Friday, August 27, 2010

Federal Judge's Ruling Sets Landscape for 'Kids-for-Cash' Civil Suits

The Legal Intelligencer

A federal court judge this week dismissed three defendants from civil suits related to the "kids-for-cash" scandal in Luzerne County, Pa., effectively clearing the way for the case to move forward.

Judge A. Richard Caputo of the U.S. District Court for the Middle District of Pennsylvania granted motions filed by the wives of former Luzerne County Common Pleas Court Judges Mark A. Ciavarella Jr. and Michael T. Conahan, as well as one filed by Conahan's brother-in-law, who served as a psychologist for the county's probation department.

It had not been proven by the plaintiffs in the cases, Caputo wrote in Wallace, et al. v. Powell, et al., that either Ciavarella's wife, Cindy Ciavarella, or Conahan's wife, Barbara Conahan, knew of or were involved in any conspiracy among their husbands and others to send juveniles to a pair of private, for-profit juvenile detention centers in exchange for $2.6 million.

Likewise, ruled Caputo, it could not be proved by the plaintiffs that Michael Conahan's brother-in-law, Frank Vita, knew his contract with the county would allow for the creation of a case backlog that would require juveniles to spend more time in the juvenile detention centers while awaiting evaluations.

The rulings mean the plaintiffs in the cases may proceed with claims against Mark Ciavarella; Michael Conahan; Robert Powell, the former co-owner of the juvenile detention facilities; and Robert Mericle, the builder of the juvenile detention facilities.

Also remaining as defendants in the cases are Mericle's company, Mericle Construction; a company owned by Powell to allegedly help funnel money to the judges, Vision Holdings; the company that operated the juvenile detention facilities, Mid-Atlantic Youth Services; and the juvenile detention facilities themselves, PA Child Care and Western PA Child Care.

In early July, Caputo dismissed Luzerne County as a defendant in the case.

Marsha Levick, chief counsel for the Juvenile Law Center, which is representing many of the plaintiffs in the case, said the plaintiffs had conceded the claims against the recently dismissed defendants.

The decision, she said, sets the path for the case to move forward.

A settlement conference is scheduled for Sept. 15. Levick said the fact Caputo's ruling came in advance of that conference was important because "we know what the landscape of the case is."

"This, really, was a tremendous victory, I think," Levick said. "We're very gratified."

Powell's attorney, Mark B. Sheppard of Montgomery McCracken Walker & Rhoads in Philadelphia, said anything that helps parties "focus on the issues in terms of a possible settlement is a good thing."

"I think the court's decision here advances that ball," he said.

One of Mericle's attorneys, Joseph B.G. Fay of Morgan Lewis & Bockius in Philadelphia, had no comment on the rulings. Fay, along with other attorneys from his firm, also represent Mericle Construction.

Neither Bernard M. Schneider of Brucker Schneider & Porter in Pittsburgh, who represents PA Child Care and Western PA Child Care, nor Edward P. McNelis, the attorney for Barbara Conahan and Cindy Ciavarella, could be reached for comment.

Michael Conahan and Mark Ciavarella, who are representing themselves pro se, also could not be reached for comment.

The lawsuit stems from federal racketeering charges alleging the former judges took more than $2.8 million from Powell and Mericle.

Michael Conahan has pleaded guilty and Mark Ciavarella is awaiting trial.

The plaintiffs in the civil suits have alleged the sums received by the judges were "kickbacks" and that the money was in exchange for sending juveniles to PA Child Care and Western PA Child Care.

Caputo previously ruled that the former judges were partially protected from claims because of judicial immunity. Neither, Caputo ruled, could be held liable for his in-court actions. Caputo, however, ruled that the two men can still be sued for their out-of-court actions related to the alleged conspiracy.

Caputo, in his decisions, dismissed Luzerne County from the case because municipal liability can only be established when "unconstitutional actions" are committed by final policymakers for the county. Judges, probation officers, district attorney's office officials and public defender's office officials could not be considered final policymakers for the county, Caputo ruled.

Further, Vita had to be dismissed from the case because the plaintiffs could not prove he had a role in the alleged conspiracy.

The plaintiffs did, however, offer significant enough allegations against Powell and Mericle, along with the host of companies, Caputo ruled.

And though Pinnacle, a company allegedly used by the former judges to collect payments from Powell and Mericle, was at the center of the alleged conspiracy, that was not enough to keep the former judges' wives, who were listed as Pinnacle's owners, in the case as defendants, Caputo ruled.

According to Caputo, allegations of ownership are enough to bind Pinnacle for the women's actions, but the inverse does not have to be true. Actions undertaken by Pinnacle did not necessarily have to involve the judge's wives.

"In the present case, plaintiffs even allege that while Mrs. Conahan and Mrs. Ciavarella owned and operated Pinnacle generally, that their husbands controlled Pinnacle during the conspiracy," Caputo wrote. "Plaintiffs provide no further factual allegations that the wives agreed, assisted, knew of, or otherwise participated in the alleged conspiracy beyond 'owning and operating' an entity used by the conspiracy."

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