Class action under the Fair Labor Standards Act (FLSA); Enforcement of an arbitration clause; The Federal Arbitration Act; Whether the cost-shifting provision in the clause could be severed & the rest of it enforced; Whether the district court impermissibly “reformed” the contract; American Arbitration Association (AAA)

[This appeal was from the ED-MI.] The court held that the district court did not err by severing the “cost-sharing” provision in the arbitration clause contained in the parties' Independent Contractor Agreements and enforcing the rest of the clause. Thus, it affirmed the dismissal of the case in favor of arbitration. Plaintiffs are hair stylists in defendants’ salons. Upon hiring, each signed an Independent Contractor Agreement that contained an arbitration clause. They filed a class action complaint against defendants in federal court under the FLSA. Defendants moved to dismiss, arguing that the case had to proceed under arbitration before the AAA. But the arbitration clause provided that the parties were required to “split” the arbitration costs as provided in the AAA’s Commercial Arbitration Rules. Plaintiffs argued that the “agreement was unenforceable because it was unconscionably costly and would require them to pay arbitration costs that exceed their yearly income.” The district court agreed on that point but enforced the contract’s severability clause by severing the reference to the Commercial Arbitration Rules, which resulted in a default to lower cost rules for their dispute. It then enforced the rest of the arbitration clause and granted defendants’ motion to dismiss. Framing the issue as whether it could sever the cost-shifting provision in the arbitration clause and enforce the rest of it, the court held that it could. The contract contained a severability clause that provided that the rest of the agreement would continue after a portion was severed. The court rejected plaintiffs’ argument that the phrase “‘the remaining provisions shall nevertheless continue in full force’” applied only to the contract’s eleven sections. They claimed that if one of those sections contained something unenforceable, the court was required to “sever the entire section from the agreement,” not just the unenforceable part. The court explained that if this were the case, the district court would have had to sever the entire arbitration section, not just the cost-shifting provision. It found that this was “a bridge too far.” Plaintiffs also argued that “the district court impermissibly reformed the contract” without a finding of “mutual mistake.” However, it “did not change the scope or meaning of ‘Commercial Arbitration Rules’ to cure a mutual mistake. It instead declined to enforce this cost-shifting clause because it was unconscionably burdensome to the stylists.”

Whether the Elliott-Larsen Civil Rights Act (ELCRA) permits a hostile-educational-environment-harassment claim under a theory of direct liability; Gender-based discrimination by educational institutions; MCL 37.2402(a); MCL 37.2103; Chambers v Trettco, Inc; Respondeat superior

Holding on remand that while the ELCRA permits hostile-educational-environment-harassment claims under direct-liability theories, an educational institution is not liable if it shows that it took prompt and appropriate remedial action in response to the complainant’s claims, the court affirmed summary disposition for defendants-school district and board. It found that plaintiff “failed to rebut defendants’ evidence showing they took prompt and appropriate remedial action.” Plaintiff sued defendants on behalf of a female student, alleging defendants created a sexually hostile educational environment by not adequately responding to several incidents of student-on-student sexual harassment at an elementary school. The trial court granted summary disposition for defendants. In a prior appeal, the court reversed, finding the ELCRA does provide a remedy for plaintiffs who assert hostile educational environment claims on the basis of student-on-student harassment. The Supreme Court remanded for a determination of whether the trial court correctly granted summary disposition under a theory of direct (as opposed to vicarious) liability. On remand, the court first held that “the plain language of the ELCRA allows plaintiff to bring the claim under a direct-liability theory because it is undisputed defendants are educational institutions within the meaning of MCL 37.2401, and plaintiff alleged defendants discriminated against [the student] on the basis of her sex by creating a hostile educational environment.” The court then noted that defendants showed “they took prompt remedial action after learning of the incidents between the students . . . and satisfied their burden of showing that they promptly and appropriately responded” to the harassment. However, plaintiff “failed to satisfy her burden as the nonmoving party and thus failed to show a genuine issue of material fact as to whether defendants took prompt and appropriate remedial action.”

