Jonathan B. Wilson

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Jonathan Wilson is an Atlanta attorney with more than 19 years of experience guiding growing private and public companies.  He currently serves as the outside general counsel of several companies and is the former general counsel of Web.com.com (NASDAQ: WWWW) and EasyLink Services (NASDAQ: ESIC).  He is also the founding chair of the Renewable Energy Committee of the American Bar Association's Public Utility Section.

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Thursday, June 30, 2005

Compensation and Responbility
On PointOfLaw: Should a plaintiff's compensation be based on his personal, subjective valuation of the thing lossed.  Or, should compensation be based upon objective (i.e., marketplace) factors?
8:34 am edt 

Watching for Rehnquist's Resignation
Speculation continues that Chief Justice William Rehnquist will resign before the Fall. 
7:15 am edt 

Wednesday, June 29, 2005

How Ireland Got Rich
Thomas Friedman explains how Ireland went from last to first. 
1:50 pm edt 

Thank You
To ProfessorBainbridge for this mention; and
 
To Kevin Thompson for adding this site to his blogroll on CyberLawCentral.
1:35 pm edt 

Punch and CounterPunch - Redux
Follow the continuation of my debate with Clay Conrad on PointofLaw
 
1:13 pm edt 

Tuesday, June 28, 2005

What Would Eric Cartman Do?
James Taranto recently poked fun at North Carolina Governor Mike Easley for having his pollster separate respondents into those who did, or did not, watch the adult comic television show "King of the Hill".
 
In doing so, Taranto mused that "South Park conservatives don't sit around trying to figure out what Eric Cartman's position would be on tort reform . . ."
 
This is true . . . because we already know he favors tort reform.
 
In the 1999 episode "Sexual Harassment Panda", after a classroom presentation by the Sexual Harassment Panda warned against the evils of sexual harassment and the risk of extortionate lawsuits, Eric Cartman sued his young friend Stan Marsh, winning a jury verdict of "all of Stan's toys". 
 
The plot exacted an ironic toll, however, and the tables were soon turned as one of the boys won a countersuit against Cartman.  The whole town, including Cartman, then learned its lesson in the suit of "Everybody vs. Everybody" (where Kyle's trial lawyer father, interestingly, represented both the plaintiffs and the defendants).
 
This brought Cartman and the boys to search out the Sexual Harassment Panda at the "Island of Misfit Mascots Commune" where they convinced him to change his name to Petey "the don't sue people" Panda.
 
If only Taranto did his research . . . .
 
cartman.JPG
1:16 pm edt 

Possible Milberg Weiss Indictment
Legal bloggers speculating on a possible indictment of Milberg Weiss on the heels on an indictment of one of its clients include Bainbridge, Ribstein and Henning
 
The practices that Lazar is alleged to have engaged in are certainly dastardly.  The principle of class action litigation is that the interests of many are adequately represented by a few named plaintiffs, allowing for a more efficient outcome than if each individual plaintiff were left to pursue his own remedies. 
 
That principle is utterly undone if, as alleged, the named plaintiff has a covert arrangment with class counsel for additional compensation that is not shared with other class members.
 
The practice is especially dastardly because the mechanics of litigation (with the protection of the attorney/client relationship) cloak the transactions between the named plaintiff and class counsel.  There is no third party to regulate those transactions and no mechanism to police wrongdoing.
 
While judges have a responsibility to avoid collusive arrangements with class counsel and collusive settlements, in practice many judges lack the inclination and the legal tools to supervise these arrangements.
 
While defendants may sometimes suspect inappropriate behavior, they too lack a mechanism to prevent it and may even lack the standing to complain about it.
 
Some commentators, like Ribstein, suggest that the defense bar should not be too gleeful to cheer on the prosecutors.  The criminal law is a particularly blunt instrument and its use to indict an entire firm for the misdeeds of a few can have repercussions that extend far beyond the present case.  (The example of Arthur Andersen is easy to see). 
 
Ribstein suggests that, as an alternative to prosecution, "legislative reforms should be viewed as an alternative to the criminal law in fixing whatever is wrong with corporations."
 
This advice is well taken and the arguments of those who have cautioned against "legislation through litigation" apply equally well to this topic.
 
