Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

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After the IRS concluded that Mayo, a tax-exempt organization under IRC 501(c)(3), owed unrelated business income tax (UBIT) on certain investment income it received from the investment pool it manages for its subsidiaries, the IRS issued a Notice of Proposed Adjustment and reaffirmed its position in a 2013 Technical Advice Memorandum. In this refund action, the parties dispute the $11,501,621 in UBIT for tax years 2003, 2005-2007, and 2010-2012. At issue is whether Mayo is a "qualified organization" exempted from paying unrelated business income tax on "unrelated debt-financed income" under section 514(c)(9)(C)(i) and whether it its a qualified organization under section 170(b)(1)(A)(ii) because it is an educational organization. The district court held that the Treasury Regulation is invalid "because it adds requirements -- the primary-function and merely-incidental tests -- Congress intended not to include in the statute."The Eighth Circuit concluded that Treasury Regulation 1.170A-9 is valid, but only in part, and that application of the statute as reasonably construed by the regulation to Mayo's tax years in question cannot be determined as a matter of law on this summary judgment record. Accordingly, the court reversed the district court's invalidation of Treasury Regulation 1.170A-9 to the extent it is not inconsistent with IRC 170(b)(1)(A)(ii) and remanded for further proceedings. View "Mayo Clinic v. United States" on Justia Law

Posted in: Tax Law
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The Eighth Circuit reversed and remanded the district court's grant of the insurer's motion to dismiss, concluding that the policy is ambiguous as to whether the directors-and-officers-liability policy required an insurer to indemnify and defend a company and its chief executive officer against claims brought by investors. Therefore, the district court erred in finding that the policy unambiguously excluded coverage.In this case, the policy is reasonably open to at least two different constructions: the first is that Endorsement 11 deleted and replaced original D with new D, and then Endorsement 13 replaced new D with nothing. Another is the one adopted by the district court, which is that Endorsements 11 and 13 together replaced original D with new D. The court explained that, with one reasonable construction potentially covering contractual-liability claims and the other excluding them, the policy is ambiguous. Applying Missouri law, the court construed the ambiguity against the insurer. View "Verto Medical Solutions, LLC v. Allied World Specialty Insurance Co." on Justia Law

Posted in: Insurance Law
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Plaintiffs, high school students, filed suit against two Northwest Missouri State police officers for allegedly violating certain statutory and constitutional rights during the investigation of misconduct by plaintiffs attending a summer camp on the university campus. Plaintiffs' claims arose from an incident where the officers directed the high school coach to gather students in a room to hold them there "for interrogation" following a report that someone was photographing a female coach in one of the dormitory rooms.The Eighth Circuit reversed the district court's denial of the officers' motion to dismiss the claims against them based on qualified immunity. The court concluded that, given the state of the law, a reasonable officer could have proceeded on the understanding that a student seizure is permissible if it is reasonable under the standard of New Jersey v. T.L.O., 469 U.S. 325, 341 (1985). In this case, a reasonable officer could have believed that the seizure was reasonable where a reasonable officer could have believed that they were authorized to investigate the incident to comply with both Title IX and Missouri law regarding invasion of privacy. Furthermore, the seizure was reasonable in scope and duration. Finally, 18 U.S.C. 5033 and 5038 are inapplicable here, and thus the officers are entitled to dismissal on these claims. Finally, the officers are entitled to qualified immunity on the conspiracy claim. The court remanded with directions to dismiss the claims against the officers. View "T.S.H. v. Green" on Justia Law

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Plaintiffs are the owners of the heavily advertised Select Comfort and Sleep Number brands of adjustable air mattresses and defendants are online retailers of their own brand of lower-priced adjustable beds. Plaintiffs alleged that defendants used similar and identical marks in several different capacities online to sell competing products, and that defendants compounded internet-related confusion by making fraudulent misrepresentations and failing to dispel confusion when consumers contacted defendants' call centers. After a trial resulted in a mixed verdict, both sides appealed.The Eighth Circuit reversed and concluded that the district court erred by finding as a matter of law that the relevant consumers were sophisticated and that a theory of initial-interest confusion could not apply. Therefore, the court concluded, based on Insty*Bit, Inc. v. Poly-Tech Indus., 95 F.3d 663, 671–72 (8th Cir. 1996), that limiting the infringement instruction to require confusion at the time of purchase was error. Given the strength of plaintiffs' evidence on the issue of confusion, the court cannot conclude that the summary judgment and instructional errors were harmless.In regard to the false advertising claim, the court concluded that the district court erred by instructing the jury in a manner that shifted the burden of proof on the materiality element based on a finding of literal falsity. Furthermore, based on the specific jury forms returned in this case, the court did not find the error to be harmless as to those claims where plaintiffs prevailed. Accordingly, the court reversed and remanded for a new trial on the seven false advertising claims on which plaintiffs prevailed. In regard to the remaining issues, the court concluded that the district court did not abuse its substantial discretion in refusing to permit amendment of the counterclaim after the close of discovery and on the eve of trial; the court noted that an expert's testimony as to the structure and meaning of survey evidence or other factual matters generally should not usurp the court's role in defining the law for the jury; the court concluded that any infirmities as to the demonstration bed go to the weight rather than the admissibility of the evidence; and the jury instructions did not impermissibly shift the burden of proof on defendants' cross claim seeking a declaration that plaintiffs held no trademark rights in the phrase "NUMBER BED." View "Select Comfort Corp. v. Baxter" on Justia Law

