NC SCT Petitions, And Perhaps Opinions, Next Week

The NC SCT is expected to file decisions on petitions, and perhaps opinions, next week.

SCOTUS Overturns 4th Circuit, Holds Employees May Sue 401(k) Managers For Mismanagement And Injuries To Individuals' Accounts

Last week, with LaRue v. DeWolff, Boberg & Associates, Inc., SCOTUS overturned the 4th Circuit and held that ERISA authorizes 401k retirement account holders like the plaintiff in that case to sue for and recover losses when retirement plan managers breach their fiduciary duties, adversely affecting individuals' accounts.

SCOTUS held that "[t]he principal statutory duties imposed on fiduciaries by [ERISA] relate to the proper management, administration, and investment of fund assets, with an eye toward ensuring that the benefits authorized by the plan are ultimately paid to participants and beneficiaries," and the misconduct alleged by LaRue -- that his manager failed to follow his investment instructions and left his money in less lucrative investments, resulting in $150 k in losses to his 401K account -- falls squarely within that category. SCOTUS held the 4th Circuit erred when it tossed LaRue's suit and mistakenly held that the pertinent ERISA statute provided remedies only for entire plans and not individuals. Indeed, individual accounts are part of plans, and therefore injuries to individual accounts affect plans.

COA Speaks to Political Speech Protections

As the '08 political season ramps up, the NC COA reminded us yesterday, in Craven v. Cope, that unkind political mailings that are hyperbole or opinion and can't be mistaken for factual assertions won't constitute defamation -- but that all political speech is not necessarily protected.

In Craven, the defendant mailed political ads in the '05 Raleigh City Council race indicating that, among other things, if the plaintiff were elected he would raise taxes to pay for development, and showing the plaintiff's name and picture sticking out of the jacket pocket of a developer fat cat. The plaintiff sued for, among other things, libel per se. The trial court dismissed, and the COA affirmed.

The COA noted that libel per se requires that the defamatory publication be "obviously defamatory." The COA also noted that rhetorical hyperbole and opinions are not subject to defamation actions, that only assertions of actual fact can be the basis for such a suit. Here, the defendant's campaign mailings were either opinions or were like PT. Barnum's political "humbug," which a reasonable reader would not believe to be literally true.

The COA also went to the trouble of underscoring in dictum that the defendant's assertion that all political speech is, by its nature, protected speech and not susceptible to defamation claims went too far. The COA noted that just because speech is used as a tool for political ends does not make it immune to legal challenge and that knowingly false statements and false statements made with a reckless disregard for the truth don't enjoy protection.

COA Holds Internal Affairs Not Jurisdictional, Etc. In Corporate Potpourri Case

In Bluebird Corp. v. Aubin, the COA addressed a potpourri of corporate, evidentiary and procedural issues.

Bluebird was a commercial real estate investment corp. owned by 2 shareholders, Susi and Aubin. Susi was the $$ shareholder, and Aubin the day-to-day manager and marketer shareholder. In 1998, Aubin found an investment opportunity, the Harborgate development. In 1999, at the Harborgate closing, Aubin was informed that not Bluebird but rather a new company, The Susi Corporation, was buying Harborgate. When Aubin later found out that neither she nor Bluebird had any interest in The Susi Corporation, she demanded a 50% interest, didn't get that, and sued. Years of litigation in NY and NC followed, during which, among other things, a receiver was appointed in NY and Bluebird properties in NY were sold.

In August 2004, Aubin's lawyer contacted Susi's and Bluebird's lawyer about an offer Aubin received on Harborgate. But Aubin's lawyer refused to disclose the potential buyer unless Aubin got a cut of the Harborgate deal. Susi and Bluebird sued Aubin for breach of fiduciary duty, constructive fraud, and other claims, and Aubin counterclaimed. The trial court dismissed the claims against Aubin but hit Susi with $1.175 million in damages for breach of fiduciary duty and constructive fraud. Susi appealed.

Susi first attacked the trial court's judgment by claiming that the NC trial court improperly overturned the NY trial court, and specifically the NY trial court's determination that the sale of NY property was fair. Susi claimed the NC court was barred by res judicata, collateral estoppel, and fair faith and credit. The COA disagreed, stating that there was no NY judgment in the appellate record indicating that the NY court had adjudicated on the merits the same claims and issues raised in Aubin's counterclaims. There was, therefore, no improper overturning.

