Short Circuit: A roundup of recent federal court decisions

Defamation insurance, child labor, and a virulently racist attorney.

Please enjoy the latest edition of Short Circuit, a weekly feature from the Institute for Justice.

New on the podcast: offensively Big Pimpin', age limits for judges, a tyrannical wiffle ball tournament, and losing your driver's license over court fees. Click here for iTunes.

• Allegation: Days after LabMD, a cancer-screening lab, publicly criticized the FTC's yearslong investigation into a 2008 data breach at the lab, FTC staff recommend prosecuting the lab. Two staffers falsely represent to their superiors that sensitive patient data spread across the internet. (It hadn't.) The FTC prosecutes; the lab lays off all workers and ceases operations. District court: Could be the staffers were unconstitutionally retaliating for the criticism. D.C. Circuit: Reversed. Qualified immunity. (Click here for some long-form journalism on the case.)
• Nine women sue comedian Bill Cosby for defamation. The defamatory act: publicly denying he sexually assaulted them. Cosby: My homeowners insurance and umbrella coverage cover defamation; my insurer must pay to defend the defamation claims. Insurer: Ah, but there's an exclusion for claims arising out of sexual misconduct. Cosby: The claims arise out of my public statements; any sexual misconduct is a separate issue. First Circuit (in opinion by Justice Souter): Not an easy call, but the insurer must defend Cosby.
• Woman catches her shoe in groove in pavement at Tewksbury, Mass. gas station; she falls, is injured. Woman: The station had a duty to warn me of the danger, perhaps by painting the grooves (which are mandated by state law to contain spills) brightly. First Circuit: There is no such duty. But here's a Judge Selya vocab quiz for your trouble: pellucid, behoof, animadversions, and rescript.
• Allegation: Skippack Township, Penn. prison guard rubs his erect penis against inmate's backside (both men are clothed). The inmate complains to a supervisor, who smashes the inmate's head into a wall. Third Circuit: For the first time, we hold that a single act of sexual abuse by a guard can violate the Eighth Amendment's prohibition on cruel and unusual punishment (even absent force or injury). The inmate can amend his sex abuse claim against the guard. Moreover, his excessive force claim against the supervisor should not have been dismissed.
• Three attorneys representing plaintiffs in a class action about high-interest loans challenged the authenticity of a loan agreement for two years before revealing—surprise!—they'd gotten an identical copy from their client before the lawsuit even started. Fourth Circuit: And the trial court did not abuse its discretion in sanctioning the attorneys $150,000 for their lack of candor.
• Mississippi Gaming Commission firearms instructor accidentally shoots, kills fellow instructor. Fifth Circuit: Qualified immunity. The Fourth Amendment protects against intentional seizures, and this was unintentional. The widow's state suit pressing a tort claim may provide a remedy.
• Allegation: Inmates beg officer driving them to Ionia, Mich. prison to slow down and stop swerving. The officer laughs and accelerates; they hit a bump in the road; the inmates go airborne. Plaintiff lands on his head, neck, and back. He complains of extreme pain to a nurse, who gives him ibuprofen. He files a grievance; the nurse won't see about getting him pain medication unless he withdraws it. District court: Qualified immunity for the officer and the nurse. Sixth Circuit: Vacated. The district court must take another look.
• "The best laid schemes o' mice an' men/Gang aft a-gley." So said Robert Burns, regarding a mouse's nest disturbed by a farmer's plough. And so says the Seventh Circuit, regarding a contractor who bribed the CEO of Chicago's public schools. No need to shorten the contractor's 84-month sentence.
• This wrongful arrest and malicious prosecution action is a "hornbook example of how to waive an argument on appeal," says the Seventh Circuit. The plaintiff made a "bizarre argument" in the trial court, pressed an "irrational argument" on appeal, and then raised a new claim on appeal that was never raised below.
