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Demartini v. Town of Gulf Stream

United States Court of Appeals, Eleventh Circuit

November 21, 2019

DENISE DEMARTINI, Plaintiff-Appellant,
v.
TOWN OF GULF STREAM, WANTMAN GROUP, INC., ROBERT A. SWEETAPPLE, Defendants-Appellees, RICHMAN GREER, P.A., GERALD F. RICHMAN, Defendants.

          Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 9:16-cv-81371-DMM

          Before ROSENBAUM, HULL and JULIE CARNES, Circuit Judges.

          HULL, CIRCUIT JUDGE

         Plaintiff Denise DeMartini appeals the district court's grant of summary judgment (1) to the defendant Town of Gulf Steam, Florida on her First Amendment retaliation claim brought under 42 U.S.C. § 1983 and (2) to the defendant Wantman Group, Inc., a government contractor, on her malicious prosecution claim brought under Florida law.

         To place this appeal in context, we begin with what happened in a prior lawsuit and appeal involving the same parties here. See Town of Gulf Stream v. O'Boyle, 654 Fed.Appx. 439 (11th Cir. 2016) (unpublished).

         I. PRIOR LAWSUIT AND APPEAL

         The Town of Gulf Stream ("the Town") is a "tiny town of under 1, 000 residents and just 17 full time employees" in Palm Beach County, Florida. Id. at 441. In their prior lawsuit, the Town and its contractor, the Wantman Group Inc. ("Wantman") sued Denise DeMartini (the plaintiff here), Martin O'Boyle, and others under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(c), 1964(c), for a fraud and extortion scheme. Id. at 440-42.

         O'Boyle resides in the Town. From 1984 until 1995, and then again from 2003 to 2015, DeMartini worked for O'Boyle's real estate company, CRO Realty, Inc. O'Boyle was DeMartini's direct supervisor and described her as his "left hand" woman.

         At the direction of O'Boyle, Citizens Awareness Foundation, Inc. ("CAFI") was created as a not-for-profit corporation, whose stated purpose included testing and enforcing municipalities' compliance with Florida public records law. O'Boyle was the sole funder of CAFI and he used it as a tool to file thousands of public records requests to the Town under Florida's public records law. Plaintiff DeMartini worked as CAFI's Treasurer and later Director. O'Boyle's CRO Realty paid DeMartini for her work on behalf of CAFI.

         In the prior lawsuit, the Town alleged that plaintiff DeMartini, O'Boyle, and others "pummeled the town with nearly 2, 000 public records requests, many of them frivolous, with no intention of actually reviewing the results." Id. The Town also alleged that, if the Town failed to timely respond then the O'Boyle Law Firm would sue the Town, allegedly "engag[ing] in a pattern of frivolous litigation activity." Id. at 441, 444. The O'Boyle Law Firm was formed by O'Boyle's son, funded by O'Boyle, and was in the same building as O'Boyle's real estate company. Here is how O'Boyle and DeMartini orchestrated their scheme through CAFI.[1]

         A. First Step: Public Records Requests

         As its first step, CAFI would issue public records requests "on a grand scale" to the Town, pursuant to Florida's Public Records Act, Fla. Stat. § 119.07. Id. at 444. Specifically, § 119.07 provides that a custodian of a public record, such as the Town, (1) shall permit the record to be inspected and copied, at any reasonable time, under reasonable conditions, (2) must acknowledge requests to inspect or copy records promptly, and (3) must respond to such requests in good faith. Fla. Stat. § 119.07(1)(a), (c).

         As relevant here, CAFI sent the Town "nearly 2, 000 public records requests." Gulf Stream, 654 Fed.Appx. at 441-42. These public records requests were deliberately vague and ambiguous in order to induce a violation of § 119.07. See id. Our prior decision listed examples of CAFI's requests as production of:

(1) "All email addresses created or received by the Town of Gulf Stream";
(2)"All phone numbers in the [T]own's records"; and
(3)"Any and all records containing a social security number."

Id.

