LAW BLOG NEWSLETTER
from The Wall Street Journal Online
January 30, 2009 -- 6:30 p.m. EST
___________________________________
TODAY'S POSTS
- Media v. Private Equity Smackdown: The FT Takes on Blackstone
- K&L Gates: The New Godzilla of BigLaw?
- The United States of Consumer Arbitration? Not So Fast, Says 2nd Cir.
- A Modest Proposal: Military Service as Punishment?
- A Sisterly Settlement: The Boncompagnis Bury the Hatchet
- Scrushy, Back in Court, Rails Against Huge HealthSouth Settlement
- Torre Story: Yanks Mull Non-Disparagement Clauses After Joe's Book
- Another Speed Bump in Obama's Guantanamo Plans
- Indictment: Marc Dreier Used Fraud Proceeds to Support Lavish Lifestyle
***
Media v. Private Equity Smackdown: The FT Takes on Blackstone
Back when the Law Blog was an M&A reporter at the the Deal, there was a problem with certain companies using a single subscription through which all employees would access the Deal's content.
Now, one news service is taking a stand. The Financial Times, reports Elizabeth Holmes at the WSJ's Digits blog, is suing the Blackstone Group for multiple use of a single online subscription, alleging the private equity firm shared a user name and password to avoid paying for multiple accounts.
The suit, filed in federal court in Manhattan (click here for the complaint), says that a senior Blackstone employee distributed login information to other employees. That account accessed thousands of individual articles between February 2006 and June 2008. The suit describes the use as massive and far more than an individual would normally access.
Online subscriptions to the FT cost $179 to $299 a year.
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/media-v-private-equity-smackdown-the-ft-takes-on-blackstone?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
K&L Gates: The New Godzilla of BigLaw?
We take a minute now to behold the wonder that is K&L Gates. In these moribund times, K&L is growing like its 1999.
Today, K&L voted in favor of acquiring Bell Boyd & Lloyd, a Chicago firm of about 250 attorneys. Here's a link to the press release.
The combo, effective March 1, will create a firm of 1,900 lawyers and 31 offices. Yowza. By the time this post is finished, the firm may be north of 2,000 attorneys. And to think it was not that long ago that Kirkpatrick was a quaint little Pittsburgh shop. (The 2007 Am Law 100 rankings listed the firm at 825 lawyers.)
But last year, K&L gobbled up Hughes & Luce, a 150-lawyer Dallas firm, and Kennedy Covington, a 175-attorney firm in Charlotte. There were other smaller acquisitions along the way, of course, including the takeover of 9-lawyer J&J Attorneys-at-law in Taipei.
K&L was mentioned in a WSJ article in October, which discussed how some firms continue to hire aggressively during the slump. Peter Kalis, chairman of the firm, told WSJ that K&L had hired 45 partners laterally during the year.
"We have no debt -- no long-term debt, no short-term debt -- and therefore have a balance sheet that allows us to grow aggressively into a downturn," he said
K&L is not alone. Mergers were up across the board last year. Down markets, after all, create buying opportunities. Top firms that may never have considered a combination are now willing to talk in light of the beating that their balance sheets are taking.
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/kl-gates-the-new-godzilla-of-biglaw?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
The United States of Consumer Arbitration? Not So Fast, Says 2nd Cir.
The Second Circuit today waded into a topic that has riled the consumer-law community: the extent to which companies can keep peeved customers from filing class actions.
It's not a new issue: For years, companies in many industries -- automotive, cell phones, computers -- have required customers to agree to arbitrate their disputes and to waive their right to pursue claims on a class-wide basis.
Consumer advocates argue that this is totally bogus (to borrow a technical term), that a lot of people lack the financial means to pursue claims unless they can do so on a class basis.
The Circuit today struck down an arbitration clause drafted by American Express that banned any type of class litigation. The ban, according to the court, would have made it impossible for plaintiffs to pursue their antitrust claims against AmEx.
Heres a copy of the ruling and heres a report on the decision from Public Citizens Consumer Law & Policy Blog.
Other courts, though, have gone the other way. Here is a posting yesterday from the ADR prof blog about a federal judge in New Jersey who upheld a Verizon Wireless class-action waiver, all the while acknowledging that the holding would kill the Verizon customers claim.