The COA also held that Susi wrongly cast the corporate internal affairs doctrine as jurisdictional, and as barring an NC court from addressing a NY corporation's issues. The COA held that all the internal affairs doctrine does is require NC courts addressing corporate issues of NY companies to do so applying NY law.

Susi also protested on appeal Aubin's damages testimony, which in NC was higher than prior testimony by affidavit. The COA noted, among other things, that discrepant testimony is a credibility issue, not an admissibility issue, and that the trial court didn't abuse its discretion in admitting the evidence.

The COA then refused to reach issues surrounding the trial court's dismissal of the claims against Aubin due to Susi's failure to assign error to pertinent findings and conclusions. The COA reminded appellate counsel yet again to be hyper-vigilant as to what, and how, to assign error.

HOAs May Assess $$ Penalties Against Errant Owners

The NC COA made clear yesterday in Riverpointe Homeowners Ass'n v. Mallory that home owner associations may impose monetary fines on errant home owners, even where the home owner association documents and declarations don't expressly allow for such fines.

In Riverpointe, the respondent bought a home in a planned community that required yard maintenance, like keeping the grass under 6 inches, and prohibited removal of landscaping without permission. The petitioner HOA sent the respondent a "friendly reminder" of the rules, saying it had received complaints that she had been violating them. When respondent did nothing to address the violations, the HOA sent her a notice of hearing. The hearing was held, and respondent was found to have violated rules and was assessed monetary penalties. When respondent didn't pay, the HOA filed a lien on the property and then sought foreclosure on the lien.

At issue in the appeal was, first, whether respondent had had proper notice of the foreclosure. The COA held respondent waived that argument when she showed up at and participated in the foreclosure hearing.

The second, and main, issue on appeal was whether the HOA could assess the monetary penalties without express enabling by the HOA documents or declarations. The COA made clear that the answer was yes. The COA noted that a 2003 NC SCT case, Wise v. Harrington Grove Community Association, indicating otherwise was superseded by legislative change in 2004. That change, to N.C. Gen. Stat. sec. 47F-3-102 of NC's Planned Community Act, made clear that unless HOA documents or declarations expressly block the HOA from assessing fines, an HOA may impose them. Here, all of the respondent's violations for which she was fined occurred after 2004, after the legislative change, and therefore the HOA had the power to impose the fines -- and file a claim of lien and foreclose when those fines went unpaid.

COA Rejects Constitutional Challenge to NC Unclaimed Property Act

Today in Rowlette v. State, the Court of Appeals (COA) rejected a "takings" challenge to the North Carolina Unclaimed Property Act (NCUPA). The case concerned interest earned on unclaimed dividends while they were in the State's custody under the NCUPA. The State surrendered the dividends to plaintiffs when they claimed them, but, as provided by the NCUPA, the State retained the interest earned on them. Under the NCUPA, income derived from the investment of funds is distributed annually "to the State Education Assistance Authority for grants and loans to aid worthy and needy students who are residents of this State and are enrolled in public institutions of higher education in this State." N.C. Gen. Stat. § 116B-7(a). Plaintiffs argued that the State's retention of interest, as prescribed by the NCUPA, was an unconstitutional taking. The COA disagreed.

The COA had to distinguish two U.S. Supreme Court cases which involved challenges to a State's IOLTA program. See Phillips v. Washington Legal Found., 524 U.S. 156 (1998); Brown v. Legal Found. of Washington, 538 U.S. 216 (2003). Under the IOLTA program, the State uses interest earned on the property of private individuals held in attorneys' trust accounts; the interest is used to fund legal services for low-income individuals. In the IOLTA cases the Supreme Cort held that "interest income generated by funds held in IOLTA accounts is the 'private property' of the owner of the principal," and that the appropriation of those earnings by the State constitutes a "taking" which triggers the Fifth Amendment. The COA today distinguished the IOLTA cases based on "the unique nature" of the property at issue: the IOLTA cases "dealt with property that unquestionably belonged to identified owners," the COA said, whereas today's case involved "property that is presumed abandoned until a holder or owner makes a claim to the Treasurer."