In fact, the prevalence of the kind of wrongdoing alleged in the Lazar case suggests that Congress has been remiss in not reforming the class action laws. 
7:34 am edt 

Monday, June 27, 2005

Focus on Luttig and Roberts
Today's Chicago Tribune reports: 
A senior Bush administration official told the Tribune that top officials in the administration have interviewed leading contenders, including, in recent weeks, Roberts. Sources close to the White House said Friday that senior administration officials are focusing most closely on Luttig and Roberts, although no decision has been made.
Tom Goldstein cautions not to read too much into the articles mention of recent interviews with Roberts.  He reasons that other contenders could have been interviewed long ago whereas the interest in Roberts is relatively recent, dating to his recent appointment to the D.C. Circuit. 
 
Update (10:55am): RealClearPolitics is also reporting an "informal poll" of Supreme Court watchers producing a list of likely nominees with Luttig and Roberts at the top. 
8:56 am edt 

Client of Milberg Weiss Indicted
According to the NY Times, a federal grand jury in Los Angeles has indicted 78-year-old Palm Springs lawyer, Seymour M. Lazar, for allegedly receiving at least $2.4 million in kickbacks from prominent plaintiffs' law firm Milberg Weiss.
 
Walter Olson has more on background. 
 
Update (1:40pm): Martin Grace notes the irony that some plaintiffs' lawyers are worrying about the chilling effect an investigation of Millberg Weiss might have. 
8:48 am edt 

Sunday, June 26, 2005

A Looming GOP Rift Over Judicial Nominees?
The Boston Globe reports on what it calls a "rift" among conservatives over possible Supreme Court nominees:
As liberals and conservatives gear up for a multimillion-dollar battle over a potential Supreme Court vacancy, a growing divide on the right threatens the unity of President Bush's coalition: Conservative legal scholars want their evangelical allies to keep quiet and take a back seat in any nomination battle.
 
Evangelical attacks on judges over the Terri Schiavo feeding tube case backfired on Republicans, polls taken in the spring indicated. Now, many conservatives fear the religious right could hurt the party's cause by using faith-based arguments about abortion, same-sex marriage, and the separation of church and state to promote a Supreme Court nominee.
 
Instead, many Republican lawyers with close ties to the White House are determined to present such a nominee to the country in the religiously neutral terms Bush used in last year's campaign: as a judge who ''knows the difference between personal opinion and strict interpretation of the law."
 
''We should be looking for outstanding jurists, not ministers," said Victoria Toensing, a Justice Department official in the Reagan administration.
This angle, however, confuses spin for a "rift".  Of course conservatives will want to present a conservative nominee in terms that are the most "marketable" to the broadest audience.  Presenting a nominee as a dyed-in-the-wool evangelical would alienate some voters.
 
Balancing the presentation between terms that will energize the Republican base and terms that will avoid alienating the opposition base will be a marketing feat.  But it is an effort in mass communications, not a signal of disunity on the conservative side of the aisle. 
8:04 am edt 

Supreme Court Nominees Backgrounder on Slate
Added to the Resources column on the Supreme Court Short List.
7:55 am edt 

Saturday, June 25, 2005

Punch and CounterPunch
Don't miss the extended debate with Clay Conrad on PointOfLaw
8:08 am edt 

A Scenario for Monday
Lyle Denniston has an excellent description of the Supreme Court's end-of-term tradition and some suggestions on when the announcement of a resignation might occur. 
8:07 am edt 

Kristol Predicts O,Connor, not Rehnquist, Will Step Down
Here's his piece.
 
The blogosphere reacts: Howard Kurtz, RightWingNews,
 
Hugh Hewitt's radio interview with Kristol discussions reactions and rationales.  (Hat tip: Radioblogger).   
 
More background on the Supreme Court Short List
7:31 am edt 

Friday, June 24, 2005

Consulting on Supreme Court Nominations
Senate Democrats are asking the White House to consult with them on any potential Supreme Court nominee: 
"The way to avoid the divisiveness and discord that occurred over past judicial nominations is through consensus and cooperation in the selection of future candidates," the Senate Democrats said in a letter sent to the White House Thursday.
This message of bi-partisan compromise and conciliation is utterly inconsistent, however, with the actions of Senate Democrats, however, shown by the example of Senator Kennedy have already "ruled out" Clarence Thomas and other judges as nominees for advancement. 
 
