Docket – March 15, 2019

4th U.S. Circuit Court of Appeals

NCO Fin. Sys. Inc. v. Montgomery Park LLC (P), 4th Cir. (Niemeyer) from DMD at Baltimore (Russell).

In this second appeal in a commercial-lease dispute, the district court erred in its analysis of the appellant’s obligation to mitigate damages under the lease.

Following a bench trial, the district court denied the appellant damages for breach of contract, holding that the appellant failed to use reasonable commercial efforts to mitigate its damages, which was a condition precedent to any recovery. But the district court misconstrued the lease agreement. Because the lease agreement’s language incorporated the common-law mitigation-of-damages doctrine (a plaintiff can’t recover damages which it could have reasonably avoided), the appellant’s recovery should only have been reduced by the amount of rent that the appellee could demonstrate would have been recovered by reasonable efforts to re-let the space.

In evaluating the commercial reasonableness of the appellant’s mitigation efforts, the district court also applied the wrong standard. Reasonable commercial efforts to mitigate damages did not require the appellant to favor the appellee’s space over other vacant space in the building. Commercial reasonableness required the appellant only to reasonably market the appellee’s space on an equal footing with the other spaces that it was seeking to rent.

Vacated and remanded.

U.S. District Court – Virginia Eastern

Cockrum v. Donald J. Trump for President Inc., EDVA at Richmond (Hudson).

Plaintiffs have failed to state a claim arising from the unauthorized publication of their personal information on the internet by Wikileaks, allegedly in cooperation with the Trump Campaign.

The plaintiffs allege that their information was illegally obtained by Russian intelligence operatives during the Russians’ hack of computer servers belonging to the Democratic National Committee. They also allege that the Trump Campaign promised to provide political benefits to Russia in return for publication of the hacked emails in order to help the Trump Campaign win the 2016 presidential election. Their amended complaint asserts three counts: conspiracy to intimidate voters, damages for public disclosure of private facts, and intentional infliction of emotional distress.

This court rejects the Trump Campaign’s threshold challenge that the alleged publication of the hacked information was protected by the First Amendment. The amended complaint’s detailed descriptions of conversations and meetings between representatives of the Campaign and Russian operatives are more than ample at this point to provide a plausible factual basis for the plaintiffs’ allegation that the Campaign was aware that the stolen information had been unlawfully obtained. The Campaign also contends that the disclosed information dealt with matters of public concern. But the amended complaint however alleges that approximately 22,000 of the emails contained personal information.

Construing the allegations in the light most favorable to the plaintiffs, the court finds that the Campaign’s release of the hacked emails from the DNC don’t warrant First Amendment protection.

The court will follow the Supreme Court’s historically consistent interpretation that § 1985(3) is purely remedial. Therefore, in order to plead a viable conspiracy claim, the plaintiffs must allege violation of a substantive constitutional right coupled with state action. They fail to do so because the Campaign was a private entity, so no state action is sufficiently alleged. Count I must be dismissed with prejudice.

For the sake of analysis, the court will adopt the elements of the common-law tort of public disclosure of private facts recognized in Maryland, New Jersey, and Tennessee, which don’t require actual injury – the wrongful act of public disclosure was complete upon publishing the plaintiffs’ personal information. But the complaint fails to disclose the location from which Wikileaks allegedly published the information. Unable to determine where the act of publication occurred, the court applies the law of Virginia, the forum state. Because Virginia doesn’t recognize a common-law right to privacy, the court must dismiss these claims but will do so without prejudice.

Motion to dismiss granted.

SourceAmerica v. U.S. Dep’t of Educ., EDVA at Alexandria (Ellis).

Two nonprofits that seek to enhance economic opportunities for the blind requested review of an arbitration panel’s decision that the U.S. Army violated the Randolph-Sheppard Act in seeking to award the plaintiffs a contract for services in Army dining facilities, rather than to an intervening state agency that also seeks to enhance economic opportunities for the blind. Because the panel incorrectly concluded that the Act’s preference for the blind applies to this contract, its finding must be set aside.

The contract here was for lesser services than the “operation of vending facilities” to which the Act’s preference applies. Under the Act, operation requires control or management over the site as a whole. But this contract was for janitorial and custodial services, which are ancillary to the facility’s operation. However, the arbitration panel correctly held that the Army violated the Act’s review requirement, under which it must justify its decision to terminate contractors’ operation of vending facilities.

The panel also violated the Administrative Procedures Act in preventing the plaintiffs from participating in the arbitration. The plaintiffs were interested persons, and their exclusion was not harmless. The proper remedy is to vacate the panel’s decision as “not in accordance with law.” Additional equitable relief requested by the plaintiffs is inappropriate because there is no reason to believe they will be wronged again. With the issues resolved at this stage and the panel lacking the ability to fashion remedies, remand is unnecessary.

Motions for summary judgment granted in part and denied in part.

Categories: Daily Dockets

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