Occupational safety-related citations; Requirement that an employer control hazardous energy related to the servicing or maintenance of machines & equipment; 29 CFR § 1910.147(a)(1)(i) (also referred to as Part 85); Whether an issue was waived; Minor-tool-change exception; § 1910.147(a)(2)(ii); Gravity as an energy source; § 1910.147(b); Sufficiency of an administrative agency’s final decision; MCL 24.285; Michigan Occupational Safety & Health Administration (MIOSHA); Administrative Law Judge (ALJ)

The court affirmed the circuit court’s order affirming the amended decision of the Board of defendant-MIOSHA, upholding citations issued to plaintiff-Argent “after one of its employees injured his arm in a press machine.” The ALJ found “that, at the time of the accident, the operator’s conduct did not meet the definition of servicing or maintenance, and therefore Part 85 did not apply. MIOSHA objected to the proposed decision on the basis that the operator had been setting up the press, and Argent countered that the ALJ’s decision was well-reasoned and supported by law. The Board ultimately reversed the ALJ’s decision, ruling that the operator had been servicing the press by setting up the press.” The court concluded “that, because Argent was not the party objecting to the proposal for decision and argued generally that the ALJ’s decision should be upheld,” it did not waive any issues. But this did “not render Argent’s issues entirely preserved.” Because it “did not argue before the circuit court that Part 85 is entirely inapplicable,” this issue was not preserved for the court’s “review. However, the remainder of Argent’s issues on appeal are preserved.” Argent asked the court “to determine whether the Board’s decision sufficiently identified the legal authority, testimony, exhibits, or portions of the record to support its findings of fact or conclusions of law.” The court concluded “that the circuit court properly applied the law when determining that the Board’s decision was sufficient.” The court held that the “circuit court did not incorrectly apply MCL 24.285. Further, the Board’s decision is sufficient for the purposes of our review.” It also concluded “that the circuit court applied the correct legal principles when reviewing the Board’s decision to apply” § 1910.147 and did not err in “applying the substantial-evidence test to the Board’s findings. Even though the injured employee was not specifically a maintenance employee and was injured during production operations, Part 85 applied because he was required to place his hands within the machine’s zone of danger to adjust or unjam the press.” And it applied the correct legal principles in upholding the Board’s determination that the minor-tool-change exception did not apply.

Stockbroker regulation; Refusal to register with the Financial Industry Regulatory Authority (FINRA); 15 USC §§ 78s(b) & (c); Violations of § 10(b) of the Exchange Act & Rule 10(b)–5; Whether the FINRA had statutory jurisdiction over plaintiff despite his refusal to register; §§ 78o–3(b)(7) & (h)(1); Securities & Exchange Commission (SEC) “exhaustion” requirement (§ 78y(c)(1); SEC v Jarkesy

The court denied petitioner-Smith’s petition for review of respondent-SEC’s order upholding sanctions against him for violations of securities-related laws and administrative rules, holding that he was under the FINRA’s jurisdiction despite his failure to register. He refused to register with the FINRA, a private, not-for-profit member organization that “promulgates rules for its members and associated persons, which the SEC reviews and modifies as it sees fit. FINRA also imposes discipline through its internal adjudicatory process for violations of its rules and federal securities law, again subject to SEC oversight.” The SEC enforces FINRA sanctions. Smith was chairman and CEO of his own consulting company (CSSC), which had a subsidiary (referred to as CSSC-BD) that was a licensed broker-dealer. He claimed he was exempt from registering with the FINRA where “he was not actively engaged in managing CSSC-BD’s securities business.” FINRA’s Department of Enforcement later filed a complaint against him “alleging that he violated a host of statutory provisions as well as industry regulations, including § 10(b) of the Exchange Act” and SEC Rule 10b–5, among others. FINRA ruled against him on all counts. Smith was ordered to pay $130,000 in restitution and barred from associating with any FINRA member. The SEC affirmed. Smith argued the SEC erred by holding that he was subject to FINRA regulatory jurisdiction. But “Congress has empowered national securities associations like FINRA to ‘provide that . . . its members and persons associated with its members shall be appropriately disciplined for violation’ of securities laws and regulations.” The court further noted that the “FINRA has disciplinary power over both members and ‘persons associated with its members.’” Thus, he still fell under the FINRA’s enforcement jurisdiction for his association with a member. Congress defined this to include anyone directly or indirectly controlling a member. “The SEC found that he did exercise such control” as he was CSSC’s chairman, CEO, and majority owner, and CSSC “wholly owned CSSC-BD, a FINRA member.” The court found that “Smith’s argument that FINRA lacks authority to discipline him runs counter to a straightforward reading of the relevant statutory text.” It did not reach the merits of his constitutional argument because he never raised the issue before the SEC, with the result that it was “statutorily barred from resolving the issue.” And he could not show “a ‘reasonable ground’ for his failure to exhaust his constitutional arguments at the agency level.”

