The Sage of Virginia Beach, Steve Emmert, has again strayed into my territory with a three topic essay. The first topic of which is to report on an unpublished opinion from the Court of Appeals, Medeiros v. Department of Wildlife Resources, which was released just over a month ago. Steve expressed surprised that the appeal, which was challenging the sustaining of a demurrer, had been dismissed for lack of a transcript from the hearing on that demurrer. The essay goes on to discuss the continuing drought of granted writs from the Supreme Court and closes by noting that Vlaming v. West Point School Board has now been in the breast of the Supreme Court for 41 weeks since it was argued in November of last year -- a record length of time for an opinion (or other result) to have not been forthcoming according to Steve's meticulous records of such things.
Other than to commiserate over the dearth of granted writs, I have nothing to say about the middle section of the essay. But I have quite a lot to say about Medeiros and a little more to say about Vlaming, or at least about the delay in its release.
Steve expressed the view that not submitting a transcript, or at least a "statement of facts, testimony, and other incidents of the case," usually referred to somewhat deceptively as just a "statement of facts," for inclusion of the record on appeal for the proceeding at which to trial court heard argument, even if it was a proceeding where evidence normally wouldn't be taken, was not a wise practice. He then stated however, that while it was not his practice to forego a transcript in such cases, he and colleagues he had discussed the issue with were of opinion that because a demurrer rests on the "eight corners" of the complaint and the demurrer, which the appellate courts review de novo, the failure to file a transcript of the proceeding should not be fatal to the appeal. Thus, Steve expressed surprise that the Court of Appeals dismissed the appeal in Medeiros because no transcript or statement of "facts" was filed. He described this approach to the need for a complete record on appeal of a demurrer to be "new."
On the first point, I agree wholeheartedly. The rule in question requires the appellant (or sometimes the appellee if cross-error is assigned) to file a "transcript of any proceeding in the case that is necessary for the appeal." It is a courageous attorney indeed who takes it upon herself to decide whether the Court will believe a transcript of the proceeding in which the issue on appeal was presented to the circuit court is "necessary for the appeal."
On the second point, I disagree that this ruling is surprising or new. It may be “new” to the Court of Appeals which is now hearing all civil cases as appeals of right (demurrers being virtually unknown in domestic practice and wholly absent in administrative law appeals from the circuit courts), but I recall that before the new appellate paradigm many was the time that a petition for appeal in a civil case, where the assignment of error was that the circuit court had wrongly granted a demurrer, was refused because there was no transcript or statement of facts – this was back when the Court would often opt to refuse, rather than dismiss, for procedural error that was not raised by the appellee – whether this was to soften the blow to the appellant or merely a matter of expediency in not having to explain the reason for the dismissal when the panel would not have granted the appeal in any case – a practice that became less frequent after the Court got serious about attorney-in-error reports in the early 2000s -- is hard to say. Probably a little of both.
The reason that a statement or transcript of every (or nearly every) hearing is considered necessary in almost every case was ably demonstrated by the late Justice Henry H. Whiting. I heard the following exchange spoken in open court and later reproduced from memory when giving a CLE on the procedural errors that tripped up appeals and have used many times since.
An attorney was arguing for a writ to review a granted demurrer when Justice Whiting, who in addition to being one of the finest trial and appellate jurists I have had the pleasure of knowing was the godson of General George S. Patton, asked, “Counsel, don’t we need a transcript or statement of facts from the hearing on the demurrer?”
The attorney was momentarily nonplussed, but recovered, saying, “Your honor, there was no court reporter for the hearing, but the parties merely restated their positions from the pleadings.”
Whiting was not having this. The colloquy continued:
Whiting: “How do we know that in making your argument to the court, you did not concede some point raised by the defendant?”
Counsel: “I can assure the Court that I would not have done that.”
Whiting: “I am sure that you likely wouldn’t do so intentionally, but how do we know that you didn’t do so in responding to a question from the trial court?”
Counsel: “I did not. The Appellee would certainly have raised that if I had.”