The COA also distinguished McMillan v. Robeson Cty., 262 N.C. 413 (1964). McMillan seemed particularly apposite, since it dealt with interest earned on unclaimed property. McMillan involved a statute that permitted county clerks of court "to invest or reinvest any moneys representing unclaimed court costs, fees received, and judgment payments and all moneys received and held by him by [the clerk]"; and the statute further said that "[t]he interest . . . received" therefrom "shall be deposited in and become a part of the general fund of the county." When a county clerk sought a declaratory judgment to determine the constitutionality of that statute, the trial court held the statute valid and directed the clerk to deposit the accumulated interest into the general fund. The Supreme Court reversed, stating that "earnings on the fund are a mere incident of ownership of the fund itself," and "[t]he constitutional provision . . . that no person shall be deprived of his property 'but by the law of the land'" -- which is the essentially the "takings" provision of the NC Constitution -- "applies to the earnings in the same manner, and with the same force, it applies to the principal." The COA today said that McMillan didn't address or rely on the constitutional "takings" provisions but instead merely remanded the action to the trial court so that all interested parties could fully develop their claims.

Instead of relying on the language from McMillan, the COA found guidance in Texaco, Inc. v. Short, 454 U.S. 516 (1982), even though, as the COA acknowleged, Texaco involved a State statute that (unlike the NCUPA) transferred private property rights not to a State, but to another private party. Texaco upheld the constitutionality of Indiana's Mineral Lapse Act, which made unused or abandoned mineral interests revert to the surface owner of the property. The COA today found persuasive the Texaco Court's statements that “States have the power to permit unused or abandoned interests in property to revert to another after the passage of time," and that the State isn't required "to compensate the owner for the consequences of his own neglect." Relying on those statements in Texaco, the COA today said that under the NCUPA the State doesn't take possession of property through any overt act on its part; rather, "the State comes into possession of the property as a result of the owner's neglect which causes the property to be unclaimed for the prescribed period of time, and thus deemed abandoned."

The COA's bottom-line holding today: "Due to this unique nature of the property, and since it is the owner's neglect that results in the State's possession of the property, the capture of interest accruing on that property by the State is not a taking, and the State is not required to pay the owner "just compensation."

COA Warns Trial Judges: Don't Make Factual Findings For Summary Judgment

Today in Craddock v. Craddock the Court of Appeals (COA) reversed a summary judgment order which contained 32 findings of fact, some of which addressed issues on which evidence was conflicting. This prompted the COA to reiterate this warning from a 30-year-old case: "'[W]e feel compelled again to point out that it is not a part of the function of the court on a motion for summary judgment to make findings of fact and conclusions of law. As we have pointed out on previous occasions, finding the facts in a judgment entered on a motion for summary judgment presupposes that the facts are in dispute. . . . [T]he Supreme Court and this Court have emphasized in numerous opinions that upon a motion for summary judgment it is no part of the court's function to decide issues of fact but solely to determine whether there is an issue of fact to be tried. Despite our frequent reminders, we find that some of the trial judges continue to treat the motion for summary judgment as a hearing upon the merits before the court without a jury where the judge becomes the trier of the facts.'"

Raleigh Lawyer Loses Fight Over Booted Car

Today the Court of Appeals (COA) rejected a tort suit brought pro se by a Raleigh lawyer whose unauthorized parking resulted in the booting of his car and a larceny prosecution against him. The case is Kirschbaum v. McLaurin Parking Co. The N&O has a story on the case here.

Mr. Kirschbaum had a two-hour lunch at Caffe Luna in dowtown Raleigh. He parked his Toyota Land Cruiser in a leased space in a private parking lot managed by McLaurin Parking. Signs by the lot warned that a permit to park was required, that unauthorized parking would result in towing, that Caffe Luna patrons could park there only after 6:00 p.m., and that nearby public parking lots were available for afternoon parking.

When Mr. Kirschbaum returned to his car after lunch, he found it booted. Rather than pay McLaurin's agent a $50 fee to remove the boot, Mr. Kirschbaum removed the booted wheel and, after installing a spare tire, drove off with it. McLaurin, owner of the boot, dispatched the police to Mr. Kirschbaum's home to fetch it. He told the police that McLaurin could bid for it on e-Bay. Later he decided to bring the boot to the police (after he removed the boot himself from the wheel, causing damage to the wheel). The police returned the boot to McLaurin, which declined to press charges. Nonetheless, the police decided to prosecute Mr. Kirschbaum for misdemeanor larceny, contending he stole the boot. At the close of the State's evidence at trial, charges against Mr. Kirschbaum were dismissed.

