Banana Republic or Legalistic Lawlessness?

NEIL H. BUCHANAN

UF Levin College of Law professor and economist Neil H. Buchanan reflects, based on current trends, on what the legal system in the United States will look in a few years. Specifically, Buchanan considers whether the country will become a “banana republic” or whether instead we will see a system of “legalistic lawlessness.”

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Russell v. Liberty Insurance Underwriters, Inc.

Docket: 18-2984

Opinion Date: February 19, 2020

Judge: Grasz

Areas of Law: Civil Procedure, Insurance Law

Russell, Daniel, and Carson co-owned a business. Under a succession plan, the company was to purchase life insurance. If a shareholder died, the company would use the proceeds to buy the deceased shareholder’s stock. Daniel died. The company received insurance proceeds and kept the money. Elizabeth, Daniel’s widow, sued Russell and Carson for conversion and breach of fiduciary duty. A Kansas court issued a judgment against Russell for $822,900.77. Russell and Carson had expected Liberty to defend and indemnify them under their Directors, Officers and Company Liability Coverage and Fiduciary Liability Coverage. Liberty cited a “Personal Profit Exclusion” for claims based upon "gaining ... any profit, remuneration or financial advantage” to which they are “not legally entitled” and a “Contract Exclusion” regarding claims "attributable to any actual or alleged liability under or breach of any contract.” Russell and Carson sued Liberty in Missouri state court for bad-faith. Elizabeth joined the suit. Liberty, a corporate citizen of Massachusetts and Illinois, removed the case to federal court. Russell and Carson sought remand, arguing that in “direct action[s]” against insurers, the insurer takes the citizenship of those it insures, 28 U.S.C. 1332(c)(1); if the Trust’s equitable garnishment claim was a direct action, Liberty shared Russell’s Missouri citizenship. The district court held that the equitable garnishment claim required Russell as a defendant, but Russell’s bad-faith claim required him as a plaintiff. The court severed the suit: Russell and Carson could sue for bad-faith failure to defend and indemnify; the Trust could separately sue Liberty and Russell. The Eighth Circuit affirmed summary judgment on the bad faith claim. Because the Missouri statutory claim is not a direct action, complete diversity exists. The district court had jurisdiction over the bad-faith claim. The policy exclusions applied.

Ali v. Roy

Docket: 19-1239

Opinion Date: February 19, 2020

Judge: Grasz

Areas of Law: Civil Rights, Constitutional Law, Criminal Law, Juvenile Law

Ali shot and killed three people during an attempted robbery in Minneapolis. He was given three consecutive life sentences, each permitting his early release after 30 years so that Ali must remain in prison for at least 90 years. Relying on recent Supreme Court precedent, Ali argued that the Eighth Amendment forbids life-without-parole sentences for juvenile defendants unless they are irreparably corrupt and that a sentencing court must conduct a hearing to consider the juvenile defendant’s youth as a mitigating factor before imposing a life-without-parole sentence. Ali claimed his sentence was the “functional equivalent” of life-without-parole. The Minnesota Supreme Court rejected Ali’s argument. The Eighth Circuit affirmed the denial of Ali’s petition for habeas relief under 28 U.S.C. 2254. Ali’s case is distinguishable from the Supreme Court cases; Ali received three life sentences for three separate murders, each permitting possible release. Ali does not face a life-without-parole sentence and the Supreme Court has not “clearly established” that its ruling apply to consecutive sentences functionally equivalent to life-without-parole.

United States v. Hamilton

Docket: 18-2436

Opinion Date: February 19, 2020

Judge: Bobby E. Shepherd

Areas of Law: Criminal Law

Following a guilty plea to possession of heroin with intent to distribute, the court sentenced Hamilton to 81 months imprisonment. Hamilton’s PSR criminal history score, used to calculate his Guidelines range, included a previous Illinois felony conviction for aggravated unlawful use of a weapon. The Eighth Circuit vacated Hamilton’s sentence because part of the Illinois statute of conviction had been declared unconstitutional. At resentencing, the district court stated that the scope of resentencing was limited to Hamilton’s previous Illinois conviction and concluded that this conviction was properly part of Hamilton’s criminal history score because Hamilton was convicted under a statutory provision that remained in effect. The court reimposed the 81-month sentence. The Eighth Circuit vacated. The court rejected Hamilton’s argument that, in determining his criminal history score, the court relied on documents that did not satisfy precedent to determine that Hamilton had a valid conviction for aggravated unlawful use of a weapon. The court examined an Order Assessing Fines, Fees and Costs, and the official charging document, which conclusively demonstrated that Hamilton was not convicted under the invalidated subsection. The district court was not limited on remand to consideration of only the Illinois conviction. Failure to understand the scope of authority and discretion at sentencing is a significant procedural error. The district court was not prohibited from considering Hamilton’s attempt to challenge the PSR’s statement of relevant conduct and the government’s original request for an upward departure or variance.

United States v. Oliver

Docket: 17-3627

Opinion Date: February 19, 2020

Judge: Raymond W. Gruender

Areas of Law: Criminal Law

A “confidential reliable informant” told police that Oliver and his co-conspirators would mail packages of cocaine to Minnesota from Maricopa, Arizona. The postal inspector found one package from Maricopa, Arizona and another with similar handwriting from Chandler, Arizona. With a search warrant, officers found cocaine inside each. The informant stated that Oliver would be transporting cocaine in a BMW that would arrive in Minneapolis on November 30, 2014. On that date, police stopped and impounded a BMW that belonged to Oliver. Days later, with a warrant, police searched the vehicle and discovered six kilograms of cocaine, and executed a warrant to search Oliver's hotel room, where they recovered cell phones but no drugs. Oliver’s co-conspirator (Williams) testified that he made multiple trips to Arizona at Oliver’s request to transport cash for buying drugs and that in November 2014, he and another co-conspirator each mailed cocaine from different towns in Arizona at Oliver’s direction. Convicted of conspiracy to distribute cocaine, Oliver was sentenced to 204 months' imprisonment. The Eighth Circuit affirmed, rejecting claims that the government’s key witness—Williams—lacked credibility and that the district court erred in denying Oliver's motions to dismiss the second indictment, to disclose the identity of the informant, and to suppress the searches of his BMW and hotel room. Williams also unsuccessfully argued that the court should have given the jury an accomplice instruction regarding Williams’s testimony and that he was prejudiced by ineffective assistance of counsel.