October 30, 2013 4th Circuit published opinions

Gaines Motor Lines, Inc. v Klaussner Furniture Industries, Inc.

Gaines and other motor carriers sued Klaussner for shipping fees not paid by the logistics company Klaussner used to arrange for shipping its commercial goods. The district court granted summary judgment to Klaussner. Klaussner challenged the subject matter jurisdiction of the district court on appeal. The panel held there was no subject matter jurisdiction and remanded with instructions to dismiss. It held that the grant of power to contract in 49 USC 14101(b)(1) does not provide jurisdiction as private contracts do not create federal statutory rights. It further held that 49 USC 13701 et seq. do not provide a basis for jurisdiction as those sections apply when a tariff is filed with the federal government  and in any event one section Gaines argued applied is disclosure section and the other does not apply as Klaussner is the shipper on these facts not the consignee. Finally, the panel held that 49 USC 14501 does not preempt Gaines state law claims as those claims depend on a contract not the interpretation of federal law nor is the dispute one about prices, routes or services. Thus, no federal common law cause of action is needed and the panel declined to recognize one.

United States v McManus

McManus pled guilty to child pornography possession. The district court applied a distribution enhancement for expectation of a thing of value and ultimately sentenced McManus to 72 months imprisonment. The panel vacated and remanded for resentencing. The panel held as matter of first impression the expectation of a thing of value is an additional element for the enhancement to apply based on the plain language of the guideline and expectation means reasonably likely to occur. Here, the panel held the enhancement did not apply as individual proof of a defendant’s state of mind is required. Otherwise, the panel reasoned, all closed access file sharing would per se be in expectation of reciprocal access. The panel noted it joined two other circuits in reaching this conclusion. Factually, the panel noted the software used here allows users to prevent access by others and the government was able to obtain the image form McManus’ file without offering anything in return. As the government failed to provide any evidence of McManus’ individual expectations, the case was remanded for resentencing as the panel could not say the ultimate sentence will not be lower given the lower guideline starting point at resentencing.

Ballard v Bank of America, N.A.

Ballard sued Bank alleging violations of the equal Credit opportunity Act by requiring her to sign unlimited guarantees for loans to her husband’s business and restructurings after defaults. The district court dismissed for failure to state a claim. The panel, with one judge separately concurring, affirmed. The majority noted that bank may well have violated the Act by requiring Ballard to sign the guarantees as her husband’s creditworthiness was not assessed and she is not a co-owner of the business.  However, because each guarantee signed after husband’s default contained a waiver of any and all claims, and this was analogous to waivers of title VII claims in severance agreements which have been upheld, the majority held Ballard’s claims under the Act were waived. One judge separately concurred agreeing the claim was waived, but, arguing the Act was not violated as the signature was required as a joint owner of property and because Ballard had wealth not because of stereotypical thinking about wives.


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