Whiting: “Perhaps. But maybe his hearing is getting bad like mine, and without a transcript, he couldn’t be sure what you said.” (This was before Justice Whiting got his cochlear implant -- a story about which I may someday preserve in this blawg)
Counsel: “But he would have to raise it in the brief in oppos . . .”
Whiting: “How could he? Without a transcript, he wouldn’t be able to cite to the record. He would be asking us to believe that you waived your appeal without support in the record.”
Counsel: <deer in headlights look>
Whiting: “Isn’t that what you’re asking us to do? To believe you when you say nothing happened at the hearing that contradicts your argument or that would favor the appellee?”
Counsel: “I can only say to the Court that I did not concede any point during the oral argument.”
Whiting: “But how do we know that? How can we know what happened at the hearing where the judge ruled against your client; the judgment you want us to overturn?”
Counsel: “I can only ask that the Court take my word as an attorney.”
I heard Whiting ask a similar question several other times when there was an "undocumented" proceeding, whether for a demurrer or other pre-trial hearing – he was a stickler for having a complete record.
The solution, which I suggested in the CLE and many time since, is to submit a statement of incidents of the hearing which says that “at the hearing on the demurrer [or the plea in bar, or summary judgment], the parties reiterated the positions set out in the pleadings” or “in the demurrer and the plaintiff’s response” or similar words reflecting the state of the record if there were supporting briefs, etc. Of course, if some issue was raised orally that was not made in writing, that should be mentioned too.
I also recall times when the lack of a transcript was deemed harmless because the circuit court had summarized the testimony and arguments made by the parties in an opinion letter, which the Court reasoned was sufficient to establish the basis for the court's ruling and the evidence relied on -- provided of course that neither party tried to assert that the judge left something important out of the opinion letter.
The chief reason I hear at CLEs about why an attorney did not have a court reporter at a hearing or, even if they did, decided to forego the expense of producing a transcript, is that “a transcript is only needed to preserve testimony and the court didn’t hear any evidence.” The answer to this, which usually does not convince the speaker because “you don’t do trial work,” is that the rules say you must file “[t]he transcript of any proceeding in the case that is necessary for the appeal,” not any “testimony.”
As to Vlaming, this never would have happened in the “Carrico era.” Back then every opinion was “released in seven weeks” flat (except over the summer, when the June opinions could linger . . . but were usually ready by July 1 so that staff could take a vacation), with the drafts discussed at the writ panels and finalized no later than Tuesday at noon of Court week – and that was when 50 copies for distribution to the chambers, parties and the media were required and had to be made by the judicial assistants or, for the out-of-town justices, by their law clerks. No excuses. That included concurrences and dissents and was the rule even during the period in the early 90s when sessions could have 55 or 60 cases if some of the first 50 scheduled cases argued earlier in the week were decided by order and new cases were “called up.”
The Clerk of Court David Beach, and later Trish Harrington, would generally wait until about 1 PM on Tuesday to gently inquire about the “red line” of a case – the official version of the opinion on linen foolscap – the "blue back" – a cover for the official version – and the “copies” of opinions from the chambers. The red line foolscap was later replaced with standard sized paper (though still linen and with the red lines on the long edges) and the blue back by a manila folder.
By 3 or 4 PM, the inquiries were no longer gentle, and if you dared not have your opinions to the Clerk by 5 PM, you could expect a visit from the Clerk to collect them in person. This was because the Clerk had to prepare the mandates – the official order of the Court that enters the judgment set out in the opinion – and have it ready for review by the Justices at the Court conference the following day, and the mandate had to reflect the precise language in the conclusion and decretal (the final line of the opinion stating the result). The mandates had to be approved and returned to the Clerk Wednesday afternoon.
And all this was going on while the Justices were hearing arguments – often from 9 AM to past 1 PM, then conferencing on those case until 6 or 7 PM or later. Law clerks were expected to attend oral argument, at least of the cases their Justice was expected to write the opinion of the court, and also shared duty "behind the curtain" with the judicial assistants recording the sessions . . . on a reel-to-reel tape recorder (and later a duel cassette deck). Law clerks and judicial assistants, the Clerk, Deputy Clerks, and the Chief Staff Attorney did not leave for the day until the Justices concluded their conference (and often not afterwards if anything that occurred in the conference required research to be prepared for the following day).