         One of CAFI's requests went to Wantman, a contractor of the Town. Id. at 442. Florida's public records law applies also to private entities, such as Wantman, that contract with government agencies. See Fla. Stat. § 119.0701. CAFI sent Wantman a public records request by e-mail, which directed that a response be sent to this e-mail address: Vendor.Contract.Publishing@gmail.com. Citizens Awareness Found., Inc. v. Wantman Grp., Inc., 195 So.3d 396, 397-98 (Fla. Dist. Ct. App. 2016). CAFI's request was sent to the e-mail address of Robin Petzold, the consultant on the government contract, with the additional language "DidTheyReadIt.com" attached at the end of her e-mail address, rendering the e-mail address unrecognized by Wantman's computer network. Id. at 397-98, 401.[2] The subject line of the e-mail stated that it was a public records request, and it indicated that it was sent from "An Onoma." Id. at 398. The e-mail's suspicious appearance led Petzold to believe that it was illegitimate and spam, and she did not respond to it. Id. at 401.

         B. Second Step: State Lawsuits Filed

         The second step of CAFI's strategy involved the O'Boyle Law Firm's filing many lawsuits. If the Town or Wantman did not respond promptly or adequately to the public records requests, CAFI, through the O'Boyle Law Firm, would threaten litigation, or actually file a lawsuit, against the Town or another entity. CAFI, through the O'Boyle Law Firm, would demand unreasonable settlements, which included excessive amounts of attorney's fees and costs. Gulf Stream, 654 Fed.Appx. at 441. The demands were based on threats that CAFI would initiate expensive and burdensome litigation or make pending litigation more expensive and burdensome. Id. The end game of the scheme was not to have the Town's public records actually released, but to obtain attorney's fees for the O'Boyle Law Firm. Id.

         In that regard, Florida's Public Records Act, Fla. Stat. § 119.12, contains an attorney's fees provision that potentially applied when CAFI filed its lawsuits against the Town to enforce the production of public records. Section 119.12 provides that the state court shall award the reasonable costs of enforcement, including reasonable attorney's fees, against the custodian if the state court determines that: (a) the custodian unlawfully refused to permit a public record to be inspected or copied; and (b) the complainant provided written notice identifying the public record request to the custodian at least five business days before filing the civil action. Fla. Stat. § 119.12(1)(a), (b). "Unlawful refusal under [§] 119.12 includes not only affirmative refusal to produce records, but also unjustified delay in producing them." Yasir v. Forman, 149 So.3d 107, 108 (Fla. Dist. Ct. App. 2014) (quotation omitted).[3] In short, if the Town or Wantman did not promptly respond in five days, CAFI would file a lawsuit and demand attorney's fees. And it was the policy and practice of the O'Boyle Law Firm to demand settlement of cases with a provision for attorney's fees in excess of the fees actually incurred by the O'Boyle Law Firm for the cases.

         As an example of the abusive litigation, in May 2014, when Wantman failed to respond to CAFI's e-mail request for records within the required time frame, CAFI filed suit after waiting merely 18 days and demanded several thousand dollars to settle the claim.[4] Citizens Awareness, 195 So.3d at 401. After the suit was filed, Wantman voluntarily provided the requested records. Id. at 398. Nevertheless, CAFI persisted with the lawsuit. Id. at 397. The Florida state court concluded that Wantman's delay in providing the records was not so unjustifiable that it amounted to an unlawful refusal to provide the records to justify an award of attorney's fees. Id. at 397, 401. Affirming the trial court's ruling, the Florida appellate court noted that Wantman believed the request was "illegitimate" and stated that "[t]he public records law should not be applied in a way that encourages the manufacture of public records requests designed to obtain no response, for the purpose of generating attorney's fees." Id. at 401.

         C. Joel Chandler's Role in CAFI

         In January 2014, O'Boyle recruited Joel Chandler to be CAFI's Executive Director. While acting as CAFI's Executive Director, Chandler became convinced that CAFI was being used for improper purposes and that the organization was engaged in potentially fraudulent and illegal activities. As a result, Chandler resigned from CAFI in June 2014, approximately five months after he accepted the position.

         Within a few days after resigning from CAFI, Chandler contacted Robert Sweetapple, who was the Town's special counsel handling the public records requests. Chandler told counsel Sweetapple that he believed CAFI, O'Boyle, and the O'Boyle Law Firm were victimizing the Town with their public records activities, and that those activities involved criminal, fraudulent, and unethical conduct. Chandler also disclosed this information to the Town's attorney, Joanne O'Connor, as well as to the media.