• Much of the world's cocoa bean supply comes from the Ivory Coast, where child and slave labor is common. Plaintiff: California consumer protection law requires Mars to inform consumers that such labor is part of its supply chain. Ninth Circuit: Nope. The law imposes a duty on manufacturers to disclose when products might pose a safety hazard. And the chocolate isn't hazardous. (Click here for some long-form journalism on the topic.)
• Man convicted of 1989 murder learns, years later, that his appointed counsel was virulently racist. (To cite but one example, counsel referred to one of his clients as a "nigger" who "got what he deserved"—a death sentence, later overturned.) Man: I have a Sixth Amendment right to effective counsel, which I didn't get. I should get a new trial. Ninth Circuit: No. You didn't show his racism adversely affected his performance. All three judges, concurring in their own judgment: We think an attorney who shows contempt and indifference to a minority client is not providing competent representation. Unfortunately, we're bound by Ninth Circuit precedent.
• Contrary to company policy, a billing manager at LabMD—a cancer-screening lab—installs music-sharing application on her work computer; a file containing patient data gets included in the music-sharing folder. In 2008 a cybersecurity firm finds it and tells LabMD the file has spread across the internet. (Which is false.) When LabMD declines to hire the cybersecurity firm, the firm reports the breach to the FTC, which prosecutes the case before its own FTC judge. LabMD does not settle; the expense of fighting forces the company to shutter. The FTC orders LabMD to adopt "reasonably designed" cybersecurity measures. Eleventh Circuit: The FTC's vague order is unenforceable because it doesn't tell LabMD how to improve its cybersecurity.
• U.S. Coast Guard intercepts vessel with the Colombian flag painted on its hull. The crew gets nailed on drug offenses. But wait! The relevant statute says that if Colombia's flag was "flying," the Coast Guard was obligated to check with the Colombian gov't before taking control of the ship, and they didn't. Eleventh Circuit: A painted flag doesn't fly.
• Hollywood, Fla. officer makes to pull man over at 3 a.m. for allegedly running a stop sign. The man, Livingston Manners, drives slowly for a tenth of mile to a well-lit gas station. Officer: Manners struggled when I tried to cuff him; he punched me and choked me. Manners: Not true; the officer lied on his report, resulting in bogus attempted-murder charge. (The charge is dropped before trial; a jury acquits Manners of resisting without violence, battery on an officer.) His defense costs $30k; he loses his job while awaiting trial. Can he sue the officer? Eleventh Circuit: Even if Manners didn't run a stop sign, there was probable cause to arrest because of his tenth-of-a-mile flight. And video shows he struggled. Qualified immunity.
• Gratiot County, Mich. officials foreclose on 35-acre parcel worth $100k over unpaid $2k tax debt. They sell the property for $42k and keep $2k to cover the tax bill—and keep the other $40k as well. District court: "In some legal precincts that sort of behavior is called theft." Motion to dismiss denied.
• Mississippi Supreme Court: Because the Mississippi Constitution assigns courts, not executive agencies, the duty to interpret statutes, the Court announces "we abandon the old standard of review giving deference to agency interpretations of statutes." Besides, when we deferred, we were all over the place: Sometimes we gave "great" deference, sometimes our deference was "illusory." (H/t: @KeatsTabby)

Can the government require you to obtain a license to work and insulate its requirements from constitutional scrutiny simply by declaring your work "professional"? Yes, says the Pennsylvania Commonwealth Court. Last year Airbnb property manager Sally Ladd filed suit against the Pennsylvania Real Estate Commission after an investigator warned her she was engaged in the unlicensed practice of real estate. Sally argued that subjecting her to the same onerous licensing requirements as traditional brokers violated her right to earn an honest living under the Pennsylvania Constitution. But according to the court, Sally failed to state a claim because she offered "professional" services having to do with real estate—no further facts or analysis required. IJ will appeal the dismissal up to the Pennsylvania Supreme Court. Read more about the case here.