Potentially Explosive Real Estate Claim: Couple Discovers WWII Era Rocket Inside Their Home

A couple discovered a World War II explosive inside a wall while remodeling their Virginia home. The Newport Fire Department and bomb squad crews responded to the home late at night.

Battalion Chief Jerry Reed identified it as a World War II-era M6 60 Caliber Bazooka anti-tank rocket. After bomb squads determined it was safe to remove the rocket, officials placed it in a secure container and turned it over to the military.

Real Estate Law: Is there Liability for Non-Disclosures?

The expense of having the fire department and bomb squads remove a rocket from a house would be significant. In this kind of case, it would be possible to hold the seller and/or real estate agent responsible for the expenses.

real estateReal estate laws in most states require the seller and/or her agents disclose any material defects to the buyer. Defects that are required to be disclosed include, but are not limited to: foundation cracks, roof leaks, and terminate infestations. Failure to reveal these defects to the buyer could result in seller’s payment of damages to the property and for legal expenses. In this case, there would be two issues: (1) did the seller know about the explosive in the wall and (2) would a rocket be considered a “material defect?”

The answer to the first question is impossible to answer without more information. The answer would hinge on when the house was sold, as multiple owners would indicate that the sellers might not have known and also whether a statute of limitations, or deadline, might apply. Investigators would need to interview the prior owners and any documents they might have regarding the property.

The second question, whether a rocket in the wall of a house is a material defect, might seem obvious. If the rocket ever exploded, the house would be significantly damaged and anyone near the blast would be injured or even killed. Most buyers would also avoid purchasing the property if they knew there was an explosive imbedded inside. The potential hazard would harm the value of the property and if the danger was ever realized, the house itself would be threatened. A rocket in the wall is comparable to a landslide and would be considered a very important defect.

But, What Else is There to Consider?

On the other hand, the rocket in question never blew up. Although the average person would feel that a rocket in a house is too great a risk, this rocket dated back to the Second World War. This rocket could have been inside the walls for decades without any owners ever being the wiser. If the property could be occupied for years without incident, it’s difficult to claim that the rocket was a defect that possessed an actual risk to inhabitants. It is also possible that the rocket was empty and there wasn’t an actual explosive inside – the media has not reported whether the weapon was actually loaded or not.

However, even if the weapon was empty, that does not relieve prior owners from their duty to disclose the rocket if they knew it was inside the house. A reasonable person who found a rocket inside their property would assume that the rocket was capable of exploding. If you are selling a property, it would probably be wise to disclose that there is a rocket inside your living room – or better yet, remove it from the house before selling it.

California Coffee Shop Refuses to Serve Police Officers for Safety Reasons

Hasta Muerte, an Oakland coffee shop, refuses to serve police officers. The cafe opened last November after a crowd-funded campaign. On February 16, a sergeant was turned away from the shop. The officer left without incident or coffee. The Oakland Police Officers Association has asked the shop to discuss its policy, but the business refused to comment.

Instead, Hasta Muerte posted a message online on February 22: “We have a policy of asking police to leave for the physical and emotional safety of our customers and ourselves.” The post also asks community members to support the cafe’s safety “especially in an area faced by drug sales and abuse, homelessness, and toxic masculinity as we see here on this block.” The shop is owned by a five-member worker cooperative.

police officersRefusing to Serve Cops: Is this Legal Discrimination?

The Civil Rights Act only protects specific traits – religion, gender, sex, national origin, and race. The Americans with Disabilities Act further protects those who are mentally or physically disabled. There are no protections for police officers. California law also prohibits discrimination based on military and veteran status, but no laws exist to prevent discrimination towards police. Police officers, at least in California, have no civil rights recourse if a business chooses not to serve them.

Laws prohibiting discrimination towards police officers don’t exist because they seem unnecessary. It seems unwise to bite the hands that might respond to an armed robbery. Of course, refusing to serve an officer does not mean that the business can escape civil or criminal liability. If the police see a crime occurring or if someone reports that a crime is occurring inside the shop, the business cannot bar the police from investigating.

On the other hand, this type of policy could also legally backfire on Hasta Muerte. The café plays with fire when it advises customers to “Talk to your neighbors, not the police.” Although community members have no legal obligation to report a crime, they cannot prevent others from calling the police. If a crime occurs and Hasta Muerte prevents witnesses from cooperating with the police, Hasta Muerte could face a criminal indictment for obstruction of justice and/or accessory after the fact.

What Should We Take Away from This?

