id. at 979. Id. Id. Id. Id. (citing State v. Bertoldi, 495 A.2d 247, 250 (R.I. 1985)). Id. at 980. Id. at 980-81.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 met the required burden of proving to the jury beyond a reasonable doubt that aggravating circumstances were present and therefore the defendant suffered no prejudice as a result of the trial justice allowing the jury to find aggravating circumstances.24 The defendant also sought a reduction of his life-withoutparole sentence pursuant to Rhode Island law “which allows for a direct appeal in cases in which a life sentence without the possibility of parole has been imposed.”25 Although not objected to at trial, the defendant alleged that the trial justice erred in charging the jury on the aggravating factor of murder for hire.26 The defendant also argued that the jury erred in finding that aggravating factors existed because the record did not reveal any evidence that the purpose of the conspiracy was to torture or abuse the victim.27 In reviewing a sentence imposing life without the possibility of parole, the supreme court must exercise independent judgment and discretion in reviewing the appropriateness of the sentence.28 The court stated that once a jury has found at least one aggravating circumstance as required by state law, the trial justice may impose a sentence of life imprisonment without parole.29 The supreme court found that the record disclosed ample evidence of cruelty and brutality to support the jury’s finding of aggravated battery and torture and a sentence of life without parole.30 The Dissenting Opinion Chief Justice Weisberger dissented.31 He argued that the trial justice’s charge of aggravating circumstances to the jury was erroneous because the defendant did not participate in the acts of torture or aggravated battery because he was not at the scene of the crime.32 24. Id. at 981. 25. Id. (citing R.I. Gen. Laws § 12-19.2-5 (2001)). 26. Id. at 982 (citing R.I. Gen. Laws § 11-23-2 (2001)). 27. Id. at 981. 28. Id. (citing State v. Tassone, 749 A.2d 1112, 1119 (R.I. 2000)). 29. Id. (citing State v. Travis, 568 A.2d 316, 323 (R.I. 1990); R.I. Gen. Laws § 1123-2 (2001)). 30. Id. at 982-83. 31. Id. at 984. (Weisberger, C.J., dissenting). 32. Id.

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CONCLUSION The Rhode Island Supreme Court denied and dismissed the defendant’s appeal, finding no error with the trial justice’s admittance of hearsay statements or with his instructions to the jury. In addition, the court found that because there existed at least one aggravating circumstance, the trial justice did not err in imposing a sentence of life imprisonment without the possibility of parole. Michelle M. Alves

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Evidence. State v. Oliveira, 774 A.2d 893 (R.I. 2001). The Rhode Island Supreme Court held: (1) exclusion is not an excessive sanction for evidence that is entirely a surprise; (2) counsel for a co-defendant is prohibited from commenting on the failure of the accused to testify since the prejudice to the accused is the same regardless of the identity of the party making the comment; (3) non-experts may state their opinions in cases where those opinions are based on a number of indescribable facts; and (4) an out-of-court statement may be admitted into testimony as probative of guilt. FACTS AND TRAVEL Gahil Oliviera (Oliveira), Robert McKinney (McKinney), Jason Ferrell (Ferrell), and Pedro Sanders (Sanders) were charged with two conspiracies, the murder of John Carpenter, and assault and attempted murder of Lorenzo Evans (Evans).1 Four of the issues raised on appeal were particularly noteworthy. Ferrell stated during discovery that Debra Baptista (Baptista) would testify that she saw and spoke to him between 10:45 a.m. and 11:15 a.m. on the day of the shooting.2 During the trial, she also attempted to testify that Ferrell had returned to her house shortly after 11:15 a.m. and stayed until 11:35 a.m.3 The trial justice ruled the additional testimony a Rule 164 violation as the defendant had not given the required notice of the alibi testimony.5 Evans was charged with a separate murder and held in the Intake Center at the Adult Correctional Facility (ACI).6 A witness that was planning to testify against Evans was also housed at the ACI at that time.7 While at the ACI, the witness allegedly told Evans that if Evans did not testify in the Carpenter murder trial, the witness would not testify against Evans in his murder trial.8 1. 2. 3. 4. 5. 6. 7. 8.

State v. Oliveira, 774 A.2d 893, 901-02 (R.I. 2001). Id. at 907. Id. at 908. Super. Ct. R. Crim. P. Oliveira, 774 A.2d at 908. Id. at 917. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 The defense objected on hearsay grounds to the testimony of this conversation being admitted into the trial at issue.9 Campbell’s attorney stated during the trial that none of the defendants had testified as to whether they personally knew Carpenter.10 The trial justice instructed the jury to disregard the statement.11 Campbell’s attorney continued, stating that “[there was] no testimony that my client knew John Carpenter. No one has testified how they knew Lorenzo Evans.”12 Oliveira’s counsel requested a cautionary instruction and counsel for Ferrell and Sanders requested a motion to pass.13 The trial justice denied the motion to pass, stating that it was not made at the appropriate time.14 The trial justice reminded the jurors that no defendant may be compelled by the state to testify and that guilt or innocence may not be inferred, as it is the right of the defendant alone to choose to testify.15 Finally, the prosecution asked a defense lay witness to identify shoe prints made in the snow when Evans ran away from his attackers.16 At issue was whether Evans ran to a chain link fence (as he originally stated), or a wooden picket fence (as he later testified).17 The significant difference was that he would only have been able to see his pursuers from the top of the picket fence.18 The trial justice permitted the state, over the defendants’ objection, to ask a defense lay witness to identify the type of shoe that had made footprints in the snow leading to the chain link fence.19 The defendants were convicted of two conspiracies.20 Three of the defendants were also convicted of murder and assault.21 One defendant was convicted of assault and acquitted of murder.22 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Id. Id. at 911. Id. Id. Id. Id. Id. Id. at 915. Id. at 916. Id. at 901 n.3. Id. at 915. Id. at 903. Id. Id.

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The defendants appealed.23 ANALYSIS AND HOLDING The defendant Ferrell argued that the trial justice erred in precluding him from offering alibi testimony from Baptista for events after 11:15 a.m.24 Rule 16(c) requires that the defendant must give written notification to the State detailing with specificity the place that the defendant claims to have been.25 Baptista attempted to testify that she had seen Ferrell after 11:15 a.m. on the day of the shooting, though she had not provided that information to the State. The supreme court held that exclusion was not an excessive sanction for evidence that is entirely a surprise, when the defendant had not given any explanation for non-disclosure of additional alibi testimony.26 Next, the defendants argued on appeal that the trial justice erred by refusing to grant a mistrial after Campbell’s attorney stated in closing argument that there was no testimony that any of the defendants knew Carpenter.27 The Fifth Amendment prohibits adverse comments by the prosecution or the trial justice on the decision of an accused not to testify.28 The supreme court held that counsel for a co-defendant is prohibited from commenting on the failure of the accused to testify, noting that the prejudice to the accused is the same regardless of the fact that defense counsel made the comment.29 To rectify the error, an adequate cautionary instruction must be immediately delivered to the jury in an easily understandable manner that clearly informs the jury that the defendant has a constitutional right to choose not to testify in his own defense.30 The supreme court held that the three separate instructions given were adequate to ameliorate any possible damage that

23. Id. 24. Id. at 907. 25. Id. 26. Id. 27. Id. at 911. 28. Id. (citing State v. Gibbons, 418 A.2d 830, 835 (R.I. 1980) (citing Griffin v. California, 380 U.S. 609, 615 (1965))). 29. Id. at 911-12 (citing Gibbons, 418 A.2d at 835-36 (citing United States v. Kaplan, 576 F.2d 598, 600 (5th Cir. 1978), cert. denied, 439 U.S. 1078 (1979))). 30. Id. at 912 (citing State v. Sherman, 317 A.2d 445, 448 (1974)).

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 occurred.31 The defendants also argued on appeal that the trial justice erred when she permitted the state, over the defendants’ objection, to ask a defense lay witness to identify the type of shoe that had made footprints in the snow.32 Rule 701 of the Rhode Island Rules of Evidence governs lay witness testimony.33 Opinion testimony may be used when the subject matter of the testimony cannot be reproduced or described to the jury precisely as it appeared to the witness at the time.34 The court noted that non-experts may state their opinions in cases where those opinions are based on a number of indescribable facts.35 In the issue at hand, it would be extremely difficult to detail conclusively the entire pattern of observed details in the shoe print in the snow.36 Describing the prints as “probably made by sneakers” allows a summation of all the observed details into one comprehensible observation, and might be properly denoted as a statement of “composite fact.”37 Finally, the defendants argued on appeal that the trial justice erred by allowing Evans to testify about the out-of-court statement made to Evans in the ACI.38 The supreme court held that the statement at issue could not be admitted as an exception to the hearsay rule.39 Instead, the court held that the statement was not hearsay since it was not offered to prove that if Evans did not testify in the Carpenter case, the other inmate would not testify against Evans in his trial for murder.40 The supreme court found that the statement could be admitted because it was offered

31. 32. 33.

Id. Id. at 915. R.I. R. Evid. 701. The rule provides that: If the witness is not testifying as an expert, the witness’ testimony in the form of opinions is limited to those opinions which are (A) rationally based on the perception of the witness and (B) helpful to a clear understanding of the witness’ testimony or the determination of a fact in issue. 34. Id. (citing State v. Bettencourt, 723 A.2d 1101, 1111 (R.I. 1999) (citing State v. Bowden, 473 A.2d 275, 280 (R.I. 1984))). 35. Id. (citing State v. Hairston, 396 N.E.2d 773, 775 (1977)). 36. Id. 37. Id. 38. Id. at 916-17. 39. Id. at 917-18. 40. Id. at 918.

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as probative of the defendants’ guilt: the statement was made to Evans because the defendants knew that his testimony would be damaging to their case.41 CONCLUSION The Rhode Island Supreme Court held: (1) exclusion of alibi testimony is not an excessive sanction for testimony that is entirely a surprise; (2) the Fifth Amendment prohibits adverse comments by the prosecution or the trial justice on the decision of an accused not to testify; the supreme court also prohibits counsel for a co-defendant from commenting on the failure of the accused to testify since the prejudice to the accused is the same; (3) in determining whether lay witness testimony is admissible, nonexperts may state their opinions in cases where those opinions are based on a number of indescribable facts; and (4) an out-of-court statement may be admitted if non-hearsay and probative of guilt.

Susan Knorr Rodriguez

41.

Id.

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Family Law. Janson v. Janson, 773 A.2d 901 (R.I. 2001). Husband’s eligibility to retire entitled wife to collect her share of husband’s pension as if he had actually retired, and correct valuation of pension plan assets to be based on the date of the final divorce decree, not the date of the property-settlement agreement. FACTS AND TRAVEL On July 3, 1995, John H. Janson (husband) filed a marriage dissolution action against his wife, Patricia J. Janson (wife).1 In January of 1998, the Jansons reached a property-settlement agreement, which in May of 1998 was embodied in an amended decision pending entry of a final judgment.2 In addition to custody and visitation arrangements for a minor child, the agreement divided the husband’s pension benefits so that the husband would retain sixty percent while the wife would be awarded forty percent.3 The benefits would be disbursed to the parties pursuant to a qualified domestic relations order (QDRO).4 On July 6, 1999, the husband filed a motion seeking to enter the final judgment and to execute the QDRO.5 Because the wife claimed that the husband was eligible to retire as of May 1999, the wife filed a motion to collect her portion of the pension benefits and also sought to extend the QDRO to cover benefits the husband earned from the inception of his employment through the date of the final judgment of divorce rather than the date of the propertysettlement.6 Following the arguments of counsel, the family court granted the husband’s motion and entered the final judgment of divorce and QDRO on August 3, 1999, but the court did not rule on the wife’s motion.7 Following this judgment the wife filed a timely notice of appeal.8 On appeal, the supreme court remanded the matter to the

1. 2. 3. 4. 5. 6. 7. 8.

Janson v. Janson, 773 A.2d 901, 902 (R.I. 2001). Id. Id. Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Family Court because that court did not address the wife’s motion to expand the QDRO.9 On remand, the family court denied the wife’s motion and the wife again appealed, arguing that the family court’s refusal to address her motion and its order to execute the QDRO was reversible error.10 ANALYSIS AND HOLDING The wife argued that she was entitled to her share of the pension benefits because the husband became eligible for retirement and acquired the right to collect pension benefits in May 1999, a right he did not possess on the date of the propertysettlement agreement.11 Since the property-settlement agreement was silent as to the date the wife would be eligible to begin collecting the pension benefits, the supreme court found that the family court should have made a determination of the correct date. The trial court should make this determination based upon a reading of the unambiguous portions of the property-settlement agreement and principles of equitable distribution. The court was critical of the trial court’s failure to address the date of benefit distribution without either explanation or justification.12 Relying on two previous decisions, the court held that an employee/spouse could not deprive a non-employee/spouse a portion of a property-settlement once the family court had decided to award the non-employee/spouse that property.13 Secondly, the Family Court had the authority to distribute to the nonemployee/spouse an equitable share of monthly pension benefits equal to what the employee/spouse would have received if that spouse had retired.14 The sum of those holdings indicated that in the Janson’s case, the wife was rightly entitled to receive her share of pension benefits as if the husband had retired in May 1999, when he became eligible to do so.15 The wife also contended that the pension should be valued from the date her husband commenced his employment through 9. 10. 11. 12. 13. 14. 15.

Id. Id. at 903. Id. Id. Id. at 904 (citing Furia v. Furia, 638 A.2d 548, 553 (R.I. 1994)). Id. at 903 (citing Furia v. Furia, 692 A.2d 327, 328 (R.I. 1997)). Id.

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the date of the final judgment of divorce, not the date the property-settlement was entered, as the trial judge had found.16 Agreeing with the wife’s argument, the supreme court held that from the date of the property-settlement to the date of the final judgment of divorce, the parties were still married and therefore maintained a continuing interest in each other’s estate.17 Because the settlement agreement contained no stipulation to the contrary, the correct valuation of the pension shares was from the time the employee spouse commenced employment to the time the parties were officially divorced.18 CONCLUSION The Rhode Island Supreme Court, vacating and remanding the decision of the family court, held that the date on which the wife should begin to receive her portion of her husband’s pension benefits was the date on which he was first eligible to retire. Secondly, the correct valuation of the pension as a whole was the duration of the husband’s employment through the date of the final judgment of divorce. Jill A. Taft

16. 17. 18.

Id. at 904-05. Id. Id.

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Family Law. Rubino v. Rubino, 765 A.2d 1222 (R.I. 2001). The Rhode Island Supreme Court reversed the family court’s granting of a divorce order and held that the equitable distribution statute, and not an antenuptial agreement, determines the rights and liabilities of the parties. The supreme court held that ex-wife had not abandoned her rights under the antenuptial agreement and that the terms of the agreement still governed despite her filing a motion for temporary orders and accepting cash from the parties’ joint account as an advance equitable distribution of marital assets. FACTS AND TRAVEL Michael (plaintiff) and Donna (defendant) Rubino were married on December 19, 1997, just two days after executing an antenuptial agreement.1 The agreement provided that in the event of divorce all assets acquired by the parties as joint tenants would be divided equally between the parties.2 Individually owned assets and any future individual acquisitions would remain the sole property of that individual only.3 Additionally, the agreement required plaintiff to transfer certain assets to himself and defendant jointly, and to add defendant as a beneficiary on certain accounts and policies.4 Both parties expressly waived all rights to alimony and temporary support or allowances pending a hearing for divorce or other proceeding.5 By the terms of the antenuptial agreement, any modification or waiver of any provisions of the agreement would be effective only if executed in writing with the same formality as the original.6 Approximately two months after his marriage to defendant, plaintiff filed a petition for absolute divorce.7 Plaintiff sought an equitable distribution of the assets of the marriage in accordance with the equitable distribution statute.8 Defendant answered and 1. 2. 3. 4. 5. 6. 7. 8.

Rubino v. Rubino, 765 A.2d 1222, 1223 (R.I. 2001). Id. Id. Id. Id. Id. Id. Id.; see R.I. Gen. Laws § 15-5-16.1 (2001).

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 counterclaimed, seeking the same equitable distribution of the assets per the statute.9 Defendant filed a motion for a temporary restraining order (TRO) and temporary allowances on the same day. It was only in this motion for the TRO that the antenuptial agreement was mentioned and no request was made to enforce the agreement’s provisions by either party at this time.10 Prior to the Family Court divorce proceeding of January 6, 1999, various orders were signed restraining both parties from assaulting, molesting, or threatening each other, and from alienating, selling, or encumbering certain assets.11 Plaintiff was ordered to withdraw $5,000 from a mutual account and to advance that money to defendant as an advance on her award of equitable distribution.12 Also prior to the divorce proceeding, defendant filed a complaint in the Superior Court requesting specific performance of the antenuptial agreement, however a Family Court justice ordered this dismissed; subsequently, defendant filed an amended counterclaim in the Family Court seeking the same.13 The sole issue at trial was whether the respective property rights of the parties should be determined in accordance with the equitable distribution statute or the antenuptial agreement signed by the parties. In a motion in limine, plaintiff argued that defendant was precluded from asserting rights under the antenuptial agreement because she had accepted an advance payment based upon her statutory right to equitable distribution, thereby waiving her right to enforce the agreement.14 Despite initial support in favor of defendant at trial, the Family Court justice later concluded in a bench decision that defendant was precluded from enforcing the provisions of the agreement because she accepted monetary support as an advancement on equitable distribution and did so one month after filing her counterclaim to enforce the contract.15 The justice found defendant’s actions to be in total violation of the intent, spirit, and wording of the contract. In the divorce order, no assets were distributed to either party due

9. 10. 11. 12. 13. 14. 15.

Id. Id. Id. Id. Id. Id. at 1224. Id.