For more, check out the Supreme Court Short List resource page. 
10:52 am edt 

CounterPunch on Tort Reform
Tort reform nemesis Clay Conrad publishes a piece on CounterPunch that re-hashes many of the arguments he made in our recent exchanges on the subject of tort reform versus juries (summary and my reply here). 
 
I like Conrad's writing because it is clear and well-researched even though I disagree with his conclusions.  I also appreciate the way he keeps the debate on the merits, rather than devolving into class warfare and personal invective.
 
But I can't help concluding that his primary argument (legal reformers have a secret, primary purpose which is to eliminate civil juries) just isn't persuasive. 
 
Conrad is a worthy debater, however, and I'll try to extend this thesis in other posts shortly.
 
 
7:53 am edt 

Kelo v. New London: Supreme Court Eminent Domain
In a 5-4 decision the Supreme Court in Kelo v. New London upheld the city of New London's ability to condemn private property for the purpose of a private re-development of that property.
 
Property rights groups are predictability upset and the blogosphere is humming (Ted Frank, SCOTUSblog, and Volokh). 
 
So much is noteworthy that it's hard to know where to begin, but a few preliminary comments may help:
 
1. Ted Frank's concern that Justice Kennedy is introducing a  brand-new test that "is so amorphous to be effectively standardless, requiring case-by-case adjudication, thus effectively transforming the judicial branch into a super-legislature with the power to veto condemnations engaged in by the executive branch . . ." is right on the money. 
 
It also guarantees that the appellate courts will see an increasing number of appeals of eminent domain decisions as unhappy property owners will be able to take a shot at reversel based upon Justice Kennedy's new "favoritism" rationale.

2. Orin Kerr and others have properly identified Justice Thomas' dissent as a model of elegance. 

Nicole Garnett persuasively aruges that Thomas identifies a key political element of the majority's decision: eminent domain of the kind involved in this case pits the politically powerful against the politically powerless.  By arguing the rights of property owners, Thomas is in fact arguing the case of the "little guy".

7:42 am edt 

Thursday, June 23, 2005

The Hidden Cost of Prosecuting Corporate Decision-Making
Professor Bainbridge has a provocative piece on the hidden downside to criminalizing corporate wrongdoing. 
 
He argues that making anything other than blatant theft punishable as a crime chills corporate decision-making.  He writes:
In sum, shareholders deserve protection from theft, but not from risk taking, even when the risk in question is how much to pay an executive. Unfortunately, it's not clear that prosecutors know the difference -- or even care.
In other words, if the corporate executive worries that potentially risky decision-making might result in a threatened prosecution, the executive will make few or no risky decisions.  In the long run, this ultra-conservative behavior will hurt shareholders because corporations will avoid taking potentially profitable courses of action because of the fear of risk.
 
Professor Larry Ribstein also suggests that many of these prosecutions of corporate decision-making are motivated more by class warfare and the desire of prosecutors to "bludgeon" corporations into tying the line than they are really about prosecuting crime. 
 
 
7:01 am edt 

Wednesday, June 22, 2005

Attack of the Radio Waves
A report from the American Council on Science and Health unearths the story of a family in California who has nailed sheet metal to their house in order to ward off radio waves.  It seems the family, including two college-educated daughters, believe that their neighbors are sending radio waves in their direction which they believe to be a health hazard.
 
The ACSH reminds us that it was not that long ago when some activists claimed that radio waves were harmful.  Hundreds of lawsuits ensued until science finally caught up with the headlines: there was no link between radio waves and health hazards of any kind.
 
