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Legal news from Thursday, September 4, 2008 |
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Pakistan lawyers' protest leads to violent clash with police
Joe Shaulis on September 4, 2008 2:13 PM ET

[JURIST] Pakistani lawyers demanding that the government reinstate judges ousted last year [JURIST report] by former President Pervez Musharraf [JURIST news archive] clashed with police in Islamabad on Thursday, according to media reports. Television images showed police beating the lawyers with batons outside Parliament, in a confrontation that reportedly began after an estimated 100 demonstrators tried to enter the nearby Supreme Court [Bloomberg News report]. Hundreds of lawyers and other protesters had gathered for a sit-in outside the buildings, where Aitzaz Ahsan [profile], president of Pakistan's Supreme Court Bar Association, told reporters [Daily Mail report] that an independent judiciary is essential to a stable government in Pakistan [JURIST news archive]. Protests also took place [AFP report] in the cities of Lahore, Karachi and Multan. The demonstrations came amid reports that four judges removed from the Peshawar High Court [official website], including the chief justice, would take new oaths Friday [Daily Mail report].
The Pakistani lawyers' movement [AHRC backgrounder; PBS report] renewed its protests last week after eight judges were reappointed [JURIST report] to the Sindh High Court in Karachi. Critics described that development as evidence of a "conspiracy" to undermine support for reinstatement of all the judges nationwide. Pakistan's coalition government dissolved [JURIST report] last week after former prime minister Nawaz Sharif [party profile; JURIST news archive] withdrew his Pakistan Muslim League - Nawaz (PML-N) [party website] party over the failure to reach an agreement with the Pakistan People's Party (PPP) [party website] to reinstate the judges. Musharraf, who resigned [JURIST report] last month to avoid impeachment proceedings for firing the judges and other alleged abuses of authority, now faces the possibility of criminal charges [JURIST report].


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SEC charges ex-brokers with subprime securities misrepresentation
Joe Shaulis on September 4, 2008 12:31 PM ET

[JURIST] The US Securities and Exchange Commission (SEC) [official website; JURIST news archive] has charged [complaint, PDF] two former brokers for Credit-Suisse [corporate website; JURIST news archive] with defrauding clients of $1 billion by selling subprime securities that they represented as being backed by government-guaranteed student loans. The SEC complaint, filed Wednesday in the US District Court for the Southern District of New York [official website], accuses Tzolov and Butler of increasing their commissions by selling auction-rate securities [New York Times backgrounder] that they told clients were "low risk, highly liquid alternatives" to bank deposits and money market funds. The investments were in fact secured by subprime mortgages and other risky collateral. The former brokers are charged with violating anti-fraud provisions of the Securities Exchange Act of 1934, the Securities Act of 1933 and SEC regulations [text]. The SEC is asking the court to order injunctive relief, civil monetary penalties and disgorgement of profits, plus interest. Butler has pleaded not guilty [Reuters report]. Andrew M. Calamari, associate director of the SEC's New York Regional Office, said [press release] that the case "demonstrates how the recent turmoil in the subprime market has affected even investors who had no intention of buying subprime securities." AFP has more. The Wall Street Journal has additional coverage.
Among other recent developments in the so-called subprime crisis [academic backgrounder], the US Court of Appeals for the Ninth Circuit ruled [JURIST report] last month that the federal Truth in Lending Act does not give borrowers a right to relief from lenders who fail to conspicuously disclose certain loan information. In July, the US Senate passed a bill [JURIST report] which would give municipalities grants to buy and redevelop foreclosed properties and would allow the federal government to provide additional financial backing to the publicly-supported Fannie Mae and Freddie Mac mortgage companies.


