Civil Rights

Acquitted lawyer can't sue, 7th Circuit says; Posner would allow claim over investigator statements

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A Michigan lawyer who was acquitted on charges that she aided a client’s fraud can’t sue officials involved in her arrest and prosecution for alleged deprivation of her constitutional rights, a federal appeals court has ruled.

The Chicago-based 7th U.S. Circuit Court of Appeals said most of the claims by Sherry Katz‐Crank are barred by prosecutorial immunity and the 11th Amendment, and the rest fail to state a plausible claim for relief. Bloomberg BNA has a story on the Dec. 8 decision.

A partial dissent by Judge Richard Posner said he would allow claims that an investigator’s statements made to the press and Katz-Crank’s clients caused her to lose business, causing harm similar to a loss of employment.

Judge Diane Sykes, who is on President-elect Donald Trump’s Supreme Court shortlist, wrote the majority opinion.

Katz-Crank, who has a practice in “the esoteric field of cemetery management,” contacted state authorities after she learned her client was under investigation for misappropriating cemetery trust assets in three states, Sykes wrote. Katz-Crank called investigator Kimberly Haskett in the Indiana Secretary of State’s office to offer her cooperation, but Haskett didn’t return the call.

“Apparently she didn’t need Katz‐Crank’s help; in 2008 [the former client] was indicted on charges of embezzling $22 million in cemetery trust funds,” Sykes wrote. The defendant later pleaded guilty in a plea bargain and agreed to testify against Katz-Crank.

“Although Haskett never returned Katz‐Crank’s call,” Sykes wrote, “she did find time to contact some of her clients to advise them that Katz‐Crank was under criminal investigation.” When Katz-Crank was charged with aiding and abetting Nelms’ embezzlement, the Secretary of State’s office and the Marion County prosecutor’s office issued press releases about the charges.

“Crime can be violent, or can be executed using white‐collar weapons like a pen, a briefcase, or in [Katz‐Crank’s] case, a cemetery plot,” the Secretary of State’s press release said.

Katz-Crank was acquitted on all charges in December 2010. Two years later, she sued state and county officials involved in the investigation and prosecution.

Katz-Crank’s claims against state officials in their official capacities are barred by the 11th Amendment, Sykes said. Her claims against Marion County prosecutors in their individual capacities also fail, Sykes said, citing prosecutors’ “robust immunity from federal tort liability.” Katz-Crank’s other claims against state officials in their individual capacities fail to allege a constitutional basis, other than “pointing very generally” to the Fourth and 14th Amendments, Sykes said.

“The only close call,” Sykes said, “is the allegation about false and inflammatory public statements in press releases, which arguably falls outside the immunity shield.” But the claim fails, Sykes said, because it doesn’t state a claim for an underlying constitutional tort.

But Posner said the defamation claim could be supported because it is akin to a claim for loss of employment that could count as a deprivation of property under the 14th Amendment. “To be self-employed, and lose one’s self-employment (or a great deal of it) by being defamed, is the equivalent of being fired or suffering a drastic reduction in pay,” Posner said.

The case is Katz-Crank v. Haskett.

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