Why do attention-grabbing headlines persist when there is no scientific basis for alarm?  The article concludes:
Just as sensationalist journalists pursue the most lurid tales of freakish behavior or bloodshed, some researchers willfully subvert science to achieve a headline-grabbing statistic, preferably with the most terrifying number possible. By establishing a dire threat, these mercenaries can attract funding for still more research.
This would be nothing more than an interesting sidelight to a human interest story if it weren't for the real economic impacts that this kind of reaction has:
As far back as 1994, Congress's General Accounting Office estimated the needless expenditures on electromagnetic field protections had already surpassed $1 billion. Power companies, municipalities, and school systems spend millions rerouting cables, installing shielding, or burying power lines. Rather than confront the public with facts, and rather than risk jackpot awards in frivolous lawsuits, utilities often just roll over and squander money on expensive measures unsupported by science.
6:52 am edt 

Tuesday, June 21, 2005

Complexity
Everyone likes to report back to their parents on occasion, even when they've graduated into adulthood, reliving those childhood memories of bringing home report cards to the smiles of Mom and Dad.
 
For lawyers whose parents are not attorneys this can sometimes be frustrating, as non-legal Moms and Dads sometimes don't appreciate the importance of things we lawyers think matter.  Even our attempts at humor can sometimes fall flat (i.e., "You can always tell an agressive patent lawyer; he's the one who looks at your shoes when we speaks to you . . . .").
 
Lawyers have nothing, however, in comparison to those children who grow up to be polymer chemists.  This point was brought home to me by my sister (Kristen S. Wilson, PhD) when she shared with me her recent paper, "Polydimethylsiloxane-magnetite nanoparticle complexes and dispersions in polysiloxane carrier fluids". 
 
I have no idea what my sister is talking about, but then neither do our parents.
2:22 pm edt 

Supreme Court Short List
If you've noticed the new link on the left nav bar you're already aware that I'm building a database of information and links to a number of possible nominees to the U.S. Supreme Court.
 
There is no vacancy to be filled as yet, of course, but it seemed to serve a helpful purpose to the blogosphere to pull together some useful information before a vacancy develops.
 
The Supreme Court Short List is not yet finished.  In fact its still pretty threadbare in places.  I'll be filling in the gaps over the next few days.
 
If you'd like to add something to the list, or have additional resources you'd like me to link, please drop me a line at jbw at jonathanbwilson.com
7:45 am edt 

DMCA Notice-and-Takedown Provisions
Blogger Ernest Miller has a problem with the notice-and-takedown provisions of the Digital Millennium Copyright Act:
We should not use unjust laws, giving them legitimacy, unless there are no reasonable alternatives. In this case, there are a number of alternatives, such as sending a polite request, sending a threatening legal letter, contacting the ISP directly, or even suing for copyright infringement (statutory damages are your friend).
Kevin Thompson responds with an excellent summary of the notice-and-takedown provisions, describing the procedures required to send a valid notice and the ISP's obligations in responding.
 
If you're an attorney and have clients with copyright interests to protect on the Web, you need to be familiar with the DMCA.
 
It's not clear why Miller describes the DMCA as an "unjust law" although I agree with him that an infringed party's first step should ordinarily be a polite request or even a cease and desist letter.
 
What's important to note, however, is one of the rationales for the notice-and-takedown provisions is to create a "safe harbor" for ISPs. 
 
Before the DMCA, ISPs were often the victim of infringement suits based upon the actions of their customers.  Although ISPs had little practical ability to prevent their customers from infringing copyrights, under traditional copyright infringement analysis they were just as liable as their customer.
 
The DMCA changed the law, making it possible for ISPs and Web hosts to develop as an industry, by creating a bright line test.  If the ISP followed the safe harbor provisions of the DMCA it could not be sued by the copyright owner.  (The copyright owner retained the right to sue the ISP's customer, who was responsible for the infringement). 
 
Those who have problems with the DMCA's lack of procedural safeguards for free speech should address their concerns through an amendment of the DMCA, but without upsetting the ISP safe harbor.  The safe harbor has eliminated the threat of litigation to a significant industry that makes cheap and easy Web access possible.  Eliminating the safe harbor would be a substantial setback to the cause of efficiency on the Web. 
 
 
7:36 am edt 

Monday, June 20, 2005

Confusion Reigns Supreme
Writing on legal topics is difficult.  You need to check your facts and make sure you understand both the facts and the law before you commit pen to paper (or mouse to screen).
 
Popular writers rarely get it right and when they fail, they fail spectacularly.
 
Today's spectacular failure comes from Terry Collins, writing in the River Valley Business Report on June 20, 2005.  (The date is important as you'll see in a minute).
 
