Fifth Circuit Court of Appeals Upholds Determination that Mississippi "Stop Notice" Statute is Unconstitutional

On October 10, 2013, the Fifth Circuit Court of Appeals affirmed a district court determination that Mississippi Code Annotation § 85-7-181 is unconstitutional. As prime contractors and owners know, an owner’s receipt of a stop-payment notice or "stop notice" could bring the flow of contract payments to a grinding halt. Miss. Code Ann. §85-7-181 required an owner to hold sufficient funds, otherwise due to a prime, to cover the amount alleged to be due and owing to a first-tier subcontractor who sent written notice that it was claiming the benefits of the "stop-payment" notice statute. Depending upon the amount of contract funds still remaining in the owner’s hands, if the owner paid the prime over the notice and thereby diminished sufficient funds available to pay the subcontractor, the stop-payment notice statute made the owner directly liable to the subcontractor. Owner-compliance, as intended by the statute, gave subcontractors (at least the first-tier) their only powerful tool to enforce payment rights on private, un-bonded projects.

The "stop-notice" statute has been in place for year, but on April 12, 2012, the Northern District of Mississippi ruled the statue unconstitutional on its face because it deprived prime contractors of property without due process. Noatex, an unlicensed California prime contractor, was hired by Auto Parts Manufacturing Mississippi ("APMM") to build an auto parts manufacturing facility. Noatex got into a billing dispute with its Mississippi subcontractor, King Construction of Houston, L.L.C. When King Construction sent a stop-payment notice to APMM asserting it was due over $260,000 from Noatex, that amount became bound in the hands of APMM. Noatex filed a declaratory judgment action, challenging the stop-payment notice statute as facially invalid and invalid as applied. The State of Mississippi, through the Attorney General’s Office, intervened in support of the stop-payment notice statute. Judge S. Allan Alexander agreed with Noatex, holding that simply by giving written notice of an alleged debt a contractor’s payment became bound in the hands of the owner—with no hearing before the money was bound—and thus the contractor was deprived of its property without due process.

The Fifth Circuit upheld Judge Alexander’s analysis. Among other things, the Fifth Circuit noted that the statute is "profound in its lack of procedural safeguards": no posting of a bond, no showing of exigent circumstances, and no sworn statement setting out the facts of the dispute. You can read the decision here.

Unless there are changes to the current stop payment law or the United States Supreme Court agrees to consider this issue, if appealed by the Mississippi Attorney General, there will be no "lien rights" for first-tier subcontractors. Only contractors with a direct contractual relationship with the owner will have lien rights.  Subcontractors may want to seek legal counsel concerning how to address stop payment notices that were to be filed or have been filed and to determine other remedies that may be available if their prime has failed to make payment.   

VA Issues Final Rule on Re-Verification of VOSBs and SDVOSBs

The Veterans Administration has published its final rule requiring re-verification of Veteran Owned Small Business and Service-Disabled Veteran Owned Small Business status every 2 years instead of annually.  The 2-year period for verification had previously been an interim rule.  Click here for the final rule.  The final rule is effective August 22, 2013.

Wait Just a Minute--No Certificate of Responsibility may Entitle Contractor to Recovery Under Quantum Meruit or Unjust Enrichment

On May 28, 2013, I published a blog entitled "No Certificate of Responsibility—No Payment for Work Performed" based upon a May 21, 2013, decision from the Mississippi Court of Appeals. [click here for decision]  On June 6, 2013, the Mississippi Supreme Court issued a decision suggesting that an unlicensed contractor may be entitled to recovery under the theory of quantum meruit or unjust enrichment. [click here for decision]

In Ground Control, LLC v. Capsco Industries, Inc., et al., the general contractor was W.G. Yates and Sons Construction Company ("Yates"), the subcontractor was Capsco Industries, Inc. ("Capsco") and its subcontractor was Ground Control, LLC ("Ground Control").  Neither Capsco nor Ground Control held a Certificate of Responsibility from the Mississippi State Board of Contractors.  Neither Yates nor the Owner was a party to the contract between Capsco/Ground Control.  Yates terminated Ground Control for default due to safety issues and Ground Control sued for payment of work performed under its contract with Capsco.  The trial court had determined that because the contract was null and void under Miss. Code Ann. § 31-5-15, Ground Control was not entitled to payment for the work it had performed. Ground Control appealed.

