LAW BLOG NEWSLETTER
from The Wall Street Journal Online
April 28, 2009 -- 6:30 p.m.
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TODAY'S POSTS
- 9th Cir. Refuses To Ground Boeing Rendition Lawsuit
- 'Best Lawyers' Talk Law Schools and the Good Life In-House
- Eccentric Brewmaster Takes Distribution Fight to Court
- A Ruling That Might Make Bono Curse Again
- After Ruling, Bratz Dolls Might Not Be Long for the Shelves
- Prosecutors Hanging On -- Just Barely -- in Grace Asbestos Case
- SEC Files Fraud Charges Against Danny Pang
- Breaking News: Marc Dreier to Plead Guilty on May 11
- Coming Soon, to a Movie Theater Near You: Tort Reform Videos!
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9th Cir. Refuses To Ground Boeing Rendition Lawsuit
A panel of judges from the U.S. Court of Appeals for the Ninth Circuit in San Francisco today overturned a lower court ruling that put a halt to a controversial lawsuit concerning extraordinary rendition, the practice of flying suspected terrorists to their home (or other) countries. Click here for the story, from the San Jose Mercury News; here for the AP story.
The lawsuit was filed by the ACLU on behalf of five men who say they were subjected to the government's extraordinary rendition program - that they were kidnapped and sent to overseas prisons where they were tortured. The suit was brought not against the U.S. government, but against a San Jose-based Boeing subsidiary called Jeppesen Dataplan, which was accused of participating in the flights.
In a 26-page ruling, the appellate court found that the federal government failed to document how the lawsuit would reveal state secrets, sending the case back to San Jose U.S. District Judge James Ware for further proceedings. Ware dismissed the lawsuit last year, concluding that litigation over the controversial flight program could prompt the disclosure of CIA secrets.
The Bush administration originally invoked the state secrets privilege in the case. In February, the Obama Administration declined to rebuke the argument. Click here and here for earlier LB coverage; here for the opinion.
"According to the government's theory, the Judiciary should effectively cordon off all secret government actions from judicial scrutiny, immunizing the CIA and its partners from the demands and limits of the law," Judge Michael Daly Hawkins (Arizona State, UVA Law) wrote for the court.
According to the AP story, U.S. Department of Justice Spokesman Charles Miller said "the United States is reviewing the court's decision." A spokesman for Boeing declined comment to the Law Blog.
See and Post Comments: http://blogs.wsj.com/law/2009/04/28/9th-cir-refuses-to-ground-boeing-rendition-lawsuit#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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'Best Lawyers' Talk Law Schools and the Good Life In-House
We spent a good part of last week on vacation in a part of the country we'd never before visited - the Gulf Coast of the Florida Panhandle. We had a great time sunning and catching up with old friends, don't get us wrong, but the tiniest part of us wishes we'd had a little extra time to attend a conference held in Atlanta by the Best Lawyers of America.
The meeting was held in order to mark the 25th anniversary of the Best Lawyers ratings organization. All of the lawyers been voted "Best Lawyers" by their peers for each of the past 25 years.
The writeup on the conference, from the Fulton County Daily Report, is chock full of good stuff, most of which came out of two panel discussions, one on the future of the profession, the other on the future of legal education. We don't have the room here to tackle all of it, but let's hit two high points.
Anxious Alums: For starters, perhaps not surprisingly, it appears that law-school deans are getting an increasing number of calls from alumni, asking for help. (At least both David Van Zandt of Northwestern and David Partlett of Emory admitted to this.)
The news prompted one lawyer in the audience to bust out with this: "You're producing a product that very few people want. Firms have hiring freezes. Why not stop producing the product-or create new markets for what you're producing?"
Richard Matasar, the dean at New York Law School, said that some law schools likely will go out of business, and others will simply have to provide a legal education at a lower cost. But Matasar said law schools are hamstrung by requirements of the American Bar Association, which accredits them.
The In-House Itch: Oh, how times have changed. Once upon a time, as conventional wisdom goes, in-house legal departments were where you went if you didn't make partner at a big law firm. In-house, the hours were better and the benefits (stock options!) were good, but the work was largely administrative, farming out work to the law firms and negotiating with those same firms over price.
Not so anymore - at least says Daniel Cooperman, the GC at Apple. Cooperman pointed out that the sophistication of in-house work and salaries have increased making large in-house law departments more like a law firm serving a single client-but with no billable hours requirements.