While having a virtual guarantee that your appeal would be decided at the next session after you argued was probably some comfort to the litigants, it also was the chief reason that the Court's merit sessions back then, which were always five days long, were known by the Justices and the staff alike as "Hell week." The most memorable (or perhaps I should say unbanishable from my memory) was a January session when a massive snow storm kept the Court closed for the first two days of the session, and the Court heard the entire docket in the remaining three days and released the opinions from the October session that Friday.
Excuse me, I now need to go take a brief lie-down with a damp towel over my eyes and some soothing music in the background.
The two gentleman here are Kurt Grelling and Leonard Nelson, and they are responsible for many undergraduate students of mathematics and logic having sleepless nights as they contemplate the significance of the Grelling–Nelson paradox. Just what is the Grelling–Nelson paradox, you ask? Well, if you value your beauty sleep, and unless you are an English Major (the academic kind, not the military kind) DO NOT READ FURTHER!
Oh, you are still here? OK. So, either you are an English Major, or you truly enjoy insomnia.
In its simplest form, the Grelling–Nelson paradox involves the definition of two words, "autological" and "heterological."
An autological word is "a word that describes a set of things that includes the word itself." For example, anapæst, which means a poetic metric that is two short or unstressed syllables followed by a long or stressed syllable, is itself an anapæst because it has two short syllables followed by a long one. Velveteen is also an anapæst. Lord Byron's “The Destruction of Sennacherib” is written in anapæstic meter.
Heterological is the antonym of autological, meaning a word that does not describe itself. For example, monosyllabic is heterological because it has five syllables, not one (however, pentasyllabic, meaning having five syllables, is autological -- unless you mispronounce it "pent-a- slab-ic").
But can one say with certainty that all words must be autological or heterological? It would seem so, because a word either describes a set it belongs to or it doesn't. QED.
Similarly, it seems apparent that autological must be autological, because words that describe sets to which they belong are autological, and thus a word that that describes that set of words that describe themselves must itself be a part of that set, right? And, since heterological is the antonym of autological, it cannot be autological. Except . . .
Heterological cannot be heterological either, because if it is, then it is autological. In fact, heterlogical does not fit into either category, because whichever category you choose to place it in, you create a contradiction, viz.:
Is "heterological" a heterological word?
no → "heterological" is autological → "heterological" describes itself → "heterological" is heterological, contradiction
yes → "heterological" is heterological → "heterological" does not describe itself → "heterological" is not heterological, contradiction
Now that might be enough to blow your mind, but here is the real paradox . . . autological is autological, as we already demonstrated, but it is ALSO heterological. How can this be? Because our original proof that autological was autological, we presumed that it fit in that category, and so it did.
But if we start from the opposite proposition by stating that "autological is not a word that describes a set of words of which it was a member," then autological is heterological, disproving the original proposition, and rendering autological heterological.
In other words, "autological" is both autological and heterological depending on which set you place it in first because by being in that set, it belongs there, while "heterological" is neither autological nor heterological because if you place it in either set, it no longer belongs in that set.
Grelling and Nelson are credited with formulating this paradox in 1908, but it is sufficiently similar to "Russell's paradox," formulated by Bertrand Russell in 1901 and a Burali-Forti proof published in 1897 by Cesare Burali-Forti (which Russell subsequently showed was self-contradictory and thus a paradox, not a proof), that it is both an original and a derivative idea . . . making it a paradox paradox.
Before you say, "but this is just semantics," recognize that the Grelling–Nelson paradox has real world applications. For example the fact that light is both a particle and a wave, or that it is impossible to know both the location and speed of a particle (which might be acting like a wave).
Yes, but that's physics, you say. What does the Grelling–Nelson paradox have to do with the law? Plenty, because the attorneys are always compelled to operate in a world where things are both known and unknown. A person is presumed innocent until proven guilty, but innocent people are convicted at times and guilty ones go free even more often. We also have to deal with instances where a jury will convict a person of using a firearm during a felony, but acquit the same defendant of the underlying felony (if you don't practice criminal law, you should know that such a verdict is considered perfectly reasonable).
