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Cypen & Cypen
JANUARY 3, 2008

Stephen H. Cypen, Esq., Editor


During the portion of a city council meeting devoted to public comments, the mayor informed a citizen that he would be limited to three minutes. There were no other speakers present. The citizen used his time to speak in opposition to a lawsuit the city had filed against him and to speak about the city’s alleged violation of the Oklahoma Open Records Act and the Oklahoma Open Meetings Act. The citizen then filed suit against the city, but suffered an adverse summary judgment upon the finding that the city had not violated any constitutional right in limiting his speaking time at the city council meeting. The citizen argued that the three-minute limitation on his speech imposed by the mayor during the public comments portion of the city council meeting constituted a prior restraint in violation of his First Amendment rights, and that the District Court erred when it ruled otherwise. The United States Court of Appeals affirmed: the three-minute time limitation imposed on the citizen’s speech was a restriction appropriately designed to promote orderly and efficient meetings. In addition, the citizen had ample alternative channels of communication available to him and utilized them by, among other things, appearing in a local newspaper and circulating flyers. Shero v. City of Grove, Oklahoma, Case No. 06-5222 (U.S. 10th Cir. Dec. 17, 2007)


Under The City of Stuart’s personnel rules, an employee terminated for cause is entitled to a post-termination hearing before the City Manager for purpose of appealing the termination by employee’s department head and for purpose of “name-clearing.” The name-clearing hearing shall be conducted by the City Manager (who has discretion to combine the name-clearing hearing with the disciplinary appeal hearing). The City Manager may appoint a panel of three persons to consider an appeal and render an advisory decision to him. Nevertheless, the City Manager’s decision shall be final and binding. The City Attorney asked the Florida Attorney General whether the meetings, either with the City Manager or with the three-member panel, are subject to the Florida Government in the Sunshine Law. Since the Mayor is not a board or commission, and is not acting for such board, meetings between him and the city employees in regard to his duties, unrelated to those of a board commission, are not “meetings” under Section 286.011(1), Florida Statutes. However, the three-member panel is hearing the appeal of a decision to discipline an employee, whether to clear his name or to overturn such a disciplinary decision. In conducting the hearing and in reviewing and weighing the evidence to determine whether to recommend that an appeal should be sustained, the panel would appear to be playing an integral part of the decision-making process. Accordingly, the Florida Attorney General opined that the three-member panel established under the city’s personnel policy should conduct its hearings in accordance with the Florida Government in the Sunshine Law. AGO 2007-54 (December 31, 2007).


Internal Revenue Service outlined ways informants can report violations of tax law and possibly claim a reward based on amount of additional tax, penalties and interest owed. Since the Whistleblower Office was created in December 2006, IRS has received about eighty claims, half of those submitted in just the last two and one-half months. To make a claim, an informant must file new Form 211, Application for Award for Original Information, which asks informants to provide an estimate of the tax owed, pertinent facts in the case and an explanation of how the informant obtained the information. IRS’s Whistleblower Office will make the final determination about whether an award will be paid and the amount of the award for claims that it processes. Awards will be paid in proportion to the value of information furnished voluntarily with respect to proceeds collected. Under the new procedures, the amount of reward will be at least 15%, but no more than 30%, of the collected proceeds in cases in which IRS determines that information submitted by the informant substantially contributed to the collection of tax. The award percentage may be reduced in some circumstances. To be eligible for an award under the new procedures, the tax, the penalties, interest, additions to tax and additional amounts in dispute must exceed two million dollars for any taxable year end, and if the taxpayer is an individual, the individual’s gross income must exceed $200,000 for any taxable year in question. (At those levels, it’s a wonder that anybody ever collects a dime.) Of course, all awards are subject to normal tax reporting and withholding requirements! (IR-2007-201) December 19, 2007.