In a WSJ article last year on the topic (link unavailable), F. Paul Bland Jr., a lawyer with Public Justice, said the enforceability of class-action bans is the most important and most hotly contested issue in consumer law.
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/the-united-states-of-consumer-arbitration-not-so-fast-says-2nd-cir?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
A Modest Proposal: Military Service as Punishment?
A little food for thought on this Friday afternoon. How about military service, rather than prison, as a form of criminal punishment?
Over at the Sentencing Law and Policy blog, Douglas Berman has linked to the Fall 2008 issue of the Justice Policy Journal, which includes an article called "Alternatives to Incarceration." The piece is focused on the military service alternative. The abstract reads:
While previous research has sought to evaluate prisoners perceptions of various alternatives to imprisonment, most have centered on the prisoners perspective as to the perceived severity of the alternative punishment. This research is quite different, as the proposed alternative does not seek to punish but rather to rehabilitate. The proposed alternative argues that military enlistment be utilized as an alternative to incarceration we intend to determine if prisoners would welcome such an alternative. Researchers have identified a correlation between military service and desistance from crime among youths, many of whom have had delinquent pasts. This current project is intended to expand upon the life course perspective as the military can act as a rehabilitative agent which will act as a hook for change, thereby facilitating desistance from criminal behavior.
In the current study, we argue that military service can facilitate social bonds, promote prosocial network contacts, and teach skills necessary for successful integration into the dominant society. Because of the benefits military service offers, it is hypothesized that prisoners will be receptive to such an alternative to incarceration. Through our interviews with prisoners at a minimum security facility in Kentucky, we discovered that indeed prisoners overwhelmingly would welcome such an alternative.
According to Berman, there is historical precedent for this:
One of the ways of avoiding a sentence of death during the middle ages was to accept a pardon from the King for service in the army for a year. The terms were readily accepted, and the King increased his force by a number of men who would perhaps be inferior to none in courage, though they might not improve the discipline of the army. Stanley Grupp, Some Historical Aspects of the Pardon in England, 7 Am. J.L. Hist. 51, 55 (1963).
LBers, it's a provocative idea, especially given our well-publicized troubles with prison overcrowding and current shortages among the military's enlisted. Any thoughts?
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/a-modest-proposal-military-service-as-punishment?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
A Sisterly Settlement: The Boncompagnis Bury the Hatchet
To all those who have been losing sleep over the fate of Natasha and Tatiana Boncompagni, the sisters embroiled in a bitter copyright lawsuit over Tatiana's forthcoming novel "Hedge Fund Wives": It's over. You can put away the Ambien.
That's right, Les Soeurs Boncompagni have decided to settle the matter and retire the lawsuit. Whether any money changed hands is unclear, but, according to this filing, Natasha (pictured, left) has basically given up all her rights in "Hedge Fund Wives." "The Defendant has announced to the Court that she is not a co-author of 'Hedge Fund Wives' and has no authorship or co-authorship rights to the work. The Defendant agrees to release any registered or pending copyrights that she has relating to 'Hedge Fund Wives,' and any domain names or other property relating to 'Hedge Fund Wives' or the Plaintiff's first novel, 'Gilding Lily.' "
In October, Tatiana (pictured, right), a former WSJ freelancer who's married to Max Hoover (yes, that Hoover), filed this suit against her sister, claiming that Natasha is infringing Tatiana's copyright in the book.
Among Tatiana's chief complaints was her allegation that Natasha had been publishing portions of the book, which is slated for publication later this year, on two Web sites -- hedgefundwives.com and hedgefundwives.net. Click here and here for earlier LB posts.
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/a-sisterly-settlement-the-boncompagnis-bury-the-hatchet?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
Scrushy, Back in Court, Rails Against Huge HealthSouth Settlement
Former HealthSouth CEO Richard Scrushy is still fighting for justice, even as he sits in a federal prison. His latest battle: raising a ruckus over a securities-fraud settlement involving HealthSouth that was approved by an Alabama federal judge back in 2007.
The Fulton County Daily-Report has a nice story today on the situation. Scrushy took his beef to the 11th Circuit yesterday, where he argued that the $445 million settlement impermissibly cuts off contractual obligations HealthSouth owes himthe company's duties to advance Scrushy his legal defense fees and reimburse him for settlement funds when he has acted in good faitheven though he's not a party to the settlement.