Ineffective assistance of counsel; People v Trakhtenberg; Failure to get into contact with potential witnesses; Duty to conduct a reasonable investigation

The court held that it was objectively unreasonable for defense counsel (J) to not adequately investigate three potential witnesses and, as a result, “fail to procure their testimonies at” trial. Thus, it reversed a portion of the order denying defendant’s motion for a new trial and remanded for the trial court to consider the issue of prejudice. Defendant was convicted of first-degree murder. At a Ginther hearing, J testified that he hired an investigator, P, to interview the witnesses listed in the police report, an estimated 20 to 30 witnesses. Defendant contended that J knew or should have known that three witnesses (D, W, and K) “told police that they saw the victims alive after the victims were seen leaving 7-Eleven with defendant.” The court concluded that J “did not satisfy his duty to conduct a reasonable investigation, and the limits on his investigation were not supported by reasonable professional judgment, due to the confluence of two interrelated considerations. First, as [J] testified, he asked [P] to interview between 20 and 30 witnesses but did not ask [P] to prioritize any witnesses.” The statements D, W, and K “gave to police—which [J] was aware of because they were included in the discovery materials—helped rebut the prosecution’s timeline of events. And” it was clear that J understood that rebutting that timeline was important. “But rather than instructing [P] to make a concerted effort to contact [D, W, and K] to verify their statements to police, [J] instead gave [P] a list of 20 to 30 witnesses then ‘trusted her discretion.’” This related to the “second consideration—in part because [P] was not given any direction on which witnesses to prioritize, her investigation was seemingly hampered.” The court noted that “if funding was scarce, it is unclear why [J] believed it best to use the limited resources available to conduct a broad and directionless investigation instead of a targeted [one] into witnesses whose testimony could aid the defense based on what [they] told police.” P’s method of trying to contact the witnesses also raised “concerns about the reasonableness of the investigation.” She only tried calling them; she did not try reaching out “through text, email, or social media, nor did she attempt to go to a witness’s home or place of work.” The court found that J’s failure to adequately investigate D, W, and K rendered his performance objectively unreasonable because their testimonies “clearly would have aided defendant’s defense, and there was no strategic reason to not call them as witnesses.”

Sufficiency of the evidence; Self-defense; MCL 780.972; People v Dupree; Honest & reasonable belief of imminent death or great bodily harm; MCL 780.951(1); Duty to retreat; People v Riddle; Improper mandatory inference; AWIGBH; People v McKewen; Constitutionality of state minimum costs under MCL 769.1k(1)(a), court costs under MCL 769.1k(b)(iii), & a crime victims fund assessment under MCL 780.905; Const 1963, art 8, § 9

The court held that defendant’s convictions were not improper because the trial court did not misapply the applicable self-defense law and did not make an improper mandatory inference when convicting him of AWIGBH. He was convicted of AWIGBH, discharge of a firearm at or in a dwelling or occupied structure causing injury, and felony-firearm, arising out of a non-fatal shooting at a gas station. On appeal, the court rejected his argument that the trial court misapplied the applicable self-defense laws by faulting him for coming out from behind a glass partition when he had no duty to retreat, and for failing to address the rebuttable presumption that he reasonably feared for his life during the altercation. It found the evidence did not support that any of the victim’s “companions were trying to remove defendant, so the rebuttable presumption under MCL 780.951(1)” did not apply. Further, defendant “did not have a reasonable belief that he was in imminent risk of death or bodily harm when he shot [the victim] from a place of safety, after” the victim and a companion “departed the gas station unarmed.” Even if he was in fear, “any purported threat was no longer imminent because both men departed the gas station and had their backs turned when defendant shot the rifle.” Moreover, defendant “was securely in the employee area when [the men] left the store, and he opened the door to the customer area to aim and shoot the assault rifle.” The court also rejected his claim that the trial court made an improper mandatory inference when convicting him of AWIGBH, noting that nothing in the trial court’s opinion suggested it “felt constrained to apply this inference or that it actually believed that it was required to infer that defendant intended to cause great bodily harm simply because he used an assault rifle, as defendant contends.” Finally, the court rejected his contention that his costs and fees were unconstitutional, finding his “court-ordered costs under MCL 769.1k(1)(a) and (b)(iii), and his assessment under MCL 780.905, [were] compensatory and nonpenal, and [did] not constitute fines for the purposes of Const 1963, art 8, § 9. Because defendant did not ‘establish that no set of circumstances exists under which the [a]ct would be valid,’ the statutory schemes underlying his costs and fees are not facially unconstitutional under Const 1963, art 8, § 9.” Affirmed.