Judges are also not immune from the Grelling–Nelson paradox. For example, in a bench trial, a judge can find that an affirmative defense applies to a misdemeanor because the defendant has permissive immunity to perform the act that is otherwise criminal, but can still be convicted of a felony based on the same conduct.
Apart from being a distraction from more pressing matters at the end of a long week, why am I bringing up the Grelling–Nelson paradox? Because it is often the case that lawyers forget that just because something appears to be a thing, does not mean that it has to be that thing, nor is it always true that if our opponent is wrong about something, we are necessarily right. It's possible for a thing to have two different and opposing natures and its possible for opposing theories to both be wrong. If you become to wedded to the idea that you have the answer, you will never notice that it is the wrong answer, or not the only answer, or the right answer, just not for the question being asked..
So why was it safe for English Majors to read this without risking a deprivation of sleep? Because English Majors are sensible people who, rather than spending time trying to determine what can really be known about a universe where one thing can be itself and its opposite and its opposite can be neither itself nor its opposite, decide to read a good book instead and drift peacefully off to sleep . . . unless it's a real page-turner.
The Court of Appeals of Virginia released three published opinions this week.
Brian Kuang-Ming Welsh v. Commonwealth of Virginia involves a topic that is somewhat controversial -- firearm and toolmark testimony. Welsh was convicted of two counts of first degree murder and associated firearms charges. These charges arose from Welsh's addiction to drugs and his association with Rishi Manwani, a drug dealer. Welsh's life spun out of control when he was fired from his job due to declining performance undoubtedly associated with his drug use.
On January 31, 2018, police conducted a welfare check on Manwani's mother, in whose home he lived. Both Manwani and his mother where found shot to death. Manwani appeared to have been robbed, as his empty wallet was found near his body.
Welsh was interviewed multiple times, and along with other investigative results, police formed the theory that Welsh had killed Manwani and his mother on the morning of January 29, 2018 and then fabricated an elaborate ruse to provide himself with an alibi including texting Manwani later that day and on the next day calling another of Manwani's customers to express concern for his safety. Police also learned that Welsh had sought his brother's anf father's assistance to secret of dispose of a handgun. Police later recovered a Buck Mark .22 caliber pistol from Welsh's father.
It was the forensic examination of this pistol and the marks on discarded shell casings at the scene of the murders that resulted in the expert testimony about toolmarks. The Commonwealth "was able to determine with 'a very high level of certainty' that Welsh’s Buck Mark .22 caliber pistol was the firearm that was used to kill the Manwanis."
Welsh moved to exclude the toolmark testimony, contending that the forensic expert's methods were not scientifically valid. After hearing testimony from the expert about her methodology, the circuit court denied the motion to exclude her testimony.
After a delay caused by the COVID-19 pandemic, Welsh was tried in a trial lasting 20 days. At trial the expert not only testified that the toolmarks on the shell casings indicated that they had been fired from the Buck Mark pistol, she further testified that the specific type of ammunition that matched the shall casing, qualities of which were recovered from both Welsh's home and his father's home, was uncommon and typically used with a silencer. She further testified that other toolmarks on the gun suggested that the barrel had been removed and replaced.
When Welsh sought to call his own expert, the circuit court accepted a proffer of the evidence, but concluded that the witness was not going to offer an opinion on whether the toolmarks showed that the shell casings were not fired by the Buck Mark. Rather the court found that the witness instead would criticize the methodology used by the Commonwealth's witness, which the court said was an improper attempt to impugn the credibility of a witness.
Welsh appealed the trial court's admission of the Commonwealth's expert's testimony and the exclusion of his expert's testimony. He also raise a speedy trial argument related to the COVID-19 emergency, which he had not raised until five months after the trial just before sentencing. The Court of Appeal, Judge Beales joined by Judges O'Brien and Athey, make short work of that issue because the speedy trial motion was raised too late. There was also a challenge to the sufficiency of the evidence that predictably falls to the standard of review.
