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Vanderbilt Law Review

Article Title

Recent Cases

First Page

259

Abstract

Civil Procedure - Appellate Jurisdiction - Orders Denying Disqualification of Counsel on Ethical Grounds Are Not Final Decisions Subject to Immediate Review Under 28 U.S.C. § 1291

Sara Porter Walsh

Petitioner,' an applicant for a Federal Communications Commission (FCC) broadcasting license, sought interlocutory review of a Commission order' denying a motion to disqualify the law firm that had represented competitor RKO for thirty years. Petitioner alleged that participation by the firm, which included an attorney who was chairman of the FCC while RKO's application was under consideration, constituted a violation of Canons Five and Nine' of the ABA Code of Professional Responsibility. The FCC denied the motion to disqualify, finding that the firm had taken sufficient precautionary measures to prevent an ethical violation.'

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Income Taxation -Interspousal Installment Sales -Taxpayers Required to Establish Purpose Other than Tax Avoidance to Qualify Under Section 453 of the Internal Revenue Code

Don B. Cannada

Taxpayer sold separately owned stock to his wife in exchange for her long term installment note' and reported his gain as an installment sale under section 453 of the Internal Revenue Code. The wife immediately resold the stock, purchased mutual fund shares to secure the note, and subsequently made monthly sales of the mutual funds to satisfy her installment obligation.' The Commissioner disallowed use of the installment method on Taxpayers' joint return, contending that the sale lacked substance and that the spouses had failed to establish a business purpose for the transaction.

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Securities Regulation-Courts Disagree Whether SEC Must Allege and Prove Scienter in Injunctive Actions Under Section 10(b) and Rule 10b-5

Frances Louise Adams

In Ernst & Ernst v. Hochfelder,' the Supreme Court resolved a conflict among the circuits by holding that in a private action for damages under section 10(b)3 and rule 10b-5,4 plaintiff must allege and prove scienter and not mere negligence.' The Court qualified its intentional misconduct requirement by leaving two questions unanswered: whether scienter is a necessary element in an injunctive action and whether recklessness might constitute scienter and suffice to establish liability under section 10(b) and rule 10b-5.7

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Torts -State Liability -Absent Specially Created Statutory Immunity the State is To Be Treated As a Private Litigant Liable to Those Foreseeably Injured by Its Negligent Acts or Omissions

William T. Luedke, IV

Plaintiffs' brought an action for damages against the State of Alaska contending that state inspectors, after undertaking an inspection of a hotel and discovering fire hazards, failed to exercise reasonable care to alleviate the dangerous conditions. The state argued that, as a public entity,' it owed a duty only to the public generally, not to any individual. The trial court, conceding that the state's failure to remedy known fire hazards was negligent, never-theless held that the state could not be liable to specific plaintiffs and granted summary judgment for the state. On appeal, the Supreme Court of Alaska held, reversed and remanded.

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