He then proceeded to file a lawsuit against McLaurin for trespass to chattel, malicious prosecution, and unfair trade practices, based on the damage he caused to the wheel by removing the boot and the larceny prosecution. The COA rejected the claims. With respect to trespass to chattel, the Court remarked that the right of a property owner to the exclusive use and enjoyment of his private property "does not hold true with respect to private parking lots." McLaurin was privileged to attach that boot to his car to protect its right to exclusive possession of the parking lot.

As for malicious prosecution, the COA observed that "defendants and the Raleigh Police had probable cause to believe that plaintiff had committed misdemeanor larceny. He took defendants' property, and carried it away without defendants' consent, and demonstrated his intent to deprive defendants of the property permanently when he told the investigating officer that defendants could 'bid on it on eBay like everybody else . . . .'"

COA Decisions Today

The NC Court of Appeals released 22 published opinions today, half criminal, half civil. There are no dissents. More on these cases later.

Fourth Circuit Rules For Employer (And Against EEOC) In Title VII Case

Yesterday in EEOC v. Firestone Fibers & Textiles Co. the Fourth Circuit, in an opinion by Judge Wilkinson, upheld summary judgment for Firestone in a Title VII dispute over whether Firestone reasonably accommodated an employee's religious beliefs. The case arises from the Western District of North Carolina (Judge Conrad). It's an important case discussing and applying Title VII's "reasonable accommodation" standard.

The employee, who worked in Firestone plants in N.C., is a member of the Living Church of God. The religion requires him to observe (and not work during) the faith's weekly Sabbath (sundown on Friday to sundown on Saturday) plus seven sets of religious holidays. The employee was assigned to a shift that conflicted with his religious obligations, and he couldn't observe all religious holidays without violating Firestone's attendance policy. Firestone concluded it couldn't make any special accomodation, because to do so would violate the collective bargaining agreement (by bumping a more senior employee in favor of this less senior employee) or would impose a burden on coworkers (who would have to work overtime to cover his shift). After the employee exhausted his allotted vacation days and floating holidays, he requested permission to take an unpaid leave of absence to observe religious holidays. Firestone declined his request. When he failed to report to work, he was terminated.

The Fourth Circuit rejected the EEOC's argument that Title VII requires an employer, absent undue hardship, to completely accommodate an employee's religious observances. The Court stressed that Congress chose to provide for "reasonable accommodation," not "total accommodation." "A duty of 'reasonableness' cannot be read as an invariable duty to eliminate the conflict between workplace rules and religious practice," the Court said, and considering an accomodation's impact on both the employer and coworkers is appropriate when determining its reasonableness. The Court ultimately held that the employee's proposed accommodations weren't reasonable. Thus, Firestone was entitled to judgment as a matter of law.

Split COA Reinstates Punitive Damage Award In Malicious Prosecution Case

Today in Scarborough v. Dillard's Inc. the Court of Appeals (COA) reinstated a punitive damage award in a malicious prosecution case. Dillard's accused plaintiff, a former part-time employee in its shoe department, of misconduct (after he failed to charge a woman for two pair of shoes); that accusation led to a failed embezzlement prosecution against plaintiff by the district attorney, a prosecution instigated by a Dillard's loss-prevention employee who also was a full-time officer with the Charlotte-Mecklenburg Police Department. The jury awarded plaintiff $77,000 in punitive damages, but the trial judge granted Dillard's JNOV on punitive damages after concluding there was insuffience evidence to support the award. The COA, in a decision by Judge Wynn, reversed.

Judge Hunter dissented. He accused the majority of disregarding the heightened standard of proof for punitive damages: clear and convincing evidence.

COA: Deed Of Trust Canceled Without Authorization Enjoys Priority Over Later Deed Of Trust, Despite Later Lender's Reliance On Cancellation

Today in Household Realty Corp. v. Lambeth the Court of Appeals (COA) addressed a priority issue concerning deeds of trust. A deed of trust held by the first lender was fraudulently canceled by the unauthorized act of a third party. In reliance on that cancelation, a second lender furnished a loan and obtained a deed of trust. When the unauthorized cancellation came to light, a priority dispute arose: which deed of trust should have priority to be a superior lien on the property?