Furthermore, In-house lawyers are closer to their client and often more involved in business decisions, he said. Added Cooperman: "In-house lawyers have supplanted outside counsel in being the trusted adviser to C-level executives."
See and Post Comments: http://blogs.wsj.com/law/2009/04/28/best-lawyers-talk-law-schools-and-the-good-life-in-house#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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Eccentric Brewmaster Takes Distribution Fight to Court
Chicago-based WSJ reporter David Kesmodel kindly sent us the following dispatch on trouble, uh, brewing between a small beer-maker and its distributor.
The U.S. is home to more than 1,500 beer producers, but two of them-Anheuser-Busch InBev and MillerCoors-control 80% of all sales. In a market like that, small brewers need to be dogged to survive. And few fight for their interests as aggressively as Larry Bell, founder of Michigan's Bell's Brewery Inc.
In his latest clash with Big Beer, the eccentric former home brewer has sued one of his distributors in a Michigan state court to try to block it from selling the rights to market his products to an Anheuser-Busch InBev distributor. The move comes about three years after Bell made headlines by yanking his beers out of Chicago-one of his largest markets-rather than see the rights to market them there sold to a big Miller distributor. (Click here for a fun story from the Kalamazoo Gazette on Bell's "Eccentric Day Friday.")
Bell, who is in his early fifties, brews small-batch "craft" beers such as Bell's Oberon Ale and Third Coast Old Ale. His concern is that distributors that primarily make a living hawking mass-market brews aren't well-suited to peddle his specialty brands. Bell's Brewery essentially made that argument in its lawsuit filed last week against distributor Classic Wines Ltd. in Kalamazoo County Circuit Court.
The suit is the latest in a string of recent legal spats around the U.S. between beer suppliers and distributors, including several in which smaller brewers, emboldened by healthy consumer demand for specialty beers, have tried to assert greater control over their destinies. Complicating such legal tussles, each state has its own set of beer laws-part of a complex regulatory architecture erected after the repeal of Prohibition.
Bell's, ranked as the 13th largest U.S. craft brewer by sales volume, seeks to block the sale of the distribution rights to its brands for part or all of eight Michigan counties on the grounds that the buyer, Anheuser distributor M&M Distributors Inc., doesn't meet its standards. According to the suit, Classic Wines contends Bell's must agree to the transfer under Michigan's liquor laws. Nick Pavona, a Classic Wines principal, couldn't be reached for comment. A message left for an M&M executive wasn't immediately returned.
The lawsuit claims that M&M lacks experience selling craft beers and didn't articulate to Bell's a "coherent" marketing strategy for its brands. The suit asks the court to award Bell's a declaratory judgment that it acted properly under Michigan's liquor code in refusing to agree to the transfer of its brands.
Craft brewers have been gaining in clout in the U.S., but they still account for only about 5% of all industry volume. They must balance their desire to filch market share from the big brewers with their need to form allies among the nation's beer distributors. Under U.S. law, beer producers generally must sell their products to distributors, who then sell to stores and bars that serve consumers. In many states, distributors enjoy the protection of franchise laws that keep brewers from arbitrarily dropping them. At the same time, distributors generally have the power to sell distribution rights whether brewers like it or not.
Bell, who calls his Kalamazoo brewpub Bell's Eccentric Caf鬠has experience taking on distributors. He re-entered the Chicago market in 2007, about a year after his departure, although he sidestepped the Miller distributor that had expected to take on his brands and signed up with other distributors. He anticipated that he would be sued for that move, but it never happened. Now the Chicago Cubs fanatic, who grew up in the city's suburbs, can buy his own beer in the Windy City.
Photo: Kalamazoo Gazette
See and Post Comments: http://blogs.wsj.com/law/2009/04/28/eccentric-brewmaster-takes-distribution-fight-to-court#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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A Ruling That Might Make Bono Curse Again
Does the Federal Communications Commission violate the First Amendment when it punishes broadcasters for failing to bleep out so-called "fleeting expletives?" In a long awaited ruling, the U.S. Supreme Court . . . didn't reach the question.
Still, that didn't stop a 5-4 majority from upholding the Bush administration's rule penalizing broadcasters for the isolated utterance of a four-letter word before 10 p.m. In an opinion penned by Justice Scalia, the court reversed a lower-court ruling that the Federal Communications Commission didn't follow proper procedures in adopting its new rule. Click here for the early WSJ story, from Jess Bravin and Amy Schatz; here for the writeup from Scotusblog; here for the opinion itself.