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to the brevity of the marriage, however, the court upheld the defendant’s $5,000 award.16 ANALYSIS AND HOLDING On defendant’s appeal, the Rhode Island Supreme Court determined that the trial justice erred in concluding that defendant had abandoned her rights under the antenuptial agreement due only to her actions of filing a motion for, and accepting, $5,000 as an advance equitable distribution of marital assets.17 The supreme court looked to the Uniform Premarital Agreement Act (Act)18 and issues of statutory construction for guidance. While the Act does not address the abandonment issue raised by defendant, it does provide that an antenuptial agreement is enforceable unless the party against whom enforcement is sought proves all of the enumerated elements of the Act, §§ 15-17-6(a)(1) and (2), and does so by clear and convincing evidence.19 Additionally, § 15-17-5 of the Act provides that after marriage, antenuptial agreements may only be amended or revoked by a written and signed agreement.20 Based on accepted methods of statutory construction such as examining the Act’s provisions in

16. Id. 17. Id. at 1225. 18. Id. at 1224-25. As codified in section 15-17-6, the Act provides that an antenuptial agreement is enforceable unless the party against whom enforcement is sought proves that: (1) That party did not execute the agreement voluntarily; and (2) The agreement was unconscionable when it was executed and, before execution of the agreement, that party: (i) Was not provided a fair and reasonable disclosure of the property or financial obligations of the other party; (ii) Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and (iii) Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party. (b) The burden of proof as to each of the elements required in order to have [an antenuptial] agreement held to be unenforceable shall be on the party seeking to have the agreement declared unenforceable and must be proven by clear and convincing evidence. R.I. Gen. Laws § 15-17-6 (2001). 19. Id. at 1225. 20. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 their entirety, attributing to the Act the meaning most consistent with the policies and purposes of the Legislature,21 and giving words their plain and ordinary meanings,22 the supreme court found the agreement controlling. Of particular guidance was the case of Penhallow v. Penhallow,23 in which the Rhode Island Supreme Court found that by enacting the specific provisions of the Uniform Premarital Agreement Act, the Legislature evidenced the intent to preserve the validity and maintain the integrity of premarital agreements.24 Consequently, the party seeking to render the agreement unenforceable is faced with a great burden by having to meet all requirements of the Act. The supreme court held that the antenuptial agreement, as governed by the Act, should determine the rights and liabilities of the parties, not the equitable distribution statute.25 Furthermore, the plaintiff did not establish any elements required by the Act, nor was there evidence that the parties ever signed a written amendment or revocation to the original antenuptial agreement.26 Contrary to the trial judge’s determination, the defendant did not abandon her rights under this agreement despite both parties’ use of boilerplate language regarding equitable distribution.27 Defendant made specific attempts to enforce her rights under the agreement both in Superior and Family Court. Therefore, the Supreme Court sustained the defendant’s appeal, reversed the Family Court judgment, and remanded the case to enforce the parties’ antenuptial agreement.28 CONCLUSION The Rhode Island Supreme Court reversed a Family Court decision that the rights and liabilities of a divorcing couple were governed by the equitable distribution statute rather than an 21. Id. (citing Commercial Union Insurance v. Pelchat, 727 A.2d 676, 681 (R.I. 1999) (quoting In re Advisory to the Governor (Judicial Nominating Commission), 668 A.2d 1246, 1248 (R.I. 1996))). 22. Id. (citing Pelchat, 727 A.2d at 681 (quoting Matter of Flastaff Brewing Corp., 637 A.2d 1047, 1050 (R.I. 1994))). 23. 649 A.2d 1016, 1021 (R.I. 1994). 24. Rubino, 765 A.2d at 1225. 25. Id. 26. Id. 27. Id. 28. Id. at 1226.

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antenuptial agreement. Despite filing a motion for temporary orders and accepting $5,000 from parties’ joint account as an advance equitable distribution, the ex-wife did not abandon her rights under the antenuptial agreement. The ex-husband failed to establish any of the elements required under the Uniform Premarital Agreement Act to render the agreement unenforceable, the parties never signed a written agreement to revoke or amend the agreement, and the ex-wife had made specific attempts to enforce her rights under the agreement. Christy Hetherington

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Federal Civil Procedure. Payphone LLC v. Brooks Fiber Comm., 126 F. Supp. 2d 175 (D.R.I. 2001). A corporation may not pierce its own corporate veil or apply the alter ego doctrine for its own benefit, nor may it employ these doctrines to create diversity jurisdiction. FACTS AND TRAVEL Plaintiff PayPhone LLC sued Brooks Fiber Communications (BFC-RI) for negligence and breach of contract.1 PayPhone operated pay telephones in the New England area and had its principal place of business in Rhode Island.2 During the early summer of 1999, a great many fraudulent phone calls were made to Puerto Rico and the Dominican Republic over a six-week period.3 An error in the switching process allowed callers to direct-dial long distance phone calls.4 The cost of the fraudulent calls was approximately $98,000 billed to PayPhone.5 Payphone contended BFC-RI’s switch should have recognized the number used to access the long distance service as invalid and should not have completed the calls.6 Additionally, PayPhone alleged that although the co-defendant, Cable and Wireless, Inc. (C&W) was aware that PayPhone’s public phones were programmed so that direct-dialed international calls would be placed through a live operator, C&W allowed a large number of calls to be completed in violation of the programming instructions.7 BFC-RI removed the proceeding to federal court on the basis of diversity jurisdiction and PayPhone moved to remand to state court.8 A hearing before the Magistrate Judge was held on May 16, 2000 to determine the citizenship of defendant, BFC-RI. In that hearing, BFC-RI persuaded the Magistrate Judge that it was a citizen of Mississippi owing to the fact that its great-

1. 2. 3. 4. 5. 6. 7. 8.

Payphone LLC v. Brooks Fiber Comm., 126 F. Supp. 2d 175, 177 (D.R.I. 2001). Id. Id. Id. Id. Id. at 178. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 grandparent corporation, MCI WorldCom (MCI) was located there.9 BFC-RI maintained that it and MCI disregarded their separate corporate identities and therefore BFC-RI satisfied the requirement of complete diversity. The Magistrate Judge denied PayPhone’s motion to remand and PayPhone filed a timely notice of appeal.10 ANALYSIS AND HOLDING Precedent in the First Circuit has established the rule that a corporation may not pierce its own corporate veil or employ the alter ego doctrine to benefit itself, nor may it utilize either of these doctrines in order to establish diversity jurisdiction.11 The court held that as a matter of law, BFC-RI should not have been allowed to argue that it and MCI had ignored separate corporate identities.12 The court posited two reasons for this: First, the alter ego and corporate veil doctrines are reserved for the relief of aggrieved third parties.13 Second, allowing a corporation to choose its citizenship in order to create or maintain diversity jurisdiction would be contrary to Congress’s intent to limit federal diversity jurisdiction and reduce the federal diversity caseload.14 The court went on to hold that BFC-RI was precluded from piercing its own corporate veil by the doctrine of equitable estoppel.15 In Rhode Island, equitable estoppel is established by “proof of an affirmative statement . . . by the person against whom the estoppel is claimed which is directed at the person seeking to establish the estoppel, and that the statement or conduct actually induces the other to act . . . to his injury.”16 The court found ample evidence to establish this requirement. First, when BFC-RI sought authorization to do business in Rhode Island, it made representations to the Rhode Island Public Utilities Commission (P.U.C.) that Rhode Island was the only

9. 10. 11. 12. 13. 14. 15. 16.

Id. Id. Id. Id. Id. Id. Id. Id. at 180.

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state where it planned to do business.17 Second, when BFC-RI and MCI WorldCom merged in 1998, the companies again had to obtain approval from the P.U.C. as required by Rhode Island law.18 At that time, both companies stated to the P.U.C. that BFC-RI would operate as a separate corporation following the merger.19 By making these representations, the court held that BFC-RI had held itself out to both P.U.C. and the public as a local company providing local service.20 As such, PayPhone was induced to do business with BFC-RI.21 The court held that allowing BFC-RI to “recharacterize” itself as a citizen of Mississippi would be misleading and detrimental to PayPhone.22 Therefore, BFC-RI was estopped from claiming diversity of citizenship.23 CONCLUSION A corporation is not allowed to pierce its own corporate veil to create a diversity of citizenship or to otherwise benefit itself; therefore, the magistrate judge’s denial of PayPhone’s motion to remand to state court was contrary to law.24 The court held it had no subject matter jurisdiction because there was no diversity of citizenship between BFC-RI and PayPhone, LLC. The case was remanded to Rhode Island Superior Court.25 Jill A. Taft

17. 18. 19. 20. 21. 22. 23. 24. 25.

Id. Id. Id. Id. Id. Id. Id. Id. Id.

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Judgments. Allstate Insurance Co.v. Lombardi, 773 A.2d 864 (R.I. 2001). A party may not obtain relief from a judgment confirming an arbitration award petition in an independent action if the party’s own unexcused negligence led to the entry of judgment, even if there was an otherwise meritorious defense to the confirmation petition. FACTS AND TRAVEL Peter Lombardi (Lombardi or appellant) was injured as a result of a two-car accident.1 He was a passenger in one of the vehicles and sued the driver of the other vehicle for negligence.2 That driver’s insurance company went into receivership while Lombardi’s lawsuit was pending.3 Allstate insured the vehicle that Lombardi was riding in for underinsured and uninsured motorist (UIM) coverage.4 Lombardi requested UIM coverage from Allstate, but after unsuccessful negotiations he demanded arbitration of his claim, pursuant to the Allstate insurance policy.5 Prior to the arbitration hearing, Allstate offered Lombardi the policy’s limits, $25,000.6 Lombardi rejected the offer.7 He sought prejudgment interest, in addition to and in excess of the policy limit.8 On August 5, 1992, an arbitrator awarded Lombardi $40,000, plus $29,000 in interest.9 Following the arbitrator’s ruling, Allstate tendered Lombardi a check for $25,000; on its face, clear wording indicated that the check was a final settlement for all claims resulting from the accident for the UIM coverage.10 Nevertheless, in November of 1992, Lombardi petitioned the superior court for a confirmation of the arbitrator’s award.11 Lombardi had already negotiated the check given in final 1. Allstate Ins. Co. v. Lombardi, 773 A.2d 864, 866 (R.I. 2001). The accident occurred on May 30, 1986. Id. at 866. 2. Id. 3. Id. 4. Id. 5. Id. 6. Id. 7. Id. 8. Id. 9. Id. 10. Id. 11. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 settlement of the claim.12 In January of 1993, that confirmation hearing was held.13 The court entered an order confirming the order in February, 1993.14 Allstate was not represented at the hearing, though Allstate’s arbitration attorney had been notified.15 An amended order was entered in July 1993, indicating credit for the $25,000 Allstate had previously paid.16 The initial confirmation order, the amended order and the judgment indicating the terms were all served on Allstate’s arbitration attorney.17 More court action followed. In March 1994, an execution of the judgment was issued at Lombardi’s request.18 In November of that year, Lombardi filed a debt-on-judgment complaint for approximately $46,000 after Allstate refused to give more than the $25,000 already tendered.19 In December 1994, Lombardi requested an entry of default because Allstate had failed to answer.20 In January 1995, before the judgment was entered, an attorney entered his appearance for Allstate and Allstate answered.21 On appeal, Allstate suggested both that the confirmation petition inaction was a result of multiple firms handling different aspects of the claim, and that the illness and 1998 death of Allstate’s arbitration attorney constituted excusable neglect for not opposing the confirmation petition.22 In March 1995, Allstate filed an independent action in which they sought relief from both the arbitration award confirmation and the debt-on-judgment default.23 Allstate made several assertions in its complaint that the judgment was a nullity because money in the amount of the policy’s limits was offered before the arbitration, Lombardi accepted a check for the policy’s limits, Lombardi negotiated the check and the language on the 12. Id. 13. Id. 14. Id. at 867 15. Id. at 866-67. The record indicates a copy of the cover letter to the clerk of the court was served upon Allstate’s attorney. Id. 16. Id. at 867. 17. Id. 18. Id. 19. Id. 20. Id. 21. Id. 22. Id. 23. Id.

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check indicated that it was for the final settlement of the claim.24 Allstate also contended that they had not been served with notice of the action, and that, in any event, Lombardi could still recover additional damages as a result of the pending litigation with the driver of the other vehicle.25 The confirmation action, the debt-on-judgment action and the relief from judgment action were consolidated into the Allstate action, and the matter was brought before the Rhode Island Supreme Court.26 Lombardi filed motions for summary judgment on the debt-on-judgment action and Allstate’s relief action.27 At the hearing on the motions for summary judgment, Allstate admitted “that it had received notice of the confirmation proceeding, that the confirmation petition had ‘got lost somewhere’ during the interim . . . and that it had made ‘a glaring error’ by not responding to the petition or opposing the confirmation of the award.”28 Allstate did not argue at the trial level that its attorney’s illness and death constituted a reason for vacating the judgment.29 No evidence was introduced by Allstate to substantiate the claim that the illness and death had an effect upon any of the actions.30 Allstate did not make a showing of excusable neglect or the absence of negligence on its part.31 Instead, Allstate argued that the decision was void as a result of the Rhode Island Supreme Court’s decision in Allstate Insurance Co. v. Pogorilich,32 which was rendered while the arbitration proceedings were ongoing.33 Allstate’s attorney admitted that the award was never contested because of “‘inadvertence of prior counsel’” and “‘remiss lawyering’” as well as because of the

24. Id. 25. Id. 26. Id. 27. Id. 28. Id. at 867-68. 29. Id. at 868. Apparently, there was a verbal indication to the trial court that Allstate’s arbitration attorney died in 1998, but that was years after the arbitration award and confirmation action had concluded. Id. 30. Id. An unsigned affidavit of the arbitration attorney that was allegedly prepared in 1995 made no mention of any kind of illness or incapacity. Id. 31. Id. 32. 605 A.2d 1318 (R.I. 1992). 33. See Lombardi, 773 A.2d at 865, 868.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 assumption that the appellant would not seek confirmation of an award with, in light of the Pogorilich decision, “‘no legal relevance.’”34 The trial court denied Lombardi’s summary judgment motions.35 The judge on the motion calendar ruled that the Pogorilich decision rendered the arbitration award void because that case established that Lombardi could only recover the limits of the UIM policy from Allstate ($25,000), an amount concededly paid.36 Further, she noted that that decision was issued prior to the arbitration award.37 Following that reasoning, Allstate moved for summary judgment on all of the actions; the same motion judge granted the motions and ruled the award void because it was contrary to the holding in Pogorilich.38 Final judgment entered in the consolidated cases in favor of Allstate.39 On appeal, Lombardi’s position was that Allstate was negligent in not raising the Pogorilich issue at either the arbitration or confirmation proceeding.40 Allstate had decided not to defend itself and it should not have been allowed to obtain relief after the fact when it had negligently failed to raise those arguments “at the proper time.”41 For those reasons, Lombardi contended, the judge erred in voiding the judgment.42 That position was refuted by Allstate. Allstate argued that the judgment was, in fact, a nullity because the policy’s limits was offered and accepted in final settlement of the UIM claims.43 Summary judgment was appropriate because of the settlement and the availability of recourse against the driver of the other vehicle for other damages.44 Allstate continued with its argument that it lacked notice of the confirmation proceeding.45

34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45.

Id. Id. Id. Id. Id. Id. Id. at 869. Id. Id. Id. Id. Id.

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It was conceded by both parties that there were no material facts to dispute and that the motion judge’s sole task was to determine if Allstate was entitled to summary judgment as a matter of law.46 ANALYSIS AND HOLDING Pursuant to Rule 60(b) of the Rhode Island Superior Court Rules of Civil Procedure, a party may seek relief from a judgment by filing an independent action.47 Specifically, Rule 60(b)(4) allows relief from a judgment that is void.48 An erroneous judgment does not necessarily make the judgment void.49 Errors of law are not grounds to vacate a judgment as void, except when the court has no jurisdiction or the actions are “a plain usurpation of power constituting a violation of due process.”50 Fraud and collusion are also reasons that judgments may be void or voided.51 A default judgment is void if no notice is given to the opposing party.52 An erroneous judgment may only be attacked directly, which makes it different from a void judgment, which may be attacked via an independent action.53 “[R]egardless of whether the Superior Court erred on the merits when it entered a judgment that confirmed the arbitrators’ award of prejudgment interest in excess of the Allstate’s policy’s limits, Allstate may not obtain relief from such a judgment merely because the . . . [c]ourt may have committed a legal error.”54 The methods to challenge that alleged error were by opposing the confirmation petition or directly appealing the award at the confirmation proceedings, but despite notice, Allstate negligently

46. Id. (citing Superior Boiler Works, Inc. v. R.J. Sanders, Inc. 711 A.2d 628, 63132 (R.I. 1998)). 47. Id. (citing Raymond v. Koszela, 473 A.2d 281, 285 (R.I. 1984)). 48. Id. 49. Id. (citing Jackson v. Medical Coaches, 734 A.2d 502, 506 (R.I. 1999) (per curiam) (quoting 11 Charles A. Wright et al., Federal Practice and Procedure § 2862, at 326 (2d Ed. 1995)); Hoult v. Hoult, 57 F.3d 1, 6 (1st Cir. 1995)). 50. Id. (quoting Hoult, 57 F.3d at 6). 51. Id. (quoting Medeiros v. Hilton Homes, Inc., 408 A.2d 598, 601 n.2 (R.I. 1979)). 52. Id. (citing Medeiros, 408 A.2d at 601 n.2). 53. Id. (citing Lubben v. Selective Serv. Sys. Local Bd. No. 27, 453 F.2d 645, 649 (1st Cir. 1972)). 54. Id. at 869-70.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 failed to take advantage of those avenues for relief.55 The court held that the trial justice erred in ruling that her earlier judgment was void because the arbitration award contained prejudgment interest.56 Even if she had not ruled it void and the judge had been in error by confirming the award, that type of error would not make the judgment void via a Rule 60 motion or independent action.57 Lombardi also complied with the applicable statute concerning the entry of an order confirming such an award.58 Lombardi complied by serving a cover letter and confirmation petition, as well as serving notice of the hearing, on Allstate’s arbitration attorney.59 There was no evidence in the record to suggest excusable neglect or a lack of actual notice.60 Statements of counsel on appeal are not evidence and not part of the record, thus statements on appeal in support of the excusable neglect and notice arguments could not be entertained.61 The record did not indicate that Allstate’s attorney was ill, or when he became ill, nor did Allstate argue to the lower court that the death or illness of the attorney constituted excusable neglect.62 There was nothing

55. Id. at 870. 56. Id. At this point, the court paused to clarify the misconception that Allstate had concerning its prior holding in Pogorilich: Contrary to Allstate’s contention, this Court’s ruling in [Pogorilich] does not stand for the proposition that an that an arbitration award cannot include prejudgment interest in excess of the limits of an insured’s uninsured motorist (UIM) coverage. Rather, all that Pogorilich held was that when arbitrators have been asked to decide the amount that the injured parties are to recover from the tortfeasor, the uninsured motorist carrier for the injured parties cannot be required to pay more than the policy limits of the coverage. But when the arbitrators have been asked to determine the amount . . . to recover from the UIM insurer, then the arbitrators can award prejudgment interest in excess of the policy limits. Id. at 870 n.2 (citations omitted) (italics in original). Thus, by relying on the Pogorilich decision, the motion justice was herself committing error. Id. 57. Id. 58. Id. (citing R.I. Gen. Laws § 10-3-11 (1956)). 59. Id. 60. Id. 61. Id. at 871 (citing Wood v. Ford, 525 A.2d 901, 903 (R.I. 1987); State v. Brown, 258 A.2d 273, 275 (R.I. 1969)). 62. Id.

