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Tuesday, May 19, 2009

Ind. Decisions - Supreme Court decides four today, including a website business dispute, and a reading of the expungement statute

In Gary Community School Corporation v. Tom Powell, a 14-page, 4-1 opinion, Justice Boehm writes:

We hold that an employee filling multiple positions with the same employer is eligible for leave under the federal Family and Medical Leave Act if that employee’s total service is sufficient to qualify, even if service in either position alone does not qualify. We hold that a ―front pay‖ award for future lost wages should be discounted to its present value. We otherwise affirm the judgment of the trial court. * * *

In June 2003, Powell brought this action alleging that GCSC violated the Family and Medical Leave Act (―FMLA‖) by failing to restore him as coach for the 2001 season and by retaliating against him for taking FMLA leave by rejecting him as head football coach in subsequent years. Powell and GCSC both moved for summary judgment on several issues, including whether Powell’s leave was covered by the FMLA. The trial court granted summary judgment for Powell on this issue and concluded that GCSC had violated the FMLA by failing to reinstate Powell as head football coach in 2001. Damages for failure to reinstate remained for trial along with Powell’s separate claim that GCSC had retaliated for taking FMLA leave. The trial resulted in an award of damages totaling $280,200.20 for the failure to reinstate and the retaliation claims. The trial court reduced the award to $188,919.29 and added prejudgment interest of $18,274 and attorneys fees of $125,000.

The Court of Appeals reversed, concluding that Powell was not eligible for FMLA leave. Gary Cmty. Sch. Corp. v. Powell, 881 N.E.2d 57, 58 (Ind. Ct. App. 2008), reh’g denied. We granted transfer. * * *

Conclusion. This case is remanded for the trial court to discount the front pay award to present value. The judgment of the trial court is otherwise affirmed.

Shepard, C.J., and Sullivan, Rucker, JJ., concur.
Dickson, J., dissents, believing that the Court of Appeals correctly decided the issues in the case.

In Dennis Conwell and Frank Splittorff, d/b/a Piece of America v. Gray Loon Outdoor Marketing Group, Inc., a 21-page, 5-0 decision with 2 opinions, Chief Justice Shepard writes:
As the Internet becomes a ubiquitous presence in American commerce, the nation‟s courts work to find satisfactory legal frameworks for resolving the disputes that inevitably arise. In this suit between a business enterprise and the marketing firm that created and hosted its website, we conclude that the Uniform Commercial Code does not apply and that the web design firm may collect for its work under principles of common law contract. As for a counter-claim alleging conversion of the intellectual product, we conclude that copyright law supports ownership by the designer. We affirm the trial court's judgment for the marketing firm. * * *

I. Does the U.C.C. Govern this Agreement? * * *

On the surface, these cases might suggest that customized software is a service while pre- made software is a good, but when courts try to pour new wine into old legal bottles, we sometimes miss the nuances. It would be a mistake, for instance, to treat software as a good simply because it was contained in a tangible medium that fits within that category. This would conflate the sale of a book with the sale of its intellectual content, suggesting that the purchaser of the book might be buying a right to general use of the expressions contained in the volume.

A website created under arrangements calling for the designer to fashion, program, and host its operation on the designer‟s server is neither tangible nor moveable in the conventional sense. To be sure, one can copy a website using tangible, movable objects such as hard drives, cables, and disks. These objects are in themselves just as certainly goods, but it does not necessarily follow that the information they contain classifies as goods as well. The arrangement between POA and Gray Loon contemplated a custom design for a single customer and an ongoing hosting relationship. As such, conventional “predominant thrust” doctrine suggests that the U.C.C. did not apply.

II. Was There an Enforceable Agreement to Modify the Site?

We proceed to examine Gray Loon‟s claim for payment under common law principles. The basic requirements for a contract are offer, acceptance, consideration, and a meeting of the minds of the contracting parties. * * *

The only evidence submitted regarding the reasonableness of the price consists of the invoice itself and POA‟s acceptance of the price through Dennis Conwell after receiving the invoice. There is no evidence that Gray Loon participated in any unconscionable effort to “strong-arm” POA into paying an unreasonable fee. In light of all that, the trial court was right to enforce the agreement even though Gray Loon had not provided a cost estimate.

III. Did Gray Loon Commit Conversion?

Piece of America appeals the trial court's denial of its counterclaim, which alleged that Gray Loon converted its property by failing to make a backup copy of the original version of the website, for which it made payment. * * *

What POA had was a nonexclusive license. Piece of America, the licensee, requested the creation of a website. Gray Loon, the creator/licensor, made and “delivered” the work to the licensee. As a nonexclusive licensee, POA never had ownership of the site under copyright law. POA purchased a non-exclusive license, which we might read as granting it rights to use the site as its own.