Stockbroker regulation; Refusal to register with the Financial Industry Regulatory Authority (FINRA); 15 USC §§ 78s(b) & (c); Violations of § 10(b) of the Exchange Act & Rule 10(b)–5; Whether the FINRA had statutory jurisdiction over plaintiff despite his refusal to register; §§ 78o–3(b)(7) & (h)(1); Securities & Exchange Commission (SEC) “exhaustion” requirement (§ 78y(c)(1); SEC v Jarkesy

The court denied petitioner-Smith’s petition for review of respondent-SEC’s order upholding sanctions against him for violations of securities-related laws and administrative rules, holding that he was under the FINRA’s jurisdiction despite his failure to register. He refused to register with the FINRA, a private, not-for-profit member organization that “promulgates rules for its members and associated persons, which the SEC reviews and modifies as it sees fit. FINRA also imposes discipline through its internal adjudicatory process for violations of its rules and federal securities law, again subject to SEC oversight.” The SEC enforces FINRA sanctions. Smith was chairman and CEO of his own consulting company (CSSC), which had a subsidiary (referred to as CSSC-BD) that was a licensed broker-dealer. He claimed he was exempt from registering with the FINRA where “he was not actively engaged in managing CSSC-BD’s securities business.” FINRA’s Department of Enforcement later filed a complaint against him “alleging that he violated a host of statutory provisions as well as industry regulations, including § 10(b) of the Exchange Act” and SEC Rule 10b–5, among others. FINRA ruled against him on all counts. Smith was ordered to pay $130,000 in restitution and barred from associating with any FINRA member. The SEC affirmed. Smith argued the SEC erred by holding that he was subject to FINRA regulatory jurisdiction. But “Congress has empowered national securities associations like FINRA to ‘provide that . . . its members and persons associated with its members shall be appropriately disciplined for violation’ of securities laws and regulations.” The court further noted that the “FINRA has disciplinary power over both members and ‘persons associated with its members.’” Thus, he still fell under the FINRA’s enforcement jurisdiction for his association with a member. Congress defined this to include anyone directly or indirectly controlling a member. “The SEC found that he did exercise such control” as he was CSSC’s chairman, CEO, and majority owner, and CSSC “wholly owned CSSC-BD, a FINRA member.” The court found that “Smith’s argument that FINRA lacks authority to discipline him runs counter to a straightforward reading of the relevant statutory text.” It did not reach the merits of his constitutional argument because he never raised the issue before the SEC, with the result that it was “statutorily barred from resolving the issue.” And he could not show “a ‘reasonable ground’ for his failure to exhaust his constitutional arguments at the agency level.”

The State School Aid Act (SSAA); Funds earmarked for “school safety & mental health” (MCL 388.1631aa(1)); Amendment conditioning receipt of the funds on the school’s agreeing to waive “any privilege” & comply with a “comprehensive investigation” “in the event of a mass casualty event”; MCL 388.1631aa(9) (the privilege waiver); Constitutional challenges; Void for vagueness; The unconstitutional conditions doctrine; The “Title-Object Clause” (Const 1963, art 4, § 24); The separation of powers