The meat of the opinion is devoted to the toolmark expert testimony. The Court notes that this type of evidence has been admissible since at least 1941. While the since of toolmark identification is frequently criticized, its admissibility is a matter committed the the circuit court's discretion and the court is permitted to rely on the expert's testimony concerning the reliability of the methodology used in deciding whether the expert has both the training and experience to render an opinion. In short, once the expert is found to be acceptable, the issue is not the admissibility of the evidence, but the witness's credibility. While this explains why the Court approved of the denial of the motion to exclude the Commonwealth's expert's testimony, it seems to open a big, gaping hole in the argument that the circuit court was also correct to exclude the defendant's expert because he was going to attack the Commonwealth's witness's credibility.
And, indeed, the Court does recognize the problem. The Court, however, does not find that the exclusion of the defense expert's testimony was harmless error. Indeed, it notes that Rule of Evidence 2:702(b) supports the circuit court's ruling that one expert cannot "opine" on the credibility of another witness. However, there is least a plausible argument that the expert was was going to attack the credibility -- or perhaps reliability is a better word -- of her methodology, a perfectly acceptable rebuttal tactic.
The Court thus takes a route, that I personally cringe at when I read the words "assuming without deciding that the trial court erred," of harmless error. My view is that if the Court is going to declare an error harmless, it should have the decency to call it an error.
As to the Court's harmless error analysis, I concede that it is not entirely unconvincing, as there certainly was a lot of, admittedly circumstantial, evidence pointing to Welsh's guilt. I am sure that Welsh and his counsel will be less sanguine about that analysis being "not entirely unconvincing," but without a dissent, I wouldn't expect to see an en banc rehearing granted. I am less certain whether the Supreme Court won't want to weigh in, however,
Let me close out this case by posing a question about something the Commonwealth apparently didn't do. You may have wondered what relevant there was to the testimony that the ammunition was typically used for guns with a silencer (the correct term, I believe is "suppressor," but po-tay-toe, po-tah-toe). Well, it seems that on a phone call to his father while he was in jail (you know, the kind that come with the warning that they will be recorded by the jail -- why are so many criminals so clueless?), Welsh asked Dad to “get rid of the soda can.” Now I happen to know that "soda can" is slang for a silencer -- and I would have thought the Commonwealth would have had someone testify to that fact.
But apparently, they did not. The Court makes no mention of such testimony, and in its harmless error analysis says that perhaps the jury reasonable concluded that the father was being asked to remove and dismantle to silencer barrel from the pistol. I suppose it's even possible that one or more the jurors, like me, knows that "soda can" is slang for a silencer.
The slang, by the way, is not as you would suspect the result of the urban myth that putting a soda can stuffed with rags around the barrel of a gun or a plastic soda bottle (either filled with soda or rags) on the end of the gun will function as a silencer. It's actually to opposite -- they myth originated from the fact that "soda can" was slang for a real low-end type silencer which resembled a soda can in shape (sort of, see image below), leading some clueless criminals to think that a real soda can or bottle would do the trick -- it won't.
Also, in case Hollywood has you convinced that a pistol or long gun with a silencer will make a soft "pfsst" when fired, that too is a myth. On average, suppressors reduce the noise of a gunshot by only 20 – 35 decibels (dB), roughly the same sound reduction as earplugs warn at the shooting range. Even the most effective suppressors on the market, on the smallest and quietest caliber (.22 LR) reduce the peak sound level of a gunshot to around 110 – 120 decibels, which is roughly the same level of sound as a thunderclap, a chain saw at 3 feet, or an auto horn at 4 feet. It's louder than a lawn mower outside your window, city traffic from the sidewalk, or a vacuum cleaner being run in the next room with the connecting door open.
So why use a silencer? Well, two reasons. First, as noted, it's not really a "silencer," is a suppressor. The thing being suppressed is not the sound, but the muzzle flash. There are time were it is more important to conceal your location than the eliminate the sound of the gunshot when firing your gun, and the muzzle flash is a dead giveaway as to your position (even in daylight). The limited suppression of the sound was just a byproduct. Snipers will sometimes use a suppressor, but as they tend to reduce range and accuracy significantly, long-distance snipers usually do not.