The Mississippi Supreme Court began its analysis by stating that "[t]his Court has never determined whether a party to an illegal contract is barred from recovery under theories of unjust enrichment or quantum meruit." It went on to find as follows:

Capsco knowingly solicited Ground Control to enter into an unlawful contract, allowed Ground Control to perform a substantial part of the work, made an interim payment to Ground Control, and obtained payment from Yates for Ground Control’s work.  To allow Capsco to use the void contract to shield itself from any obligation to pay for the work performed by Ground Control is unconscionable.  Enforcing the statute in such a way as to preclude any recover is inequitable, invites fraudulent activity, and violated the Remedy Clause of our State Constitution. See Miss. Const. art. 3, § 24.

Although the contract is void pursuant to Section 31-3-15, Ground Control should not be precluded from having the opportunity to proceed in court under a claim for the value of what it expended in labor and supplies on the project.  We do not address the issue of other penalties, if any that may be appropriate for the trial court to address.

Interestingly, the Mississippi Supreme Court did not mention Ace Pipe Cleaning, Inc. v. Hemphill Const. Co., Inc. and Federal Ins. Co., but the Ground Control decision seems to suggest Ace Pipe Cleaning, Inc. is now overruled.

There is now a glimmer of hope for those who have failed to comply with the statutory requirement for a Certificate of Responsibility.  However, recovery under quantum meruit may not be without the assessment of a civil penalty by the Mississippi State Board of Contractors under Miss. Code Ann. § 31-3-21(4) or criminal penalty or fine under Miss. Code Ann. § 31-3-21(1). [click here for statute]

When all the dust has settled, the rule of thumb remains that before soliciting bids or entering into a construction contract in Mississippi, check with the Mississippi Board of Contractors to determine if a Certificate of Responsibility is required.

Definitive Responsibility Requirement in Solicitation Upheld by Mississippi Court of Appeals

The Mississippi Court of Appeals has recently recognized the validity and enforceability of a definitive responsibility requirement set forth in a solicitation for the construction of a prison. [click here for a copy of decision] The solicitation required that prospective bidders "[p]rovide [a] list of prior construction experience with references on successful correctional facilities projects within the last [five] years having a minimum construction contract amount of eight[-]million dollars…each for no less than two…separate projects…Failure to do so may be cause for rejection." Desoto County Board of Supervisors rejected the apparent low bidder and second low bidder who did not satisfy the solicitation’s requirement and awarded it to the third low bidder for a price premium of $283,100.00. The disappointed bidders challenged the decision to award the contract to the third low bidder but the Court affirmed the decision finding the definitive responsibility requirement to be reasonable and enforceable.

There are two lessons to be learned from this. The first lesson is to protest such a definitive responsibility requirement as unduly restrictive of competition and try to convince the procuring agency to eliminate or "loosen" the standard. The second lesson is to make sure you can satisfy the criteria set forth in the solicitation or face the prospect of having your bid rejected as non-responsive.

No Certificate of Responsibility--No Payment for Work Performed

How would you feel if you performed thousands of dollars of work on a construction project and were then told you would not be paid anything?  That is exactly what has happened with a recent decision from the Mississippi Court of Appeals.  The Court’s opinion makes it absolutely clear that any contract entered into in violation of Miss. Code Ann. §31-3-15 is null and void.  [click here for decision]  This means if a contractor does not have a Certificate of Responsibility (“COR”) from the Mississippi State Board of Contractors for work in excess of $50,000 on a private or public project, the contract is null and void and the contractor is not entitled to ANY compensation under ANY legal theory if it performed work without the appropriate COR.  

In this particular case, the subcontractor did not have a COR but entered into a contract with the prime contractor.  When the subcontractor sued for payment, the prime contractor claimed the subcontract was null and void and refused to pay the subcontractor.  The trial court agreed and the Mississippi Court of Appeals affirmed the decision.  