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EU high court annuls freeze on assets linked to terrorism
Joe Shaulis on September 4, 2008 9:41 AM ET

[JURIST] The European Court of Justice (ECJ) [official website; JURIST news archive] has ruled [case materials; press release, PDF] that the EU violated the fundamental property rights of a Saudi business and a Swedish foundation linked to al-Qaeda [JURIST news archive] by freezing their assets without giving them a hearing. The EU's highest court on Wednesday reversed a 2005 Court of First Instance decision dismissing complaints [JURIST report] brought by Yassin Abdullah Kadi and the Al Barakaat International Foundation, whose bank accounts were frozen in 2001. Although the ECJ agreed with the lower chamber that the European Council [official website] had the authority to adopt a regulation [PDF text] allowing such seizures, it found that EU courts had jurisdiction to review the measure and, further, that Kadi and Al Barakaat had a right to effective judicial review. According to the ECJ opinion, the contested regulation, in so far as it concerns the appellants, was adopted without any guarantee being given as to the communication of the inculpatory evidence against them or as to their being heard in that connection, so that it must be found that that regulation was adopted according to a procedure in which the appellants' rights of defence were not observed, which has had the further consequence that the principle of effective judicial protection has been infringed.
It follows from all the foregoing considerations that the pleas in law raised by Mr Kadi and Al Barakaat in support of their actions for annulment of the contested regulation and alleging breach of their rights of defence, especially the right to be heard, and of the principle of effective judicial protection, are well founded. The ECJ gave the council three months in which to cure the defects in the regulation. AP has more. The Financial Times has additional coverage.
Other groups and individuals have successfully challenged similar measures in the EU courts. Earlier this year, some European Parliament members criticized the watch list [JURIST report] as unfair and opaque, saying that the process for adding names to the list should be changed. In July 2007, the Court of First Instance overturned [JURIST report] an EU decision freezing the assets of the Communist Party of the Philippines (CPP) chairman and the Hamas-affiliated al-Aqsa Foundation, finding that the EC did not give the plaintiffs an opportunity to challenge the legal basis for their inclusion on a terrorist watch list. In December 2006, the same court similarly annulled an asset freeze [JURIST report] against the People's Mojahedin Organization of Iran. That judgment prompted the European Council to revise the procedures [JURIST report] used in establishing and maintaining the EU's terror list.


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Dallas suburb faces lawsuit over ordinance targeting illegal immigrants
Joe Shaulis on September 4, 2008 8:20 AM ET

[JURIST] A lawsuit filed Wednesday in US District Court for the Northern District of Texas [official website] challenges the latest version of a Farmers Branch [official website; JURIST news archive] municipal ordinance which prohibits illegal immigrants from occupying leased property. In the lawsuit [case materials] against the Dallas suburb, several landlords and a former City Council member seek to enjoin enforcement of Ordinance 2952 [DOC text], which is scheduled to take effect Sept. 13. The plaintiffs claim it is unconstitutional because it violates the Supremacy Clause by regulating immigration [JURIST news archive] and denies immigrants equal protection and due process rights. Anyone wishing to rent a single-family residence would be required to obtain an occupancy license, and the city building inspector would submit information from these license applications to a federal database, the Systematic Alien Verification for Entitlements Program (SAVE) [official website], to determine the applicants' immigration status. This ordinance is different from prior versions because it relies on the federal government, rather than on landlords, to determine applicants' status. AP has more. The Dallas Morning News has local coverage. The Fort Worth Star-Telegram has additional local coverage.
In May, US District Judge Sam Lindsay [official profile] finalized a holding [JURIST report] that an earlier law, Ordinance 2903 [DOC text], was unconstitutional. The Farmers Branch City Council [official website] passed the current ordinance [JURIST report] in an attempt to cure the flaws identified by Lindsay, and the city has been defending the ordinances since an initial version was adopted [JURIST report] in late 2006. More than 50 other US municipalities have contemplated similar laws, and last year a federal judge struck down [JURIST report] two Hazleton, Pennsylvania ordinances designed to prevent illegal immigrants from living or working in the town.