This conclusion makes short work of POA‟s conversion claim. Because the website actually did not belong to POA, it cannot bring a claim for conversion. Furthermore, even if POA had owned the website, Gray Loon did not commit conversion. It performed the work – including hosting the site – at POA‟s request. When POA did not pay, Gray Loon discontinued its hosting service and refused to hand over a copy of the site. Because this contingency was not addressed by the proposal, the common law of contract applies, not conversion. POA elected to pursue its counterclaim only on the latter grounds.

Piece of America‟s failure to pay the seventy-five dollar per month hosting fees alone could justify Gray Loon‟s taking down the site from the Internet. If it had paid all other fees, there might be a dispute as to whether Gray Loon had breached its license agreement by refusing to transfer the files to POA, but POA‟s failure to pay the June 2004 invoice coupled with the fact it did not request the files from Gray Loon persuades us that Gray Loon is not at fault either for withholding the files or taking the site offline.

Conclusion . The trial court having found for Gray Loon on its claim and on POA‟s counter-claim, we affirm.

Dickson, Sullivan, and Rucker, JJ., concur.
Boehm, J., concurs in result with separate opinion. I agree with the majority‟s analysis and conclusions on the record in this case. I write separately to explain why I agree that Piece of America (POA) is not entitled to relief for what amounts to a destruction of the website it had paid Gray Loon to construct. * * *

Whether POA had any damages from Gray Loon‟s breach is a matter of speculation on this record. POA elected to pursue only a conversion theory, presumably in hopes of treble damages and attorney fees in this dispute over an amount that surely is dwarfed by the cost of this litigation. Similarly, when Gray Loon sued for its fees, POA did not assert breach of its license as either an affirmative defense or set-off. I therefore concur in the result reached by the majority.

In Edwin Hayes, Jr. v. State of Indiana, a 6-page, 4-1 opinion, Justice Sullivan writes:
We affirm the convictions of Edwin Hayes, Jr., for promoting prostitution, child exploitation, and possession of marijuana and order that he be sentenced to 18 years, with years to be served in the Department of Correction. * * *

Shepard, C.J., and Boehm, and Rucker, JJ., concur.
Dickson, J., dissents without separate opinion.

In State of Indiana Ex Rel., The Indiana State Police v. Chad Arnold, an 10-page, 4-1 opinion, Justice Sullivan writes:
Chad Arnold was arrested in 1993 for robbery but was never charged. In 2006, he filed a petition to expunge the arrest from his record. We affirm the trial court‟s order granting the expungement, declining to adopt the State‟s interpretation that the applicable expungement statute denies the trial court discretion in this regard. * * *

On appeal, the State argued that “based on the plain language of Indiana Code § 35-38-5- 1(f), the trial court may not grant an expungement when a person has an arrest history for matters other than minor traffic offenses.” (Appellant‟s Br. at 10.) Because Arnold has “an arrest history for matters other than minor traffic offenses,” the State maintains, the trial court did not have authority under the Expungement Statute to grant his request. In other words, the State‟s interpretation is that subsection (f) contains a list of three disqualifiers and that if any one of these is found, the trial court must deny a petition for expungement. * * *

We resolve this conflict between the Reynolds and Arnold decisions of the Court of Appeals in favor of the interpretation of subsection (f) adopted by the Court of Appeals in Arnold for the reasons set forth below. * * *

Based upon the above reasons, we conclude that if, after conducting a hearing, the trial court finds that an individual has a record of arrests other than minor traffic offenses, the court has discretion to either grant or deny that individual‟s petition for expungement. To the extent Reynolds, 774 N.E.2d 902, holds to the contrary, it is disapproved. * * *

Conclusion. We affirm the judgment of the trial court.

Boehm, J., and Rucker, J., concur.
Dickson, J., concurs in the result.
Shepard, C.J., dissents with separate opinion. I think the Court has worked too hard at parsing the expungement statute. The legislature‟s policy seems apparent enough. When someone petitions to expunge an arrest and the prosecutor stands silent, the trial court shall grant the expungement. When the State believes it would be harmful to the public‟s interest to expunge and thus objects, the court must decline to expunge where the record reflects multiple arrests for real crimes.

While the expungement statute might produce an occasional anomaly, as the Court speculates, there is nothing anomalous about the case before us. Besides his arrest for armed robbery, Arnold has been arrested for drunk driving four times, convicted twice, and violated probation. I conclude that the General Assembly has prohibited expungement under such circumstances.

For more on expungement in Indiana, see this ILB entry from Feb. 24, 2007.

Posted by Marcia Oddi on May 19, 2009 01:39 PM
Posted to Ind. Sup.Ct. Decisions