O'Connell Associates Sued for Credit Reporting & Privacy Violations, Exams of Civil procedure

Download O'Connell Associates Sued for Credit Reporting & Privacy Violations and more Exams Civil procedure in PDF only on Docsity! UNIVERSITY OF MARYLAND SCHOOL OF LAW LEGAL METHOD-CIVIL PROCEDURE (3 Hours) Day Division Monday, December 15, 1997 Professor Condlin 9:10 a.m. - 12:10 p.m. No. Signature: Printed Name: INSTRUCTIONS: Sign and print your name in the blanks above. Put the course and instructor names, and your examination number, on the outside cover of each of your blue books, and on the envelope. Do not put your name on the blue books or envelope at any place. Answer each question in a separate blue book and number the blue books by question. After completing the examination put your answers in the envelope, fasten the flap, and hand in the envelope to the examination administrator. Be sure to enclose all of your answers -- you will be graded only on what is inside the envelope. Hand in the questions separately. Do not put them in the envelope. There are three questions, weighted equally, and you should allocate your time accordingly. A superior answer to one question, produced by spending a disproportionate amount of time on it, will not compensate for a weak answer to another, caused by not having enough time to finish it. Please take this advice seriously. I repeat it each year, but two or three (sometimes more) people regularly fail to heed it. Two great answers will not beat three average ones. The exam is moderately long, but if you work continuously you should finish it. The first question is about personal jurisdiction, the second about subject matter jurisdiction, and the third about the Erie/Hanna problem. I could not decide which questions were difficult, and which easy, so I decided to count them all equally. Answer only the questions asked, and discuss just those issues logically necessary to resolving the questions. Avoid long descriptive statements about law in the abstract. Analysis counts, recitation of law does not. THIS EXAM IS OPEN BOOK. YOU MAY BRING ANY MATERIALS YOU LIKE INTO THE EXAM WITH YOU. LAWRENCE WAY, and RICHARD STOVER, Plaintiffs, v. O'CONNELL ASSOCIATES, INCORPORATED, Defendant. UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND For approximately six weeks in the spring of 1992, Lawrence Way (Way), and Richard Stover (Stover), volunteered for the "Maryland Draft Perot Committee" (MDC), a grass roots group organized in Frederick County, Maryland, to place H. Ross Perot (Perot) on the ballot as a national presidential candidate. In late April, 1992, other volunteers from the MDC contacted Mark Blahnik (Blahnik), Manager of Field Operations for the national Perot Petition Committee (PPC), to express concerns about their safety. Racist statements Way allegedly had made, and his reputed membership in the Ku Klux Klan, left some campaign volunteers feeling threatened. Thomas D. Barr (Barr), a partner in the New York City law firm of Cravath, Swaine & Moore and advisor to the PPC, arranged for Blahnik to speak with Richard Callahan, a principal in the private investigation firm of Callahan & Gibbons (C&G). This conversation took place over the telephone while Callahan was meeting with Barr in New York on unrelated matters, and Blahnik was in Texas. After Blahnik described his concerns, Callahan told him to call his son John Callahan, in their San Francisco office, to discuss the situation. Blahnik telephoned John Callahan, told him about the volunteers' concerns, and asked him to do whatever he felt was appropriate. At the direction of John Callahan, C&G conducted a background check on both Way and Stover, requesting and receiving an address update on them from U.S. Datalink. This search yielded the plaintiffs' current and past addresses, and their social security numbers. C&G then hired O'Connell Associates, Inc. (O'Connell), a private investigation firm based in New York City, to look more deeply into the plaintiffs' backgrounds. As part of its investigation, O'Connell obtained the plaintiffs' names, addresses, birthdates, social security numbers, and places of employment from Equifax Corporation (Equifax), a consumer credit reporting company located in Chicago, Illinois. O'Connell also retained Montgomery Investigative Services, Ltd., (Montgomery), a licensed private investigation firm located in Rockville, Maryland, to search public state and federal court records in Maryland for any reference to the plaintiffs, and to determine whether either of them