The court held that the amendment to the SSAA conditioning a school’s receipt of funds earmarked for “school safety and mental health” on agreeing to waive “any privilege” and comply with a “comprehensive investigation” “in the event of a mass casualty event” did not violate the Michigan Constitution. Thus, it affirmed the Court of Claims order granting defendants summary disposition. MCL 388.1631aa(9), as amended, contains what the court referred to as the privilege waiver. It first held that the provision was not void for vagueness. Plaintiffs argued “the phrase ‘any privilege’ is unconstitutionally vague because it does not identify which privilege or privileges are to be waived, whether [they] include those held by any individuals, or the duration of the waiver.” But the court concluded that when read in context, “‘any’ is not ambiguous, and it clearly refers only to privileges held by the school or district itself, and it also refers only to privileges related to information pertaining to a particular mass casualty event under investigation.” The statutory language was “clear—only the district or school receiving funds must agree to the waiver.” As to the possibility of being subject to criminal penalties, “if an administrator or employee invokes a privilege in the good-faith belief that they are entitled to invoke that privilege, they are likely not in violation of MCL 388.1761, even if it is ultimately determined that they did not have a right to invoke the privilege.” The court added that the “privilege waiver is further modified by a restrictive clause as the waiver is only applicable ‘in the event of a mass casualty event.’ While no published decision in Michigan has expressly defined the phrase ‘in the event of,’ it has been treated as indicating a conditional occurrence.” MCL 388.1631aa(12)(a) lists four possible circumstances that would qualify as a mass casualty event. Read in context, the statute’s “repeated references to ‘an incident,’ and its reference in subsection (9) to a singular investigation into a singular event, indicate that the Legislature intended for any of those four possibilities to arise.” As to plaintiffs’ unconstitutional conditions doctrine claim, given that “the schools never had any constitutional rights, and because individuals are not subject to direct or indirect waivers of their rights . . . the privilege waiver is not unconstitutionally coercive.” The court also found no violation of the Title-Object Clause or the separation of powers.

Dismissal without prejudice due to prosecution discovery violations; MCR 6.201; Showing that a discovery violation was prejudicial; People v Dickinson; A trial court’s discretion to fashion a remedy

Holding that the trial court did not abuse its discretion in dismissing these consolidated cases without prejudice because this remedy “was a principled outcome based on the prosecutor’s discovery violations[,]” the court affirmed. It was undisputed that the prosecutor failed to provide defendant-Ewing’s “recorded statement to the defense. The former officer in charge indicated that the interview was very likely recorded, and the prosecutor failed to find out this information until trial was imminent, despite repeated requests for the evidence over a substantial period of time.” The prosecution also “failed to provide other evidence that appeared to be previously in its possession, including the audio recording of a conversation involving Ewing’s mother. These delays and oversights regarding the investigation reasonably caused the trial court to question whether the prosecutor failed to provide all of the available evidence in accordance with MCR 6.201. The prosecutor’s failure to identify, obtain, and disclose recordings and other evidence that were likely in the government’s possession at some point constituted discovery violations, and [they] prejudiced the defense.” The court noted that “the trial court has discretion to fashion a remedy to fit the” discovery violation. It was initially presented with three options, but the prosecution withdrew its motion for an adjournment. That left a jury instruction or dismissal. It found that the prosecutor’s instruction request “would not be sufficient for defendants to receive a fair trial, indicating that the actual prejudice to [them] from the discovery violations outweighed the effects of a jury instruction. Instead, [it] opted to grant defendants’ motion for dismissal.” Review of the record showed that the “rejection of an instruction in favor of dismissal was a principled outcome and not an abuse of discretion.” The court stressed that the “dismissals were without prejudice. They did not foreclose the prosecutor from seeking to refile charges against one or both defendants; if” this occurs, any discovery questions “can be taken up anew.” As to any statute of limitations issue, a murder charge “can be filed at any time. The lesser assault and felony-firearm charges must be brought within ten years and six years, respectively, without” considering any applicable tolling.