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in the record to suggest that the attorney was suffering from terminal cancer at the time of the confirmation petition, nor was there anything in the record to suggest any evidence to believe the claim had been settled.63 Allstate “relied solely on the vague, conclusory, unsworn, and unsupported statements of its counsel on appeal to plaster over all the cracks, crevices, and gaping holes in the porous evidentiary foundation for its independent relieffrom-judgment petition it slapped together for the Superior Court.”64 The review of a summary judgment award considers the issues that were properly presented to the lower court and a party may not raise new issues on appeal to secure a reversal.65 Allstate’s attorney submitted no sworn factual rebuttal and that neglect was imputed to Allstate.66 The court noted that it was important that Allstate was on notice for the award confirmation, because there may have been merit to Allstate’s claim that the receipt and negotiation by Lombardi of the check indicating final settlement was, in law and fact, final settlement of the claim67 Rhode Island accepts the widely accepted common law rule that, when there is a dispute about the amount of debt owed, the creditor’s taking of a check for less than the amount claimed extinguishes the debt.68 Allstate’s awareness and subsequent negligence by failing to act was fatal to its independent action in equity seeking relief from the earlier judgment.69 The traditionally required elements that a party seeking relief from judgment in an independent equity action must show are (1) a judgment that because of equity or good conscience should not be enforced, (2) a good defense to the claim, (3) some fraud, accident, or mistake that prevented giving the defense, (4) the absence of an adequate remedy at law and (5) “‘the absence of fault or negligence on the part of the defendant.’”70 Equitable relief is traditionally limited to those 63. Id. 64. Id. at 871-72 65. Id. at 871 (citing Ludwig v. Kowal, 419 A.2d 297, 302 (R.I. 1980)). 66. Id. (citing Ludwig, 419 A.2d at 303-04). 67. Id. at 872. 68. Id. at 872 n.4 (citing 1 Henry J. Bailey & Richard V. Hagedorn, Brady on Bank Checks: The Law of Bank Checks § 4.12 at 4-40 to 4-41 (rev. ed. 1997)). 69. Id. at 872-73. 70. Id.at 873 (citing Clark v. Dubuc, 486 A.2d 603, 605 n.3 (R.I. 1985) (quoting Paul v. Fortier, 366 A.2d 550, 552 (R.I. 1976))).

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108 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 who come before the court with “clean hands.”71 Allstate admitted to its own negligence by not opposing the confirmation petition, admitted its ‘glaring error’ by not responding to the petition and failed to show any evidence in the record that could create excusable neglect on its part.72 Allstate could not satisfy the required elements for bringing an independent action in equity and the judge erred in vacating the original judgment. The lower court’s summary judgment in favor of Allstate was vacated and the case was remanded so that all judgments in the consolidated cases would be entered in favor of Lombardi.73 In dissent, Justice Bourcier would have allowed a challenge to the judgment, even if the judgment was not void.74 Rule 60(b)(5) would have been an appropriate way to get relief from the judgment.75 Relief from a judgment pursuant to that rule “is appropriate where the limit of a policy has already been paid in final settlement of the underlying claim.”76 In this case, there was no dispute that Lombardi accepted a check that expressly released Allstate from further liability beyond the policy’s limits.77 Further, Allstate adequately rebutted any alleged negligence because “it explained that its arbitration attorney . . . died after the arbitration hearing . . . concluded and that, as a result, it never received actual notice of the confirmation proceedings and the various orders . . . Lombardi . . . sent to the deceased attorney’s office in time for Allstate to object . . . or . . . to oppose . . . or to appeal . . . .”78 The dissent noted that the motion judge decided correctly, but for the wrong reason; suggesting that the reasoning should have focused on “that it was ‘no longer equitable that the judgment should have prospective application.’”79 Because the Rhode Island Supreme Court may affirm a decision on different grounds from that of the trial judge 71. Id. (citing Opie v. Clancy, 60 A. 635, 638 (R.I. 1905); Carteret Sav. & Loan Ass’n v. Jackson, 812 F.2d 36, 39 (1st Cir. 1987)). 72. Id. 73. Id. 74. Id. at 876 (Bourcier, J., dissenting). 75. Id. at 877. 76. Id. (citing Vaughan v. Mut. Ins. Co., 702 A.2d 198, 206 (D.C. 1997). 77. Id. 78. Id. 79. Id. (quoting R.I. R. Civ. P. 60(b)(5)).

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and Allstate was entitled to relief, Allstate was entitled to summary judgment in its action in equity.80 It was inappropriate to deny relief “simply because the motion hearing justice gave the wrong reason for doing so.”81 CONCLUSION In Allstate Insurance Co. v. Lombardi, the Rhode Island Supreme Court held that relief is not available, via an independent action, to an insurer merely because the lower court judge may have committed legal error; a judgment is not void solely because it may be erroneous. Because the insurer was on notice of a hearing on the confirmation of an arbitration award that included prejudgment interest and no evidence establishing excusable neglect was in the record, the creditor was entitled to the full arbitration award, despite the negotiation of a check for the policy’s limits. In doing so, the court clarified its earlier decision in Pogorilich. Further, an independent action in equity may not be entertained when the party seeking relief does not come to the court with “clean hands.” Stephen P. Cooney

80. 81.

Id. Id.

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Judgments. Webster v. Perrotta, 774 A.2d 68 (R.I. 2001). Entry of a default judgment constitutes a concession of all well pleaded allegations of liability, however, it is not considered an admission of damages. Also, a police officer’s salary, wages and benefits awarded pursuant to statute cease when he or she is no longer an active member of the police force. Furthermore, prejudgment interest is only awarded to police officers when the town is acting in an enterprise or proprietary manner. FACTS AND TRAVEL The plaintiffs are former officers of the Johnston Police Department who sought wages and benefits from the date of their respective retirements.1 Each plaintiff voluntarily retired from the force because of illness or injury suffered or contracted in the line of duty.2 At the time of their retirement, there was a valid and enforceable provision in their union contract stating that all members of the police department who are injured or contract illness in the line of duty are statutorily entitled to benefits.3 This statute is often referred to as the Injured on Duty provision.4 1. 2. 3. 4.

Webster v. Perrota, 774 A.2d 68, 71 (R.I. 2001). Id. Id. Id. The Injured on Duty provision provides, in pertinent part: Whenever any police officer. . . of any city, town, fire district, or the state of Rhode Island is wholly or partially incapacitated by reason of injuries received or sickness contracted in the performance of his or her duties, the respective city, town, or fire district, or state of Rhode Island by which the police officer. . . is employed, shall, during the period of the incapacity, pay the police officer. . . the salary or wage and benefits to which the police officer. . .would be entitled had he or she not been incapacitated, and shall pay the medical, surgical, dental, optical, or other attendance, or treatment, nurses, and hospital services, medicines, crutches, and apparatus for the necessary period, except that if any city, town, fire district, or the state of Rhode Island provides the police officer. . . with insurance coverage for the related treatment, services, or equipment, then the city, town, fire district, or the state of Rhode Island is only obligated to pay the difference between the maximum amount allowable under the insurance coverage and the actual cost of the treatment, service, or equipment. In addition, the cities, towns, fire districts, or the state of Rhode Island shall pay all similar expenses incurred by a member who has been placed on a disability pension and suffers a recurrence of the injury or illness

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 However after retirement, the plaintiffs received pension payments that were less than 100 percent of the salary, wages and benefits that they would have received had they not retired.5 In 1997, the plaintiffs sued the town for recovery claiming that they were entitled to 100 percent of the salary, wages and benefits that they would have received had they not retired.6 A fourth plaintiff claimed that he was owed the same amount of compensation; however his claim was based on a collective bargaining agreement.7 During the litigation the town failed to comply with discovery orders and the superior court issued a default judgment in all four cases pursuant to Rule 37 of the Superior Court Rules of Civil Procedure.8 The default judgments were deemed final, and they mandated the town to immediately pay 100 percent of the salary and benefits that each plaintiff would have received as an officer of the Johnston police department.9 Each judgment was also scheduled for a proof of claim hearing to determine the amount of money that the town owed the plaintiffs.10 Incidentally neither the complaints nor the final judgments included a claim or finding that these plaintiffs, from the time of their voluntary retirements, remained active members of the police department.11 Shortly after their entry, the town sought to vacate these final judgments pursuant to Rule 60(b)(1) of the Superior Court Rules of Civil Procedure for mistake, inadvertence, surprise, or excusable neglect.12 The superior court denied these motions.13 At the consolidated oral-proof-of-claim hearing the town made a second motion for the judgments to be vacated or modified in order to comport with the provisions of § 45-19-1 and the pronouncements of the supreme court.14 The town sought relief

that dictated his or her disability retirement. R.I. Gen. Law § 45-19-1 (2001). 5. Webster, 774 A.2d at 72. 6. Id. 7. Id. 8. Id. 9. Id. 10. Id. 11. Id. 12. Id. at 73. 13. Id. 14. Id.

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from the judgments pursuant to Rule 60(b)(4), (5) and (6).15 The hearing justice found that the defendants failed to satisfy the burden imposed on them by Rule 60(b)(1)-(6).16 Furthermore the justice stated that law of the case precluded him from “second guessing” other justices of the superior court with respect to legal determinations made by them.17 When dealing with the proof of claim issues, he rejected the town’s argument that attacked the language in the judgments, in that they suggested that the computation of damages required a thorough and detailed analysis of the scope and purposes behind section 45-19-1 and the pronouncements of the supreme court.18 The hearing judge was persuaded that the language of the final judgments was controlling.19 He held that the provisions with respect to the calculation of damages agreed upon in a previous stipulation was controlling.20 Finally, the hearing judge denied plaintiffs’ request for prejudgment interest, finding that the town was clearly acting in a governmental capacity as opposed to a proprietary one.21 Both parties appealed.22

15.

Id. Rule 60(b) states in part that: On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. R.I. Superior Ct. R. Civ. P. 60 (b). 16. Webster, 772 A.2d at 73. 17. Id. 18. Id. at 73-74. 19. Id. at 74. 20. Id. 21. Id. 22. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 The defendants alleged that the judgments were void, arguing that the judgments should have been vacated and modified because they exceeded the scope of section 45-19-1 and are applied to individuals who are no longer active members of the department, contrary to the previous pronouncements of the supreme court and the legislature.23 The town also argued that its motions to vacate or modify the judgments should have been granted because the judgments were based on an incorrect conclusion of law and an erroneous interpretation of Chester v. aRusso.24 Finally, the defendants urged the court to revisit the holding in Chester and clarify whether that case is applicable to voluntary retirement.25 Alternatively the town argued that the hearing justice erred by failing to conclude that § 45-19-1 and the previous pronouncements of the supreme court controlled the proper measure of damages at the hearing on oral proof of claim.26 On cross-appeal, the plaintiffs argued that the denial of prejudgment interest was error because the plaintiffs’ action against the town was one in contract.27 ANALYSIS AND HOLDING The supreme court held that although labeled final, the judgments entered upon the default of the defendant were merely conclusive in that they established the liability of the defendants as it related to the allegation in the complaints.28 The court states that all language purporting to set forth the measure of damages was null and void.29 The court also noted that it is well established in the jurisdiction that a default judgment does not concede the amount of damages, nor may this type of judgment include the measure of damages.30 A party’s default is deemed to constitute a concession of all well-pleaded allegations of liability, 23. Id. 24. Id. Chester v. aRusso, 667 A.2d 519 (R.I. 1995) (holding that when there exists a valid and enforceable collective-bargaining agreement whose terms provide greater disability benefits than is afforded by special legislation, the collective bargaining agreement trumps the special legislation). 25. Webster, 774 A.2d at 74. 26. Id. 27. Id. 28. Id. at 75. 29. Id. 30. Id. at 75.

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however a default judgment is not considered an admission of damages.31 Therefore, although the plaintiffs are relieved of the burden of establishing liability in this case, they nonetheless bear the burden of establishing the damages they are entitled to recover.32 Furthermore the court held that the litigation was not terminated because the case was ordered to a hearing on the plaintiffs’ oral proof of claim.33 Examining the complaints, the court held that three of the plaintiffs’ complaints alleged that the named plaintiff contracted illness or injury in performance of his duties.34 Additionally under section 45-19-1 the plaintiff was entitled to salary, wages and benefits that he would have been entitled had he not been incapacitated, and that the defendants have refused to make payments required by law.35 A second count alleged that at the time the plaintiff ceased working as a full time officer a collective bargaining agreement was in place, which entitled him to receive benefits pursuant to section 45-19-1.36 Finally, a third count alleged that the defendants’ failure to recognize the previous decision of the superior court amounted to bad faith. The court held that this allegation amounted to a conclusion at law and had no relevance in a default judgment, thus was a nullity.37 Plaintiff Ferrante filed the fourth complaint and the court held that this complaint was completely devoid of any allegations that would support relief in this case and had no relevance to section 45-19-1, thus the judgment for this plaintiff was null and void.38 This complaint made no mention of section 45-19-1 or that the plaintiff was on Injury on Duty status, but only stated that the town failed to afford plaintiff benefits of a disability retirement.39 Finally, the court concluded that the trial justice erred in failing to examine the pleadings to determine whether the plaintiffs were

31. Id. at 77. (citing Greyhound Exhibitgroup Inc. v. E.L.U.L. Reality Corp., 973 F.2d 155, 158 (2d Cir. 1992)). 32. Id. 33. Id. at 75. 34. Id. at 77-78. 35. Id. at 78. 36. Id. 37. Id. 38. Id. 39. Id.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 legally entitled to recover the relief awarded in this case.40 The court also held that pursuant to the supreme court’s examination, the plaintiffs were not entitled to relief awarded in the judgments.41 Regarding the motions to vacate, the court held that according to the language in the complaints, plaintiffs Webster, Riccitelli and Bolton were entitled to compensation governed by section 45-19-1 and previous pronouncements of the supreme court.42 However, the court held that an officer who is no longer a member of the police department is not entitled to the benefits provided by section 45-19-1 or the collective bargaining agreement.43 Regarding the Chester decision, the court held that this case had no bearing on the plaintiffs’ entitlement to damages, and any contrary holding is overruled.44 Chester stated that collective bargaining agreements could take precedent over an act of legislature when it provides greater disability benefits.45 The court held that Chester was a case of statutory construction, and never addressed the applicability damages granted to retired officers’ pursuant section 45-19-1.46 Regarding prejudgment interest, the court held that prejudgment interest would only be awarded against a municipality on a breach of contract claim where the municipality acts in a proprietary or enterprise capacity.47 Here the court held that the defendants were acting in a governmental manner thus cannot be awarded the interest.48 Furthermore, because no plaintiff has alleged that he was a current member of the collective bargaining agreement unit, they were unable to pursue a claim through the grievance process.49 In Justice Flanders’ dissent, he argued that Rule 37 of the Superior Court Rules of Civil Procedure should be interpreted broadly to permit the court to enter a final judgment for a 40. 41. 42. 43. 44. 45. 46. 47. 48. 49.

Id. at 79. Id. Id. Id. at 79-81. Id. at 82. Id. (citing Chester v. aRusso, 667 A.2d 519 (R.I. 1995)). Id. Id. at 82. Id. Id.

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defendant’s discovery violation.50 Furthermore this justice stated that Rule 37 can and often does award damages and other relief to the non-defaulting party pursuant to the well-pleaded allegations of the complaint.51 On this same subject, the dissent stated that because this was a final judgment, the defendants should not have been able to assert the voluntary-retirement defense because the entire theory of default centered on the notion that the defaulting party has forfeited liability.52 The dissent also asserted that Chester specifically dealt with a retired police officer who was no longer employed by the town, however, the Chester court still awarded him benefits under section 45-19-1.53 Furthermore, Justice Flanders stated that under Chester, there is no indication that contemporaneous employment is a precondition of recovery under section 45-19-1.54 Regarding the pre-judgment interest, the dissent argued that breaching employment contracts with police officers and/or their union is not an exercise of police power, and in turn not a government function.55 Justice Flanders argued that the appropriate inquiry is whether the activity at issue is one that a private person or corporation would most likely undertake.56 In this case the dissent held that employment contracts do fall into this category.57 CONCLUSION The court held that plaintiffs Webster, Bolton and Riccitelli, who claimed compensation pursuant to the provisions of section 45-19-1, are entitled to receive compensation from the town for all periods during which they were actively employed and were entitled to a paycheck. Each plaintiff was owed 100% of the salary and benefits he was receiving up to the date of voluntary 50. Id. at 83-84 (Flanders, J., dissenting). 51. Id. at 83. 52. Id. at 84-85. (citing Calise v. Hidden Valley Condo. Ass’n., 773 A.2d 834, 839 (R.I. 2001)). 53. Id. at 86. 54. Id. at 87. 55. Id. at 87. 56. Id. (citing Housing Auth. of Providence v. Oropeza, 713 A.2d 1262, 1263 (R.I. 1998) (quoting DeLong v. Prudential Prop. & Cas. Ins. Co., 583 A.2d 75, 76 (R.I. 1990))). 57. Id.