In Virginia Alcoholic Beverage Control Authority v. Zero Links Markets, Inc. t/a VinoShipper.com, we learn about the fascinating topic of shipping wine into the Commonwealth. Well, the topic may not be fascinating, but much of the background provided by the Court -- a thumbnail sketch of the history of booze in Virginia -- certainly is. Judge Raphael, who is joined by Judge White and Sr. Judge Petty, begins this opinion with the aforementioned history of booze, or rather the legality of selling the fermented, brewed and distilled varieties of adult beverages. in the Old Dominion. It makes the opinion worth reading even if you stop at the top of page 7 when the Court leaves of its historical musings and addresses the legal issues in the case over the renaming 16 pages.
It wasn't too long ago that you couldn't ship wine directly to consumers in Virginia from out-of-state. However, a few years back when the winery business was booming (and craft brewing was still a niche market), the wine selling lobby convinced the General Assembly to allow wine sales from out-of-state. It was a big tussle between local wineries in Virginia, big wine wholesalers, and the out-of-state wineries and "wine clubs" and unless you were an oenophile (yep, it's a real word -- "a lover or connoisseur of wine"), you probably did not notice. Fast forward to 2020 and the ABC is overseeing 1400 out-of-state licensees who are shipping the nectar of Bacchus to the good citizens of the Commonwealth.
One of these was Zero Links Markets, which wisely chose to operate under the trade name of Vinoshipper.com. The problem was that while Zero Links had a license to ship wine into Virginia, it wasn't actually shipping any wine. Rather, Zero Links was, for lack of a better word, a Potemkin village, a fancy façade, with nothing of substance behind it. Zero Links took orders through its website, but then separately ordering the wine from "various wineries across the country" which selected the wines, packaged them, labeled the package, and tendered the shipment to the common carrier for delivery to the customer in Virginia.
The ABC concluded that Zero Links' license did not permit this. The license permitted the holder to ship wine from its place of business (in this case, an office park in Windsor, California, which is sort of adjacent to the wine regions of the Sunshine State -- though according to Wikipedia its economy, through formerly based on growing wine grapes, is now on tourism and serving as a regional commerce center), it was not doing so. To the extent that Zero Links was shipping wine at all, by virtue of its placing orders with the actually wineries that then contracted with the shippers, it was doing so from multiple, unlicensed locations.
Now, I will pause here to note that, if it is not apparent already, this case is about to veer deep into the Great Dismal Swamp that is administrative law. Frequent readers of this blawg know that I enjoy administrative law only slightly less than getting a poke in the eye with a sharp stob. So let's make this quick and as painless as possible.
Appealing the ABC's decision to the Circuit Court of the City of Richmond, which has the misfortune to be the court designated by statute to hear all such administrative agency appeals, Zero Links obtained a reversal -- though how is frankly beyond me, because, as the Court of Appeals points out, the law is pretty clear that “a separate license [is required] . . . for each separate place of business” from which wine is shipped -- shipped, not "sold." The only exception was if the licensee used a fulfillment warehouse that was not physically in the same location as the "place of business," but was the sole point from which shipments originated. While Zero Marketing was arguably "selling" wince from Windsor,, CA (and I would not be willing to go even that far), it was definitely not shipping it from there.
Now that we've gotten that unpleasant task out of the way, let me offer an apology to the real Great Dismal Swamp -- which actually is not dismal at all. The fens and forest land surrounding Lake Drummond in the Southeastern corner of Virginia is a beautiful, verdant, and vibrant ecosystem. Lake Drummond is, itself, something of a mystery, as there are no natural stream course that would have supported the creation of such a large body of water, and theories as to its origin include the possibility that a small meteorite struck the wetlands, creating an impact crater that flooded, resulting in the surrounding marsh being reduced in size and allowing the forested parts of the region to flourish. This theory, while not accepted by all, is support by a native legend that the lake was created by a "fire bird" that crashed into the swamp.