Counting absentee ballots; Const 1963, art 2, § 4; The Michigan Election Law; MCL 168.765a(4); MCL 168.814; Comparing Gracey v Grosse Pointe Farms Clerk; MCL 168.745; MCL 168.823(3); Mandamus; Southfield Educ Ass’n v Board of Educ of Southfield Pub Schs

The court held that the trial court abused its discretion in not granting plaintiff-mayoral candidate a writ of mandamus and ordering defendant-county “Board of Canvassers to have the 37 ballots” at issue subjected to MCL 168.745’s challenged voter procedures as required by Gracey. The City Clerk discovered 37 ballots that were overlooked and not counted. She “later learned that several individuals (none of whom were authorized election staff) had entered her office while the ballots were stored there.” Thus, she told “the Board that she could no longer vouch for the chain of custody and had to rescind her previous statement that only election officials had access to the Clerk’s office.” The Board subsequently “declined to tabulate the 37 ballots.” A recount showed that plaintiff’s opponent won by 11 votes. The court noted that, pursuant to Gracey, evidence showing “that the ballots were stored in an unsecured room overnight in violation of the procedures of the Michigan Election Law did not necessarily invalidate those ballots, ‘but merely subjected them to the challenged voter procedures of § 745.’” Given the mandates “in Const 1963, art 2, § 4(1) and MCL 168.814, in light of” other constitutional rights, the Michigan Election Law, and the relevant case law, the court held “that the statutory mandate requiring the canvassing board to determine whether a ballot is ineligible under the law requires more than simply receiving testimony from the clerk indicating that several individuals who were not election officials entered the room where the ballots were stored. While there may be circumstances in which the law provides no remedy as it pertains to irregularity in an election,” this case did “not present such a circumstance because the Michigan Election Law provides a process for these votes to be deemed to be challenged, marked, and processed pursuant to MCL 168.745.” As to the requirements for mandamus, the court found “that plaintiff and the 37 voters who cast their ballots had a clear legal right to have them appropriately considered under the Michigan Election Law and defendant had a clear legal duty to perform the acts required by that law. The act of so marking the ballots as challenged pursuant to Gracey is ministerial and does not involve discretion or judgment. Finally, no other legal or equitable remedy exists that might achieve the same result.” Reversed and remanded.

Retaliatory discharge; COVID-19 Employment Rights Act (CERA); MCL 419.403(1)(a) & MCL 419.405(1); Burden-shifting framework; McDonnell Douglas v Green; Causation; DeBano-Griffin v Lake Cnty; Contractual limitations period; Employment agreement; Rayford v American House Roseville I, LLC

The court held that plaintiff created a jury question whether defendant-Workbox, her former employer, discharged her in violation of CERA after she remained off work because she still had COVID-19 symptoms. It also held that the trial court had to reconsider the contractual limitations issue under Rayford. Plaintiff worked as a recruiter for Workbox. After testing positive for COVID-19 she reported that she still had symptoms and could not yet return to work. The trial court granted summary disposition, finding her claim was untimely under a six-month contractual limitations provision and that she had not shown a triable CERA violation. On appeal, the court held that CERA claims should be analyzed under the indirect-evidence framework used in other employment cases because its retaliation provision is “analogous to antiretaliation provisions of other employment discrimination statutes” and should receive “parallel treatment here.” The court next held that plaintiff established a prima facie case because she was protected by CERA, suffered an adverse employment action, and presented evidence of causation, including that “in just a few short days after exercising her rights under CERA, Workbox fired her,” that it did so “a mere two hours after it learned she would not be returning to work as planned,” and that “just the day prior, Workbox expressly planned for her return.” The court further held that plaintiff presented sufficient evidence of pretext because Workbox at most viewed her as “coachable” the day before firing her, and a jury could therefore conclude its asserted performance rationale had “no basis in fact” or was not “the actual factors motivating the decision.” The court also remanded the contractual-limitations issue because Rayford now requires courts to evaluate shortened employment limitations periods for adhesiveness and reasonableness. Vacated and remanded.

False advertising claim under the Lanham Act; The FedEx Ground Package Sys, Inc v Route Consultant, Inc test; Whether defendant made false or misleading statements of fact; 15 USC § 1125(a)(1); “Literally false” versus simply “misleading”; Whether defendant’s claim “actually deceived” the intended audience; Whether the claim was “material” to consumers