The designated due date for 2005 CE Form 1 (Statement of Financial Interest) annual filing was September 1, 2006. A trustee of a municipal pension board located in Miami-Dade County filed his form CE 1 in Broward County on September 21, 2006. Because state law accesses an automatic fine of $25 per day on a person who fails timely to file a required CE form, the trustee was automatically fined $500. However, the facts were not so simple. On June 8, 2006, the trustee had contacted the Miami-Dade County Supervisor of Elections because he had received a CE Form 1 from Broward County, where he resided. He thought he had already filed the CE Form 1 with Miami-Dade County. As it turned out, the trustee had filed CE Form IF (Final Statement of Financial Interest) with Miami-Dade County on March 25, 2006. Miami-Dade County forwarded the form to Broward County. Further, appellant never received a delinquency notice that Broward County had sent him. (The foregoing facts were revealed and everything was resolved after the trustee received a courtesy reminder in mid-September, 2006.) The Commission on Ethics may waive a fine in whole or in part for good cause shown, based on “unusual circumstances” surrounding failure to file by the designated due date. The Florida Administrative Code defines “unusual circumstances” as uncommon, rare or sudden events over which the reporting individual has no control, and which directly result in failure to act in accordance with the filing requirement; circumstances that allow for time in which to take those steps necessary to assure compliance with filing requirements shall not be deemed or constituted unusual circumstances. On appeal by the trustee, the Florida Commission on Ethics found that the trustee’s lack of notice and confusion over which form was due - - CE Form 1 or CE Form IF - - and where it should be filed, constituted “unusual circumstances,” which contributed to the Trustee’s failure timely to file. Thus, the Commission waived the accessed fine of $500. Here’s the twist: the trustee had not left office and should not have been furnished with Form IF in the first place. State of Florida Commission on Ethics Financial Disclosure Appeal No. FD 06-105, Final Order No. COE 07-186 (December 5, 2007).


The so-called “Sarnoff Memorandum” has spawned an appellate decision interpreting Chapter 119, Florida Statutes, the Public Records Act. City of Miami Commissioner Marc Sarnoff received a telephone call from a former City of Miami official requesting a meeting to discuss city affairs. Following the meeting, Commissioner Sarnoff prepared a written memorandum “to the file,” summarizing details of what the former city official had told him. The memorandum contains alleged factual information about possible criminal activity. Under threat of subpoena, Commissioner Sarnoff turned the memorandum over to the Miami-Dade State Attorney’s Office as part of an on-going criminal investigation, retaining a copy for himself. The Miami Herald submitted a public records request to Commissioner Sarnoff, seeking a copy of memorandum pursuant to Chapter 119, Florida Statutes. Unsure of his legal rights, Commissioner Sarnoff filed a declaratory judgment action seeking a judicial determination of as to whether the memorandum is a public record within the meaning of Chapter 119, Florida Statutes. The Miami Herald simultaneously filed its own complaint seeking production of the document. As part of the proceedings in a trial court, the parties made the following stipulations:

  • Commissioner Sarnoff attended the meeting with the former City of Miami official in his official capacity as a City Commissioner.
  • The meeting related to official business of the City of Miami
  • The memorandum was the final evidence record, memorialization and explanation of the knowledge gathered from the meeting by Commissioner Sarnoff.
  • The memorandum was Commissioner Sarnoff’s final work product with regard to the information and was not the precursor or preliminary to any other document.
  • The memorandum was the only written record of what was said at the meeting.

After reviewing the memorandum in camera, the trial court concluded that the subject document was not a public record for purposes of Chapter 119, Florida Statutes. The trial court essentially found that although Commissioner Sarnoff had prepared the memorandum to reflect a conversation that occurred in his capacity as a public official, the Commissioner stated that creation of the document was that of a memo for his personal use, at a later time. On appeal, The Miami Herald argued that the trial court erred in its determination that the memorandum was not a public record because the document represents the final evidence of knowledge gained by a public official in his official capacity in connection with public business. The Third District Court of Appeal agreed. The subject memorandum solely contains alleged factual information about possible criminal activity. It is undisputed that Commissioner Sarnoff is an “agency” for purposes of Chapter 119, Florida Statutes; he attended a meeting in his capacity as an elected city official; official city business was discussed at the meeting; and he drafted the memorandum to formalize and perpetuate his final knowledge gained at that meeting. The subject document was not a draft or a note containing mental impressions that would later form part of a government record. The judgment was reversed and the cause remanded with directions to the trial court to order disclosure of the memorandum. (In a somewhat unusual move, the appellate court stated its ruling takes effect immediately, notwithstanding the filing of any motion for rehearing or rehearing en banc. Miami Herald Media Company v. Sarnoff, 33 Fla. L. Weekly D24 (Fla. 3DDCA December 19, 2007).