The trial court held that the first deed of trust, the one canceled without authorization, should have priority. The trial court ordered that it be reinstated as a lien on the property effective from its original recordation date. The second lender appealed, arguing that, because it relied on the recorded cancellation, it should have a superior lien. The COA agreed with the trial court, holding that the first deed of trust was entitled to priority over the second lender's deed of trust, even though the second lender made its loan in reliance on the presumed validity of the record cancellation. The COA relied on a 1992 COA decision and a 1927 NC Supreme Court case.

The COA acknowledged that the Fourth Circuit had read NC law differently; the Fourth Circuit, in 1995, had articulated "the following rule of North Carolina law: a subsequent lien creditor with a properly recorded deed of trust enjoys priority, despite the unauthorized cancellation of a prior deed of trust, if the subsequent creditor obtains its deed of trust after the cancellation has occurred, in reliance on the cancellation's validity, and without knowledge that the cancellation was unauthorized." The COA concluded that the Fourth Circuit was relying on dicta from a NC Supreme Court decision.

COA Applies Res Judicata To Sovereign Immunity Dismissal

Today in Herring v. Winston-Salem/Forsyth County Bd. of Educ. the Court of Appeals held that, for purposes of res judicata, a dismissal on the ground of soverign immunity constitutes a final adjudication on the merits entitled preclusive effect in a subsequent action between the parties. The Court then reversed an award of Rule 11 sanctions against plaintiffs' attorneys, in part because, before today's decision, "no case had specifically held that a dismissal on grounds of sovereign immunity was a final adjudication on the merits barring subsequent actions" under the doctrine of res judicata.

COA Holds That Damaged Breast Implant Draws Workers' Comp Benefits

Today in Richardson v. Maxim Healthcare/Allegis Group, a workers' comp case, the Court of Appeals held that damage to a breast implant is a compensable injury. The employee in today's case was in a car accident on the job, and it caused her breast implant to rupture. Under the Workers' Compensation Act, injury includes "breakage or damage to eyeglasses, hearing aids, dentures, or other prosthetic devices which function as part of the body.” N.C.G.S. § 97-2(6). On this issue of first impression, the Court concluded "that breast implants satisfy the statutory requirement as a compensable prosthetic device that functions as part of the body." However, the Court held that plaintiff is entitled to compensation for damage to only one breast implant, not both, and this prompted a dissent from Judge Wynn, who would've affirmed the Industrial Commission's ruling awarding plaintiff compensation for both. Here's an AP story about the case.

Today's NC Court of Appeals Decisions

The NC Court of Appeals handed down 30 published opinions today, nine of which are criminal. The Court found error in nine cases. Five of the cases drew dissents.

Fourth Circuit Rolls Out Yet Another FLSA Case, This One Favoring Employees Alleging Retaliation

Yesterday in Darveau v. Detecon, Inc. the Fourth Circuit issued another FLSA decision, this one addressing whether a former employee can assert against his former employer a "retaliation" claim under the FLSA, even though the allegedly retaliatory act (a lawsuit against the employee) occurred after his employment terminated, and thus had no materially adverse effect on his employment (e.g., hiring, discharage, promotion, or compensation).

This federal case began as a FLSA case for unpaid overtime compensation brought by a former employee whose position had been eliminated. After he filed the FLSA suit, the employer filed a state court lawsuit against him for fraud. So he amended his federal complaint to charge that the employer's lawsuit constituted retaliation under the FLSA. See 29 U.S.C. 215(a)(3). The district court dismissed the retaliation claim and then granted summary judgment to the employer on the overtime compensation claim, holding that plaintiff was exempt from the FLSA's overtime provisions as an administrative employee.

The Fourth Circuit first upheld that summary judgment ruling, concluding, as a matter of law, that plaintiff had no FLSA claim because, given the range of his former employment duties, he fell within the administrative exemption.

The Court then addressed his retaliation claim. The Court first held that the retaliation claim wasn't foreclosed by the Court's holding that plaintiff was not protected by the FLSA (since he fell within the administrative exemption). Because he had a colorable (though unavailing) argument that he was entitled to overtime compensation under the FLSA, he had standing to raise the retaliation claim under the FLSA, the Court concluded.