The court held that plaintiff-Brough Brothers failed “to identify any unambiguously false statements” by defendant-Fresh Bourbon, and because it did not introduce any evidence that customers were deceived by defendant’s statements, the district court properly granted defendant summary judgment on plaintiff’s false advertising Lanham Act claim. The case involved the right to be known as the first African American-owned company to distill bourbon in Kentucky. Plaintiff claimed to be the first, having opened “its physical distillery in 2020. But Fresh Bourbon counters that it was the ‘first’ because its owners physically distilled their brand at another company’s distillery two years earlier.” Plaintiff sued defendant for false advertising under the Lanham Act. Applying the multi-part test in FedEx, the court noted that the parties only disputed the first three elements. “The first one requires a ‘false or misleading’ statement of fact.” The court has “divided actionable factual claims into two categories: those that are ‘literally false’ and those that are merely ‘misleading.’” If a statement qualifies as the former, “the defendant can identify no possible framing in which one could consider the statement true.” By contrast, a misleading statement “requires a reader to engage in some mental processing to determine its truth or falsity.” And the distinction between the two “matters to the second element[,]” which considers “if the challenged statement has deceived or could deceive consumers.” The court presumes “that a literally false statement ‘actually deceived’ consumers.” However, it does “not accept this presumption for misleading claims.” Rather, it requires “plaintiffs to present proof of deception.” The court held that plaintiff’s claims failed “on deception grounds alone.” Plaintiff failed to show that defendant “expressly made a literally false statement[.]” Plaintiff also contended that all of defendant’s “statements, taken together, ‘left . . . the clear impression that Fresh Bourbon was the first black owned distillery in Kentucky.’” The court concluded it “may simply assume the validity of Brough Brothers’ false-by-necessary-implication theory. Fresh Bourbon’s collective statements were still, at most, ambiguous. Even if they could convey the (false) claim that [it] opened its venue first, they could also convey the (true) claim that [it] made and sold Kentucky bourbon first. And courts do not treat as literally false a statement (whether express or implied) that a reader could take to convey both a truthful assertion and a mistaken one.” Affirmed.

The State School Aid Act (SSAA); Funds earmarked for “school safety & mental health” (MCL 388.1631aa(1)); Amendment conditioning receipt of the funds on the school’s agreeing to waive “any privilege” & comply with a “comprehensive investigation” “in the event of a mass casualty event”; MCL 388.1631aa(9) (the privilege waiver); Constitutional challenges; Void for vagueness; The unconstitutional conditions doctrine; The “Title-Object Clause” (Const 1963, art 4, § 24); The separation of powers

The court held that the amendment to the SSAA conditioning a school’s receipt of funds earmarked for “school safety and mental health” on agreeing to waive “any privilege” and comply with a “comprehensive investigation” “in the event of a mass casualty event” did not violate the Michigan Constitution. Thus, it affirmed the Court of Claims order granting defendants summary disposition. MCL 388.1631aa(9), as amended, contains what the court referred to as the privilege waiver. It first held that the provision was not void for vagueness. Plaintiffs argued “the phrase ‘any privilege’ is unconstitutionally vague because it does not identify which privilege or privileges are to be waived, whether [they] include those held by any individuals, or the duration of the waiver.” But the court concluded that when read in context, “‘any’ is not ambiguous, and it clearly refers only to privileges held by the school or district itself, and it also refers only to privileges related to information pertaining to a particular mass casualty event under investigation.” The statutory language was “clear—only the district or school receiving funds must agree to the waiver.” As to the possibility of being subject to criminal penalties, “if an administrator or employee invokes a privilege in the good-faith belief that they are entitled to invoke that privilege, they are likely not in violation of MCL 388.1761, even if it is ultimately determined that they did not have a right to invoke the privilege.” The court added that the “privilege waiver is further modified by a restrictive clause as the waiver is only applicable ‘in the event of a mass casualty event.’ While no published decision in Michigan has expressly defined the phrase ‘in the event of,’ it has been treated as indicating a conditional occurrence.” MCL 388.1631aa(12)(a) lists four possible circumstances that would qualify as a mass casualty event. Read in context, the statute’s “repeated references to ‘an incident,’ and its reference in subsection (9) to a singular investigation into a singular event, indicate that the Legislature intended for any of those four possibilities to arise.” As to plaintiffs’ unconstitutional conditions doctrine claim, given that “the schools never had any constitutional rights, and because individuals are not subject to direct or indirect waivers of their rights . . . the privilege waiver is not unconstitutionally coercive.” The court also found no violation of the Title-Object Clause or the separation of powers.