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108 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 retirement, and these cases were remanded for a new determination of damages. The judgment for the plaintiff Ferrante who made no claim under section 45-19-1 was vacated in its entirety and remanded for trial. Finally the plaintiffs were denied their prejudgment interest because the defendants were acting in a governmental capacity. Camille A. McKenna

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Land Use and Planning. Sciacca v. Caruso, 769 A.2d 578 (R.I. 2001). The planning board for the town of Johnston conditionally granted a landowner of two previously merged parcels of land the ability to re-divide the parcels to their original, pre-merger dimensions. Following this conditional grant, the landowner petitioned the zoning board for a dimensional variance to facilitate building a new home on one of the newly separated lots. The Rhode Island Supreme court reversed the superior court’s decision upholding the zoning board’s grant of the dimensional variance. In doing so, the court held that the superior court misapplied the law in question and that the variance was improperly granted because the landowner created the very hardship from which variance relief was sought by subdividing her property. FACTS AND TRAVEL Gloria Caruso (Caruso) acquired two adjacent residential lots in Johnston, Rhode Island in the 1960s.1 These lots were then known as Nos. 91 and 92, and at that time were independently buildable, each respectively having the necessary road frontage and overall square footage for a building permit to be issued.2 Shortly after obtaining the two parcels, Caruso constructed a single-family dwelling on lot No. 91, which she retained as a personal residence.3 Additionally, Caruso landscaped lot No. 92 and constructed a shed on the premises.4 Following Caruso’s construction of her house and adjoining shed, the town of Johnston amended its zoning ordinance.5 In 1979, an amendment was passed “placing both lots [No. 91 and 92] in an ‘R-20’ residential zoning district that required a minimum total area of 20,000 square feet and minimum road frontage of 120 feet to build a single-family dwelling on any given lot.”6 The new amendment also included a “merger provision,” whereby contiguous lots owned by the same entity that failed 1. Sciacca v. Caruso, 769 A.2d 578, 579 (R.I. 2001). 2. Id. 3. Id. 4. Id. 5. Id. 6. Id. at 579. For the text of the amended zoning ordinance see Johnston Town Code § 26-16(a) & (b) (1995).

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 independently to meet the new minimum frontage and footage requirements were to be merged together into a single parcel.7 Further, the amended ordinance contained explicit language forbidding the subdivision of contiguous parcels with common ownership when such subdivision would cause the new lot or lots to be below the minimum frontage and footage requirements.8 Pursuant to the amended ordinance provisions, Caruso’s two lots were merged into a single parcel.9 In 1997, Caruso determined that she wanted to utilize the undeveloped land on lot No. 92 to build an additional threebedroom house.10 Through her builder, Caruso filed an application with the Johnston planning board to have her merged property re-subdivided into its two original pieces, parcels No. 91 and 92.11 Although Caruso’s neighbors never received notice of her application, the planning board “conditionally granted Caruso’s request and approved a lot-line change, thereby subdividing the lots and restoring them to their original dimensions.”12 After obtaining this conditional approval, Caruso submitted an application to the Johnston zoning board, requesting a dimensional variance to build on the smaller of her two lots, No. 92.13 This lot measured 14,364 square feet and had only 100 feet of road frontage, both of which were below the minimum dimensional requirements set out in the 1979 ordinance.14 Caruso’s neighbors opposed her application, submitting the testimony of a qualified real estate appraiser and consultant that the proposed variance should not be granted because “Caruso would suffer no loss of the beneficial use of her property if the board denied her request for a dimensional variance.”15 In addition, he suggested that any new building built on the small lot No. 92 would unreasonably “‘crowd’ the lot and lessen the value of

7. 8. 9. 10. 11. 12. 13. 14. 15.

Id. at 579, n. 1 (quoting Johnston Town Code § 26-16(b) (1995)). Id. at 579, n. 1 (quoting Johnston Town Code § 26-16(b) (1995)). Id. at 580. Id. Id. Id. at 580. Id. Id. at 579. Id. at 580.

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the adjoining properties.”16 Caruso did not present any evidence to counter this testimony or otherwise demonstrate that she would have “no ‘other reasonable alternative way to enjoy a legally permitted beneficial use of the subject property.’”17 At its first hearing on October 30, 1997, the zoning board unanimously denied Caruso’s petition.18 However, approximately one month later the zoning board reconsidered the application by its own motion, and granted it on January 29, 1998, by a four-toone vote, without providing any record of the reasoning underlying this decision.19 The neighbors appealed the zoning board’s decision to the superior court, where its grant of the application was affirmed upon the judge’s finding that Caruso “met the threshold showing required for the granting of a dimensional variance (‘more than a mere inconvenience’).”20 In upholding the zoning board’s decision, the superior court judge held that the planning board’s previous decision to grant the conditional lot-line change rendered the merger provisions of the Johnston zoning ordinance irrelevant to review of the case.21 The neighbors petitioned the Rhode Island Supreme Court for a writ of certiorari, and that petition for review was granted.22 ANALYSIS AND HOLDING In analyzing the case, the supreme court first noted that following its decision in Viti v. Zoning Board of Review of Providence,23 it was firmly established that a request for a “dimensional variance” from dimensional or area restrictions regulating the appropriate use of a particular piece of property required only a showing by the applicant landowner of “‘an adverse impact amounting to more than a mere inconvenience.’”24 16. Id. at 581. 17. Id. at 581 (quoting R.I. Gen. Laws § 45-24-31(61)(ii) (1994)). 18. Id. 19. Id. Although the decision was rendered in January, the written decision in the matter was filed on March 5, 1998. Id. In this decision, the zoning board provided “no reasons for its ruling, nor did its decision indicate why it had reconsidered its earlier denial of the requested variance.” Id. at 581. 20. Id. at 581. 21. Id. 22. Id. 23. 166 A.2d 211, 214 (1960). 24. Sciacca, 769 A.2d at 582 (citing Gara Realty, Inc. v. Zoning Bd. of Review of

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 However, the court notes that the General Assembly’s decision to “comprehensively amend Rhode Island’s zoning laws in 1991”25 through the enactment of General Laws § 45-24-41, created a “new, uniform, and comprehensive state-wide zoning plan that revised previous zoning laws in several important respects.”26 One respect in which this newly enacted zoning amendment affects previous zoning law is through its redefinition of the term “more than a mere inconvenience” to mean, for purposes of obtaining a variance, “‘that there is no other reasonable alternative to enjoy a legally permitted beneficial use of one’s property.’”27 The court noted that this redefinition by the General Assembly sounded the “death knell” of its previous interpretation of the Viti case, making it more difficult for a property owner to obtain a dimensional variance under the new standard.28 In addition, the court noted that the 1991 amendment passed by the General Assembly still retains the requirement that a dimensional variance not be granted to “‘the owner of a substandard lot where such lot was created by the deliberate conduct of the applicant.’”29 Applying these observations to the case at hand, the court concluded that the superior court judge misapplied the standard announced in § 45-24-41(c), and that this misapplication constituted reversible error. The supreme court held that the superior court should have considered both whether Caruso had met her burden proving “‘no other reasonable alternative’ to enjoying the use of lot No. 92 except by granting the requested variance, [and also] the self-created hardship rule of § 45-24-

South Kingstown, 523 A.2d 855, 858 (R.I. 1987) (quoting DeStefano v. Zoning Bd. of Review of Warwick, 405 A.2d 1167, 1170 (1979)); Viti, 166 A.2d at 214). 25. See 1991 Pub. Laws ch. 307 § 1. 26. Sciacca, 769 A.2d at 582-83 (The supreme court notes that the General Assembly “repealed what formerly had been sections 1 through 26 of chapter 24 of title 45 of the General Laws,” and that as a result, “those zoning provisions that had authorized municipalities to relieve property owners of particular zoning restrictions by means of a variance, including deviations and dimensional variances, were superceded by § 45-24-41.”). 27. Id. at 583, n. 6 (quoting R.I. Gen. Laws § 45-24-41(d)(2) (1994)). 28. Id. at 583; see also id. at 582, n. 6. 29. Id. at 583, (citing Rozes v. Smith, 388 A.2d 816, 820 (1978) (quoting 3 Robert M. Anderson, American Law of Zoning§ 18.57 at 299-300 (2d ed. 1977))); see also R.I. Gen. Laws § 45-24-41(c)(2) (1994) (requiring the applying landowner to show that the present hardship is not the result of the applicant’s prior action before a variance can be granted).

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41(c)(2).”30 Further, the court held that the zoning board had improperly granted Caruso’s variance because they had not taken into account her role in creating the hardship from which she was seeking relief.31 Caruso’s prior act of petitioning the planning board to have her merged lot re-subdivided created a substandard lot requiring a dimensional variance before any building could occur on the premises.32 “Thus, Caruso sought relief from dimensional zoning requirements that became applicable to her substandard lot only because of her earlier illegal subdivision of the property before the planning board.”33 The supreme court held that the zoning board and the superior court misapplied state law through both their respective acts of granting and of upholding Caruso’s requested dimensional variance.34 Finally, the court commented on the deficiency of the zoning board’s record regarding the basis for its decision in this case. Here, the Johnston zoning board recorded only their decision on the record, and failed to provide the later reviewing courts with a specification of the evidence that the board was considering and whether this evidence meets the requirements for variance relief set forth in § 45-24-41(c) and (d).35 The supreme court cautioned zoning boards to provide such a record in rendering their decisions, and warned that zoning board decisions made due to “‘special knowledge’” by a particular board member of a local area or condition “‘will not be upheld . . . unless the record reveals the underlying facts or circumstances the board derived from its knowledge of the area.’”36 CONCLUSION The Rhode Island Supreme Court held that a landowner seeking a dimensional variance from a zoning board must prove, in accordance with the redefinition provided in § 45-24-41(d)(2), that no reasonable alternative exists for the landowner to enjoy a legally permitted beneficial use of his or her property before such 30. 31. 32. 33. 34. 35. 36.

Id. at 583. Id. at 584. Id. Id. at 584. See id. See id. at 585. Id. at 585 (quoting DeStefano, 405 A.2d at 1171).

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 a variance can legally be granted. The court emphasized that a dimensional variance cannot be granted to an individual who has created his or her own hardship through prior action, in accordance with § 45-24-41(c)(2). Finally, the court warned zoning boards to clearly note the evidence supporting their decisions on the record to assist reviewing courts in interpreting their findings. Lucy H. Holmes

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Legal Malpractice. Richmond Square Capital Corp. v. Mittleman, 773 A.2d 882 (R.I. 2001). An attorney and his law firm committed legal malpractice by failing to notify lender about unpaid-tax encumbrances on mortgaged property used to secure a loan, and this subsequently damaged the lender because it was forced to pay back-taxes in order to maintain its collateral and priority as a first position lender. Furthermore, any evidence of a settlement between the lender and a guarantor over the loan default was inadmissible to disprove damages regarding the legal malpractice claim. FACTS AND TRAVEL Richard Mittleman (Mittleman or defendants) and the law firm of Cameron and Mittleman (defendants) appealed from a damages judgment after a jury found them liable to their client, lender Richmond Square Capital Corporation (Richmond Square or plaintiffs), for legal malpractice.1 The plaintiffs retained the defendants for representation in connection with a loan to be made to Parking Corporation of America (Parking), and to be secured by mortgages on several pieces of real estate including the Shepard Building.2 The alleged malpractice occurred when Mittleman assured the president of Richmond Square, Harold Schein (Schein), that Richmond Square would have a first position mortgage on the Shepard Building property.3 At this point Schein believed that the Shepard Building was free and clear of all encumbrances because he would not have made the loan if he knew there were outstanding taxes due and owing on the property.4 As a small business investment corporation, Richmond Square had certain lending limits which were exceeded by adding the amount of unpaid taxes to the loan extended to Parking.5 Shortly after the property’s closing, Parking failed to make required loan payments, and in December 1990, the plaintiffs

1. 2001). 2. 3. 4. 5.

See Richmond Square Capital Corp., v. Mittleman, 773 A.2d 882, 883 (R.I. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 received notice of a tax sale on the Shepard building.6 “Schein testified that he was shocked to receive such notice because he thought all the taxes [had been] paid by the previous owner.”7 To avoid public auction, Richmond Square paid the 1989 back-taxes and in February 1991 instituted a foreclosure on the Shepard building property, subsequently selling it.8 During the foreclosure proceedings, Richmond Square entered into a settlement with David Golden (Golden), the president of Parking, concerning the loan guaranty.9 In exchange for releasing Golden from his guaranty, he agreed not to contest the foreclosure, gave Richmond Square several properties, and paid $40,000.10 On December 17, 1993, Richmond Square filed a legal malpractice action.11 Initially, the action was dismissed pursuant to the statute of limitations, but the Rhode Island Supreme Court reversed, holding that there was a question of material fact as to when Richmond Square discovered the tax liens.12 If the plaintiffs did not discover the validity of the tax liens until on or after December 17, 1990, their claim was timely.13 The jury found that Richmond Square did not learn of the tax liens until December 17, 1990 at the earliest and, therefore, rendered a verdict of $127,182.16 in its favor.14 ANALYSIS AND HOLDING On appeal, the defendants contended that Richmond Square failed to prove its actual damages.15 The defendants also asserted that the trial justice erred in excluding evidence concerning the settlement between Richmond Square and Golden that, if admitted, would have reduced or negated Richmond Square’s damages arising from the legal malpractice.16 The defendants argued that the settlement documents would have helped the jury 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Id. at 884. Id. Id. Id. Id. Id. Id. Id. Id. at 885. Id. Id.

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analyze the value of the consideration given by Golden to determine if this amount was more or less than Golden’s initial obligations under the loan.17 Ultimately, the defendants asserted that without these documents in evidence the jury was not in a position to determine whether Richmond Square suffered any damages.18 In addition, defendants argued that Richmond Square was reimbursed for any damages through the settlement agreement with Golden, and that, in spite of the back-taxes payment and the expenses of foreclosure, Richmond Square profited from the settlement.19 The plaintiffs asserted that the settlement documents were irrelevant because they were speculative, did not have probative value, and were too far removed from the loan transaction at issue.20 Furthermore, Richmond Square argued that it suffered a front-end cost ($79,493.34) by having to pay the taxes on the Shepard property in December of 1990.21 The Rhode Island Supreme Court affirmed the judgment and held that there was no abuse of discretion on behalf of the trial judge.22 In this malpractice action, the plaintiffs have the burden of proving that the defendants were the “but for” cause of plaintiff’s damages incurred in paying the back taxes.23 Here the court held that reasonable persons could conclude that Richmond Square suffered damages when it incurred an unforeseen expense in paying the back taxes, and that Mittleman was negligent in failing to discover these taxes before the closing date.24 The court further pointed out that regardless of the loan’s fate, Richmond Square was forced to pay back-taxes to maintain its collateral for the loan to Parking.25 Regarding mitigation, the court held that the trial judge did not abuse his discretion by refusing to admit the settlement documents.26 First, the settlement documents did not indicate 17. 18. 19. 20. 21. 22. 23. 24. 25. 26.

Id. Id. Id. at 886. Id. Id. Id. Id. Id. at 886-87. Id. at 887. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 that the properties and other consideration covered the back taxes that were owed.27 Furthermore even if the documents were specific as to the back taxes, they were inadmissible because the value of the settlement would not have reduced the damages the plaintiffs incurred in paying back taxes.28 This was an expense that the plaintiffs had to pay regardless of the fate of the loan or any subsequent settlement.29 Finally, the settlement documents did not contain specific values of the properties, thus, introduction into evidence would have caused the jury to speculate impermissibly.30 Overall, the trial judge could not have reduced the jury’s award because the evidence in the record did not specifically indicate that the value of the settlement with Golden exceeded the amount of the unpaid loan and covered or reduced the back-tax payments.31 Moreover, evidence of appraisals or other documents concerning the settlement properties’ value would be barred by the collateral source doctrine.32 CONCLUsION The defendants’ failure to discover and notify the plaintiffs of the existence of back-taxes on the Shepard Building was legal malpractice and the proximate cause of the front-end expense incurred by Richmond Square. There was no abuse of discretion in precluding the admission of the settlement documents that were speculative and non-probative. Camille A. McKenna

27. Id. 28. Id. 29. Id. 30. Id. 31. Id. at 888. 32. Id. The collateral source doctrine “‘mandates that evidence of payments made to an injured party from sources independent of the tort-feasor are inadmissible and shall not diminish the tort-feasor’s liability to the plaintiff.’” Id. at 887 (quoting Gelsomino v. Mendonca, 723 A.2d 300, 301 (R.I. 1999)).