FIP; Waiver of a Second Amendment argument; Whether defendant was aware of United States v Williams; Waiver validity; United States v Ruiz; Sentencing; Applicability of the enhancement under USSG § 2K2.1(a)(3) for using a semiautomatic gun capable of accepting a large capacity magazine; Whether there is a state-of-mind requirement; United States v Sands; Enhancement for using a firearm in connection with another offense; § 2K2.1(b)(6)(B); Proximity of the gun to a large quantity of drugs

[This appeal was from the WD-MI.] The court held that defendant-Seuell knowingly waived his right to assert a Second Amendment challenge and that USSG § 2K2.1(a)(3) (using a semiautomatic that could be used with a large capacity magazine) does not have a state-of-mind requirement. Seuell was arrested on an outstanding warrant. When his car was impounded, drugs and a loaded semiautomatic were found. He pled guilty to FIP and was sentenced to 70 months. Seuell challenged his conviction on Second-Amendment grounds. But the court held that he waived this argument during sentencing. He asked his attorney to file a motion to dismiss on the ground the statute was unconstitutional as applied to him but the attorney refused. The district court then offered to appoint another attorney for Seuell, but he declined, saying he did not want to cause trouble. The judge explained that it was no trouble and reiterated the offer, but Seuell stated that he wanted to proceed with sentencing. The court rejected Seuell’s claim that he did not waive the challenge because he was not aware “that he could protest his dangerousness” under Williams. It found that “the transcript makes clear that the Williams decision was a significant factor in the district court’s colloquy with Seuell. And a waiver is valid so long as a defendant knows the ‘nature of the right and how it would likely apply in general in the circumstances.’” Seuell next challenged application of the § 2K2.1(a)(3) sentencing enhancement, claiming it did “not apply because he did not know that his pistol could carry enough ammunition to count as accepting a large capacity magazine.” But the court noted that the statute “does not contain a state-of-mind requirement. It requires an enhancement whenever the firearm qualifies.” It added that “the Sentencing Commission knew how to add a state-of-mind requirement when it wished to do so.” And in Sands the court “described a related firearm enhancement that lacked a state-of-mind element as a ‘[s]trict liability enhancement.’” Further, every “circuit to interpret this provision has recognized that it does not contain a state-of-mind requirement.” The court also upheld application of the § 2K2.1(b)(6)(B) enhancement for committing another felony offense, rejecting his claim that there was no connection shown between his pistol and drug trafficking where “the proximity of the gun to the large quantity of drugs suffices to make the connection.” Affirmed.

Class action under the Fair Labor Standards Act (FLSA); Enforcement of an arbitration clause; The Federal Arbitration Act; Whether the cost-shifting provision in the clause could be severed & the rest of it enforced; Whether the district court impermissibly “reformed” the contract; American Arbitration Association (AAA)

[This appeal was from the ED-MI.] The court held that the district court did not err by severing the “cost-sharing” provision in the arbitration clause contained in the parties' Independent Contractor Agreements and enforcing the rest of the clause. Thus, it affirmed the dismissal of the case in favor of arbitration. Plaintiffs are hair stylists in defendants’ salons. Upon hiring, each signed an Independent Contractor Agreement that contained an arbitration clause. They filed a class action complaint against defendants in federal court under the FLSA. Defendants moved to dismiss, arguing that the case had to proceed under arbitration before the AAA. But the arbitration clause provided that the parties were required to “split” the arbitration costs as provided in the AAA’s Commercial Arbitration Rules. Plaintiffs argued that the “agreement was unenforceable because it was unconscionably costly and would require them to pay arbitration costs that exceed their yearly income.” The district court agreed on that point but enforced the contract’s severability clause by severing the reference to the Commercial Arbitration Rules, which resulted in a default to lower cost rules for their dispute. It then enforced the rest of the arbitration clause and granted defendants’ motion to dismiss. Framing the issue as whether it could sever the cost-shifting provision in the arbitration clause and enforce the rest of it, the court held that it could. The contract contained a severability clause that provided that the rest of the agreement would continue after a portion was severed. The court rejected plaintiffs’ argument that the phrase “‘the remaining provisions shall nevertheless continue in full force’” applied only to the contract’s eleven sections. They claimed that if one of those sections contained something unenforceable, the court was required to “sever the entire section from the agreement,” not just the unenforceable part. The court explained that if this were the case, the district court would have had to sever the entire arbitration section, not just the cost-shifting provision. It found that this was “a bridge too far.” Plaintiffs also argued that “the district court impermissibly reformed the contract” without a finding of “mutual mistake.” However, it “did not change the scope or meaning of ‘Commercial Arbitration Rules’ to cure a mutual mistake. It instead declined to enforce this cost-shifting clause because it was unconscionably burdensome to the stylists.”