Lawyers for the company have acknowledged that between 1996 and 2002, HealthSouth overstated its corporate revenues by $2.7 billion. Several directors and officers of the company pleaded guilty to criminal charges, while Scrushy was acquitted in a trial. Scrushy later was convicted along with former Alabama Gov. Don Siegelman in an unrelated federal bribery case; another 11th Circuit panel heard their criminal appeals last month.
Scrushy's lawyer, David G. Russell of Atlanta's Parker, Hudson, Rainer & Dobbs, emphasized that the valuable rights of a non-settling defendant cannot be taken away without just compensation. He said Scrushy was left having to defend the plaintiffs' claims against him out of his own pocket.
Judge R. Lanier Anderson told Russell he understood that the benefits Scrushy was getting as a result of HealthSouth's settlement with the plaintiffs weren't exactly the same kind as the contractual benefits he was losing. But the judge suggested Scrushy still was getting a substantial compensation.
No case law supports denying defense fees in a case like this, argued Russell.
True, Anderson responded. "But," said the judge, "it seems to me that it is very reasonable to do."
Scott B. Smith of Bradley Arant Boult Cummings' Huntsville, Ala., office represented HealthSouth.
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/scrushy-back-in-court-rails-against-huge-healthsouth-settlement?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
Torre Story: Yanks Mull Non-Disparagement Clauses After Joe's Book
For baseball fans, one of the true joys of living in New York is that even in the dreariest winter months, when the airwaves are dominated by ice hockey and mediocre Big East hoops, the Mets and Yankees somehow manage to continue making news.
The latest comes out of Yankeeville, and involves the team's erstwhile manager, Joe Torre, now the skipper of the LA Dodgers. Controversial allegations made by Torre in his new book, The Yankee Years, about David Wells, Alex Rodriguez, and other Yankee players, have reportedly prompted the Yankees to think about tucking non-disparagement clauses into the contracts of coaches and managers. Here's the story, from Newsday.
According to Newsday, a Yankee official said yesterday that some members of the front office staff already are required to sign a confidentiality agreement in order to protect "proprietary knowledge of our business model." The proposed clause is intended to ensure that future books about the Yankees are "positive in tone," and "do not breach the sanctity of our clubhouse."
A few problems with this notion, though. The Major League Baseball Player's Union apparently thinks that including such agreements into players' contracts would violate the labor agreement (we're not sure, frankly, if coaches and managers are covered by baseball's collective bargaining agreement).
More generally, non-disparagement agreements have come under attack in recent years, subject to attacks that they violate the spirit of the First Amendment, though they're apparently completely legal in most contexts. Click here for an NYT story from a few years back on media companies and non-disparagement agreements made with their laid off employees.
The agreements raise other questions, too, like what constitutes disparagement? After all, one person's disparagement is another's backhanded compliment.
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/torre-story-yanks-mull-non-disparagement-clauses-in-wake-of-joes-book?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
Another Speed Bump in Obama's Guantanamo Plans
To many, President Obama's decision last week to halt legal proceedings at Guantanamo Bay, sounded sensible enough. But since then, the administration's learned that the devil's in the details.
The latest: A military judge on Thursday denied the feds' request to delay the case of Abd al-Rahim al-Nashiri, a detainee accused of planning the 2000 attack on the USS Cole (pictured). Here are stories from the WaPo and the NYT.
According to the WaPo, the administration, was "taken aback" by yesterday's decision. Judges in other cases, including one involving five Sept. 11 defendants, had quickly agreed to the government's request.
In order to halt proceedings for 120 days -- as Obama wants -- the Pentagon may be forced to temporarily withdraw charges against al-Nashiri and possibly 20 other detainees facing trial in military commissions.
"We just learned of the ruling here . . . and we are consulting with the Pentagon and the Department of Justice to explore our options in that case," White House spokesman Robert Gibbs said.
The chief military judge at the detention center at Guantanamo Bay, Cuba, Army Col. James Pohl, said that he found the government's arguments "unpersuasive" and that the case will go ahead because "the public interest in a speedy trial will be harmed by the delay in the arraignment."
Nashiri was captured in the United Arab Emirates in late 2002 and was turned over to the CIA. He is one of three detainees who the government has acknowledged were subjected to waterboarding. He was transferred to Guantanamo Bay in September 2006 along with 13 other "high-value" detainees.