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Municipal Law. Mercado v. City of Providence, 770 A.2d 445 (R.I. 2001). In personal injury actions against a city for failure to maintain a sidewalk, the plaintiff must provide notice of the injury to the city within sixty days from the time of the alleged injury. FACTS AND TRAVEL On July 8, 1996, Dioairo Mercado (Mercado) allegedly fell in a hole that surrounded a water shut off value and injured his left foot and leg.1 Mercado notified the city council of his claim on August 5, 1997.2 On January 12, 1999 Mercado filed a personal injury action against the city in which his sole cause of action was that the city negligently failed to repair or replace the sidewalk.3 The city denied the claim of negligence in its answer and raised as an affirmative defense Mercado’s failure to provide proper notice as required by statute.4 On February 2, 1999, the city filed a motion for summary judgment, asserting that Mercado failed to comply with the sixty-day notice requirement set forth in section 45-15-9 by filing his claim on August 6, 1997, thirteen months after his injury.5 The city’s motion was heard and granted on June 22, 1999.6 Mercado filed a timely appeal.7 BACKGROUND An individual who suffers an injury as a result of a municipality’s failure to maintain its highways or bridges, including its sidewalks, may recover damages8 provided that the claimant files notice with the municipality within sixty days of the injury.9 The purpose of the notice provision is to inform the city or town of the location where the injury occurred and the nature of 1. 2. 3. 4. 5. 6. 7. 8. 9.

Mercado v. City of Providence, 770 A.2d 445, 445 (R.I. 2001). Id. at 446. Id. Id. Id. Id. Id. R.I. Gen. Laws § 45-15-8 (2001). R.I. Gen. Laws § 45-15-9 (2001).

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 the claim so that the city or town may investigate the circumstances, prepare a defense against the allegations or determine the advisability of settling the claim.10 ANALYSIS AND HOLDING On appeal, plaintiff argued that, pursuant to Karczmarczyk v. Quinn,11 the required notice was not necessary because the disrepair was the fault of the city’s Water Supply Board and not its Department of Public Works.12 In Karczmarczyk, this court distinguished between a municipality’s activity as a governmental function and a municipality’s activity as a proprietary function. A municipality’s statutory obligation to maintain its highways and bridges constitutes a governmental function, while providing a water hose for a third party’s needs constitutes a proprietary function.13 Furthermore, claims alleging failure or negligent performance of a governmental function are subject to the sixtyday notice requirement set forth in section 45-15-9.14 However, the plaintiff’s complaint did not allege negligence by the Providence Water Supply Board, rather the complaint asserted that the city had a duty to maintain its sidewalks and negligently failed to do so.15 Since maintaining highways and bridges, including sidewalks, constitutes a government function, the plaintiff was required to comply with the sixty-day notice requirement.16 CONCLUSION Maintaining highways and bridges, including sidewalks, constitute a government function and not a proprietary function, thus subject to the sixty-day notice requirement set forth in section 45-15-9. Because the plaintiff failed to give the sixty-day notice requirement, his claim must be dismissed.

10. 11. 12. 1964)). 13. 14. 15. 16.

Mercado, 770 A.2d at 447. 200 A.2d 461 (R.I. 1964). Mercado, 770 A.2d at 446 (citing Karczmarczky v. Quinn, 200 A.2d 461 (R.I. Id. Id. Id. Id.

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103 Mark P. Gagliardi

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Property. Phoenix J. Finnegan v. Seaside Realty Trust, 777 A.2d 548 (R.I. 2001). If an interest in a property has not been recorded, failure to notify the property interest owner of the tax sale will not invalidate the tax sale, nor will it invalidate any subsequent foreclosure of a right to redeem the property. FACTS AND TRAVEL In 1995, Leslie A. Parillo (Parillo) signed a five-year lease agreement with Seaside Realty Trust (Seaside) for a bathhouse at the Bonnet Shores Beach Club.1 At the same time, Parillo and Seaside also entered into a purchase and sale agreement allowing Parillo to exercise an option to purchase the bathhouse for $1 at any time before “30 days prior to the execution of the lease.”2 Per the lease agreement, Parillo was responsible for the payment of taxes and fees levied against the property.3 Parillo did not record the lease or the option, and did not pay the assessed taxes.4 On May 21, 1997, after notification to Seaside and the mortgagees, the tax collector for the Bonnet Shores Fire District sold the property for non-payment of taxes to Phoenix J. Finnegan, a local real estate partnership (Finnegan).5 Seaside Realty Trust owned the bathhouse at the time of the sale.6 The Bonnet Shores Beach Club was the beneficiary of the trust; the trust instrument was not recorded either.7 The Fire District did not give notice to Parillo or the Beach Club.8 On April 22, 1999, Finnegan filed a petition to foreclose all rights of redemption in the bathhouse, naming Seaside and the mortgagees as respondents in the petition.9 Again, no notice was given to Parillo or the Beach Club.10 Finnegan’s motion was granted June 4, 1999, and the court entered final judgment

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Phoenix J. Finnegan v. Seaside Realty Trust, 777 A.2d 548, 548 (R.I. 2001). Id. Id. Id. Id. at 548-49. Id. at 548. Id. Id. at 549. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 foreclosing all rights.11 On June 24, 1999, Parillo filed a motion with the Superior Court to vacate the final judgment in favor of Finnegan, claiming that the tax sale and the redemption foreclosure petition were void.12 The court denied the motion, and Parillo appealed.13 ANALYSIS AND HOLDING In 1999, the supreme court held that mail or personal notice must be given to “readily identifiable interested parties[.]”14 Though Parillo clearly possessed a property interest in the bathhouse that was adversely affected by the property sale, the interest had never been recorded.15 Therefore, notice was not required, as her interest was not readily identifiable to the tax collector or the title examiner hired by Finnegan.16 CONCLUSION Since Parillo did not record her property interest, that interest was not readily identifiable to the parties conducting the tax sale of the bathhouse she was leasing with an option to purchase.17 Due to these facts, Parillo’s failure to receive notice did not invalidate the tax sale or the subsequent foreclosure of her right to redeem the property.18 The court denied Parillo’s appeal and affirmed the final judgment entered by the superior court.19 Susan Knorr Rodriguez

11. 12. 13. 14. 15. 16. 17. 18. 19.

Id. Id. Id. Id. (citing Robert P. Quinn Trust v. Ruiz, 723 A.2d 1127, 1129 (R.I. 1999)). Id. Id. Id. Id. Id.

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Regulation of the Legal Profession. In re Ferrey, 774 A.2d 62 (R.I. 2001). The Rhode Island Supreme Court possesses ultimate and exclusive authority to determine who may or may not be permitted to practice law in Rhode Island and nonresident attorneys must file pro hac vice motions with the court prior to practicing in Rhode Island. FACTS AND TRAVEL Steven E. Ferrey (Ferrey) was a member in good standing of the Massachusetts bar.1 He sought permission to continue providing legal services for his client in front of the Energy Facility Siting Board, a state administrative agency.2 He filed a pro hac vice motion in the Rhode Island Supreme Court.3 His motion was filed in the alternative; he requested permission to practice in front of the board beginning from the time of the filing of the motion “and/or” that the admission be made nunc pro tunc, as he had already been practicing law in front of the agency board.4 The agency gave Ferrey the specific permission to practice in front of it.5 ANALYSIS AND HOLDING The Rhode Island Supreme Court granted that part of the motion seeking prospective permission to practice, but would not retroactively grant the motion to the time when it should have been filed, before Ferrey’s first appearance in front of the agency.6 The court said that it had “never before, in any published opinion or order, has granted a pro hac vice request nunc pro tunc when to do so ‘would be tantamount to affixing an ex post facto imprimatur of approval on what might under some circumstances be construed as the unauthorized practice of law.’”7 Rhode Island General 1. In re Ferrey, 774 A.2d 62, 63 (R.I. 2001); see also Peter S. Margulies, Protecting the Public without Protectionism: Access, Competence and Pro Hac Vice Admission to the Practice of Law, 7 Roger Williams U. L. Rev. 2 (2002). 2. Id. 3. Id. 4. Id. at 65. 5. Id. 6. Id. at 63. 7. Id. (quoting In re Church, 303 A.2d 758, 759 (R.I. 1973)).

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Laws section 11-27-5 prohibits the practice of law by non-members of the Rhode Island bar.8 Rhode Island General Laws section 1127-2 defines the practice of law as “the doing of any act for another person usually done by attorneys at law in the course of their profession . . . includ[ing]: . . . acting as the attorney . . . before any court, referee, master, auditor, division, department, commission, board, judicial person, or body authorized . . . to exercise any judicial power . . . .”9 Thus, Article II, Rule 9, of the Rhode Island Supreme Court Rules was promulgated to address the admission of out-of-state attorneys desiring to practice law in Rhode Island.10 However, nothing in the rule mentions granting pro hac vice permission to represent clients in any place other than a court, including in front of boards and agencies.11 The omission of such language did not deprive the court “of [their] unquestioned inherent right” to permit such practice.12 Modern conditions are such that a great deal of the practice of law is performed “‘outside of any court and having no immediate relation to proceedings in court.’”13 Therefore, because the exclusive and ultimate authority to determine who may practice law in Rhode Island is vested with the Rhode Island Supreme Court, the court may allow the practice of law before any agency, board or commission.14 8. Id. Section 11-27-5 reads: “No person, except a member of the bar of this state, whose authority as a member to practice law is in full force and effect, shall practice law in this state.” R.I. Gen. Laws § 11-27-5 (2000). 9. Id. (quoting R.I. Gen. Laws § 11-27-2 (2000) (emphasis added by court)). 10. Id. at 64. Article II, Rule 9 states, in pertinent part: Any attorney who is a member in good standing of the bar of any other state, not residing in this state, may, upon special and infrequent occasion and for good cause shown upon written motion presented by a member of the bar of this state, be permitted in the discretion of the court to participate to such an extent as the court may prescribe in the presentation of a cause or appeal in any court of this state . . . . R.I. S. Ct. Art. II, R. 9. The rule continues and lists the prerequisites for showing good cause, such as: specialization in a complex field of law; a longstanding attorney-client relationship; a lack of local counsel with adequate expertise in the area of law; a question of law of a foreign jurisdiction; a need for extensive discovery in a foreign jurisdiction. Id. 11. See Ferrey, 774 A.2d at 64. 12. Id. 13. Id. (quoting R.I. Bar Ass’n v. Auto. Serv. Ass’n, 179 A. 139, 144 (R.I. 1935)). 14. Id. (citing Unauthorized Practice of Law Comm. v. State, 543 A.2d 662, 664 (R.I. 1988)).

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Absent prior permission, an out-of state lawyer who is practicing in Rhode Island is committing a criminal offense.15 Further, it is illegal to receive any form of remuneration for the practice of law without prior permission from the Rhode Island Supreme Court.16 State law provides for penalties and the duty is on the Attorney General to enforce the law.17 Whether Ferrey had been engaged in the unauthorized practice of law by appearing in front of the state agency was an issue not before the court.18 In its strongest tone, the court noted: This Supreme Court alone possesses sole authority to determine who may, and who may not, engage in the practice of law in this state. No municipal or state board, agency or commission shares in that authority, and none has ever been delegated by this Court to any municipal or state board, agency or commission.19 Thus, the law was clear that it is unlawful to practice law anywhere in Rhode Island without pro hac vice permission.20 Ferrey was a nonresident who had been given permission by the agency to practice, although the agency had no authority to do so.21 The court noted that he, like everyone else in the state, is presumed to know what the law is, but that his ignorance was Therefore, because of the “somewhat understandable.”22 ignorance and the mistakenly given permission, Ferrey’s request for continued representation was granted.23 However, though Ferrey may not have known the law, the court was not willing to assist in what section 11-27-5 prohibits by granting the motion nunc pro tunc because they “are duty bound to follow that law and not blindly ignore or condone past transgressions thereof.”24

15. Id. at 63, 64 (citing R.I. Gen. Laws § 11-27-5 (2000)). 16. Id. at 64 (citing R.I. Gen. Laws § 11-27-6 (2000)). 17. Id. (citing R.I. Gen. Laws §§ 11-27-14, 11-27-19 (2000)). 18. Id. 19. Id. at 65. 20. Id. at 64. 21. Id. at 65. 22. Id. However, the court cited Massachusetts case law, the state where Ferrey was authorized to practice, for very similar reasoning regarding judicial authority and statutory penalties in this context. Id. at 65 n.2 (citing Lowell Bar Ass’n v. Loeb, 52 N.E.2d 27, 30 (Mass. 1943)). 23. Id. at 65. 24. Id.

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Concurrence and Dissent Justice Flanders agreed with the majority that the motion should be granted, however, he disagreed with the majority because the motion was not granted nunc pro tunc.25 Article II, Rule 9, is limited and there are no other explicit rules regarding pro hac vice motions for the issue at bar.26 Additionally, granting the motion nunc pro tunc would also prevent the “inevitable tactical attempts—apparently already begun” that would undo what Ferrey had already done in the administrative proceedings, particularly since there was no apparent bad faith or wilful misconduct.27 Justice Flanders also addressed the pro hac vice process. Admission for nonresident lawyers should be governed through a rulemaking procedure, rather than the current practice of filing miscellaneous petitions to the Rhode Island Supreme Court.28 In that way, a procedure for nonresident lawyers who want to provide transactional legal services in Rhode Island could be established after providing notice, hearings and a public comment period.29 When the court selectively grants or denies the a pro hac vice request they “are roiling the waters of the bar unnecessarily, only to reap a tidal wave of confusion and fear in response.”30 There are no rules, no standards and no clear tests. This could potentially create problems for attorneys who act in good faith and could create unnecessary collateral litigation regarding the validity of work performed by a nonresident attorney in Rhode Island.31 It would be more appropriate for the court, the bar and other interested parties to come together and promulgate a rule addressing multijrisdictional practice and the myriad of other situations that would require pro hac vice approval.32 Justice Flanders also opined that the statutory provisions at

25. 26. 27. 28. 29. 30. 31. 32.

Id. at 65-66 (Flanders, J., concurring in part and dissenting in part). Id. at 66. Id. Id. Id. Id. Id. Id. at 66-67.

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issue do not address visiting attorneys, licensed in another state and in Rhode Island on temporary business.33 “[E]ven though the regular, continuous, or permanent practice of law in this state by nonresident attorneys would be unlawful without obtaining admission to the Rhode Island bar, legal business that is performed ‘while temporarily in this state’ by nonresident attorneys is arguably permissible.”34 Because there was no evidence in the record to suggest that Ferrey regularly practiced law in Rhode Island, granting the motion nunc pro tunc would not, despite the majority’s assertions, be sanctioning illegal activity.35 Section 11-27-3, concerning receipt of fees, was inapplicable to Ferrey, as well.36 That is because the statute is not triggered until a third party assignee of a fee owed to an attorney receives part of that attorney’s fee.37 That situation was not present in the case at bar and, thus, the statute was inapplicable.38 CONCLUSION In In re Ferrey, the Rhode Island Supreme Court reaffirmed that they alone possess the authority to allow or disallow the practice of law in Rhode Island. The power extends to all practice, including appearing in front of boards, agencies and commission. Granting a pro hac vice request nunc pro tunc could be considered as authorizing an illegal activity. The pro hac vice power remains exclusively within the power of the Rhode Island Supreme Court and it has never been delegated. Stephen P. Cooney

33. 34. 35. 36. 37. 38.

Id. at 67. Id. (quoting R.I. Gen. Laws § 11-27-13 (2000)). Id. Id. Id. (citing Pearlman v. Rowell, 401 A.2d 19, 20 (R.I. 1979)). Id.

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Tax. DeBlois v. Clark, 764 A.2d 727 (R.I. 2001). The appropriate burden of proof for a determination of domicile in a state income tax case is the preponderance of the evidence test as outlined in section 8-8-25 of the Rhode Island General Laws. FACTS AND TRAVEL This is an appeal of a tax deficiency judgment at the district court holding petitioner was a resident of Rhode Island and owed Rhode Island income taxes.1 In the district court the Department of Revenue initially raised two arguments: first, the petitioner is a domiciliary of Rhode Island, and second, the source of income rules mandated the income be treated as Rhode Island income subject to tax at a resident’s rate.2 However, the argument regarding source of income was not addressed in the district court’s opinion.3 Petitioner was a resident of Rhode Island for many years.4 However, in 1988 he decided to relocate to Florida.5 In the decision making process the petitioner contacted a tax expert to determine how to appropriately make Florida his permanent residence.6 Petitioner retained a condominium in Warren, as well as buying a condominium in Florida.7 Petitioner spent late May to early October and late November and December in Rhode Island and the remaining months in Florida. The parties stipulated that the petitioner spent less than 183 days in Rhode Island.8 While he was not using the condominium in Rhode Island, other family members, who were non-residents of Rhode Island, used it for a get away location.9 Family and business ties to Rhode Island remained.10 However, petitioner did resign from several civic and business groups explaining that he moved his

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

DeBlois v. Clark, 764 A.2d 727, 730 (R.I. 2001). Id. Id at 731 n.1. Id. at 730. Id. Id. at 734. Id. at 730. Id. at 730 n.1. Id. at 730. Id. at 733.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 residence to the State of Florida.11 After filing non-resident income tax returns for the years 1991, 1992 and 1993, petitioner received notices from the tax assessor stating that the tax was due in 10 days.12 The tax division determined that the petitioner was a Rhode Island resident, subject to the resident income taxes.13 The tax administrator affirmed the hearing officer.14 The district court held utilizing the clear and convincing standard that the petitioner was unsuccessful in changing his domicile and that the deficiency notices were valid since any deficiencies were de minimis.15 The main issue is whether the domicile must be established by a clear and convincing standard or by a preponderance of the evidence standard.16 The procedural issue is the validity of the deficiency notices received.17 BACKGROUND A resident for state income tax purposes is defined in R.I. General Laws section 44-30-5(a) as either someone who is domiciled in the state, or someone who is not domiciled in this state, that meets the following conditions: they own a permanent residence in the state and they are actually present in the state for more than 183 days.18 An additional method for the state to tax at resident rates, is the source of income theory that is set forth in R.I. General Laws section 44-30-32.19 However, this theory was not addressed in the district court’s opinion.20 ANALYSIS AND HOLDING

11. Id. at 736. 12. Id. 13. Id. 14. Id. at 731. 15. Id. 16. Id. at 730. 17. Id. 18. The 183-day limit is not an issue in this case because the parties stipulated that the petitioner was not located in the state for more than 183 days. 19. Id. at 731 n.1. 20. Id.