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Sixth Circuit rules on challenge to EPA regulation of Kentucky waters
Abigail Salisbury on September 4, 2008 6:44 AM ET

[JURIST] The US Court of Appeals for the Sixth Circuit [official website] on Wednesday ruled [opinion, PDF] on a suit brought by several Kentucky environmental groups, including a chapter of the Sierra Club [advocacy website], against Stephen L. Johnson [EPA bio] in his official capacity as Administrator of the US Environmental Protection Agency (EPA) [official website]. The plaintiffs filed suit under the Clean Water Act [text], seeking to compel Johnson to fulfill his duty to implement antidegradation requirements for Kentucky. In a complex order, the Sixth Circuit affirmed the district courts grant of summary judgment to the EPA on the challenge to the EPAs approval of Kentuckys selection of regulated waters, reversed the grant of summary judgment to the EPA on the its approval of Kentuckys exemption of six types of pollution discharges from review, and remanded the matter to the EPA. Judge Clay authored the opinion, stating "In my view, the EPA acted contrary to law by relying on [Kentucky's] unenforceable commitments."
In recent months, the EPA has been sued by a number of states seeking either the promulgation of regulations or effective response to petitions. In August, twelve states filed suit [press release; JURIST report] against the EPA for its alleged failure to enforce provisions of the Clean Air Act [text; EPA materials] requiring oil refineries to adopt measures curbing the pollution contributing to global warming. In July, California Attorney General Jerry Brown [official website] formally notified [letter, PDF; press release] the EPA that the state had petitioned the EPA three times seeking a regulatory ruling and would file a lawsuit [JURIST report] against the agency if it refused to issue rules regulating greenhouse gas emissions from various vehicles and types of machinery.


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Ninth Circuit maintains position on 'first sale' defense to copyright actions
Abigail Salisbury on September 4, 2008 6:12 AM ET

[JURIST] The US Court of Appeals for the Ninth Circuit [official website] on Wednesday reversed [opinion, PDF] a district court's grant of summary judgment to retailer Costco in a copyright infringement action brought by watch manufacturer Omega [corporate websites]. Omega claimed that Costco's unauthorized sale of its imported watches constituted infringing distribution and importation. The decision turned on whether the US Supreme Court's decision in Quality King Distributors, Inc. v. Lanza Research International, Inc. [LII materials] required the Ninth Circuit to overrule its precedents that the "first sale doctrine" raised by Costco as a defense provides no protection against an infringement claim involving (1) foreign-made, nonpiratical copies of a U.S.- copyrighted work, (2) unless those same copies have already been sold in the United States with the copyright owners authority. The Ninth Circuit held that the Supreme Court's ruling could be reconciled with its own case law:Perhaps most compelling is the objection that [the precedent] would provide substantially greater copyright protection to foreign-made copies of U.S.-copyrighted works. A U.S. copyright owner, for example, would be unable to exercise distribution rights after one lawful, domestic sale of a watch lawfully made in South Dakota, but, without the limits imposed by [the first sale doctrine], the same owner could seemingly exercise distribution rights after even the tenth sale in the United States of a watch lawfully made in Switzerland. The difference would likely encourage U.S. copyright owners to outsource the manufacturing of copies of their work overseas. [The Court has] resolved this problem by clarifying that parties can raise [the defense] in cases involving foreign-made copies so long as a lawful domestic sale has occurred. Insofar as Costco contends that [the doctrine] should apply to foreign made copies even in the absence of a lawful domestic sale, the surviving rule...requires otherwise. [citations omitted] The court went on to find that "Because there is no genuine dispute that Omega made the copies of the Omega Globe Design in Switzerland, and that Costco sold them in the United States without Omegas authority, the first sale doctrine is unavailable as a defense to Omegas claims."
The Supreme Court's decision in Quality King had reversed the Ninth Circuit's rejection of the first sale defense, holding that "The whole point of the first sale doctrine is that once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution." Wednesday's ruling does not fall squarely under that precedent, because while Omega's watches were produced abroad, the goods in Quality King had been produced in the US, exported, and then returned to the US for domestic sale. The first sale doctrine lies within Section 109(a) of the 1976 Copyright Act [text], and its application is murky in such transactions, which are said to occur on the "gray market" [backgrounder] and involve the resale of goods with US trademarks or copyrights.


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