Fee for providing a copy of a public record; Indigent discount; MCL 15.234(2); Abandoning an argument by failing to properly present it

Concluding that MCL 15.234(2) “explicitly outlines the framework for deductions from fees, setting forth a permissible deduction amount of $20[,]” the court held that this statutory language supported defendant’s action in giving plaintiff only the $20 discount. Thus, it affirmed the trial court’s order granting defendant summary disposition in this FOIA action. “Plaintiff filed an FOIA request seeking 11 items, namely texts and emails of elected officials and department heads employed with” defendant. He was informed that the costs to process his “request totaled $13,604.86. After applying a $20 waiver for indigent persons and a $678.99 reduction for defendant’s late response, the total amount due came to $12,905.87.” The issue on appeal was whether he was “entitled to a discount greater than the $20 given to him by defendant.” The court noted “MCL 15.234(2) clearly states that indigent individuals and certain nonprofit organizations are entitled to receive copies without charge for the first $20 of the fee. Any statutory reductions beyond that are not listed in plaintiff’s brief, nor does he cite to case law that requires defendant to provide [him] a greater discount. To the extent” he challenged the charged fees on alternative grounds, the court found he simply “claimed that the trial court’s ruling was incorrect, without addressing [its] reasoning or providing relevant legal authority to bolster his assertions.” It concluded that he “effectively abandoned these arguments due to his inadequate briefing and failure to address and point to the error in the trial court’s rationale.” It added that even if it were to consider his additional arguments, none of them altered “the fact that the trial court properly relied on the clear language of MCL 15.234(2).”

Material misrepresentation; Innocent third party; Rescission; Balancing the equities; Request for dismissal

The court affirmed the trial court’s denial of defendant-insurer’s (Auto Club) motion for summary disposition on grounds that (1) it was premature and (2) “even if Auto Club was entitled to rescind its policy with [insured-David Sr.], there is a question of fact whether [plaintiff-David Jr.] is an innocent third party.” But it reversed the trial court’s dismissal of defendant-Citizens because there remained “a question of fact whether David Jr. is an innocent third party.” With the errors corrected, the court remanded the case back to the trial court for further proceedings. “David Jr. was injured in a vehicle collision and tried to claim benefits under a policy issued by Auto Club to” David Sr. Auto Club first contested “the trial court’s conclusion that Auto Club’s evidence was insufficient to establish that David Sr. made a material misrepresentation in his application for insurance.” Concluding that there was “no question of fact that David Sr. made a material misrepresentation in his application for insurance at this stage—before the close of discovery—would be premature, and the trial court properly denied Auto Club’s motion for summary disposition, albeit not on the correct grounds.” The court held that even “if Auto Club established that it was entitled to rescind the policy it issued to David Sr., that still leaves the question whether equity favored extending that rescission to David Jr. as an innocent third party. The trial court addressed whether the equities favored rescinding Auto Club’s policy with respect to David Jr. in the context of competing motions for summary disposition.” The court noted that to “the extent that the trial court weighed the equities as part of addressing Auto Club’s motion for summary disposition, Auto Club was the moving party, and the trial court had to consider the evidence in the light most favorable to the nonmoving parties.” But it also noted that “to the extent that the trial court weighed the equities as part of addressing Citizens’ request to be dismissed, Citizens was the moving party, and the trial court had to consider the evidence in the light most favorable to Auto Club as the nonmoving party.” Reviewing the trial court’s ruling, the court concluded “that the trial court properly viewed the evidence in the light most favorable to the nonmoving parties to conclude that Auto Club was not entitled to summary disposition. But that was the only analysis the trial court conducted—the court did not conduct a separate analysis to consider Citizens’ request to be dismissed. It follows that, when the trial court granted Citizens’ request for dismissal, it never viewed the evidence in the light most favorable to Auto Club as a nonmoving party.” The court next addressed “the trial court’s analysis of whether, assuming Auto Club established that it was entitled to rescind its policy with David Sr., the equities favored extending that rescission to David Jr.” It found that “to the extent that the trial court weighed the equities as part of considering Auto Club’s motion for summary disposition, the trial court did not err by concluding that the first, second, and third factors weighed against rescission, but it did err by concluding that the fourth favor weighed against rescission. Despite this error, the trial court’s conclusion that rescission was not warranted when the evidence was viewed in the light most favorable to the nonmoving parties was within the range of reasonable and principled outcomes, so we affirm that conclusion.”