The 18-month decline in shareholder class action filings has definitely reversed course, with 2007 federal filings projected to increase by 58% compared to the previous year, according to a NERA study. The study draws from more than 15 years of NERA research on case filings and settlements in shareholder class actions, and includes data through December 15, 2007. NERA projects there will be 207 federal filings by year end, following just 131 filings in 2006. Despite widespread speculation that filings would continue to decline, the trend has reversed course, and filings are back up to 2005 levels. The shape increase in filings has been driven in part by litigation related to subprime lending. As of December 15, 2007, 38 subprime shareholder class actions had been filed in 2007. Subprime lending does not explain the entire trend, however: standard federal filings excluding subprime or options backdating cases also increased nearly 40% from 2006 to 2007. The average settlements have also spiked this year, continuing an overall upward trend over the past five years. Still, 2007 marked a notable increase, in that the average settlement paid to resolve a shareholder class action case in 2007 was $33.2 million dollars, up nearly 50% from 2006. The median settlement also reached a new high in 2007, at just under $10 million dollars. According to its website, NERA Economic Consulting is an international firm of economists who understand how markets work. (We did not think anyone understood how markets work.)

Lynch was injured in a industrial accident in 1967 and was subsequently awarded permanent total disability compensation. In 1997 he was indited on charges relating to possession, sale and distribution of crack-cocaine. He pleaded guilty to conspiracy to possess cocaine with intent to distribute. The Bureau of Worker’s Compensation terminated Lynch’s permanent total disability compensation, finding that his criminal activities for profit constituted sustained remunerative employment. On ultimate appeal to the Supreme Court of Ohio, that ruling was affirmed. Exchanging labor for pay on a sustained basis constitutes sustained remunerative employment sufficient to terminate permanent total disability compensation. So, what did Lynch argue on appeal? He argued that the court could not consider the activity he engaged in to be sustained remunerative employment, because the activity was illegal! Talk about chutzpah. State ex rel. Lynch v. Industrial Commission of Ohio, Case No. 2007-0423 (Ohio December 19, 2007).


The Public Safety Officers’ Benefits Act of 1976 provides a one-time cash payment to survivors of public safety officers who die in line of duty. For a survivor to be entitled to payment, the public safety officer must have suffered a “personal injury” within meaning of the act, the injury must have been suffered “in line of duty” and death must have been “direct and proximate result” of the personal injury. The act defines “public safety officer” as “an individual serving a public agency in an official capacity, with or without compensation, as a law enforcement officer, as a firefighter, as a Chaplin, or as a member of a rescue squad or ambulance crew.” The act additionally defines “firefighter” as “including an individual serving as an officially recognized or designated member of a legally organized volunteer fire department.” Christopher Kangas was a 14-year-old “apprentice firefighter” with the Brookhaven Fire Department. Christopher was riding his bicycle from home to the fire station in response to a fire alarm, when he was struck by an automobile. As a result, Christopher sustained serious injuries and died. His mother filed a claim with the Department of Justice’s Bureau of Justice Assistance, seeking death benefits under PSOBA. BJA determined that Christopher was a trainee but did not possess authority to act as an official firefighter, and thus was not a public safety officer under PSOBA. BJA noted that Christopher was only permitted to participate in training activities, to provide first aid care, to assist with clean-up activities, to support canteen activities and to participate in the support capacity for operations such as searches/rescues. In addition, Christopher was not permitted to operate equipment or assist with fire suppression at fire scenes or enter hazardous atmospheres. After BJA denied the claim, Christopher’s mother brought suit in the United States Court of Federal Claims, which granted judgment in her favor. That Court held BJA’s denial of benefits was an arbitrary exercise of its authority, and held that the mother could recover under PSOBA because Christopher was a firefighter who had died in the line of duty within meaning of the statue and implementing regulations. The United States appealed the Court of Federal Claims’ decision, and the appellate court concluded that the lower court had erred in failing to defer to BJA’s interpretation of firefighter. Judgment was reversed and the cause remanded with instructions for entry of judgment in favor of the United States. The ordinary, common meaning of the term “firefighter” as a “person who fights fires” is consistent with BJA’s interpretation of firefighter. The appellate court agreed with the government’s argument that there is no indication in the act itself of any legislative intent to depart from this ordinary meaning. Amber-Messick v. United States, 483 F3d 1316 (U.S. Fed. Cir., 2007).