However, this shouldn’t be a reason for police not to protect the café or anyone else who refuses to serve officers. Police will always have a duty to protect and serve, even if the protected are hostile towards the officers. The police department should be the bigger men in these situations. The state should not require that shops like Hasta Muerte serve officers. Instead, the police department should work to win back the trust of the community. Respect is earned. If the local community doesn’t respect its officers, the responsibility is on the officers to earn it.

MLB Players Association Accusing Four Teams of Breaking Union Agreements

Players from the Pittsburgh Pirates, Tampa Bay Rays, Oakland A’s, and Miami Marlins (notably currently owned by former Yankee Derek Jeter) have brought a grievance through the MLB Player’s Association–the long standing baseball players union–over teams pocketing shared revenues instead of using them to improve on field performance through payroll, free agency, equipment, and other avenues as required by the MLB’s collective bargaining agreements.

This isn’t quite the same as a lawsuit, the MLB agreements handle most everything through an extremely complicated set of internal rules and regulations. However, in terms of burden of proof and possible consequences for the teams accused, it might as well be a real legal action.

All four of these teams stand to potentially lose funds, have strict sanctions placed on them by the Commissioner, or any number of other punitive actions. Most of all, it presents–if you’ll pardon the pun–an opportunity to look into the inside baseball of the sports law surrounding the Major League Baseball Association.

MLBRevenue Sharing and the Collective Bargaining Agreement

An enormous amount of the inner workings of how baseball players, their clubs, and the league at large interact has long been hammered out through collective bargaining agreements between the clubs, the league, and the MLB Players Association. This agreement is frequently referred to as the “Basic Agreement.”

Not so long ago, the MLB Players Association and the league at large reached a new collective bargaining agreement recently entered for the years 2017-2021. It is a 373 page behemoth which covers everything from clubs giving players loans to rules for international play to–of course–revenue sharing. However, as with most union agreements, nothing in the collective bargaining agreement is simple. Even just the revenue sharing provisions are 18 pages long.

The new revenue sharing provisions require all clubs within the league to contribute its average net local revenue–calculated by looking at the net local revenues of the last three years with extra weight on the most recent year–to a pool to be divided equally among the clubs every year. At least theoretically it is distributed evenly.

Each club has quite different revenues so they all contribute different amounts–the more you contribute the less you’re obviously getting of your equal distribution. Sometimes this means you pay more than you receive. In these cases, you are classified as a “revenue sharing payor.”

Not surprisingly, if you make money out of the deal you are a “revenue sharing payee”. Every year the clubs keep track of their contributions and get a receipt for them, as well as keeping track of whether they are a payor or a payee. The biggest clubs in the league, such as the Yankees, are disqualified completely from receiving revenue sharing distributions. Worth noting given the recent accusations, the Oakland A’s would normally be disqualified but instead receive progressively less as a distribution over the next several years.

We’ve mentioned that the clubs keep track of whether they are payors or payees in a year. This is because the clubs you donate the most qualify for a refund on their contributions. In the first year as a payor, a club receives 100% of this refund amount. However, the amount they receive becomes less for each successive year they make above the average and are a payor.

This goes on for five years until, after five consecutive years as a payor, the club gets no refunds whatsoever. Every year, decreases the refund by a “tier” of one to five. Even if a club is a payee for one year, it doesn’t change its refund tier unless until the club is a payee for two years straight. If that happens, the club goes back to tier one for refund purposes. As the tiers go up and a club forfeits more of their refund, that extra money goes to payee clubs and funds to benefit the players themselves.

There is also something called the Commissioner’s Discretionary Fund which allows the Commissioner to give out $15M every year to clubs as they see fit–so long as no club receives more than $4M. The clubs request these funds through written applications to the Commissioner.

The idea behind this revenue sharing is that it takes two strong teams to have a good game of baseball. With that in mind, the Basic Agreement requires clubs to–as we’ve discussed a bit already–use these funds from revenue sharing and the Commissioner’s Discretionary fund to improve performance on the field through investment in players, team personnel, equipment, etc.

Where clubs don’t do this, as the grievances against these four teams allege, the Major League Constitution (yes, that is a real thing) allows the Commissioner of the MLB to impose penalties on the teams. They can also force a change in the agreement or the way clubs choose to follow the rules to further protect the players.

Every year, all the teams are required to submit a report before August 15th which covers how they put their revenue sharing funds to use to improve team performance. This report requires some discussion of strategy to improve the team going forward and a summary of expenses. The MLB has the power to audit these reports whenever they like.