had "any ties to the KKK or any other known white supremacist group." Although the scope of Montgomery's investigation later expanded to include inquiries into public court records maintained by the Maryland Bankruptcy Court, local District and Circuit Courts, and Federal Court, Montgomery did not inquire into the plaintiffs' credit history. O'Connell sent the information it received from Equifax and Montgomery to C&G in California. Using this information, C&G prepared reports on each plaintiff for the PPC. The report on Way contained his name, birth date, social security number, current residential address, prior C. HENRY MARSTON, individually and as a partner in the law firm of CABINESS, JOHNSTON, GARDNER, DUMAS & O'NEAL, Defendant. COMPLAINT 1. The plaintiff, David Hill, is an adult resident citizen of the State of Alabama. 2. The defendant C. Henry Marston is an adult resident citizen of the State of Alabama and a partner in the law firm of Cabiness, Johnston, Gardner, Dumas & O'Neal, with offices in Jefferson and Mobile Counties in the State of Alabama. 3. This action is brought against the defendant as a result of defendant's negligence, and his violation of the Securities Act of Alabama, by reason of having acted in concert with Cooper & Grelier Diversified Companies, Inc. (the Company), to sell to the plaintiff shares of Common Stock (the Shares), in the Company by means of a confidential private place offering memorandum (the Memorandum). The action is also based on the defendant's violation of an order of the United States District Court for the Southern District of Alabama prohibiting defendant from dealing in securities not registered with the Securities Commission of Alabama. 4. The defendant represented to the Company that he and his law firm were competent to provide legal services for matters involving the application of federal and state laws to corporate securities transactions. 5. The Company retained the defendant to perform all requisite legal services, including the preparation of the Memorandum, in connection with the offer and sale of 5,000,000 shares of Common Stock in the Company, at a selling price of $1.00 per share. 6. The plaintiff David Hill purchased 75,000 Shares from the Company for $75,000. 7. The Shares purchased by the plaintiff have no value. Count One 8. The allegations of paragraphs 1 through 7 are hereby adopted and realleged. 9. The defendant was aware that the Memorandum was to be used by the Company for the particular purpose of offering and selling the Shares to persons, including the plaintiff. 10. The defendant was aware that the Company intended that purchasers of the Shares rely upon the Memorandum in making their decision to purchase. 11. The defendant was aware of the identity of purchasers of the Shares when such purchasers, including the plaintiff, executed a subscription agreement prepared by the defendant, and paid their money to the escrow agent appointed by the Company. 12. The defendant was negligent in the preparation of the Memorandum, in that he failed to prepare the Memorandum in accordance with the applicable state and federal rules governing the offer and sale of corporate securities. 13. As a proximate consequence of the defendant's negligence, the plaintiff has been injured in that the Shares he purchased in reliance on the Memorandum have no value. Count Two 14. The allegations of paragraphs 1 through 7, and 9 through 11 are hereby adopted and realleged. 15. The Shares are a security within the meaning of the Securities Act of Alabama, which Act provides that it shall be unlawful to offer and sell securities in the State of Alabama unless the securities have been registered with the Alabama Securities Commission. 16. The Company sold the Shares to the plaintiff in violation of the registration requirement of the Securities Act of Alabama, in that the financial statements of the Company included in the Memorandum, required to be filed as part of the registration process, did not meet the requirements of Regulation D of the Federal Securities and Exchange Commission, promulgated under the authority of the Federal Securities Act of 1933. 17. The defendant did materially aid the Company in the offer and sale of the Shares. 18. The plaintiffs hereby tender their shares to the defendant and demand return of the consideration paid for the securities, pursuant to the requirements of the Securities Act of Alabama. Count Three 19. 'The allegations of paragraphs 1 through 7, 9 through 11 and 15 through 17 are hereby adopted and realleged.