Month: July 2014

W.D.N.C.: Legal Newsline v. Garlock Sealing Technology- Requirements for Confidentiality in Sealing of Pleadings and Hearings

Summary:

In the bankruptcy of Garlock Sealing Technology, allegations were raised that national counsel for mesothelioma victims had engaged in fraud, deceit, and other activities prohibited by the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, in settling their clients’ claims. After the bankruptcy judge ordered the hearing closed, Legal Newsline filed an emergency motion to keep the hearing at which these issues were raised open to the media and the public.

Following Media General Operations, Inc. v. Buchanan, 417 F.3d 424, 431 (4th Cir. 2005), the district court held that sealing the hearing and documents “shifted the presumption that favors open courts to a presumption favoring the closure of proceedings based on confidentiality designations by counsel, improvidently shifting the burden to the public and the press to disprove the contours of a need to seal which has also not been described.” In restricting public access to a hearing or documents, a court is required to “state the reasons for its decision to seal supported by specific findings, and the reasons for rejecting alternatives to sealing to provide this court with sufficient information for meaningful appellate review.” Media General Operations, Inc.… Read More

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4th Cir.: In re Railworks Corp- Initial Transferee for Preference Recovery Cannot Be A Mere Conduit

Summary:

The Chapter 11 Trustee sought to avoid and recover as preference, premium payments that Railworks transferred made to CPG within 90 days of filing bankruptcy, which later transferred them to TIG, which provided various insurance coverage to Railworks. While CPG had physical control over the transfers it received, it held the funds in trust for TIG.

Pursuant to 11 U.S.C. § 550(a)(1), a preferential transfer can be recovered from an “initial transferee.” The Court of Appeals applied the ‘dominion and control’ test to determine whether an entity qualifies as such holding that under this test, an initial transferee must

(1) have legal dominion and control over the property—e.g., the right to use the property for its own purpose; and
(2) exercise this legal dominion and control.”

“[A] party cannot be an initial transferee if he is a ‘mere conduit’ for the party who had a direct business relationship with the debtor.” In re Se.… Read More

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4th Circuit: Olson v. Midland Funding- FDCPA Statute of Limitations, Non-collection Notices, and Unsucessful Debt Collection Suits

Olson raised FDCPA claims in federal court against Midland, which had brought a debt collection action in state court. These claims were asserted within a year of when Olson first appeared in the state court debt collection action, but more than a year after the alleged violations. The 4th Circuit found that the one-year statute of limitation barred Olson’s FDCPA suit, as the Statute of Limitations ran from the violation date, especially as Olson had been on notice and participated in the state court action for longer than one year.

Olson further contended that privacy notices sent directly to him, after Midland was aware he was represented by counsel, violated § 1692c(a)(2).… Read More

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