         In July 2014, Chandler met with Sweetapple, the Town's special counsel, and provided Sweetapple with documents and a sworn statement detailing CAFI's fraudulent conduct. Chandler also gave Sweetapple a sworn video statement concerning his involvement with CAFI, O'Boyle, and the O'Boyle Law Firm. Chandler advised Sweetapple about CAFI's two-step "windfall scheme" of (1) issuing deliberately vague and ambiguous public records requests to the Town and other entities and (2) then demanding excessive amounts of attorney's fees and other costs to settle the dispute when the Town or other entities failed to respond to the public records requests in a timely manner.

         Chandler informed counsel Sweetapple that O'Boyle had orchestrated hundreds of public records requests and directed the O'Boyle Law Firm to file numerous lawsuits on behalf of CAFI, many times without Chandler's authorization. Chandler reported that the O'Boyle Law Firm had settled cases on behalf of CAFI without having fee arrangements or contingency agreements in place, without closing statements, and without providing any accounting of the settlements to CAFI.

         Chandler also explained that he became uneasy with DeMartini's close rapport with O'Boyle as well as her dual roles at the O'Boyle Law Firm and as a director of CAFI. Chandler's grievances against DeMartini included the following: (1) she chastised him for not supplying the O'Boyle Law Firm with sufficient cases from CAFI; (2) she worked with another employee to reject Chandler's pitch to refer CAFI's litigation to law firms besides the O'Boyle Law Firm; (3) CAFI adopted a policy that permitted DeMartini-a non-lawyer-to authorize public records requests and litigation; and (4) she demanded that Chandler produce a "minimum of 25 lawsuits" per week for the O'Boyle Law Firm.

         After obtaining Chandler's sworn statement, Sweetapple compared it to the information he had already obtained through his own investigation and concluded that Chandler's account of CAFI's "windfall scheme" was credible.

         D. RICO Civil Suit

         With all of this information in hand, the Town decided to take action. In October 2014, the Town held a regular meeting of its Commission to consider specific ways to thwart O'Boyle's "malicious and frivolous lawsuits and public records requests." At the October 2014 meeting, the Town's attorney, Joanne O'Connor, advised the Commission that: (a) more than 1, 500 public records requests had been submitted to the Town since August 27, 2013; (b) the Town believed that an overwhelming majority of those requests were submitted by O'Boyle, one other prolific requester, or entities that they controlled; (c) these requests resulted in 36 lawsuits against the Town; and (d) the requests had "barraged" the small town staff and, since January 2014, the Town had spent $370, 000 in legal fees in defending those actions and responding to those requests.

         At the October 2014 meeting, Scott Morgan, the Town's Mayor, explained that the Town was considering filing a RICO action and retaining attorney Gerald Richman and his law firm, Richman Greer, as special counsel. At the meeting, Richman introduced himself, explaining to the Town that he was a past president of the Florida bar and an active trial lawyer with experience in RICO lawsuits. Richman encouraged the Town to file a RICO action against the O'Boyle Law Firm, CAFI, and certain individuals. Richman stated that the "best way to counteract" O'Boyle's operation was to "file a RICO action in federal court." Richman explained that the RICO action would seek injunctive relief and damages against the O'Boyle Law Firm, CAFI, and the individuals involved.

         Mayor Morgan asked special counsel Richman about damages, and Richman responded that a successful RICO action would provide for attorney's fees and damages related to the costs of defending the public records lawsuits. After Richman discussed his fee arrangement, Thomas Stanley, a Town Commissioner, asked Richman about other litigation costs. Richman explained that there would be costs for depositions, interrogatories, and experts as the case progressed, but initially the costs would be related to the complaint, service, and class certification. Joan Orthwein, another Town Commissioner, asked special counsel Richman what the overall cost of the RICO litigation would be, and Richman estimated that it would cost between $20, 000 and $25, 000 in fees the first few months. Donna White, also a Town Commissioner, asked Richman how long the RICO action would last, but Richman did not speculate.