The main opinion stressed that it was dealing only with the question of whether the flat ban on "fleeting expletives" was "arbitrary and capricious" under the law that governs the powers of administrative agencies. The Court said it did not violate that standard, but that is as far as the ruling went.
Justices Stevens, Breyer and Ginsburg all filed dissenting opinions. Justice Souter joined Justice Stevens's opinion.
The agency announced the decision to ban fleeting expletives in a case involving General Electric Co.'s NBC, which was accused of violating broadcast-indecency rules when it failed to bleep U2 singer Bono (pictured) during the Golden Globes awards show in 2003. The singer used an expletive when his band won an award.
Two years later, the agency began enforcing the new rule when it sided with viewers who complained about several instances of celebrities' unbleeped swearing during live shows on Fox and other broadcast networks.
Fox Television Stations Inc., which brought the case, didn't receive a fine from the agency, but it challenged the agency's decision anyway, arguing that the FCC's new policy violated the First Amendment. (Fox Television is owned by News Corp., which also publishes The Wall Street Journal.)
The government argued that the case was less about First Amendment concerns than whether the agency had properly followed administrative procedures when changing its policy. The outcome of the case wasn't totally a surprise, because the justices spent much of their time in oral arguments focusing on potential violations of administrative procedures instead of First Amendment issues.
Justice Scalia did liven things up a bit in his opinion, taking a swipe at "foul-mouthed glitteratae from Hollywood."
Wrote Scalia:
We doubt, to begin with, that small-town broadcastersrun a heightened risk of liability for indecent utterances. In programming that they originate, their down-homelocal guests probably employ vulgarity less than big-cityfolks; and small-town stations generally cannot afford or cannot attract foul-mouthed glitteratae from Hollywood.
See and Post Comments: http://blogs.wsj.com/law/2009/04/28/a-ruling-that-might-make-bono-curse-again#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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After Ruling, Bratz Dolls Might Not Be Long for the Shelves
Doll collectors and toy aficionados, take note: The Bratz doll might not be around for that much longer.
A federal judge in Riverside, Calif., Stephen G. Larson, ruled late Monday that he would lift the stay on a previous order that blocked MGA Entertainment, the maker of the Bratz doll, from producing the Bratz doll or using its name. The lift of the stay mandates that Bratz stop producing or licensing Bratz dolls. His stay does, however, allow retailers to continue selling Bratz dolls until the end of the year.
The ruling came in response to MGA's bid to reduce the $100 million in intellectual property damages it was supposed to pay to rival Mattel Inc. Judge Larson shot down that motion, then went on to lift the stay. Click here for the WSJ story, from Nicholas Casey; here, here and here for previous LB posts on the Mattel/Bratz smackdown.
Mattel, the maker of Barbie, and MGA, have been locked in a dispute over the Bratz dolls that played out in the Riverside court for nearly a year. In a trial which began in May 2008, Mattel argued that MGA had essentially stolen the idea for its urban-themed Bratz dolls by hiring a Mattel employee, who was under contract with the toy giant, to design them. Later that summer, a jury sided with Mattel, awarding it $100 million in damages.
But MGA argued that the jury had awarded multiple damages for the same crime - what the company's lawyers termed "duplicative." At most, Mattel should be awarded $20 million, MGA argued according to court filings. Judge Larson did not agree. "The fact is the evidence not only supported a verdict of $100 million, this Court could have ... easily sustained a verdict many times this amount."
MGA Chief Executive Isaac Larian did not immediately return a call for comment. A Mattel spokesman declined to comment.
See and Post Comments: http://blogs.wsj.com/law/2009/04/28/after-ruling-bratz-dolls-might-not-be-long-for-the-shelves#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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Prosecutors Hanging On -- Just Barely -- in Grace Asbestos Case
Forgive us for the repetitive leads this morning, but it seems that that darn history just keeps repeating itself. So herewith, we bring you echoes of what we've already written this morning:
Another day, another set of allegations of prosecutorial misconduct.