Photo: AP
See and Post Comments: http://blogs.wsj.com/law/2009/01/30/another-speed-bump-in-obamas-guantanamo-plans?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
Indictment: Marc Dreier Used Fraud Proceeds to Support Lavish Lifestyle
After his law firm fell to pieces in the midst of his alleged $400 million fraud, New York plaintiffs lawyers Marc Dreier has now been indicted by a federal grand jury. The charges are securities and wire fraud along with the conspiracy to commit those frauds. (Here's the news release from the U.S. Attorney's office, Southern District of New York.)
Dreier, who still sits in a New York jail, is accused of falsely representing to hedge funds that he had the authority to sell promissory notes by a New York development company (which has been independently identified as Solow Realty) that would be used to finance real estate deals in the US and abroad. The notes, which the indictment says turned out to be false, had interest rates that ranged from 8% to 12% and had terms of one or two years. To convince the funds that the notes were legitimate, the indictment says Dreier supplied the funds with fake financial statements. In another component of the alleged scheme, Dreier impersonated a lawyer representing a Canadian pension plan and represented to a hedge fund that he was the lawyer.
The indictment (found here) states: In order to carry out these impersonations as part of the fraudulent scheme, Dreier obtained numerous cellphones, designated phone lines at Dreier LLP, and set up various fake email addresses. Dreier told the purchasers of the fictitious notes to contact the issuers or holders of the notes at those phone numbers and fake email addresses.
"It was not unexpected. There are no surprises," said Gerald L. Shargel, Dreier's lawyer told reporter Chad Bray in this WSJ.com story. "As I've said before we're looking for a fair and appropriate resolution of the matter."
The indictment said the alleged scheme was carried out to support his lavish lifestyle. (Some glimpses of the Harvard Law School grad's lifestyle was laid out in this WSJ story.)
The forfeiture allegation included with the indictment gives us another opportunity to enviously peruse some of the possessions (detailed previously on this blog here), including his 2005 Heesen yacht sitting at Pier 66 in Fort Lauderdale, that his alleged fraud allowed him to acquire.
See and Post Comments: http://blogs.wsj.com/law/2009/01/29/indictment-marc-dreier-used-fraud-proceeds-to-support-lavish-lifestyle?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
***
See and Post Comments: http://blogs.wsj.com/law/2009/01/29/breaking-news-blagojevich-gone-but-not-soon-forgotten?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
___________________________________
LAW VIDEO
When is a merger not a merger? Legal reporter Dan Slater speaks with Deal Journal lead writer Heidi Moore to find out why Rohm and Hass sued Dow Chemical.
http://online.wsj.com/video/why-rohm-and-hass-sued-dow-chemical/BD415ABD-19AE-4574-8603-DE269D4CEE34.html?mod=djemWLB&reflink=djemWLB
___________________________________
TOP LAW NEWS
___________________________________
ADVERTISEMENT
Take Advantage of Online Journal Research and Tools!
Utilize our valuable research and tools for important business,
investing and financial planning decisions. Our research includes
quotes and up-to-date information on nearly 30,000 companies as well
as an article archive and extensive market data.
http://online.wsj.com/advanced_search?mod=emtdfix
Contact WSJ's Law Blog at lawblog@wsj.com
__________________________________
ONLINE JOURNAL E-MAIL CENTER
TO UNSUBSCRIBE DIRECTLY from this list, go to:
http://setup.wsj.com/EmailSubMgr/do/delete?addr=ignoble.experiment%40ARCONATI.US&id=145
Your request will take effect within 48 hours.
TO VIEW OR CHANGE any of your e-mail settings, go to the E-Mail Setup Center:
http://online.wsj.com/email
You are currently subscribed as ignoble.experiment@ARCONATI.US
FOR FURTHER ASSISTANCE, please contact Customer Service at 1-800-369-2834
or 1-609-514-0870 between the hours of 7 am - 10 pm Monday - Friday and 8 am - 3 pm Saturday or e-mail onlinejournal@wsj.com.
___________________________________
Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved.
Privacy Policy -
http://online.wsj.com/public/privacy_policy
Contact Us -
http://online.wsj.com/public/contact_us
No comments:
Post a Comment
Keep a civil tongue.