         Mayor Morgan stated that the Town "ha[d] suffered enough" by expending funds, time, resources, and morale and was encountering "difficulties [with] retaining and hiring employees as a result of the scandalously malicious and frivolous lawsuits and public records requests filed by . . . O'Boyle under related entities." The Mayor explained that the Town could "either take the approach of defending these individual cases as they come in, and bleed to death by a thousand cuts, or . . . take steps necessary to stop those cases by advancing this case." The Mayor commented that there was a "conspiracy . . . to advance actions that essentially do nothing other than shake down municipal agencies and related contractors for funds" and "all the talk of open public access . . . is nonsense." He explained that "by putting a stop to it with this RICO action, we then put a stop to the individual lawsuits on the public records requests." The Mayor was "confident" that the RICO lawsuit would stop the individual lawsuits and public records requests.

         Commissioner Orthwein responded, "I agree, because I don't see an end just defending one by one. I think we have to take it all as a group and go forward because just defending is not doing anything. . . . I think it's very important that we just don't bleed to death, we protect ourselves."

         After the discussion, the Commission voted to retain Richman and his law firm, Richman Greer, as special counsel to represent the Town and to commence the civil lawsuit. Richman also contacted Wantman about whether it would join the RICO lawsuit. Richman had previously represented Wantman in other matters, including a prior public records lawsuit involving CAFI. Based on discussions with Richman, Wantman decided to join the Town in the RICO civil suit.

         On October 27, 2014, Sweetapple, as the Town's special counsel, obtained Chandler's affidavit, which outlined the existence of O'Boyle's "windfall scheme" and DeMartini's participation.

         In February 2015, attorney Richman filed a civil complaint on behalf of the Town and Wantman against O'Boyle, CAFI, DeMartini, and others, alleging violations of RICO, 18 U.S.C. §§ 1962(c), 1964(c).[5] In their complaint filed in federal district court, the Town and Wantman, as named plaintiffs on behalf of a putative class, alleged that the defendants (1) filed large numbers of frivolous public records requests, which were often intentionally inconspicuous, (2) then filed lawsuits when the requests were not addressed on time or otherwise, and (3) then extorted their victims by demanding settlements, including payment of their allegedly incurred attorney's fees and costs, or face protracted litigation and additional frivolous public records requests and lawsuits. The complaint alleged the defendants' pattern of frivolous public records requests and frivolous lawsuits was extortionate under the Hobbs Act, 18 U.S.C. § 1951. The complaint also alleged that DeMartini was the self-appointed "key employee" for all of O'Boyle's companies, and that she "direct[ed] the flow of litigation" and "call[ed] the shots."

         Upon motion to dismiss by the defendants, the federal district court dismissed the Town and Wantman's class action RICO complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The district court concluded that the defendants' filing lawsuits, or even threatening to sue, did not constitute a predicate act under RICO. In so ruling, the district court relied on Eleventh Circuit precedent in Raney v. Allstate Ins. Co., 370 F.3d 1086, 1087-88 (11th Cir. 2004) (holding that the filing of a lawsuit did not state a claim for extortion as a predicate act under RICO), and United States v. Pendergraft, 297 F.3d 1198, 1207 (11th Cir. 2002) (holding that neither the threat to litigate nor the fabrication of evidence behind the threat of a lawsuit made the action "wrongful" within the meaning of the Hobbs Act, and, thus, could not be a predicate act under RICO).

         On appeal, the Town and Wantman attempted to distinguish our above precedent based on CAFI's thousands of abusive public records requests, the large volume of lawsuits actually filed or threatened to be filed, and the systematic use of those lawsuits as part of the O'Boyle-led scheme to defraud with the intent to deceive. Gulf Stream, 654 Fed.Appx. at 444. This Court assumed that the defendants had "engaged in a pattern of frivolous litigation activity while abusing, on a grand scale, their statutory right to request public documents from the government." Id. Ultimately, however, this Court affirmed the district court's dismissal of the Town and Wantman's complaint. Id. at 445. We stressed that the law encourages citizens to use the courts to redress wrongs and enforce rights, including to resolve public records disputes. Id. at 443-44. Moreover, citizens have a constitutional right to petition the government for redress under the First Amendment. Id. This Court concluded that, regardless of the scope and scale of the public records litigation, the courts are equipped with procedures to deal with parties who file frivolous litigation. Id. Therefore, this Court determined that a threat to file litigation against the government does not trigger liability under the Hobbs Act. Id. at 443. Nonetheless, this Court characterized the activities of CAFI, O'Boyle, and the O'Boyle Law Firm as "troubling." Id. at 441.