This decision is an important reminder for prime contractors and subcontractors at all tiers to make sure that you have the required COR for the work to be performed.  If there is any doubt, contractors should contact the Mississippi State Board of Contractors at (601) 354-6161, (808) 880-6161 or visit their website at www.msboc.us.  

 

Arbitrator's Decisions Upheld by Mississippi Court of Appeals

Arbitration has found some favor in the construction industry with parties over the last decade in part because of its finality. Unlike civil litigation, the right to appeal an arbitrator’s award is extremely limited under the Mississippi Construction Arbitration Act, Miss. Code Ann. §11-15-101, et seq. The specific grounds for vacating an arbitrator’s award are set forth in Miss. Code Ann. § 11-15-133(1).  Click here to read Miss. Code Ann. § 11-15-133(1).

The Mississippi Court of Appeals recently considered a challenge to an arbitrator’s award which was confirmed by the circuit court. (It appears from the opinion that the arbitration was governed by the Construction Industry Arbitration Rules for the American Arbitration Association.) The appellant objected to the arbitrator’s decision not to grant appellant a continuance when requested and also prohibiting appellant from introducing evidence that it had not produced during discovery. The Court found that the refusal to grant the continuance was justified by the appellant’s dilatory conduct in refusing to pay its half of the arbitration cost and its four changes in legal counsel. The Court also found the arbitrator acted within its authority when it denied appellant’s admission of evidence where it failed to produce any documents during the discovery period or prior to the arbitration.

Once again, the lesson to be learned is that while arbitration is a more informal proceeding than litigation, there are procedural rules that govern arbitration. When an arbitrator renders a decision on these procedural matters, the courts will be inclined to enforce such decision because of the extremely narrow scope of appellate review.

Fifth Circuit Upholds Mississippi's $1 Million Cap On Noneconomic Damages

Yesterday the Fifth Circuit Court of Appeals issued its opinion upholding as constitutional the Mississippi statute that caps the award of noneconomic damages at $1 million. Miss. Code § 11-1-60(2)(b) provides:

[i]n any civil action filed on or after September 1, 2004, …in the event the trier of fact finds the defendant liable, they shall not award the plaintiff more than One Million Dollars ($1,000,000.00) for noneconomic damages.

The term "noneconomic damages" is defined in §11-1-60(1)(a) to include "subjective, nonpecuniary damages arising from" death, pain, suffering, inconvenience, mental anguish, emotional distress, loss of enjoyment of life, loss of consortium, and other nonpecuniary damages. However, "noneconomic damages" do not include punitive or exemplary damages.

Lisa Learmonth was injured in an automobile accident and sued Sears, Roebuck and Co. for her injuries. A total award of $4 million was made by a jury, and $2.2 million of that amount was deemed to be for her noneconomic damages. When the district court reduced the $2.2 portion of the award to $1 million under §11-1-60(2)(b), Learmonth challenged the law as violating the Mississippi Constitution’s jury trial guarantee and separation of powers provisions.

The Fifth Circuit affirmed the lower court’s application of the $1 million cap. Noting it was Learmonth’s duty to prove the statute unconstitutional, the Fifth Circuit determined that burden was not met on the issues she presented on appeal. The Fifth Circuit rejected Learmonth’s argument that the legislature could not enact a legal remedy which limited an award of damages made by a jury. The Fifth Circuit also rejected her argument that the statute impermissibly allowed the legislature to dictate to the judiciary procedures or guidelines for determining awards. You can find the opinion here.

Agreement to Arbitration Trumps Right to Jury Trial

In a recent Mississippi Supreme Court decision the Court considered language in a contract which contained an arbitration provision, which excluded aesthetic-effect claims from arbitration. Click here to see decision. The contract in question was the AIA Document A101-1997 Standard Form of Agreement Between Owner and Contractor and AIA Document A201-1997 General Conditions for the Contract for Construction. The Owner maintained that because the contract stated "[a]ny Claim arising out of or related to the Contract, except Claims relating to aesthetic effect and except those waived…shall, be subject to mediation as a condition precedent to arbitration or the institution of legal or equitable proceedings by either party" there had been no clear waiver of its right to a jury trial. The trial court disagreed and on appeal the Mississippi Supreme Court affirmed.