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The supreme court held that the correct burden of proof is the preponderance of evidence standard.21 Applying that standard, the court found that the petitioner was successful in changing his domicile to the state of Florida.22 The court also held that the notices of deficiencies received by the taxpayer were defective.23 The court stated that R.I. General Laws section 8-8-28 governs the burden of proof in tax cases.24 That statute states that a “preponderance of evidence shall suffice to sustain the burden of proof”.25 The statute goes on to say that if the issue is one of fraud, then the standard is the clear and convincing standard.26 The court held that because the Department of Revenue did not assert fraud, the petitioner needed only to show by a preponderance of the evidence the change in domicile state.27 The tax administrator argued that the statute allows both the burden of proof and the burden of production to shift.28 The court held that the burden of proof lies with the party looking for affirmative relief.29 The court went on to explain that the burden of production shifts as the case proceeds in the same manner as any other civil suit.30 Once the court decided the appropriate legal standard, it went on to resolve the case, as all the facts were uncontroverted.31 To resolve the case, the court needed to address the domicile of the petitioner and the validity of the notices.32 The court stated a person can have only one domicile, although he can have several residences.33 The court defined the test to change a domicile, as consisting of two prongs.34 The first prong mandates that the person must have a physical abode in the new location.35 The second prong requires that the person have 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

Id. at 730. Id. Id. Id. at 731. Id. at 732. Id. Id. at 732-33. Id. at 732. Id. Id. at 733. Id. Id. at 733-38. Id. at 734. Id. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 the intent to stay permanently in the new location.36 The court held that the petitioner was able to demonstrate both prongs of the above test. The petitioner’s ownership of the condominium in Florida satisfied the first prong.37 The second test must be determined on a case-by-case basis.38 The district court relied heavily on the fact that petitioner decided that their final restingplace would be in Rhode Island.39 The supreme court stated that while this is a factor, it should be weighed lightly because there are many reasons a person would choose a final resting-place.40 Many of these reasons do not reflect where the person is interested in remaining while alive.41 The supreme court looked to the fact that the petitioner told people that he was changing his domicile to the state of Florida when resigning from civic and business groups.42 The supreme court also looked at the location of household items.43 The higher percentage of overall personal belongings in a residence, the more of an indication it is of which location the petitioner intended to be their domicile.44 In this case, the petitioner had over three-quarters of his possessions in the state of Florida, and had been granted a homestead exemption.45 Other factors the court considered included: voter registrations intangible taxes, driver’s licenses, car registrations, churches, country club memberships and wills, which the petitioner had changed to Florida.46 The above factors caused the court to decide that the petitioner had intended his domicile to be in the State of Florida, thus meeting the second test.47 It is not required that the petitioner abandon the old location completely.48 The final issue raised in the case is the validity of the

36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48.

Id. Id. at 735. Id. at 734. Id. Id. at 735. Id. Id. at 736. Id. at 735. Id. Id. at 735-36. Id. at 736. Id. Id. at 737.

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deficiency notices.49 The petitioners received deficiency notices that indicated “Federal Tax Liability Appears Incorrect Rhode Island Tax Computed Incorrectly.”50 The deficiency notice mandated that the tax was due within 10 days of the notice being mailed.51 The notices contained no other information.52 If the deficiencies in the notice do not comply with R.I. General Laws section 44-30-81 but are de minimis, the notices can stand.53 However, if the deficiencies are not de minimis then the court has the right to void the assessments.54 The R.I. General Laws section 44-31-81(b) states that the notice of deficiency will turn into an assessment after 30 days.55 At that time the tax can be collected.56 These notices contradicted that statute by demanding payment in ten days, therefore the court held them to be invalid.57 The notices were also held to be invalid because the reason for the deficiency was too vague and possibly misleading.58 From the notation on the deficiency, the petitioner could not tell that the issue was one of residency. It appeared to be that the Department of Revenue felt that the petitioner had calculated his federal income tax incorrectly.59 Since Rhode Island income tax is based on the federal income tax, this was a misleading comment.60 As such, this notice was held to be invalid and the assessments were unlawful.61 CONCLUSION The supreme court held that the petitioner was successful in changing his domicile, that the correct burden of proof is the preponderance of evidence standard and that the notice of deficiencies received by the taxpayers were defective. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61.

Id. at 736. Id. Id. at 737. Id. Id. Id. Id. Id. Id. at 737-38. Id. Id. at 738. Id. Id.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Marjorie A. Connelly

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Tort. Barone v. Christmas Tree Shop, 767 A.2d 66 (R.I. 2001). The Rhode Island Supreme Court held that a claim of negligence in a slip and fall case must include evidence of the nature and extent of the slippery substance, along with evidence concerning the length of time the substance was present at the site. FACTS AND TRAVEL Plaintiff Caroline Barone (plaintiff) entered The Christmas Tree Shop (defendant or shop) at approximately 10 A.M. on a snowy wet day.1 While perusing the merchandise, plaintiff slipped and fell, fracturing her leg.2 Plaintiff testified that she fell on a wet substance, but did not notice any water on the floor while she was awaiting assistance.3 Judith Kerr (Kerr), the assistant store manager, testified that the entrance area of the store was carpeted and mats designed to absorb excess water were present near the entrance.4 Kerr also testified that the floor where the plaintiff fell was clean and dry at the time of the accident.5 The trial judge granted the defendant’s motion for the entry of judgment as a matter of law, stating that no evidence had been offered regarding the condition of the floor at the exact location where the plaintiff fell.6 Plaintiff appealed.7 ANALYSIS AND HOLDING The supreme court found it determinative that no testimony was received concerning the nature and extent of any water on the floor at the precise location where plaintiff fell.8 It is settled law that a plaintiff who has fallen and is claiming negligence must present evidence proving that he or she fell because of an unsafe condition that the defendant was or should have been aware, and

1. 2. 3. 4. 5. 6. 7. 8.

Barone v. Christmas Tree Shop, 767 A.2d 66, 67 (R.I. 2001). Id. Id. Id. at 67-68. Id. at 68. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 that the condition existed for a long enough time to allow the owner or occupier of the premises to remedy the situation.9 In the instant case, evidence regarding the nature and extent of the water at the site of the fall was not presented.10 Furthermore, no evidence regarding the length of time the slippery substance was present at the location was introduced.11 As there was a complete absence of evidence substantiating a claim of negligence against the defendant, the trial justice did not err in granting a motion for judgment as a matter of law.12 Justice Goldberg dissented. In her dissent she pointed out that both the plaintiff and her sister testified that there were puddles of water at various locations within the shop.13 In addition, the presence of absorbent floor mats at the entryway was not established.14 Since the plaintiff had identified the substance she slipped on as water in her testimony, the finding of the trial justice that there was no evidence offered as to the condition of the precise location of the floor that the fall occurred was incorrect.15 This impermissible determination of fact by the trial justice constituted a violation of Rule 50 of the Superior Court Rules of Civil Procedure.16 Enough evidence existed in this case to create an inference of negligence.17 CONCLUSION Since the plaintiff failed to present any evidence of the nature and extent of the “slippery substance” at the site of her fall in the defendant’s shop, the judgment of the superior court was affirmed.18 Susan Knorr Rodriguez

9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Id. (citing Massart v. Toys R Us, Inc., 708 A.2d 187, 189 (R.I. 1998)). Id. at 68. Id. Id. Id. at 69. Id. Id. at 70. Id. Id. at 71. Id. at 69.

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Torts. Flanagan v. Wesselhoeft, 765 A.2d 1203 (R.I. 2001). (1) The trial court’s refusal to allow pediatric surgeon to question a patient’s mother regarding informed consent was not an abuse of discretion where the questions were repetitious of surgeon’s long cross-examination of mother. (2) Articles from two medical journals were not admissible, under the learned treatise exception to the hearsay rule, for use in cross-examining defendant pediatric surgeon and his medical expert, where no expert witness had authenticated the articles as reliable. (3) Deposition testimony of patient’s father that two physicians had told him that defendant pediatric surgeon’s performance of surgery on patient had violated the standard of care was inadmissible hearsay in medical malpractice trial, where the declarations were offered to prove that the surgeon had violated the standard of care. (4) Minor patient’s parents failed to preserve appellate review of their constitutional challenge to Rhode Island statute regarding prejudgment interest in medical malpractice actions, where Attorney General had not been served with a copy of the proceeding and had not been given an opportunity to be heard at the trial level. FACTS AND TRAVEL On August 30, 1989, plaintiff, Donna Flanagan (Flanagan or plaintiff), brought her eleven-month-old daughter, Ashley, to defendant Dr. Conrad Wesselhoeft (Wesselhoeft or defendant), a surgeon, to examine an enlarged cervical node below Ashley’s right ear.1 The examination lasted about five or six minutes; Wesselhoeft informed Flannagan the node would have to be removed and biopsied.2 The defendant warned only of the risk of infection and bleeding; no further discussion took place between the initial consultation and the surgery.3 The surgery took place on September 27, 1989.4 About a month after the surgery Flanagan noticed the child seemed to be “winging”; a condition

1. 2. 3. 4.

Flanagan v. Wesselhoeft, 765 A.2d 1203, 1205 (R.I. 2001). Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 resulting in a drooping shoulder and protruding scapula.5 This condition was later diagnosed as a probable severed spinal accessory nerve in the child’s neck resulting from the surgery performed by defendant.6 Another surgeon, Dr. Melvin Rosenwasser, performed corrective surgery and successfully repaired the severed nerve.7 After convalescing, Ashley fully recovered.8 In September, 1992, plaintiffs filed an action against Wesselhoeft and a resident physician at Rhode Island Hospital.9 In that case, the superior court ruled in favor of defendant on a judgment as a matter of law and the state supreme court reversed and remanded for a new trial.10 Upon remand, in front of a jury, a judgment for plaintiffs was reached with damages assessed at $209,446 in favor of the child and $41,889 in favor of the mother.11 Wesselhoeft appealed arguing three points: (1) that the trial court erred in sustaining several of plaintiff’s objections to crossexamination questions of Donna Flanagan regarding her knowledge of the risks of surgery and whether she would have gone ahead with the surgery regardless of the risks;12 (2) that the trial court erred in allowing excerpts from medical publications, used as part of the subject of cross-examination, to be read into evidence without first having been authenticated by an expert, and;13 (3) the trial court erred in allowing a deposition to be read into evidence that contained hearsay statements.14 Flanagan cross-appealed challenging the constitutionality of a Rhode Island statute that fixes the date of prejudgment interest in medical malpractice cases.15 ANALYSIS AND HOLDING The court handled the issues in “order of their importance” 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Id. Id. Id. at 1205-06. Id. at 1206. Id. Id. at 1205. Id. Id. at 1206. Id. at 1208. Id. at 1210. Id. at 1211.

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starting with the issue of the cross-examination of Flanagan.16 Flanagan was cross-examined by defense counsel who attempted to get her to admit “that had she been warned of the 1 percent possibility of damage to the accessory nerve and the possibility of malignancy that she nevertheless would have authorized the operation.”17 The trial court sustained several objections to questions about Flanagan’s informed consent because a number of questions along that line were repetitious and assumed facts not in evidence.18 Wesselhoeft argued that the trial justice’s ruling constituted reversible error.19 The supreme court held that the “scope and extent of crossexamination are subject to limitations within the sound discretion of the trial justice,” and that such rulings will not be overturned without a “clear abuse of discretion.”20 In addition, the trial court may, subject to an abuse-of-discretion standard, exclude questions on cross-examination that could mislead the jury.21 Here, there was ample evidence regarding Flanagan’s informed consent, given the totality of the evidence to show that errors committed by the trial justice, if any, were harmless.22 The court next turned to the issue of the plaintiff’s crossexamination of Wesselhoeft and his expert witness, Dr. Peter Altman, while using treatises that had not been authenticated.23 The use of treatises is proper, pursuant to Rule 803(18), if “‘established as a reliable authority by the testimony or admission of the witness or by other expert testimony or by judicial notice. If admitted, the statements may be read into evidence, but may not be received as exhibits.’”24 The attorneys properly used two medical journals,25 but Flanagan argued that without the evidence suggested in other unauthenticated journals, there was no evidence to support a jury verdict on the negligence count. The court held the trial justice erred by permitting the use of the 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Id. at 1206. Id. Id. at 1207. Id. at 1206. Id. at 1207. Id. Id. Id. Id. (quoting R.I. R. Evid. 803(18)). Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 unauthenticated articles in certain medical journals.26 However, the court stated that that the refusal by Wesselhoeft and Altman to recognize as authoritative these articles “strained all credulity.”27 Moreover, other evidence, including admissions by Wesselhoeft himself, “would certainly have supported a jury determination of negligence.”28 Thus, any error was not prejudicial.29 The court next turned to whether the trial justice erred by allowing the deposition of John Flanagan, the father of Ashley, to be read to the jury.30 The deposition contained hearsay statements made by other doctors, which concluded that Wesselhoeft had not properly isolated and avoided injury to the accessory nerve.31 The court found the reading of the deposition to be a violation of Rules 801(c) and 802 of the Rhode Island Rules of Evidence.32 Although a deposition may be read into evidence, it must be admissible evidence.33 Here, the evidence was hearsay and not admissible.34 However, this error was harmless given the existence of other evidence that supported the jury’s finding that defendant was negligent in failing to isolate and avoid injury to the nerve.35 Lastly, the court addressed plaintiffs cross-appeal challenging the constitutionality of a Rhode Island statute which provides that “prejudgment interest in medical malpractice actions begins on the date of the written notice of the claim or the filing of the action, whichever occurs first.”36 The court indicated that the law was constitutional, but did not rule specifically on the issue, as the plaintiffs had not served the Attorney General a copy of their challenge in superior court.37 Since the Attorney General was not given the opportunity to be heard at the trial level, there was no

26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37.

Id. at 1209. Id. Id. at 1210. Id. Id. Id. at 1211. Id. at 1210. Id. (quoting Super. Ct. R. Civ. Proc. 32). Id. Id. at 1211. Id. Id.

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issue that could be properly reviewed.38 CONCLUSION In Flanagan v. Wesselhoeft, the Rhode Island Supreme Court held that: the trial court did not abuse its discretion refusing to allow a repetitious cross-examination; articles from two medical journals were not admissible for cross-examination when the journals had not authenticated the articles; deposition testimony was inadmissible hearsay in medical malpractice trial, where the declarations were offered to prove that the surgeon had violated the standard of care; and the plaintiff’s failed to preserve appellate review because the Attorney General had not been served with a copy of the proceeding and had not been given an opportunity to be heard at the trial level. Joseph M. Proietta

38.

Id.

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Tort Law. Martinelli v. Hopkins, 787 A.2d 1158 (R.I. 2001). A town is engaged in a governmental function when issuing an entertainment license and is therefore is generally protected from liability, subject to certain exceptions, under the public-duty doctrine. However, when a town does not inquire about possible conditions that could result in harm to the public before granting the entertainment license, the issuance of the license can be considered egregious conduct and the town loses its protection under the public-duty doctrine. FACTS AND TRAVEL Frank Hopkins conducted an annual outdoor festival on his property in the Town of Burrillville that grew from 175 attendees in 1979 to approximately 4500 attendees in 1992.1 By 1990, before issuing an entertainment license to Hopkins, the Burrillville Town Council required Hopkins to hire a private security firm, ensure that the music was shut down by midnight, provide an adequate number of outdoor toilets, and assume responsibility for the expense of detail police officers called in by the Chief of Police.2 Hopkins only ordered fifty portable toilets to accommodate over 4000 people for the 1992 festival and he told the security firm that he hired that there would only be 2000 to 2500 people in attendance.3 In response to Hopkins’ representation about numbers, the Chief of Police only assigned seven police officers to assist him in handling police duties at the festival.4 That evening, the crowd quickly grew to about 4500 people.5 Free beer was served in mugs, as well as in quart, one-gallon and five-gallon containers.6 Before long, numerous people became drunk and unruly.7 The lines to the outdoor toilets grew so long that people began to climb over a snow fence that had been set up along the parameter of the property in order to relieve themselves 1. 2. 3. 4. 5. 6. 7.

Martinelli v. Hopkins, 787 A.2d 1158, 1162-63 (R.I. 2001). Id. at 1162. Id. at 1163. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 in the woods.8 Although the Chief of Police had become aware that the crowd had become intoxicated and unruly, he made no attempt to close down the festival for fear that the crowd might riot.9 The Chief of Police also allowed the band to play fifteen minutes past the midnight deadline.10 However, the band did not stop playing until the Chief of Police threatened them at 12:30 a.m.11 Meanwhile, between midnight and 12:20 a.m., a group of rowdy attendees climbed over the plastic fence and while doing so, a rotted tree, to which the fence was attached, toppled and fell upon Michael Martinelli rendering him a paraplegic.12 Martinelli later commenced this action. Before the trial, a consent order was entered granting the town’s motion for partial summary judgment and the town’s liability was capped at $100,000 pursuant to section 9-31-3 of the Government Tort Liability Act.13 A superior court jury awarded Martinelli $2 million and determined the town was twenty percent negligent.14 The trial justice found that the town was acting in a governmental function when it issued the entertainment license, but the town’s conduct in both issuing the license and in not containing the festival once it got out of hand was egregious, therefore it was liable under the egregious conduct exception to public-duty doctrine and was not protected from liability.15 Therefore, in accordance with the consent order that had been entered into by the town and section 9-31-3, the trial justice limited Martinelli’s recovery from the town to $100,000.16 After the trial, the town renewed its motion for judgment as a matter of law, claiming that Martinelli failed to show that the town’s actions were the proximate cause of his injuries.17 In the alternative, the town filed a motion for a new trial.18 Martinelli 8. Id. 9. Id. 10. Id. 11. Id. 12. Id. 13. Id. at 1164. Section 9-31-3 provides “in any tort action against any city of town. . . , any damages covered therein shall not exceed the sum of $100,000. . . .” R.I. Gen. Laws § 9-31-3 (2000). 14. Id. 15. Id. 16. Id. 17. Id. 18. Id.