         Meanwhile, Mayor Morgan sent a letter to town residents regarding the Town's operating budget, including a planned increase in the Town's budget for legal fees. After describing the status of the RICO civil lawsuit, Mayor Morgan said, "I have stated numerous times that if the litigants will discontinue their lawsuits, I will recommend discontinuing our RICO action." And when the Town lost on appeal, Mayor Morgan conceded during a public hearing held in July 2016 that the Town's RICO suit was "new to the law." In filing the RICO suit, the Town knew that it "would either prevail or expose the case." But "something had to be done to try to stop the public record lawsuits that at that time numbered 53 against the Town." Mayor Morgan also reported that the Town had not had a public records lawsuit since the RICO action was filed.

         E. DeMartini's § 1983 Retaliation Case

         Approximately two months after this Court affirmed the district court's dismissal of the Town and Wantman's RICO civil action, DeMartini filed the instant § 1983 action against them. In relevant part, DeMartini's amended complaint alleged that the Town and Wantman's RICO lawsuit constituted unlawful retaliation against her. Her amended complaint contained: (1) a First Amendment retaliation claim under § 1983 against the Town; and (2) a malicious prosecution claim under Florida law against Wantman.[6]

         As to her § 1983 First Amendment retaliation claim, DeMartini alleged that the speakers at the Town's October 2014 Commission meeting made clear that the Town was not concerned with the merits of its RICO lawsuit or its likelihood of success. Rather, the Town's sole motivation in voting for the RICO lawsuit was to stop CAFI's filing of public records lawsuits. DeMartini noted that, after this Court affirmed the dismissal of the Town's RICO complaint, Mayor Morgan admitted at a July 2016 Commission meeting that the Town's RICO lawsuit served its purpose because new public records lawsuits had not been filed, which "was exactly what we tried to accomplish."

         DeMartini contended that she engaged in speech that was constitutionally protected by associating with CAFI, which had filed the multiple public records lawsuits against the Town. DeMartini alleged that: (1) the filing of these public records lawsuits against the Town, at her direction, constituted constitutionally protected activity; (2) the Town retaliated against her protected activity by filing the RICO lawsuit; and (3) the Town's retaliatory conduct adversely affected her protected activity and caused her to incur substantial damages, primarily due to the loss of her employment.

         As to her Florida malicious prosecution claim against Wantman, DeMartini alleged that Wantman disliked her petitioning the government by using Florida's public records law and weaponized the RICO suit as a means to punish her for that expression. She claimed that Wantman sued her without having any evidence that she had any involvement or participation in the extortionate scheme alleged in the RICO complaint.

         The district court denied the defendants' motions to dismiss. Later, the defendants moved for summary judgment on all claims and DeMartini filed a cross-motion for partial summary judgment against Wantman. The district court granted the defendants' motions for summary judgment and denied DeMartini's cross-motion against Wantman. The district court concluded the defendants had probable cause to initiate a civil RICO lawsuit which precluded plaintiff's § 1983 First Amendment retaliation claim and her Florida malicious prosecution claim. DeMartini timely appealed.[7]

         II. SECTION 1983 FIRST AMENDMENT RETALIATION CLAIM

         A. First Amendment

         "A constitutional claim brought pursuant to § 1983 must begin with the identification of a specific constitutional right that has allegedly been infringed." Paez v. Mulvey, 915 F.3d 1276, 1285 (11th Cir. 2019). Plaintiff DeMartini alleges that the defendants violated her First Amendment rights-to make public records requests and to bring lawsuits-by filing the RICO civil action against her in retaliation for her exercising those First Amendment rights.