The Court found the language of the contract required arbitration of all claims with the exception of those relating to aesthetic effect. Opinion on whether there had to be an express waiver of the right to a jury trial, the Court stated:

No caselaw suggests that, to be valid, an arbitration agreement must include an express statement which waives the right to a jury trial.

[T]he Constitution does not ‘confer the right to a trial, but only the right to have a jury hear the case once it is determined that the litigation should proceed before a court. If the claims are properly before an arbitral forum pursuant to an arbitration agreement, the jury trial right vanishes.

McKenzie Check Advance of Miss., LLC v. Hardy, 866 So.2d 446, 455 (¶30)(Miss. 2004)(citations omitted). Section 11-15-103 requires only a written agreement to arbitration.

Thus, the Court makes it clear that where a contract includes an agreement to arbitrate disputes, there is no need to have an express waiver of the right to a jury trial.

Mississippi District Court Finds Mississippi Stop Payment Statute Unconstitutional

On April 12, 2012, United States Magistrate Judge S. Allan Alexander issued an order and opinion finding Mississippi’s "stop payment" statute, Miss. Code Ann. §85-7-181 (1972) unconstitutional stating:

 

[T]he court is compelled to hold that Mississippi’s stop notice statute violates due process by authorizing what is in practical effect the prejudgment attachment of funds without prior notice and hearing, or an acceptable post-seizure remedy.  Consequently, §85-7-181 is facially unconstitutional...

 

The decision has been appealed.  Because the district court’s decision is based upon an "Erie guess", the State courts in Mississippi are not bound to follow the district court’s decision.  Nonetheless, subcontractors that have previously relied upon "stop payment" rights may see this decision cited by general contractors and owners to challenge a stop payment notice.

 

It will be interesting to see how this decision develops on appeal. Stay tuned for more information.

WHEN IS AN INSURED "MADE WHOLE"?

A basic tenet of law is that when one party is injured by another party the innocent party is entitled to be "made whole." This concept in its simplest terms means that the innocent party should be awarded damages sufficient to put the innocent party back in the position it was in before the injury occurred. Often, the innocent party has insurance which will provide compensation to the innocent party until a recovery from the wrongful party can be obtained. The insurance company holds what is called a "right of subrogation" to any funds the innocent party receives from the wrongful party—a concept entitled to prevent the innocent party from double recovery (i.e., recovery from both the insurance company and the wrongful party).

In the case of Armstrong and Hill v. Miss. Farm Bureau Ins. Co., Armstrong and Hill were both injured in an automobile accident. Farm Bureau made payments to Armstrong and Hill under an insurance policy. Armstrong and Hill sued the negligent party and obtained a judgment which they collected from the negligent party. Farm Bureau took the position that it was entitled to receive the funds the negligent party had paid pursuant to Farm Bureau’s right of subrogation. Conversely, Armstrong and Hill took the position that Farm Bureau was not entitled to the money because their damages were higher than what they had been awarded by the jury in the trial and, therefore, they were not "made whole."

In a case of first impression, the Mississippi Supreme Court decided what "made whole" means in a factual setting of this kind. The Court ruled that the jury had decided what dollar amount of damages were necessary to make Armstrong and Hill "whole" when the verdict was rendered. Since it was a jury verdict, Armstrong and Hill could not contend that their damages were higher and re-litigate the issue with Farm Bureau. Thus, since Farm Bureau had already paid Armstrong and Hill, Farm Bureau was entitled to the funds paid by the negligent party.

This decision still leaves unanswered what would happen if the insurance company pays more than the jury awards. We’ll have to await that answer for another Court ruling.