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filed a post-trial motion seeking relief from the consent order earlier agreed upon by counsel for both parties.19 He sought relief from the statutory cap on the town’s liability asserting that the town’s police detail, while performing security guard type activities at the festival, was acting in a private function and not in a governmental function and in doing so, they acted in a negligent manner.20 The trial justice denied all of the motions and both the plaintiff and the town filed cross-appeals with the Rhode Island Supreme Court, which denied the cross-appeals and affirmed the lower court’s judgment.21 ANALYSIS AND HOLDING In his appeal, Martinelli argued for the abolition of the publicduty doctrine and, in the alternative, that the public-duty doctrine should not apply in this case because the police were carrying out the same duties as those carried out by the private security detail.22 He also argued that two exceptions to the public-duty doctrine were applicable to the case.23 While the court found Martinelli’s argument for the abolition of the public-duty doctrine compelling, the court refused to consider these arguments because of the stipulated agreement between the parties limiting his recovery from the town to $100,000 in damages.24 The town claimed on appeal that the trial justice erred in applying the public-duty doctrine’s egregious conduct exception to the facts of the case. The court held that while the town was engaged in a governmental function when it issued the entertainment license to Hopkins and therefore protected under the public-duty doctrine, the fact that it acted in an egregious manner stripped the town’s immunity from liability.25 Under the public-duty doctrine, the immunity enjoyed by the state is lifted in three situations: when the state owes a special duty to the defendant, when the act is egregious, and when the state is

19. 20. 21. 22. 23. 24. 25.

Id. Id. Id. at 1164-65. Id. at 1166. Id. Id. at 1166-67. Id. at 1167.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 performing a duty normally performed by a private entity.26 The court found that in past years the Chief of Police had objected to the issuance of Hopkins’ permit, stating that each year problems associated with the crowds at the festival had escalated and that the Chief of Police made the council aware of the large crowds and the mass consumption of free beer.27 In light of this information, the town continued to issue permits for the festival without ever inspecting the premises in which the festival was taking place.28 The town was on notice that the large crowds and unruly behavior presented certain risk to the spectators and by issuing the entertainment license nonetheless, the town acted in an egregious manner.29 The town also claimed that even if it was negligent, there was no evidence to show that the town’s negligence caused Martinelli’s injuries.30 The town argued that the causal connection between negligence and a plaintiff’s injury must be shown by evidence and not based on speculation.31 The court stated that while the town’s argument is true, negligence and proximate cause may also be shown by reasonable inference from the facts.32 The court concluded that the town should have know of the dangers inherent in a large crowd gathering together to consume large quantities of free beer.33 The town failed to inquire about the quantities of free beer that would be offered, the number of toilets that would be available, or the number of security personnel that would be on hand.34 The court also pointed out the fact that even though the Chief of Police was aware that the event was out of hand by 11:30 p.m., despite his authority to shut the event down at any time, he did not force the band to stop playing until 12:30 a.m.35 It was

26. Id. (citing Schultz v. Foster-Glocester Regional School District, 755 A.2d 153, 155 (R.I. 2000) (quoting Kuzniar v. Keach, 709 A.2d 1050, 1053 (R.I. 1998))). 27. Id. at 1168. 28. Id. 29. Id. at 1168-69. 30. Id. at 1169. 31. Id. (quoting Kurczy v. St. Joseph Veteran’s Association, Inc., 713 A.2d 766, 771 (R.I. 1998)). 32. Id. (quoting McLaughlin v. Moura, 754 A.2d 95, 98 (R.I. 2000) (quoting Skalling v. Aetna Ins. Co., 742 A.2d 282, 288 (R.I. 1999))). 33. Id. 34. Id. 35. Id. at 1169-70.

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during this time period in which Martinelli received his injuries.36 The court held that the town’s negligent issuance of the license, coupled with the Chief of Police’s failure to close down the event once it became unruly, was a proximate cause of Martinelli’s injury. CONCLUSION A town is engaged in a governmental function when issuing an entertainment license and is therefore protected from liability under the public-duty doctrine. However, when a town does not inquire about possible conditions that could lead to harm to the public upon granting the entertainment license, the issuance of the license can be considered egregious conduct and the town loses its protection under the public-duty doctrine. Joe H. Lawson II

36.

Id.

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Tort Law. Ohms v. State Dept. of Trans., 764 A.2d 725 (R.I. 2001). The Rhode Island Supreme Court held that a moped lessor had no duty to warn a lessee of hazards that might be encountered on all the highways, roadways, and trailways upon which a lessee may travel. FACTS AND TRAVEL Joanne S. Ohms (Ohms or plaintiff) leased a moped from Aldo’s Mopeds, Inc. (Aldo’s or defendant) to tour Block Island on or about August 5, 1994.1 Ohms had signed a lease agreement, which, among other things, contained a warning regarding the hazardous travel conditions that were present on Block Island.2 Ohms had experience with driving mopeds on Block Island, having done so on four other occasions.3 However, on August 5, 1994, the plaintiff took an outing to a portion of the island that she had never previously explored.4 During this expedition, the moped “tipped and ‘went down’ on the road.”5 Ohms alleged that she was injured as a result of gravel, pebbles, and debris in the road which caused the moped to go down.6 Ohms filed a negligence suit against Aldo’s, “alleging that it had failed to warn her of known and/or foreseeable conditions that existed on the roads on which people might drive a moped on Block Island.”7 The defendant filed a motion for summary judgment, which a justice of the superior court granted, holding that Aldo’s did not have a duty to warn Ohms or any other lessee about dangerous conditions that exist on public roads.8 ANALYSIS AND HOLDING The supreme court stated that whether Aldo’s had a duty to inform the plaintiff of the existence of dangerous road conditions

1. 2. 3. 4. 5. 6. 7. 8.

Ohms v. State Dept. of Trans., 764 A.2d 725, 726 (R.I. 2001). Id. Id. Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 was a question of law to be decided by the trial or motion justice.9 The court also stated that a summary judgment would be affirmed if the court, after de novo review, concludes “that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law.”10 The court concluded that there exists no duty on the part of the lessor of a vehicle to warn a lessee of hazards that may be encountered on various roadways over which the lessee may travel.11 The court also concluded that the warning found in the lease agreement was adequate to apprise the plaintiff of any roadway dangers she might encounter.12 CONCLUSION The Rhode Island Supreme Court denied and dismissed the plaintiff’s appeal, finding no error with the court’s finding that there was no duty on the lessor to wan a lessee of possible hazards. Michelle M. Alves

9. Id. at 727. 10. Id. (citing Woodland Manor III Assocs. v. Keeney, 713 A.2d 806, 810 (R.I. 1998) (quoting Rotelli v. Catanzaro, 686 A.2d 91, 93 (R.I. 1996)). 11. Id. 12. Id.

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Trusts and Estates. In re Estate of Gervais, 770 A.2d 877 (R.I. 2001). The surviving spouse has a right to vacate and rent a premises inherited from decedent in which he or she claims a life estate and by doing so, the surviving spouse does not abandon his or her life estate. FACTS AND TRAVEL In 1998, Maurice A. Gervais (the decedent) died and his daughter, Jeanette, was named executrix to his will.1 The decedent’s widow, Lillian Gervais (Lillian), elected to waive the devise made to her in the decedent’s will and instead chose to claim her right to a life estate in the decedent’s real estate, the marital domicile (the property).2 Upon the grant of her claim, Lillian vacated and leased the property to a third party.3 Upon learning of the lease, Jeanette asserted that Lillian had “abandoned” the property when she vacated it and Jeanette filed a motion in the probate court to “Enjoin and Restrain Widow from Leasing Premises.”4 In April, 1999, the probate court granted Jeanette’s motion and ordered that the value of the property be paid to Lillian in lieu of her interest, which was a life estate, in the property.5 Lillian then timely appealed to the superior court for a de novo review.6 The superior court reversed the decision of the probate court.7 The justice determined that “the common law rule permitting the holder of a life estate to rent his or her property is applicable because Lillian’s statutory right to elect a life estate in the decedent’s real estate was not conditioned upon her continued occupancy of the property.”8 The trial justice also found that the probate court exceeded its statutory authority by ordering the termination of Lillian’s life estate and that the value of the life

1. 2. 3. 4. 5. 6. 7. 8.

In re Estate of Gervais, 770 A.2d 877, 879 (R.I. 2001). Id. (citing R.I. Gen. Laws § 33-25-4 (1995)). Id. at 879. Id. Id. Id. Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 estate be paid to her instead.9 Jeanette appealed the superior court’s order.10 BACKGROUND Common law and statutory rights to dower and curtesy were abolished in Rhode Island in 1978.11 In place of dower and curtesy rights, a decedent’s real estate shall pass to the spouse vesting a life estate.12 In addition, if an estate is devised to a surviving spouse, the devise will bar the life estate unless the surviving spouse waives his or her devise and claims his or her life estate in the real estate of the decedent.13 ANALYSIS AND HOLDING On appeal, Jeanette argued that a widows right to elect a life estate was provided to ensure the widow a place to live after their spouse had died.14 She also argued that the statutory life estate replaced rights of dower and curtesy as they previously existed.15 She cited no authority to support her position, she only pointed out that the legislature did not specifically convey the right to vacate and rent a premises in which a spouse has claimed a life estate.16 From this observation, she asserted that Lillian abandoned the property upon vacating and leasing it to a third party.17 The Rhode Island Supreme Court disagreed with Jeanette’s assertion and found that “[s]uch an interpretation . . ., would produce an absurd result.”18

9. Id. at 879-80. 10. Id. at 880. 11. Id. (citing R.I. Gen. Laws § 33-25-1 (1995)). 12. Id. The statute reads in part: Whenever any person shall die leaving a husband or wife surviving, the real estate owned by the decedent in fee simple at his or her death shall descend and pass to the husband or wife for his or her natural life subject, however, to any encumbrances existing at death; provided that the liability, if any, of the decedent to discharge the . . . encumbrances shall not be impaired. R.I. Gen. Laws § 33-25-2 (2001). 13. Gervais, 770 A.2d at 880. 14. Id. at 880. 15. Id. 16. Id. 17. Id. 18. Id.

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The supreme court held that even though section 33-25-4 does not specifically give the surviving spouse the right to vacate and rent her real estate, a plain reading of the statute concludes that such a right exists.19 The court explained that although the legislature abolished the common law rights of dower and curtsey, there is no suggestion that they ever abolished the common law rights associated with life estates.20 The court went on to point out that section 33-25-4 grants the surviving spouse the right to waive any devise granted to him or her by the decedent and to claim a life estate in all real estate owned in fee simple by the decedent.21 The court then noted that “the term ‘real estate’ embraces every type and amount of real property.”22 Thus, the court held that the legislature did not limit the right to a life estate only to the marital domicile, but the surviving spouse has the right to a life estate in all of the decedent’s real estate held in fee simple, residential and nonresidential.23 The court reasoned “[c]onsequently, it would be absurd to read into section 33-25-4 a requirement that the surviving spouse simultaneously must reside on all the decedent’s property to preserve his or her life estate interest.”24 Thus, the court held that a surviving spouse does not abandon his or her life estate in decedent’s real estate upon vacating the property.25 Likewise, under common law, the holder of a life estate is entitled to the possession and use of his or her property free of interference from the remainderman, this includes the right of the life estate holder to the rents generated by the property during the life estate holder’s lifetime.26 Because the legislature did not abolish the common law rights of the holder of a life estate, Lillian did not “abandon” her life estate when she entered into a lease with a third party.27 Since Lillian had a right to claim a life estate in all of her deceased husband’s property owned by him in fee simple, including any rental properties he may have owned, 19. 20. 21. 22. 23. 24. 25. 26. 27.

Id. Id. at 881. Id. Id. Id. Id. Id. Id. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 the court held that it would be absurd to prohibit her from leasing to a third party.28 Finally, the supreme court agreed with the trial justice’s ruling that the probate court exceeded its procedural and substantive jurisdiction by sua sponte ordering that Lillian’s life estate be valued and paid to her in lieu of her interest.29 The probate judge made the order without the property being sold or taken and without any request or petition by Lillian as required by Rhode Island General Laws section 33-25-5.30 CONCLUSION In In re Estate of Gervais, the supreme court affirmed the trial court’s ruling that he surviving spouse has a right to vacate and lease a premises inherited from the decedent in which he or she claims a life estate and by doing so, the surviving spouse does not abandon his or her life estate. Also, because the surviving spouse did not petition the court to do so as required under Rhode Island General Laws section 33-25-5, the probate court exceeded its procedural and substantive jurisdiction by sua sponte ordering a valuation of the surviving spouse’s life estate interest in the property and the payment to her of the value of that interest. Joe H. Lawson II

28. 29. 30.

Id. Id. at 882. Id.

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Business Law. An Act Relating to the Uniform Commercial Code. On July 1, 2001, the Revised Article 9 became effective in Rhode Island. The revisions broaden the types of secured transactions covered, accommodate modern electronic technology, address some of the issues with the previous Article 9 and provide guidance for a smooth transition between the previous and revised articles. Effective July 1, 2001. 2000 R.I. Pub. Laws ch. 420. BACKGROUND Article 9 of the Uniform Commercial Code provides a “comprehensive scheme for the regulation of security interests in personal property and fixtures.”1 In 1990, the American Law Institute and the National Conference of Commissioners on Uniform State Laws established a committee to review Article 9.2 In 1992, the committee recommended that the article be revised and six years later, the sponsors approved the Revised Article 9. 3 All 50 states have since adopted the Revised Article 9; it became effective in 46 states, including Rhode Island on July 1, 2001, in Connecticut on October 1, 2001 and in Alabama, Florida and Mississippi on January 1, 2002.4 The purpose of this survey piece is to highlight some of the major changes to Article 9.5 HIGHLIGHTED CHANGES Scope The scope of Article 9 has been expanded to include previously excluded types of transactions. The transactions that have been added to coverage include security interests in an agricultural lien; sales of accounts, payment intangibles,6 or promissory notes; and consignments.7 Moreover, Revised Article 9 places limitations

1. R.I. Gen. Law § 6A-9-101 cmt 1. (2001) 2. Id. § 6A-9-101 cmt. 2. 3. Id. 4. See www.intercountyclearance.com/whats_new/jurisdictional_news.html (last visited April 13, 2002) 5. See § 6A-9-101 cmt. 4. 6. Id. § 6A-9-102(61) (defining the new term ‘payment intangibles’ as a type of general intangible). 7. Id. § 6A-9-109(a).

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 on some of the previous exclusions.8 The new limits are that the exclusion assignment of a deposit account applies only in a consumer transaction; the exclusion of the assignment of interest or claim in an insurance policy does not apply to an assignment by or to a health care provider of a health care insurance receivable9 and any subsequent right to payment; the exclusion of the assignment of interest in tort claims only applies if it is not a commercial tort claim; and the exclusion for the assignment of lien services and materials does not apply to agricultural liens.10 The expanded definition of “account” also serves to extend the article’s scope.11 “Account” now includes, in addition to its former meaning, the right to payment for an insurance policy, a secondary obligation, energy provided, use or hire of vessel under charter or other contract, lottery payments, insurance receivables and the right to payment arising out of the use of credit card.12 Filing The filing requirements laid out in Article 9 provided critical information to a secured creditor who wished to insure that he or she will have priority in the debtor’s payment obligations. Revised Article 9 made changes to rules governing: where to file, how to file, and exactly what must be included on a filed financing statement. The law of the jurisdiction of the debtor’s location will govern perfection.13 The debtor’s location is either the individual’s state of residence or, for a registered organization,14 the state in which the organization was registered or incorporated.15 Rhode Island’s centralized filing location continues to be the Secretary of

8. Id. § 6A-9-109(c), (d). 9. Id. § 6A-9-102(46) (new definition). 10. Id. § 6A-9-109(d). 11. See § 6A-9-102(a)(2) (the old definition of account encompassed only the right to payment for the sale or lease of good or services rendered which are not evidence by an instrument or chattel paper). 12. Id. Insurance receivables is also a new term meaning “an interest in or claim under a policy of insurance which is a right of payment of a monetary obligation for health-care goods or services provided.” R.I. Gen. law § 6A-9-102(46) (2001). 13. Id. § 6A-9-501. Formerly, Article 9 provided 3 alternatives for filing: local filing, central filing or both. Id. at cmt. 2. 14. Id. § 6A-9-102(a)(70) (defining the new term “registered organization” as a corporation under the laws of the state in which it was incorporated). 15. Id. § 6A-9-307.

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State’s Office.16 The drafters of the revisions recognized the technological advances in business transactions and the increased usage of electronic transactions. In response, a financing statement no longer requires a signature.17 Rather, Revised Article 9 requires that the debtor authorize the filing in an “authenticated record.”18 Thus, the drafters shifted the focus from the actual signature to the authorization of filing. Although the filing office may implement certain authentication procedures, authorization is a question for the courts, not the filing office. The following information must appear on the initial financing statement: (1) the name of the debtor, (2) the name of the secured party or its representative, and (3) the collateral covered by the financing statement.19 The debtor’s name must be identical to the debtor’s name on the public record of the state of organization; a trade name will not suffice.20 The filing office may refuse to accept the financing statement if it is filed in a method not authorized by the office, if the full filing fee is not tendered, or for lack of information.21 To be helpful in meeting these requirements, Revised Article 9 provides “safe harbor” written forms that must be accepted in every filing office as long as written communication is accepted.22 Four forms are provided: (1) the initial financing statement, (2) the initial financing statement addendum, (3) the amendment, and (4) the amendment addendum.23 Effective Date and Transition Period Part Seven of Revised Article 9 provides guidance on the transition between the former and revised articles. The revisions apply to all transactions within its scope entered into or created before July 1, 2001 if the former Article 9 did not govern those

16. 17. 18. 19. 20. 21. 22. 23.