Collins criticizes President Bush for advocating tort reform, noting that Bush favors caps on malpractice claims and "federalizing" class action lawsuits even though "studies indicate there is no 'tort crisis.'"
 
Collins' first point is that malpractice caps won't matter much in Wisconsin, because Wisconsin already has caps: 
While both measures are perceived as good news for business owners worried about liability costs, limitations on medical malpractice lawsuits will change little in Wisconsin because the state in recent years already has enacted its own laws imposing limits. The president's proposals would create federal laws that track with some that we already have in Wisconsin.
Setting aside the important legal consideration that federal caps on damages (even if they were mathematically redundant with state caps) could have a significant impact on the way cases are actually litigated, Collins then lets loose this howler:
Other professions are not protected by damage caps, as are health-care providers.  Typically, claims against other professionals do not have a large non-economic component and therefore limits have not been deemed necessary.
Really, Terry?  That's good to know.  I'll be sure to pass it on to all the businesses that have ever been tagged with a punitive damages award in excess of $100 million. 
 
Collins then turns his attention to Bush's proposal for reforming class actions:
Federalizing class-action lawsuits, on the other hand, may hold changes for Wisconsin businesses.  . . . While details of the proposed law are unknown at this time, most expect it will vest exclusive jurisdiction in the federal courts and prevent state court filings. It would not be surprising if the law also includes restrictions on when class-action suits may be filed.  (emphasis added). 
Apparently the snow hadn't thawed in Wisconsin in time for its business writers to read about the Class Action Fairness Act passed Congress and was signed by the President on February 18, 2005. 
 
How many lay readers in the River Valley of Wisconsin will read Collins' article and believe that the details of Bush's proposed class action reform "are not known at this time?"
7:09 am edt 

Regulation Changes Behavior
Christine Hurt has an interesting piece on how broker behavior has changed in light of Regulation AC. 
6:41 am edt 

Sunday, June 19, 2005

The Next Supreme Court Justice?
Could Michael Luttig be next in line?
 
luttig_michael1.jpg
11:09 am edt 

Saturday, June 18, 2005

California Supreme Court Struggles with Punitive Damages
The California Supreme Court issued two opinions last week (Johnson v. Ford Motor Co., and Lionel Simon v. San Paulo U.S. Holding Company, Inc.) applying the U.S. Supreme Court's rules limiting punitive damages from State Farm v. Campbell.
 
I have an extended post on PointofLaw, but in summary I think the cases will be hard to reconcile and will lead to further confusion and litigation. 
 
What would reduce the confusion is one of the two recommendations I make in Out of Balance: a statutory cap on punitive damages based upon a ratio with compensatory damages. 
 
Under State Farm v. Campbell, there is a Constitutional limitation on punitive damages based upon a number of factors including the ratio between punitive and compensatory damages.  Drawing an arbitrary, but legislatively-mandated line rule, would improve certainty, finality and efficiency in litigating cases with punitive damages. 
3:42 pm edt 

Friday, June 17, 2005

The Meaning of Judicial Activism
John Dean (yes, that John Dean) has a thought provoking piece on the meaning of judicial activism.  He cites a number of examples from the left and the right to support he central thesis that the word is (to quote Antonin Scalia) "just fluff."
 
Dean cites a 2004 law review comment by Keenan Kmiec entitled, "The Origin and Current Meanings of "Judicial Activism"".  Kmiec's piece traces the usage of the word from 1947 to the present day.
 
Dean's conclusion is that politicians and policy makers should be far more precise when they talk about the judiciary.  Judicial activism should not just mean "judges behaving badly".
 
The age and composition of the Supreme Court suggest that we will all have a lot to say about judges in the relatively near future.  We would all be well advised to take Dean's suggestions to heart. 
7:47 am edt 

PointOfLaw Today
A new ADA reform bill would impose a 90-day notice period before filing suit.
 
A flood of securities class action settlements in the past few weeks will bring in a bumper crop of contingent fees for Bill Lerach & Friends. 
7:17 am edt 

Thursday, June 16, 2005

Out of Balance - Update
Out of Balance is now available through Amazon and Barnes & Noble.
1:30 pm edt 

Tort Reform Criticism
Clay Conrad, writing at JuryGeek, has written two extended pieces (June 9, June 11) on tort reform and the institution of the civil jury.
 