That's right - fresh off the Ted Stevens debacle, the DOJ is staring down another possible embarrassing situation in another high-profile case, this one involving its criminal prosecution of W.R. Grace, the big chemical products company, and five of its executives. The government has charged the group with a handful of crimes in connection with their operation of a vermiculite mine in Libby, Mont. (pictured), which is alleged to have poisoned many of the town's residents. Click here, here and here for earlier LB posts on the case; here for today's NYT report; here for the report from the "Grace Case" blog.
The quick background: lawyers for Grace asked last week for the charges to be thrown. They accused prosecutors of repeatedly violating court orders to turn over evidence favorable to the defense and of putting on the stand a star witness whose credibility, they said, has since been destroyed by information that the jury never heard about.
"There's a failure in the process here," Judge Molloy said, addressing one of the prosecutors. "The question is, What do I do about it? I don't know what the remedy is here; you tell me."
According to the NYT, for the most part, prosecutors did not fight back, but said repeatedly that they thought most of the missteps had been small, and that they were sorry for the rest.
But Judge Malloy seemed to see things differently. He ultimately dismissed all charges against one of the five defendants, Robert Walsh, but said he had not yet figured out how to deal with the others.
At one point, Judge Molloy told one of the prosecutors that he has "no faith in anything the Government says."
See and Post Comments: http://blogs.wsj.com/law/2009/04/28/prosecutors-hanging-on-just-barely-in-grace-asbestos-case#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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SEC Files Fraud Charges Against Danny Pang
Another day, another financier in hot water.
The latest to find himself at the butt-end of a government lawsuit: Danny Pang, who ran two businesses based in Irvine, Calif., Private Equity Management Group Inc. and Private Equity Management Group LLC. The Securities and Exchange Commission on Monday filed a civil lawsuit in Los Angeles federal court, alleging that Pang defrauded investors of hundreds of millions of dollars. Click here for the WSJ story; here for the LA Times story; here for the SEC complaint.
As part of the suit, federal district court judge Philip Gutierrez froze the assets of Pang and his businesses and appointed a receiver to safeguard the existing assets.
Pang's investment practices came to light in this page-one article from earlier this month.
The SEC alleged Pang's Ponzi-like fraud scheme began at least in 2003 when he raised hundreds of millions of dollars from investors, mostly in Taiwan. Pang sold investors securities and told them he would earn enough profit to pay them returns through purchasing life-insurance policies at a discount, the SEC said. In truth, the SEC alleged, the life-insurance policies didn't generate enough profit to cover the cost of the premiums or meet the returns he promised to investors. PEMGroup instead paid investors from new money that was supposed to be invested in time-shares, the SEC said.
Latham & Watkins's David Schindler, an attorney for Pang, said his client expects to be fully vindicated. He said Mr. Pang voluntarily returned to the U.S. more than a week ago to cooperate with PEMGroup's internal probe and is committed to saving the company.
A company spokesman had no immediate comment on the SEC allegations.
For another chapter in the Danny Pang story, click here for the strange tale of his wife's murder back in 1997. A former stripper, Janie Pang was killed in the bedroom of the couple's upscale home in Villa Park in Orange County. Newport Beach lawyer Hugh "Randy" McDonald was charged with murdering Pang's wife, but his trial ended with a hung jury.
See and Post Comments: http://blogs.wsj.com/law/2009/04/28/sec-files-fraud-charges-against-danny-pang#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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Breaking News: Marc Dreier to Plead Guilty on May 11
This just in, courtesy of Dow Jones Newswires's Chad Bray (link not available):
Disgraced lawyer Marc Dreier will plead guilty May 11 to money laundering and other charges in an alleged scheme to sell $700 million in fictitious promissory notes, his lawyer said Monday.
Gerald L. Shargel, Dreier's lawyer, said his client will enter a guilty plea to all the charges in a superseding indictment unsealed in March - conspiracy, securities fraud, money laundering and five counts of wire fraud. Dreier will plead guilty without a deal in place with the government, Shargel said. His lawyer had previously indicated they expected a quick resolution of the case.
Prosecutors have alleged Dreier sold about $700 million in fake promissory notes and misappropriated client funds from his law firm. The out-of-pocket loss to investors and clients when the fraud was discovered in December was more than $400 million, the government has said. The overall scheme allegedly ran from 2004 to 2008.
Dreier also is facing civil charges by the U.S. Securities and Exchange Commission, filed in December, and his assets have been frozen. His law firm, Dreier LLP, filed for bankruptcy protection on Dec. 16.