SBA Finally Issues Final Rule Establishing Women-Owned Small Business Program

On October 4, 2010, the U.S. Small Business Administration published a final rule in the Federal Register establishing a federal contracting programs for WOSBs.  See Press Release.  In a press release of the same date, the SBA says the new WOSB program will be used to help achieve a statutory goal that 5% of federal contracting dollars go to women-owned small businesses. [insert pdf] Under the program, contracts may be set-aside for competition among WOSBs when the anticipated contract price is not expected to exceed $3 million, except in the case of manufacturing contracts, is not expected to exceed $5 million.

The basic requirements to qualify as a WOSB are that the company be owned and controlled at least 51% by one or more women who are U.S. citizens and "small" according to its primary industry classification. According to the SBA, it will "pursue vigorously punitive action against ineligible firms which seek to take advantage of this program and in so doing deny its benefits to the intended legitimate WOSBs."

SIX YEARS AND COUNTING ... WHEN DOES EXPOSURE TO LIABILITY END?

On March 9, 2010, the Mississippi Court of Appeals denied a rehearing in the case of J. Criss Builder, Inc. v. White, but it is not clear the controversy has ended.  The Court has not yet released its opinion for publication which means the decision is still subject to revision or withdrawal.  Perhaps that is because the Court was clearly divided regarding the case as reflected in the four to three decision.

In this case, J. Criss Builder, Inc. ("JCB"), an unlicensed residential contractor, purchased land on which it built a house.  Janie Criss ("Criss"), the owner of JCB and an individually licensed residential contractor, oversaw the construction of the home.  On November 21, 1996, Criss purchased the home from JCB and occupied it as her homestead until February 17, 1997, when it was sold to the Whites.  Even though within one year of moving into the house the Whites noticed a hairline crack in the scored concrete floor which grew bigger over time, the Whites did not file suit for damages from foundation problems until February 12, 2003 – 6 years, 2 months and 22 days after the home had first been occupied by a resident.  On that date, the Whites sued both JCB and Criss, individually.

JCB and Criss sought to have the action dismissed on the basis that the Mississippi statute of repose barred the action.  Specifically, Miss. Code Ann. § 15-1-41 requires an action for damages arising out of construction to be brought "no more than six (6) years after the written acceptance or actual occupancy or use, whichever occurs first." There could be no disputing the fact that the first occupancy of the house occurred on November 21 1996, when Criss purchased the home from JCB for her homestead.  Thus, JCB and Criss contended suit had to be filed by November 21, 2002.  The Court also upheld liability against Criss, individually, even though the property was owned and constructed by JCB "[s]ince Criss was the licensed builder and JCB was legally prohibited from performing residential construction."

The Court majority relied upon a prior decision to conclude that the statute of repose did not apply to circumstances where the possessor and builder were the same and that the statute of repose would not begin to run until the "builder/owner, Criss, undisputably the builder, sold the home to the Whites."  Since suit was filed within 6 years of Criss selling the house to the Whites, the Court ruled the action was not barred.  The three dissenting justices would have barred the action.  They concluded that "Criss-even if considered the builder-purchased the completed home from JCB and actually occupied and used the home in her personal capacity."

The decision leaves more questions than answers.  Would the decision be the same if JCB had been properly licensed?  Residential builders commonly build a home which they occupy first and then sell to someone else.  Under this decision, could a licensed builder build a home, sell to its owner, live in the house ten years, thirty years, or more, and yet the statute of repose still not begin to run until the time the owner sells to a third party?  Clearly, more direction from the Court will be necessary.  Until that time, builders beware: "six years" under the statute of repose may not be six years.

Do you have coverage under your Commercial General Liability Policy for Defective Subcontractor Construction?

Less than one week after placing readers on alert about the pending decision of Architex Association, Inc. v. Scottsdale Insurance Company, the Mississippi Supreme Court has issued its decision in that case addressing the following narrow issue with regard to a Commercial General Liability ("CGL") policy:

Whether the intentional act of hiring subcontractors by an insured general contractor precludes the possibility of coverage?