Conrad's central argument seems to be that "tort reformers" are secretly engaged in an effort to eliminate civil juries and are dishonestly using the problem of excessive litigation to reach their true, but hidden goal:
The tort reform battles have not yet exhausted themselves. It is important, however, to recognize them for what they are: a smokescreen for an attack on the jury system. And a dishonest attack, at that.
Conrad's arguments fall short on several levels.
 
First, he falls prey to the linguistic error that seems common among trial lawyer advocates who lump everyone who advocates some kind of civil justice reform into the monolithic "tort reformers".  There is a wide variety of opinion among reform advocates.  We don't all agree amongst ourselves.  Consequently, to suggest that everyone who advocates reform is secretly united in a cabal to eliminate jury trials is simply false.
 
Second, although he cites Punitive Damages, How Juries Decide, as an exemplar of jury criticism, he dismisses its arguments by citing a contrary work.   
 
What the authors of that book (Viscusi, in particular) demonstrate is that there is no rational connection between the evidence involved in punitive damages cases and the punitive damages awarded by juries.  A later study by Viscusi demonstrated that, inappositely, juries were more likely to punish responsible corporate decision-making (i.e. trade-offs between cost and safety) than they were to reward it.
 
Thus, he concluded, if the goal of punitive damages is to deter unsafe and reckless conduct, jury-awarded punitive damages actually undercut that goal. 
 
Conrad does not address this theme.
 
Third, and perhaps most importantly, Conrad claims that "tort reform bills that have either passed or been suggested have nothing to do with reining in lawsuit abuse."
They deal with reducing damage awards in cases with actual, bona fide victims. I would suggest this is because the corporate sponsors of tort reform are more concerned with the awards they have to pay their REAL victims than they are with the costs of frivolous litigation.

If the latter was the concern, a loser-pay system would be their goal, or at least a system to require plaintiffs or their counsel to reimburse defendants if the litigation is dismissed as frivolous. We aren't hearing many cries for those sorts of reforms.
Conrad needs to widen his reading horizons.
 
Walter Olson has been writing about loser-pays for more than a decade.
 
My book, Out of Balance, Prescriptions for Reforming the American Litigation System, spends a great deal of time explaining why fee-shifting offer of judgment rules will do much to reduce frivolous litigation and more efficiently resolve meritworthy cases.
 
Are proposals like these taken seriously by legislatures?
 
Just a few months ago, my home state of Georgia adopted a fee-shifting offer of judgment rule.
 
There are a great many reform advocates who take aim at the real economic problem of excessive litigation.  Those who criticizes juries have legitimate reasons to do so.  Conrad's approach fails to account for legitimate jury criticism and those reforms that truly speak to procedural improvement.
7:31 am edt 

Wednesday, June 15, 2005

Texas Silicosis Antics
The ordinarily pro-plaintiff Atlanta Journal Constitution has let slip through a piece by a local freelance writer on the "sleazy" practices of some plaintiffs' lawyers in a silicosis case in the Southern District of Texas. 
 
As Ted Frank noted in several posts on PointofLaw (Feb. 17, Feb. 27, and March 21) the case had generated a lot of publicity, including its own website
 
Atlanta writer Luke Boggs quotes the presiding judge, Janis Graham Jack, saying, "this case is more about fraud and money than it is about criminal liability."
 
After hearing several days of testimony on the admissibility of plaintiffs' proposed experts, Judge Jack declared that the facts raised "great red flags of fraud"  because nearly half of the 10,000 plaintiffs involved in the case claimed to have silicosis even though they had previously claimed in other litigation to have asbestosis.
 
Medical experts testified that it was "extremely rare" to have both conditions in a patient.  On cross-examination, many of the plaintiffs' proposed expert witnesses reneged on their diagnoses.
10:58 am edt 

Pigs in California
A case brought by animal rights activitists in California will test the effects of Proposition 64. 
 
The activists are suing a pork producer over conditions on the producer's farm, including the size and type of cages used for the animals.  Among the activists' causes of action are claims under California's notorious Unfair Competition Law 17200.
 
California voters in November 2004, through Proposition 64, amended that law to re-impose a traditional notion of standing, preventing parties from suing under the law unless they had a legal interest in the case.
 