In another case involving The Public Safety Officers’ Benefits Act, the United States Court of Appeals for the Federal Circuit has upheld determinations of non-coverage made by the Bureau of Justice Assistance. Here, decedent was employed as a helicopter pilot by a private company that had entered into a contract with the California Department of Forestry and Fire Protection to provide piloting services for fire suppression missions. The contract provided that the company’s employees shall act in an independent capacity and not as officers or employees or agents of the State of California and that the company would pay and provide benefits to the pilots who performed services under the contract. While piloting a helicopter pursuant to the contract, decedent died as a result of a mid-air collision with another aircraft. The BJA determined that decedent, as an employee of a government contractor, did not satisfy the PSOBA definition of “public safety officer,” and denied the claim. Like in Amber-Messick (see item 8 above), the appellate court reversed: it did not agree with claimants’ assertion that the congressional intent to include privately employed individuals within PSOBA’s coverage is so clear as to make BJA’s interpretation unsustainable under United States Supreme Court authority. Groff v. United States, 493 F3d 1343 (U.S. Fed. Cir., 2007).


The Associated Press reports that a record number of fatal traffic incidents and a double-digit increase in shooting deaths led to one of the deadliest years for law enforcement officers in more than a decade. With the exception of 2001 (which saw a dramatic increase in deaths because of the September 11 terrorist attacks), 2007 was the deadliest year for law enforcement since 1989. As of December 26, 2007, 186 officers had died, up from 145 last year. Eighty-one died in traffic accidents, which surpassed the record of 78 set in 2000. Shooting deaths increased from 52 to 69, a rise of about 33%. (Think about it: an officer is being killed in America, on average, every other day!) Of the 81 traffic deaths, 60 officers died in car crashes, 15 were hit by cars and 6 died in motorcycle accidents. After traffic crashes and shootings, physical causes such as heart attacks were the leading cause of death, contributing to 18 fatalities. Other causes of death included smaller categories, such as airplane and boating accidents, for an additional 18 fatalities. Texas led the nation with 22 fatalities, followed by Florida (16), New York (12), and California (11). The average age of officers who died in 2007 was 39. Most were men, and average service in law enforcement was 11 years.


With the new wave of foreign investments being made by pension boards, we thought the following tip from a fellow member of the National Academy of Public Pension Attorneys might be of interest. Section 179 of Mexican Tax Law provides an exemption for qualified pension plan investors in certain investment funds investing in Mexico, so that the interest of the plans in income and gains of investment funds is exempt from income tax. To qualify for the exemption under Section 179, the pension plan must register with the Registry of Banks, Financial Entities, Pension and Retirement Funds and Nonresident Investment Funds maintained by the Ministry of Finance and Public Credit. There is an initial registration and an annual renewal thereafter. Any trustees of plans having investments in Mexico might want to mention this fact to the appropriate money manager, although we would hope that any such manager would be aware of this requirement and would have already complied. Buena suerte.


A report from indicates that prosecutors are unlikely to files charges against the former Mayo Clinic surgeon who took a picture of a patient’s tattooed p.enis. The doctor could have been prosecuted for violating the patient’s rights under federal laws that safeguard a patient’s privacy. HIPAA violations are misdemeanors, but no one in Arizona (where the incident took place) has been prosecuted under the 4-year-old statute. The executive director of the Arizona Medical Association believes the doctor should be disciplined. The Mayo Clinic announced that the doctor was no longer practicing there, not saying whether he resigned or was fired. The doctor did acknowledge to Mayo administrators that he snapped the picture of the patient’s p.enis, which is tattooed with the words “Hot Rod.” The picture was taken shortly before gallbladder surgery last month. When the doctor told the patient he had taken the picture (duh), he said he “felt betrayed, violated and disgusted.” How about bewitched, bothered and bewildered?


“Get your facts first, then you can distort them as you please.” Mark Twain

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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