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The Eighth Circuit affirmed the district court's grant of defendant's motion to suppress evidence of medicine vials, concluding that the plain view exception does not apply where the incriminating character of the vials was not immediately apparent. Furthermore, there is nothing in the record suggesting that the officer had specialized expertise or training with regard to narcotics such that his specific knowledge could be a basis for finding probable cause.In this case, officers arrived at the residence after a neighbor's report of a woman screaming and crying, they entered the home without consent to check on the woman, found her extremely intoxicated but unharmed, and discovered the small glass vials. The court explained that, when one of the officers picked up the vials, held them higher to get a better view, and turned them to read the labels, he had no idea of the contents. At that moment, the vials had been searched and seized, before he had probable cause to believe they were an illegally possessed controlled substance. View "United States v. Arredondo" on Justia Law

Posted in: Criminal Law
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The Eighth Circuit affirmed defendant's conviction for violating 18 U.S.C. 922(g)(8) and 922(a)(6), concluding that the indictment was sufficient to give defendant notice where he could have easily read the definition on the order form and known that S.O. was an intimate partner and that he was restricted from firearm and ammunition possession. The court explained that section 922(g)(8) simply does not require that the court-order form identify the protected party as an intimate partner. Rather, section 922(g)(8) requires only that the order protect an intimate party in fact. The court rejected defendant's contention that he was denied due process. The court also concluded that the district court's error under Rehaif v. United States, 139 S. Ct. 2191 (2019), was harmless where a rational fact finder could infer that defendant had knowledge of his status under section 922(g)(8) beyond a reasonable doubt because he was aware of the facts that met the statutory requirements for the court order.However, the court remanded for resentencing. The court concluded that, because USSG 2K2.1(b)(2) does not contemplate attempted firearm purchases, the district court erred by including defendant's attempted purchase in its analysis. Because there is a reasonable probability that the sporting-use reduction would have applied to defendant's offense-level calculation, he has shown plain error. View "United States v. Sholley-Gonzalez" on Justia Law

Posted in: Criminal Law
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The Eighth Circuit reversed defendant's 51-month sentence imposed after the district court determined that he had violated the conditions of his supervised release. While defendant was awaiting a hearing on his alleged violations of his supervised release, law enforcement discovered that he was in possession of 4.86 grams of cocaine. In this case, defendant stipulated that he violated his conditions of release by possessing cocaine, but he denied that he intended to distribute a controlled substance. Furthermore, the district court did not find that defendant had committed a controlled substance offense as that term is defined in the Sentencing Guidelines. Therefore, the district court erred by concluding that defendant had committed three grade A violations and the court remanded for resentencing. View "United States v. Trent" on Justia Law

Posted in: Criminal Law
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The Eighth Circuit affirmed defendant's conviction for possessing a firearm and ammunition after having been convicted of a felony, in violation of 18 U.S.C. 922(g)(1), 924(a)(2). The court concluded that the district court did not err in denying defendant's motion to suppress where the initial duration of the traffic stop was justified by defendant's inability to produce the basic identifying information the officer requested and the time it took for her to address this issue. Furthermore, by the time the officer handcuffed defendant, she had moved beyond addressing defendant's traffic offense and begun investigating ordinary criminal wrongdoing where defendant was on federal probation for a firearm offense, and she had seen a loaded gun magazine in plain view in the pocket of the driver's side door. Therefore, the officer's extension of the stop was properly supported by reasonable suspicion that other criminal activity was afoot and did not violate the Fourth Amendment.The court also concluded that, in light of this circuit's silence on whether Simmons v. United States, 390 U.S. 377 (1968), permits the use of a defendant's suppression hearing testimony for impeachment purposes, this court cannot say that the district court's decision to allow the government to impeach defendant at trial with his prior testimony at the suppression hearing was not plain error. View "United States v. Navarette" on Justia Law

Posted in: Criminal Law
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The Eighth Circuit affirmed the district court's judgment denying safety-valve relief following defendant's guilty plea to distributing five grams or more of actual methamphetamine. The court concluded that defendant, while under an obligation to truthfully disclose his involvement in drug trafficking, chose to concoct a story to advance his own agenda and mislead the government about one of his drug suppliers. Therefore, the district court did not err in determining that defendant was ineligible for safety-valve relief. View "United States v. McVay" on Justia Law

Posted in: Criminal Law
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Plaintiff, who was employed with Andersen from 2000-2018, was terminated for violating lock-out, tag-out (LOTO) safety procedures. After plaintiff filed suit against Andersen, he voluntarily dismissed four of his eight claims and the district court granted summary judgment on the remaining four claims.The Eighth Circuit affirmed the district court's grant of summary judgment, concluding that Andersen did not violate the Minnesota Whistleblower Act by terminating his employment in retaliation for his previous sexual harassment and falsified documentation complaint. The court explained that plaintiff failed to show causation between the protected activity and his discharge, and summary judgment was therefore appropriate. The court also concluded that plaintiff was unable to establish the causal link necessary for a prima facia case of retaliation under the Minnesota Human Rights Act. Finally, the court concluded that plaintiff's retaliation claim under the Family Medical Leave Act also failed for lack of causation. View "Lissick v. Andersen Corp." on Justia Law