How Could This Proceed?

Under the Basic Agreement, some of the teams accused such the Pirates and the Marlins–well on the smaller side of teams and perennial payees in the revenue sharing scheme–could stand to lose a substantial amount if the grievances get purchase and the Commissioner ends up coming down on them. However, as mentioned, they vehemently deny the accusations and–fortunately for the teams but unfortunately for the accusing player–the MLB has released statements saying they do not believe the accusations to be true.

Regardless, the Basic Agreement is very clear on the procedure to revenue sharing grievances. These sorts of grievances will always go to arbitration if a settlement isn’t reached. Even the arbiter himself is set as the MLB always uses the same man–Mark Ivings–as their independent arbitrator.

The arbitrator will consider the expenditures the clubs have made with the revenue sharing funds, along with the way they’ve used the funds in the past, and look to see that they are being used properly. Normally, the MLB Players Association itself has the burden of proving that they’ve been on the up and up in their use of funds. The only exception to this is when a team’s payroll is enough lower than their revenue sharing receipts. As of now, it doesn’t look like any of the four clubs accused fall into this exception.

Given the stance of the MLB on the matter, this is likely going to be an uphill battle for the MLB Player’s Association if the grievance makes its way to arbitration. If they succeed, we may see some major shakeups in some of the smaller clubs–something to keep an eye on if you’re a fan of the Pirates, the Rays, the A’s, or the Marlins.

Jonathan Lurie is a Founding Partner of The Law Offices of Lurie and Ferri (Contact Info). He primarily handles business law, employment law, and intellectual property issues, but works with all types of civil matters. He is a Vice-Chair of the Sports and Entertainment Interest Group of the California Intellectual Property Section and has won awards for his knowledge of intellectual property, start-up business issues, and California civil procedure. 

Appeals Court Rules Civil Rights Act Protects Gay Employees

In 2010, Donald Zarda was fired from his job at Altitude Express as a sky-diving instructor. Mr. Zarda was preparing for a tandem sky-dive with a female student, when he noticed she was uncomfortable about being tightly strapped to him. To comfort her, Zarda told the student he was “100% gay.” Her boyfriend complained to the school about the comment. Zarda sued Altitude Express for violating the Civil Rights Act’s ban on sex and gender discrimination.

At first, the lawsuit looked like it was doomed. Although the Equal Employment Opportunity Commission had given Zarda permission to sue in federal court, the trial court and a three judge appeal court ruled against him. When Zarda passed away in 2014, it looked like the case had died with him.

However, his estate persisted and they filed an appeal to the 2nd District court en banc (the full Appeals court with all 13 judges). The EEOC won a separate case in which the court ruled that the gender and sex discrimination ban of the Civil Rights Act included sexual orientation, lending strength to Zarda’s claim.

civil rights actThe Justice Department under Mr. Trump interceded prior to the en banc hearing. The Justice Department argued that the Civil Rights Act did not explicitly cover sexual orientation discrimination. The DOJ also said that the EEOC did not “speak for the United States,” the first time that a federal department has openly attacked another federal agency. Nevertheless, the 2nd Circuit ruled against Altitude Express and found that the Civil Rights Act did include sexual orientation. It is unknown whether Altitude Express will appeal to the Supreme Court.

The Extent of the Civil Rights Act

Astute readers might notice that Zarda only claimed to be gay to reassure a female student that he would not be sexual with her while they were strapped together during a dive. It isn’t clear whether Zarda was actually gay or just joking. Legally, this is a difference without a distinction. Similar to criminal law, illegal employment discrimination focuses on the intent of the defendant, not the status of the victim. It makes no difference whether the employee was actually a certain race, religion, gender, or sexual orientation. If the employer takes action based on what they believe is the employee’s trait, that’s enough for the employer to be liable.

Of course, the case is about whether the Civil Rights Act protects sexual orientation from employer discrimination or whether Congress needs to update the Civil Rights Act to include sexual orientation. There are reasonable arguments on both sides.

The Civil Rights Act protects sex and gender. Case law is clear that employers cannot enforce sex stereotypes unless the job explicitly requires it. Employers cannot fire a woman for failure to wear skirts and makeup unless it is industry custom for women to wear a specific uniform. Expecting men to be attracted to women, or women to be attracted to men, is a similar stereotype that should be illegal. Obergefell, the Supreme Court case that legalized same sex marriage, is built partly on the reasoning that Equal Protection for sex and gender includes Equal Protection for sexual orientation. If the constitutional definition of sex and gender includes sexual orientation, there is no reason why the federal definition of sex and gender should not be the same.