Whether the Elliott-Larsen Civil Rights Act (ELCRA) permits a hostile-educational-environment-harassment claim under a theory of direct liability; Gender-based discrimination by educational institutions; MCL 37.2402(a); MCL 37.2103; Chambers v Trettco, Inc; Respondeat superior

Holding on remand that while the ELCRA permits hostile-educational-environment-harassment claims under direct-liability theories, an educational institution is not liable if it shows that it took prompt and appropriate remedial action in response to the complainant’s claims, the court affirmed summary disposition for defendants-school district and board. It found that plaintiff “failed to rebut defendants’ evidence showing they took prompt and appropriate remedial action.” Plaintiff sued defendants on behalf of a female student, alleging defendants created a sexually hostile educational environment by not adequately responding to several incidents of student-on-student sexual harassment at an elementary school. The trial court granted summary disposition for defendants. In a prior appeal, the court reversed, finding the ELCRA does provide a remedy for plaintiffs who assert hostile educational environment claims on the basis of student-on-student harassment. The Supreme Court remanded for a determination of whether the trial court correctly granted summary disposition under a theory of direct (as opposed to vicarious) liability. On remand, the court first held that “the plain language of the ELCRA allows plaintiff to bring the claim under a direct-liability theory because it is undisputed defendants are educational institutions within the meaning of MCL 37.2401, and plaintiff alleged defendants discriminated against [the student] on the basis of her sex by creating a hostile educational environment.” The court then noted that defendants showed “they took prompt remedial action after learning of the incidents between the students . . . and satisfied their burden of showing that they promptly and appropriately responded” to the harassment. However, plaintiff “failed to satisfy her burden as the nonmoving party and thus failed to show a genuine issue of material fact as to whether defendants took prompt and appropriate remedial action.”

Withdrawal of the petition to terminate; MCL 722.638(1)(b)(i); Health & safety; 42 USC § 671(a)(15); Due process; In re Gach; Jurisdiction & anticipatory neglect; Abandoned issue; Lawyer-guardian ad litem (LGAL)

The court affirmed the trial court’s rulings allowing the DHHS “to withdraw a petition for termination of respondent-father’s parental rights to his minor child, OLE, and denying termination of respondent-mother’s parental rights[.]” The LGAL asserted that the trial court erred by permitting petitioner to withdraw the petition for termination of the father’s rights, noting that the DHHS filed a mandatory petition. The LGAL’s argument focused “only on the language concerning the prior termination of respondent-father’s parental rights and ignores the directive for petitioner to determine whether ‘there is a risk of harm’ to the child and whether the parent has rectified the conditions that led to the prior termination.” Also, the language stated that the DHHS, “rather than the trial court, must determine the existence of the three separate conditions.” No language in the statute at issue here, MCL 722.638(1)(b)(i), “supported the LGAL’s claim that the DHHS ‘was required to pursue the petition to adjudication after it determined that not every condition existed.’” Hence, the DHHS “was not required by MCL 722.638(1)(b)(i) to follow through on the petition to terminate [the father’s] parental rights when it could not determine that the three specified conditions listed in the statute existed.” Thus, the trial court did not err by allowing the DHHS to withdraw the petition. The LGAL also asserted “that OLE’s health and safety were protected by [§] 671(a)(15), but the trial court ignored the statutory considerations when it permitted the DHHS to withdraw the petition.” The LGAL’s reliance on § 671(a)(15) “does not support her argument because it does not provide OLE with enforceable federal rights.” The LGAL asserted that the trial court erred by allowing the DHHS “to withdraw the petition for termination of [the father’s] parental rights because it deprived OLE of procedural due process.” In Gach, the court “determined that because MCL 712A.19b(3)(l) did not provide any method to rebut the presumption of unfitness arising from the prior termination, the statute failed ‘to comport with due process in light of the fundamental liberty interest at stake.’” In this case, in contrast, the LGAL cited “the right to procedural due process for the proposition that petitioner is obligated to seek termination of parental rights, which is a far cry from the claim of constitutionally impermissible termination of parental rights that carried the day in” Gach[.]