Navy Federal Credit Union v. Delores B. Lentz is the shortest of the this weeks published opinions, clocking in at just under 8 pages. It comes from Judge White, joined by Judge Raphael and Sr. Judge Petty -- the same panel that decided Zero Marketing, so perhaps they were taking a breather after producing that 23-pager. The issue in the appeal is whether the circuit court erred in not grant a demurrer and the subsequent motion for summary judgment. Now it's not unusual for a circuit court to find itself bench-slapped by the appellate court for short-circuiting a case by demurrer or summary judgment, but its a very rare case to see one told that it erred deciding to let a case go to trial . That, however, is what happened in Lentz. Well, not quite, because this is an interlocutory, so the case was on its way to trial, but stopped off at the Court of Appeals first.
Ms. Lentz, 74 years old at the time, fell victim to a scam that was presented to her as coming from a Facebook friend. The friend's account, of course, had been hacked, and the message encouraging Lentz to enroll in a government grant program, which for some reason required her to make payments to the "government" first before she would then get a significantly larger return, was the baldest flimflammery. Alas, neither Lentz, nor any of the employees at the credit union where she kept her money, recognized the scheme for what it was. Lentz was soon $134,500 poorer.
Now, I did say that none of the credit union employees questioned the legitimacy of the transactions, but it is not clear that Lintz discussed the reasons she was requesting to make two large wire transfers with any employee of the bank. Nor does the opinion indicate what proportion of Lentz's deposits with the credit union were being transferred or whether she had made large, legitimate transfer in the past.
Lentz sought to recover the lost funds from the bank under a theory that Code § 63.2-1606(L)(i) imposes a duty on a financial institution to protect its depositors from financial exploitation. Indeed, the statute is entitled "Protection of aged or incapacitated adults; mandated and voluntary reporting," and imposes duties on various entities including financial institutions. She also relied on the Bank Secrecy Act, a federal statute.
But do either of these statutes create a duty to the depositor and, thus, a private cause of action when the financial institution fails to discover that there is chicanery afoot. The circuit court thought so, and denied the demurrer and motion for summary judgment.
The Court of Appeals does not read the statues as creating the duty to the depositor. The BSA is a federal statute, and well-established precedent says that Congress must expressly create a private cause of action when legislating on regulatory matters. The BSA imposes duties on financial institutions, and while these may enure to the benefit of the depositors, the law does not provide for private enforcement of the act -- which is for the government regulators alone to enforce.
State law can, however, create a duty the breach of which may give rise to a cause of action. However, in this case, the duty was not to protect the individual depositor from any and all exploitation, but to have in place procedures that would attempt to identify potential exploitation. The statute relied upon by Lentz doesn't actually require the financial institution to stop any suspect transactions, but instead empowers them to stay the execution of a transfer order for the purpose of investigating. In this regard, the statute is more of a shield to prevent the depositor from claiming that the delay caused them harm. Because the statute permitted, but did not compel, the the credit union to act, its failure to do so is not the breach of any duty to Lentz (though it is also not a ringing endorsement of the perspicacity of its employees and the training it provides them).
The Court goes on to point out that there are provisions of the UCC which govern situations like this and they preempt any theory that Code § 63.2-1606 was intended to create a private cause of action. The UCC displaces any common law duty -- including a duty implied by another statute (though none was found here). My guess is that this last section was more a nod to the General Assembly, which might otherwise have been accused of failing to protect Lentz and others who get scammed. The Court is, in essence, saying that "look, the legislature can take steps to encourage private enterprises to be on the lookout for elder abuse and financial exploitation, but it had to balance the interest of protecting the vulnerable against imposing a duty to act affirmatively on those enterprises -- and possibly interfering with the smooth operation of the banking system."
That analysis may seem harsh -- but it is the balance that the elected and judicial branches have to wrestle with every day. It is frustrating that the bad guys get away with preying on the elderly and others who are ensnared. It's especially frustrating to know that many of the scammers are either protected by or actively employed by their governments, flouting international law. Until we find away to bring them to justice, however, the burden for falling for a scam will fall, no matter how harshly and heavily, on the victim.