The Court next addressed the employer's principal argument: that a retaliation claim under the FLSA can't lie unless the employee suffered an adverse employment action (relating to hiring, leave, discharge, promotion, or compensation). The district court had held that, because plaintiff's employment had terminated months before he filed the FLSA suit and the employer filed its lawsuit, he couldn't have suffered any adverse employment action by the employer's allegedly retaliatory lawsuit. The Fourth Circuit rejected that reasoning.

The Court concluded that requiring a FLSA retaliation plaintiff to prove a materially adverse employment action would have the practical effect of declaring that the FLSA's prohibition applies to retaliation exclusively against current, and not former, employees. The Court relied on Title VII cases (rejecting the employer's argument that Title VII cases are inapposite in this FLSA context); those cases hold that, for purposes of a retaliation claim, an "employee" encompasses former as well as current employees; a plaintiff need simply allege and prove that the challenged act is one that might have dissuaded a reasonable worker from bringing a claim. The employer argued that extending to former employees the FLSA's protection from retaliation would be anomolous since former employees no longer enjoy the substantive protections of the FLSA. The Fourth Circuit rejected the argument.

The ultimate holding: "a plaintiff asserting a retaliation claim under the FLSA need only allege that his employer retaliated against him by engaging in an action 'that would have been materially adverse to a reasonable employee' because the 'employer's actions . . . could well dissuade a reasonable worker from making or supporting a charge of discrimination.'"

Thus, plaintiff's retaliation claim in this case will go forward, even though he was exempt from the FLSA and the retaliatory conduct he alleges occurred months after his employment terminated and thus didn't affect the terms or conditions of his employment.

Fourth Circuit Lets NC's Nuisance Suit Against TVA Go Forward

Yesterday in State of N.C. v. Tennessee Valley Authority the Fourth Circuit rejected TVA's sovereign immunity defense, thereby allowing NC's nuisance suit to go forward.

TVA operates coal-fired plants in Tennessee, Alabama, and Kentucky. NC brought this common-law nuisance action against TVA, contending that the plants emit pollutants which travel downwind through the atmosphere into NC's airspace, where they adversely affect human health and the environment. Even though such emissions are regulated by and in compliance with the federal Clean Air Act and State law at the location of the plants (i.e., TN, AL, and KY law), NC contends that the emissions, even if permitted under applicable statutory laws, nonetheless create a public nuisance under NC law. NC seeks an injunction prohibiting the TVA from operating its plants in a harmful manner and requireing it to abate the alleged nuisance. NC Solicitor General argued successfully in support of the State. The Fourth Circuit, in an opinion by Judge Shedd, rejected TVA's sovereign immunity defense.

Judge Niemeyer concurred in part and dissented in part. He concurred in the result because the Clean Air Act subjects TVA and other federal agencies to suits where the agency fails to meet federal or State "requirements . . . respecting the control and abatement of air polution." Insofar as NC's nuisance law imposes a "requirement" "respecting the control and abatement of air polution," he agreed that it would fall within the Act's waiver of immunity.

However, Judge Niemeyer disagreed with the majority on the alternative basis for finding a waiver of immunity: whether a waiver could arise from language in TVA's enabling statute stating that TVA "may sue and be sued in its corporate name."

Specifically, he argued that this language must be read in light of the Constitution's separation of powers doctrine, which prelcudes a suit challenging a governmetnal agency's exercise of its discretionary function. He argued that the emissions are a tradeoff inherent in Congress's having authorized TVA to employ available technology for power generating, including the coal-fired plants in question; it reflects a choice to provide benefits at the expense of some clean air. "If the old technology impliedly authorized by Congress from the beginning of the TVA can be updated or replaced to provide less pollution, the decision would have to be a federal decision based on a number of discretionary factors balancing the environmental risks with the economic viability of the program. But it cannot be for any one State to dictate to Congress or an agency that Congress creates how it must carry out its discretionary functions," he wrote.

Thus, he concluded, by allowing TVA to "sue or be sued," Congress didn't clearly intend to authorize a State suit "questioning the fundamental decisions of the federal government to create the TVA and build coal plants to provide energy and thereby inherently authorize some emissions that are within federal and state regulatory standards." The majority's contrary conclusion, he complained, "tends to stand the federal structure on its head, permitting States to disagree with federal policies and dismember projects undertaken by the federal government in accordance with federal authority."