Id. § 6A-9-501. Id. § 6A-9-502 cmt. 3. Id. § 6A-9-509. Id. § 6A-9-502. Id. § 6A-9-503(a)(1), (c). Id. § 6A-9-516(b). Id. § 6A-9-521 cmt 2. Id.

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104 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 transactions.24 In other words, those transactions that are included solely because of the newly expanded scope of the article are covered regardless of the transaction date. In addition to not being governed under the former article, the transaction or lien must be validly entered into or created and would be subject to Revised Article 9 if entered into after July 1, 2001, and the rights, duties and interests flowing from these transactions or liens remain valid after July 1, 2001.25 If the security interest was perfected under the former article and would be perfected under Revised Article 9 as well, then the security interest remains perfected.26 That security interest remains perfected for one year after the effective date as a grace period and is only enforceable thereafter if the Revised Article 9 enforcement and attachment requirements are met prior to the expiration of the grace period.27 Likewise, the security interest is only perfected after July 1, 2002 if the Revised Article 9 perfection requirements are complied with during that year.28 An unperfected security interest prior to the effective date remains enforceable for one year after July 1, 2001, and then continues to be enforceable only if the Revised Article 9 enforcement and attachment requirements are satisfied within that year.29 The unperfected interest becomes perfected in one of two ways: without any action if Revised Article 9 perfection requirements were satisfied prior to July 2002, or upon satisfaction of those requirements.30 For action not including a filing, taken prior to the effective date that is enforceable after the effective date, the statute provides a one-year grace period for compliance with Revised Article 9 requirements. A pre-effective date filing is sufficient to perfect if Revised Article 9 requirements are satisfied.31 If not, perfection continues until the earlier of (1) the time the financing statement expired under the law of the jurisdiction in which it was filed or (2) June 30, 2006. A continuation statement is 24. 25. 26. 27. 28. 29. 30. 31.

Id. § 6A-9-702. Id. Id. § 6A-9-703(a). Id. Id. § 6A-9-704. Id. Id. § 6A-9-705. Id.

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effective for a pre-effective date filed financing statement if the original filing office is the same office and jurisdiction as required under Revised Article 9.32 If Revised Article 9 requires a different filing office or jurisdiction, then the initial financing statement must be used to continue a pre-effective date filed financing statement, commonly referred to as “in lieu financing statement.”33 The debtor need not authorize this in lieu financing statement.34 The in lieu financing statement must indicate certain information regarding the effectiveness of the pre-effective date financing statement.35 This in lieu financing statement may be filed prior to the effective date or at any time during the effective period.36 If the statement is filed prior to July 1, 2001, it will retain the effectiveness period of the related pre-effective date financing statement.37 If it is filed on or after July 1, 2001, the effectiveness period will be calculated using the date that the in lieu financing statement was filed.38 Pre-effective date filed financing statements may only be amended if (1) the amendment is filed in the same office as the pre-effective date financing statement, (2) the amendment is filed at the same time or later than the in lieu financing statement, or (3) the amendment is in the in lieu financing statement.39 The statement may be terminated in the office that the pre-effective date financing statement was filed unless an in lieu financing statement has been filed.40 The secured party may file the necessary statement under this part in order to continue the effectiveness of the original financing statement filed prior to July 1, 2001.41 Because the debtor already authorized the original financing statement, his or her authorization is not required.42 As for priority, if priority was established before Revised 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42.

Id. § 6A-9705(d). Id. § 6A-9-706. Id. § 6A-9-706(c)(i). Id. § 6A-9-706(c)(2). Id. § 6A-9-706. Id. § 6A-9-706(b)(1). Id. § 6A-9-706(b)(2). Id. § 6A-9-707. Id. § 6A-9-707(e). Id. § 6A-9-708. Id. at cmt.

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106 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 Article 9 took effect, then former Article 9 governs priority.43 If a filing occurred before July 1, 2001 and did not serve to perfect the security interest under former Article 9 but would under Revised Article 9, then the priority of the security interest is perfected from the time that Revised Article 9 took effect.44 CONCLUSION The revisions to Article 9 of the Uniform Commercial Code increase the scope of transactions included, accommodate modern technology and address some of the obvious problems with the former Article 9. Now that all states, including Rhode Island, have adopted the revisions, the focus has shifted to a smooth transition from the old to the new. Dena M. Castricone Michael J. Daly Stan Pupecki

43. 44.

Id. § 6A-9-709(a). Id. § 6A-9-709(b).

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Financial Institutions. An Act Relating to Financial Institutions. Provided that certain requirements are met, each credit union that is converted into a financial institution chartered under the laws of Rhode Island has all of the power and privileges conferred on, and is subject to all the duties and liabilities imposed on financial institutions. Similarly, each credit union that is converted into a financial services entity chartered under the laws of the United States has all of the power and privileges conferred on, and is subject to all the duties and liabilities imposed on federally chartered services entity. Effective July 13, 2001. 2001 R.I. Pub. Laws ch. 233. SUMMARY The Credit Union Conversion Act of 2001 was enacted to set forth the procedures and requirements for the conversion from a credit union to a financial institution or other financial services entity. There are several requirements that must be met before a credit union can convert into a financial institution or other financial services entity. First, the credit union must comply with either the requirements of Chapter 2 of Title 19, if the conversion is to a financial institution, or the applicable federal laws and regulations, if the conversion is to a financial services entity.1 Second, the plan of conversion must be adopted by a two-thirds vote of the board of directors and be approved by both the director or the director’s designee and a majority vote of those members of the credit union qualified to vote pursuant to section 19-5-7.2 Members may vote either in person or by proxy at a meeting called by the board of directors.3 A credit union member who is qualified to vote is defined as an individual whose tax identification number or social security number is used by the credit union for interest reporting purposes to the Internal Revenue Service.4 Third, once the plan of conversion has been approved, the director or the director’s designee must issue a certificate of approval of the conversion to the converted entity 1. 2. 3. 4.

The Credit Union Conversion Act of 2001, R.I. Gen. Laws §19-5.1-3 (2001). Id. § 19-5.1-3 (b). Id. Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 and file it with the secretary of state along with the payment of fifty dollars.5 Additionally, a certificate of the general treasurer must also be filed stating that the converted entity has paid into the treasury for the use of the state, a sum equal to one tenth of one percent of its capital stock, the amount of which cannot be less than $100.6 The state must immediately record the certificate of approval upon the filing and the payment of the fifty dollars.7 Fourth, deposits must continue to be federally insured in order for there to be a conversion into a financial institution or other financial services entity.8 A conversion does not require the prior liquidation of the credit union.9 Furthermore, the corporate existence of the credit union does not terminate pursuant to a conversion into a financial institution or other financial services entity, rather there is a continuance of the corporate existence.10 However, if the plan of conversion calls for the issuance of capital stock, there are several requirements that must be met. First, the converted entity must issue and sell the stock issued in connection with the conversion at its pro forma market value which must be made by an independent appraisal.11 Second, the stock must be offered initially in a subscription offering to the members of the credit union on an eligibility record date established by the board of directors, giving those members priority rights to purchase the shares over the general public pro rata based on deposits.12 Third, the converted credit union must create a liquidation account for the benefit of its members on the eligibility record date.13 This liquidation account must represent the total equity of the credit union at the time calculated in accordance with the regulations promulgated by the director or the director’s designee.14 This liquidation account, unless otherwise impaired, is considered as part of the paid-in and unimpaired capital stock 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Id. § 19-5.1-3 (f). Id. Id. Id. § 19-5.1-3 (e). Id. § 19-5.1-3 (a). Id. § 19-5.1-3 (e). Id. § 19-5.1-3 (c). Id. Id. Id.

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and surplus of the newly chartered stock financial institution or financial services entity.15 A credit union conversion may be accomplished pursuant to a merger, by forming a holding company or by utilizing an existing holding company for the purpose of holding the shares of the financial institution or other financial services entity.16 The newly formed holding company may offer all of its stock to its depositors and general public, subject to subscription rights in favor of depositors, in lieu of the capital stock of the financial institution or other financial services entity.17 Mark P. Gagliardi

15. 16. 17.

Id. Id. § 19-5.1-3 (d). Id.

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Financial Institutions. An Act Relating to Mutual Holding Companies. Provides that a mutual savings bank may reorganize into a mutual holding company pursuant to this section. Effective June 22, 2001. 2001 R.I. Pub. Laws ch. 183. SUMMARY This Act amends Title 19 of the General Laws entitled “Financial Institutions” by adding chapter 2-14.1. The Mutual Holding Companies Act1 sets forth the method by which a mutual savings bank may reorganize into a mutual holding company. A mutual savings bank may so reorganize by organizing a mutual holding company and chartering one or more interim stock financial institutions or corporate subsidiaries and merging with those banks and subsidiaries.2 This may also occur in any other manner approved by the director.3 The stock financial institutions (institution) are not terminated under this Act, but are deemed a continuation of the mutual savings bank.4 However, the mutual holding company must always own a majority of the voting shares of capital stock of the institution.5 Furthermore, the institutions shall have all the powers and privileges granted a financial institution.6 The reorganization plan of the mutual holding company must be approved by a two-thirds vote of the board of trustees and by the director.7 The plan must also be approved by a majority vote of the depositors of the mutual savings bank at a board meeting.8 If shares of common stock are offered for sale by the institution, depositors shall be given subscription rights, and the offering shall be conducted in the manner provided in section 19-214, and in any regulations issued by the director under that section.9 The Act further provides that a mutual holding company

1. 2. 3. 4. 5. 6. 7. 8. 9.

R.I. Gen. Laws §19-2-14.1 (2001). Id. §19-2-14.1(a). Id. Id. Id. Id. §19-2-14.1(c). Id. §19-2-14.1(b). Id. Id. §19-2-14.1 (d).

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 and any subsidiary may engage in any activity permitted under the Bank Holding Company Act of 1956,10 or in any activity authorized by the director.11 In addition, a mutual holding company may, with the director’s approval, (1) merge or consolidate with another bank, financial services or savings and loan holding company, including a mutual holding company; or (2) acquire or consolidate with another financial institution, either in mutual or stock form.12 Finally, the Act states that a mutual holding company may convert to stock form with a two-thirds vote of the board of trustees.13 The conversion plan shall provide that minority stockholders shall receive an ownership interest in the resulting stock holding company, which is equal to their percentage ownership.14 The percentage ownership interest is adjusted taking into account the assets held by the mutual holding company, and the remaining shares sold pursuant to section 19-214.15 Lastly, the Act grants the director the power to issue rules and regulations to implement this section.16 Besty Wall

10. 11. 12. 13. 14. 15. 16.

12 U.S.C.A. § 1841 et seq. (2001). R.I. Gen. Laws § 19-2-14.1(e) (2001). Id. Id. §19-2-14.1(f). Id. Id. Id. §19-2-14(g).

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Public Health and Safety. An Act Relating to Public Health and Safety – Carbon Monoxide Detectors. Fire and carbon monoxide detections systems act. This act requires carbon monoxide detectors be located in the sleeping areas of each residence. Effective January 1, 2002. 2001 R.I. Pub. Laws ch. 177. SUMMARY This legislation (the Act) amends Title 23 of the Rhode Island General Laws, entitled “Health and Safety,” by amending Chapter 28.34, renamed “Fire and Carbon Monoxide Detection Systems” and Chapter 28.35, renamed “Fire Detectors and Carbon Monoxide Systems in Existing Residential Occupancies.”1 For both chapters, the Act provides that each residence must have a carbon monoxide detector system that is listed by a nationally recognized testing laboratory, which has been approved by the fire marshal.2 The rules for a new residence and an existing residence are very similar.3 One of the differences for new residences provided by the Act is that “all buildings hereinafter constructed or converted for residential occupancy, those premises being equipped with gas utilities, shall also be equipped with a carbon monoxide detector system. . . .”4 This is not applicable for existing structures. The law requires all residential buildings to have a carbon monoxide detector.5 On January 16, 2002, the Senate introduced a bill that would remove the language “those premises being equipped with gas utilities”.6 The Senate bill is proposed to be effective on passage.7 This would eliminate the major difference between a new structure and an existing residence that existed. Once the bill passes, the newly constructed residential buildings and the existing residential buildings must be equipped with carbon monoxide detectors; a minimum of one in each 1. 2. 3. 4. 5. 6. 7.

R.I. Gen. Laws §§ 23-28.34-1 et seq., 23-28.35-1 et seq. (2001). Id. §§ 23-28.34-1, 23-28.35-1. See id. §§ 23-28.34-1 to 23-28.35-15. Id. § 23-28.34-1 (emphasis added). Id. § 23-28.35-1. S.B. 2135 (SN) (R.I. 2001). Id.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 building, located outside sleeping areas will be required.8 If a room other than a bathroom separates a sleeping area, then each sleeping area requires a separate detector.9 Each carbon monoxide detector must be mounted in compliance with the manufacturer’s specifications, meet specific power indicators and meet specific audio signals.10 Property cannot be transferred without meeting these requirements; therefore, an existing structure may not be required to have a carbon monoxide detector until it is to be sold.11 However, cities and towns can require buildings not currently covered by these chapters (i.e., those not currently for sale), to comply within one year.12 The city can designate the department that will perform inspections for compliance.13 The seller is responsible for the fee that accompanies each inspection.14 Once a carbon monoxide detector is required, the owner must ensure it remains in proper working order.15 Marjorie A. Connelly

8. 9. 10. 11. 12. 13. 14. 15.

R.I. Gen. Laws §§ 23-28.34-3, 23-28.35-2. Id. Id. §§ 23-28.34-4, 23-28.35-3. Id. § 23-28.35-1. Id. Id. § 23-28.35-1.2. Id. Id. § 23-28.35-5.

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State Employee Benefits. An Act Relating to Public Officers and Employees – Insurance Benefits. Modifies the definition of “dependent” to include domestic partners who are at least 18 years of age and meet other qualifications set forth in this definition. Domestic partners are now eligible for certain state employment benefits including insurance. Effective, July 9, 2001. 2001 R.I. Pub. Laws ch. 110, § 1. SUMMARY This legislation (the Act) amends section 36-12-1 of the Rhode Island General Laws to include domestic partners within the definition of “dependent”.1 The amendment requires that a domestic partner be at least eighteen (18) years of age, mentally competent to contract, and not married.2 The amendment also requires that the partners reside together, are financially interdependent, and are not related by blood.3 Financial interdependence is defined by demonstrating evidence of at least two of the following: (1) a domestic partnership agreement or relationship contract; (2) joint mortgage or joint ownership of primary residence; (3) two of: (a) joint ownership of motor vehicle; (b) joint checking account; (c) joint credit account; (d) joint lease; and/or (4) the domestic partner is designated as a beneficiary in the employee’s will, retirement contract or life insurance.4 Susan Knorr Rodriguez

1. 2. 3. 4.

R.I. Gen. Laws § 36-12-1(3) (2001). Id. Id. Id.

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Workers’ Compensation Law. An Act Relating to Labor and Labor Relations- Workers’ Compensation-Benefits. Provides that a health care provider must give notice to an employee and his or her attorney with regard to a compensable injury for which the employee was treated and must give notice of release. A health care provider must also file an itemized bill with an employee and his or her attorney. Furthermore, this Act provides that an employer or insurer must pay weekly compensation to an injured employee who accepts suitable alternative employment. Finally, this section has been amended to delay the implementation of the six-year limitation on indemnity benefits to an injured employee who is not materially hindered. Effective, July 13, 2001. 2001 R.I. Pub. Laws ch. 355. SUMMARY The legislation (the Act) amends sections 28-33-8, 28-33-18.2, and 28-33-18.3 of the Workers’ Compensation Law. Regarding section 28-33-8(b), the Act provides that within three days of an initial visit following an injury, the health care provider shall provide to the insurer or self-insured employer and the employee and his or her attorney, a notification of compensable injury form approved by the administrator of the medical advisory board.1 The health care provider must also send a notice of release to the employee and his or her attorney within three days of the injured employee’s release or discharge, return to work, and/or recovery from injury.2 Under section 28-33-8(c)(1) a heath care provider must also file an itemized bill and affidavit every six weeks until the injured employee has ascertained maximum medical improvement.3 This Act provides that an itemized bill and affidavit must be filed with the insurer, employee and his or her attorney.4 Prior to this Act, only the insurer and self-insured employee received any notice regarding these issues.5 Section 28-33-18.2(a), which involves suitable alternative

1. 2. 3. 4. 5.

R.I. Gen. Laws § 28-33-8(b) (2001). Id. Id. § 28-33-8(c)(1). Id. Id. § 28-33-8.

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102 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol.6:584 employment, was amended to add that the employer or insurer shall pay the injured employee who accepts suitable alternative employment a weekly compensation equal to sixty-six and twothirds percent (66 2/3%) of the difference between the employee’s average weekly wage, earnings or salary before the injury and his or her weekly wages, earnings or salary from the suitable alternative employment.6 Section 28-33-18.3(a)(1) has been amended in that the definition of “material hindrance” will be applied to injuries on and after July 1, 1997, replacing July 1, 1995 as the relevant date.7 Material hindrance includes only compensable injuries causing more than sixty-five percent (65%) of functional impairment and/or disability.8 Therefore, some partially disabled employees will be able to continue to collect workers’ compensation indemnity benefits for more than six years. This Act also amends section 28-33-18.3(a)(2) in that the provision of this subsection now applies to all injuries from September 1, 1990 to July 1, 1997, rather than July 1, 1995.9 Camille A. McKenna

6. 7. 8. 9.

Id. § 28-33-18.2(a). Id. § 28-33-18.3(a)(1). Id. Id. § 28-33-18.3(a)(2).