On the other hand, there is a sharp difference between government action and private action. Just because the federal constitution applies to the government doesn’t mean that private actors are also subject to the same restrictions. The government has no authority or power to regulate speech, but YouTube and Twitter can close accounts with impunity. The only limitation is if Congress enacts a law restricting certain actions. If there is an ambiguity in a statute, we should expect Congress to clarify the meaning of the statute instead of relying on unelected judges.

Martin Shkreli Sentenced to Prison for the Wrong Offenses

Former U.S. drug executive Martin Shkreli has finally received his just desserts. U.S. District Judge Kiyo Matsumoto sentenced Shkreli to 7 years in federal prison after a jury found him guilty of securities fraud in August 2017. As part of his sentence, the federal government will also seize $7.36 million in assets from Shkreli through civil asset forfeiture, including the $2 million Wu-Tang Clan album Shkreli had purchased in 2015.

Shkreli became infamous as Turning Pharmaceuticals when he raised the price of Daraprim, an anti-infection drug needed by HIV patients, by 5,000%. Shkreli was not arrested for his actions at Turning Pharmaceuticals, because raising prices is not illegal. Instead, prosecutors charged Shkreli with securities fraud for stealing $10.4 million from investors. Shkreli’s attorneys argued that his client had not caused any losses because Shkreli’s investors eventually made more money than Shkreli had stolen. The jury found him guilty anyway.

Prosecutors demanded 15 years in prison. The defense requested 12-18 months with community service. Judge Matsumoto settled for a median of 7 years with a $7,500 fine and a civil asset forfeiture order of $7.36. Shkreli’s attorneys argued that their client was a changed man who was remorseful of his actions. Shrekli’s behavior during trial showed the opposite: Shrekli bragged online about avoiding jail after the jury handed him his guilty verdict in August 2017 but before his sentencing in March 2018.

shkreliThe Al Capone Treatment?

On its face, it seems like Martin Shkreli was brought down in the same manner as Al Capone. Al Capone was an infamous Chicago crime boss who avoided prison for multiple murders, but was ultimately prosecuted for tax evasion. Shkreli’s decision to raise the price of Daraprim from $13 to $750 brought down the ire of Congress and major political figures. However, raising prices, even to extraordinary levels, is not illegal. This isn’t to say that Shkreli wasn’t guilty of securities fraud, but District Attorneys probably wouldn’t have been as interested in prosecuting Shkreli if Shkreli hadn’t gone out of his way to put a target on his own back.

The Shkreli highlights two issues with the U.S. justice system. First, there is no penalty for abusing vulnerable peoples. Daraprim is not a new drug – it has been used as medication since 1953. Patients who use Daraprim often rely on it to treat life-threatening diseases, including HIV. Prices can be raised to extraordinary levels, but patients must still purchase it. America has been criticized for prioritizing profits over people, but the fact that putting the supply of medication out of reach of most patients is not illegal is one of the most blatant examples possible.

The second issue is how political prosecutions are. Shkreli could have defrauded tens of thousands of investors, but prosecutors might have looked the other way if Shkreli hadn’t gained the notoriety he did. Although laws punish abuse defrauding wealthy investors more than poor medical patients, those wealthy investors would not have had their time in court without the attention that ripping off HIV patients got. The crux of the problem is that the law should prosecute people regardless of other immoral acts they might have committed.

Arrogance of the Wealthy

One of the most interesting things about this case is how arrogant Shkreli was. Shkreli flouted the fact that he could raise prices without regard for human life. Shkreli’s bail was revoked because he put out a $5,000 bounty for a piece of Hillary Clinton’s hair. Even after a jury found Shkreli guilty of three out of seven charges, Shkreli believed he wouldn’t serve much prison time. His own attorney admitted at sentencing that at times he wanted to punch his client in the face.

It is easy to attack Shkreli for being an insufferable douche, but America is full of Shkreli like characters. Men like Bill O’Reilly, Bill Cosby, and Harvey Weinstein think they can abuse women with less power and get away with it. Prosperity theology takes these douches and turns them into holy figures and political martyrs. Even worse, we reward men like Bill Clinton and Donald Trump with power even after their real character comes out. If we are outraged that one man can raise the price of Daraprim from $13 to $750 and that is legal, we have to stop putting men like Shkreli into positions of power. They will always write the rules so that their outrageous and abusive behavior becomes legal.