The Court found "that under Scottsdale’s CGL policy, the term ‘occurrence’ cannot be construed in such a manner as to preclude coverage for unexpected or unintended ‘property damage’ resulting from negligent acts or conduct of a subcontractor unless, otherwise excluded or the insured breaches its duties after loss." Slip Op. at page 27. Thus, "[f]aulty workmanship, defective work, et al., may be accidental, intentional, or neither." Slip Op. at page 23.

The United States Court of Appeals for the Fifth Circuit in ACS Construction Company v. CGU, 332 F.3d 885 (5th Cir. 2003) had previously concluded that since hiring a subcontractor is a deliberate and intentional decision by a general contractor, any subsequent act by the subcontractor must be intentional and not covered under the definition of an "occurrence". The insurance industry has used ACS to deny coverage for defective work by subcontractors, even though many general contractors purchased policies and paid premiums with the understanding that their CGL policy would provide coverage.

The Mississippi Supreme Court’s decision in Architex brings clarity to the issue stating that "[w]hile the alleged ‘property damage’ may have been ‘set in motion’ by Architex’s [the general contractor] hiring of the subcontractor, the ‘chain of events’ may not have ‘followed a course consciously devised and controlled by [Architex], without the unexpected intervention of any third person or extrinsic force.’" In other words, hiring a subcontractor will not preclude coverage under a CGL policy.

Even if the insurer does not unequivocally agree that there is coverage under the CGL policy, the insurer may agree to defend the general contractor under reservation of rights. This means the insurer will pay the general contractor for the cost associated with defending the claim of defective workmanship. This does not mean the insurer gets to select the attorney to defend the claim, it means the insurer must pay for the attorney the general contractor selects to defend the claim. Therefore, it would be wise for the general contractor to select a construction lawyer to defend the claim rather than the insurer’s preferred attorney who is likely to have experience in defending slip and fall cases and car wrecks and not complex construction defect cases.

The Architex decision is good news for general contractors. However, the decision also admonishes general contractors that there are other reasons for denial of coverage such as failure to give timely notice of a potential claim. Slip Op. at page 12, fn. 11. This means that general contractors should place their insurance carrier/agent on written notice of any potential claim for which the CGL policy might arguably provide coverage. Otherwise, coverage may ultimately be denied.

Arbitration Clauses - A Balancing Act

The Mississippi Court of Appeals just released a decision addressing the scope of arbitration clauses. Although the case dealt with an employment agreement, the decision is certainly a warning sign for arbitration clauses in any contract.

At issue in the case was whether tort claims for assault and battery were included within the arbitrable claims of the employment agreement. The agreement required arbitration of "all matters directly or indirectly related to your recruitment, potential employment, or possible termination of employment, including, but not limited to, claims involving and/or against the Company, employees, supervisors, officers, and/or director of [Company] or any affiliates, as well as any other common law claims for wrongful discharge or other similar claims." Even though the Court determined that the foregoing language was broad and that the claims stemmed from a supervisor’s alleged actions while on a business trip, the Court nevertheless ruled that the arbitration provision did not include claims for assault and battery.

One judge disagreed with the Court’s majority. In a separate opinion, the dissenting Justice noted that in a case decided four years prior an agreement that required "any dispute under this agreement" to be arbitrated included intentional tort claims.

The current decision does not overrule the older court decision, and distinguishing factual circumstances can be found between the two decisions. However, the current decision at least constitutes a warning signal that the Court will look more closely when considering whether intentional torts fall within the ambit of arbitration provisions. A delicate balancing act will be required to make arbitration provisions broad enough to capture as much as possible, yet specific enough to include what might be considered more remote claims. Everyone should revisit the language of its contractual arbitration provisions or risk being in court to settle disputes rather than arbitration.

Freedom of Information Act Does Not Compel Disclosure of One Company's Emails to a Federal Agency About a Competitor's Eligibility for Contract

The U.S. District Court for the Southern District of Ohio has ruled that the Freedom of Information Act ("FOIA") (5 USC § 552) does not require the Department of the Air Force to release a series of emails sent by one contractor about another contractor’s eligibility to participate in an Air Force contracts program. See Tybrin Corp. vs. United States Department of the Air Force, Case No. 3:08-cv-002 (So. Dist. Ohio)(pdf).