See and Post Comments: http://blogs.wsj.com/law/2009/04/27/breaking-news-marc-dreier-to-plead-guilty-on-may-11#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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Coming Soon, to a Movie Theater Near You: Tort Reform Videos!
And now for a little curmudgeonly rant: We don't like movie trailers. Never have. We don't like that they hold you captive before the movie starts, often give away far too much of a movie's plot, and we really don't like that these days they can delay the start of the movie by 15 or 20 minutes. (Part of it's our own fault - we always feel so silly having finished our Raisinets before the movie's opening credits roll.)
Well, now comes a movie trailer the likes of which we might actually get to the theater early for: a law-related movie trailer. That's right. Next month, the U.S. Chamber of Commerce will unveil four short clips to run before feature films in Washington, D.C.-area movie houses. The clips, which you can watch here, all tell a story of supposed "Lawsuit Abuse" - cases in which people were allegedly dragged into the legal system with the filing of a frivolous lawsuit. One features the parents of a 7-year old child who was sued after a skiing accident. Another features a small business that was sued after a goose that was staying on its property snapped at a passer-by.
"Lawsuit abuse and the harm it brings to everyday Americans and small businesses is one of the great American tragedies," says Lisa Rickard, the president of the Chamber's Institute for Legal Reform, formerly of Akin, Gump. That's why the silver screen is the perfect venue for these Faces of Lawsuit Abuse short films."
According to a U.S. Chamber spokesman, the trailers will air "for at least a month" at four theaters in D.C. - including the Regal Gallery Place Stadium 14 (pictured), which is very close to the headquarters of the American Association for Justice, a main lobbying arm for the nation's trial lawyers. After that, says a U.S. Chamber spokesman, they'll move to a handful of theaters outside the Beltway.
We checked in with a spokesman for the AAJ, Ray DeLorenzi, who gave us this fun little quote. "With U.S. Chamber's core membership receiving all those taxpayer bailouts, they must be flush with cash to waste on PR stunts like this. Like their lobbying agenda, these ads are rated NC - not suitable for consumers."
Now, we'll just sit back and hope that someday the AAJ's unveils its own movie trailers. Ah, such fun.
See and Post Comments: http://blogs.wsj.com/law/2009/04/27/coming-soon-to-a-movie-theater-near-you-tort-reform-videos#mod=djemWEB&reflink=djemWEB&reflink=djemWLB
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LAW VIDEO
Matthew Gluck, a partner at Milberg LLP, tells Kelsey Hubbard how his firm hopes to help victims of Bernie Madoff's Ponzi scheme get compensated.
http://online.wsj.com/video/what-madoff-victims-can-expect/87A19AE4-927F-4852-A1BF-9B8E59A20EF8.html#mod=djemWEB&reflink=djemWEB
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TOP LAW NEWS
Maryland passed a law barring manufacturers from requiring retailers to charge minimum prices for goods, a move that could lead to lower prices for consumers.
http://online.wsj.com/article/SB124087840110661643.html#mod=djemWEB&reflink=djemWEB
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The Supreme Court, in a 5-4 decision, refused to pass judgment on whether the FCC's "fleeting expletives" policy is in line with the First Amendment. (Opinion) - It Is So Ordered: Decisions This Term - Indecency Complaints Pile Up at FCC
http://online.wsj.com/article/SB124091903135863347.html#mod=djemWEB&reflink=djemWEB
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A number of Supreme Court justices, during arguments, were concerned about exposing national banks to lending-discrimination investigations by state prosecutors.
http://online.wsj.com/article/SB124093986182464325.html#mod=djemWEB&reflink=djemWEB
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The Supreme Court's decision to send the "fleeting expletives" case back to a lower court means it could be months before the FCC begins tackling its growing backlog of indecency cases.
http://online.wsj.com/article/SB124094950578464965.html#mod=djemWEB&reflink=djemWEB
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Castor Pollux Securities won the auction to acquire the assets related to the market-making business of Bernard L. Madoff Investment Securities for a boosted bid of up to $25.5 million.
http://online.wsj.com/article/SB124092407079163479.html#mod=djemWEB&reflink=djemWEB
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WaMu's former parent has filed a lawsuit against J.P. Morgan for access to the cash it had on deposit when regulators seized the thrift.
http://online.wsj.com/article/SB124093665616164091.html#mod=djemWEB&reflink=djemWEB
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