         The First Amendment provides that "Congress shall make no law . . . abridging the freedom of speech, or . . . the right . . . to petition the government for a redress of grievances." U.S. Const. Amend. I. The Amendment protects "not only the affirmative right to speak, but also the right to be free from retaliation by a public official for the exercise of that right." Suarez Corp. Indus. v. McGraw, 202 F.3d 676, 685 (4th Cir. 2000). "The First Amendment right to petition the government for a redress of grievances includes a right of access to the courts." Bank of Jackson Cty. v. Cherry, 980 F.2d 1362, 1370 (11th Cir. 1993); see Cal. Motor Transp. Co., v. Trucking Unlimited, 404 U.S. 508, 510, 92 S.Ct. 609, 612 (1972) (stating "[t]he right of access to the courts is indeed but one aspect of the right of petition"). The right to petition the government for a redress of grievances is "one of the most precious of the liberties safeguarded by the Bill of Rights," and is "high in the hierarchy of First Amendment values." Lozman v. City of Riviera Beach, Fla., 585 U.S.___, ___, 138 S.Ct. 1945, 1954-55 (2018) (internal quotation marks omitted) (quoting BE & K Const. Co., v. NLRB, 536 U.S. 516, 524, 122 S.Ct. 2390, 2395 (2002)); see also Connick v. Myers, 461 U.S. 138, 145, 103 S.Ct. 1684, 1689 (1983). The right to petition the government for redress of grievances is such a fundamental right as to be "implied by '[t]he very idea of a government, republican in form."' BE & K Const., 536 U.S. at 524-25, 122 S.Ct. at 2396 (quoting United States v. Cruikshank, 92 U.S. 542, 552 (1875)). In short, a citizen's public records requests and lawsuits against the government can clearly constitute protected First Amendment activity.

         B. Elements of Retaliation Claim

         To state a § 1983 First Amendment retaliation claim, a plaintiff generally must show: (1) she engaged in constitutionally protected speech, such as her right to petition the government for redress; (2) the defendant's retaliatory conduct adversely affected that protected speech and right to petition; and (3) a causal connection exists between the defendant's retaliatory conduct and the adverse effect on the plaintiff's speech and right to petition. Bennett v. Hendrix, 423 F.3d 1247, 1250 (11th Cir. 2005).[8]

         In § 1983 First Amendment retaliation cases, the Supreme Court has recognized that retaliatory animus by a governmental actor is a subjective condition that is "easy to allege and hard to disprove." See Nieves v. Bartlett, 587 U.S.___, ___, 139 S.Ct. 1715, 1725 (2019) (internal quotation marks omitted) (quoting Crawford-El v. Britton, 523 U.S. 574, 585, 118 S.Ct. 1584, 1590 (1998)); see also Hartman v. Moore, 547 U.S. 250, 257, 126 S.Ct. 1695, 1702 (2006) (The defendant inspectors argue that "a plaintiff can afflict a public officer with disruption and expense by alleging nothing more, in practical terms, than action with a retaliatory animus, a subjective condition too easy to claim and too hard to defend against."). For this reason, courts have identified two general approaches to retaliation claims against governmental actors, with the particular approach chosen dependent on the type of alleged retaliation at issue. One approach, typically used when a governmental employee claims that he was fired because he engaged in First Amendment activity, looks to whether the defendant governmental employer's retaliatory motivation was the but-for cause of the adverse employment decision. If not-that is, if the defendant would have taken the same action had there not also been a retaliatory animus motivating that conduct-then the defendant is not liable. Mt. Healthy City School Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 285-87, 97 S.Ct. 568, 575-76 (1977); see Lozman, 585 U.S. at___, 138 S.Ct. at 1955.

         The second approach-taken when the governmental defendant has utilized the legal system to arrest or prosecute the plaintiff-has been to require the plaintiff to plead and prove an absence of probable cause as to the challenged retaliatory arrest or prosecution in order to establish the causation link between the defendant's retaliatory animus and the plaintiff's injury. Nieves, 587 U.S. at, 139 S.Ct. at 1726; Hartman, 547 U.S. at 260-61, 265-66, 126 S.Ct. at 1704, 1706-07.

         These four major Supreme Court precedents-Mt. Healthy, Hartman, Lozman, and Nieves-expand upon the causal connection requirement in First Amendment retaliation cases and are necessary background to our ultimate conclusion. We start with the First Amendment retaliation decisions in Mt. Healthy and Hartman.

         C. 1977 Mt. Healthy: "But-For" Test When Retaliatory Employment ...


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