The Air Force’s Consolidated Acquisition of Professional Services ("CAPS") program is a five-year indefinite delivery/indefinite quantity contract under which multiple contract awards can be made. Actual work and services are awarded by the Air Force through subsequent competitions among the awardees. Both Tybrin Corporation and HMRTech2 were CAPS awardees.

In May 2007, Tybrin sent emails to the Air force concerning the eligibility of HMRTech2 to receive awards for work under the CAPS program. In July 2007, the Air Force disqualified HMRTech 2 from further participation in CAPS.

HMRTech2 sought release of the emails form the Air Force, and Air Force officials had determined to release them. Tybrin filed a "reverse FOIA" suit, claiming that the "(b)(4)" exemption under the FOIA prevented disclosure of its emails, and demanding that the Air Force be enjoined from releasing them. The (b)(4) exemption exempts "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 USC § 552(b)(4).

Tybrin’s position was that its emails were confidential and commercial. The District Court looked to the District of Columbia Circuit for guidance on whether the emails were subject to release under the FOIA. In 1992, the District of Columbia Circuit adopted the following test to determine whether information was "confidential" and therefore not subject to disclosure under FOIA:

financial or commercial information provided to the Government on a voluntary basis is "confidential" for the purpose of [the (b)(4)] exemption] if it is of a kind that would customarily not be released to the public by the person from whom it was obtained.

Critical Mass Energy Project v. Nuclear Regulatory Commission, 975 F.2d 871, 879 (D.C.Cir.1992)(en banc).

Thus, the Court considered whether Tybrin treated as confidential emails such as the ones sent to the Air Force concerning HMRTech2. The District Court determined that because Tybrin did not release them to the general public and controlled distribution of them even within Tybrin, the emails were treated by Tybrin as confidential.

Tybrin also argued that its emails were "commercial" because it had a "commercial interest" in them. Some courts have held that if the information submitted by an entity does not reveal anything about the nature, character, finances, revenues, or other business information the release of which would hurt the submitter, it is not "commercial" information protected from disclosure. However, again following a District of Columbia Circuit decision, the District Court in Ohio determined that Tybrin had a "commercial interest" in the emails concerning HMRTech 2’s eligibility to participate in CAPS. The Air Force was prohibited from releasing the emails it received from Tybrin.

 

Forum Selection Clauses

The Mississippi  courts will enforce forum selection clauses when the intent is clear and unequivocal.  When confronted with challenges to the enforcability of a forum selection clause, the  first step in analysis is whether it is mandatory or permissive. Titan Indemnity Company v. Hood, 895 So.2d 138, 146-47 (Miss. 2005) (.pdf). The determination of what language is considered mandatory as opposed to permissive was carefully examined and discussed in Bently v. Mutual Benefits Corp., 237 F.Supp.2d 699 (S.D. Miss. 2002) (.pdf). In Bently, the district court was tasked with determining whether to enforce a forum selection clause with language strikingly similar to the language found in SCP’s terms and conditions. Its analysis followed the two-step inquiry articulated by the Fifth Circuit in Caldas & Sons, Inc. v. Willingham, 17 F.3d 123 (5th Cir. 1994) (.pdf). As to whether the forum selection clause was mandatory or permissive, the district court reasoned that "a mandatory forum selection clause has express language limiting the action to the courts of a specific locale which is clear, unequivocal and mandatory." Bently, 237 F.Supp.2d at 702 (emphasis added). The district court when on to cite a number of decisions discussing the importance of limiting language in the forum selection clause to obviate any uncertainty with regard to the exclusivity of the chosen forum.

If the forum selection clause is considered mandatory, the second step in the legal analysis requires the court to consider (1) whether "Its incorporation into the contract was the result of fraud, undue influence or overweening bargaining power; (2) [t]he selected forum is so gravely difficult and inconvenient that the resisting party will for all practical purposes be deprived of its day in court; or (3) [t]he enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought, declared by statute or judicial decisions." Titan Indemnity Company v. Hood, 895 So.2d 138,146-47 (Miss. 2005).