The pork-producing defendant in this case claims that the activists have no standing to challenge the animal's living conditions because they are not affected by those conditions.
7:42 am edt 

Public Companies Going Private to Flee Sarbanes-Oxley

In reaction to the expense, hassle and administrative burden of complying with the Sarbanes-Oxley Act and other increased regulatory requirements facing public companies, increasing numbers of public companies are "going private" in leveraged buyouts. 

7:24 am edt 

Barratry in Pennsylvania
On PointOfLaw, Cumberland County, Pennsylvania charge a serial litigant with barratry for filing 24 lawsuits against county officials over ten years. 
7:22 am edt 

Tuesday, June 14, 2005

Employment at Will vs. Self-Defense
Walter Olson, writing on PointOfLaw, highlights an interesting debate stirred up by a recent decision of the West Virginia Supreme Court.
 
David Kopel recounts the case of Feliciano v. Seven-Eleven in which Feliciano was terminated by Southland Corp. (the owner of the 7/11 store) for disarming and holding for police an armed assailant who tried to rob the 7/11 store where he worked.  Southland had a policy that prohibited its employees from trying to disarm assailants and that required employees to respond passively.
 
The West Virginia Supreme Court held it was wrongful for Southland to have terminated Feliciano and that Feliciano's right to self-defense trumped Southland's right to create rules of employment and workplace behavior.  Notwithstanding Feliciano's status as an at-will employee, Southland could not terminate Feliciano for exercise his right to self-defense.
 
In addition to Kopel's praise for the ruling, Glenn Reynolds also notes this holding approvingly. 
 
Stephen Bainbridge, however, argues that this "is yet another judicial blow against freedom of contract and private property rights."  He notes that judicial exceptions to the law of employment at will have a number of negative consequences, including practical impacts (increased cost of hiring and restrained job opportunities) and the theoretical (a decrease in freedom to contract).
 
While I have a gutteral reaction to the story of a convenience store employee who heroically disarms a robber, I can also empathize with the employer who tries to enforce its rules of employment.
 
It's easy to side with the right of self-defense when everything turns out well, but what if Feliciano's act of bravery had failed?  If the assailant had then killed or injured the store's employees or patrons it is virtually inevitable that one or more of those killed or injured would have sued the store owner.
 
The store owner would have defended against the claim on a number of fronts, including by arguing that the employee's attempt at disarmament was ultra vires and prohibited by the employer's rules.  If the plaintiffs could point to past examples where the employer had declined to enforce its rules against self-defense, the defendant might have been deprived of this potential defense.
 
In short, if employers are to be liable for hazardous conditions on their premises and for the actions of their employees, employers must be free to impose and enforce workplace rules, even if those workplace rules infringe on other rights, including the right of self-defense. 
7:58 am edt 

Monday, June 13, 2005

Fourth Amendment Puzzle
Although I generally write on civil litigation problems, I couldn't help noticing this interesting piece by Orin Kerr.  Because electronic discovery is increasingly important in civil litigation, the treatment of these problems in criminal litigation is noteworthy.
 
As I understand it, the question is whether the government has the right to review an imaged copy of a computer hard drive (which it obtained with the consent of the computer owner) after the computer owner has revoked his consent.
 
Kerr suggests that the government would not have the right.  In the same way that the government would have to cease a search of a residence after the owner revoked consent, the government must cease its search of a copy after consent is revoked.
 
One way to resolve this conundrum, however, is to ask when was the consent revoked. 
 
Imagine, in Example #1 where the computer owner revoked his consent after the copy was made and after that copy was reviewed.  In that situation, the revocation would be too late.  The government could permissibly use what it learned during the search of the copy.
 
In Example #2, the computer owner revokes his consent after the copy was made, but before the copy was reviewed.  Kerr suggests that the government may not review the copy.
 
If the law was as Kerr suggests, wouldn't that give the government a powerful incentive to search every imaged hard drive as quickly as possible after the copy was made simply to avoid the possibility that the owner might revoke consent? 
 
Making the revocation effective to deprive the government of the ability to review the copy makes it possible for the government to review the evidence today, but not review it the moment after the consent is revoked.
 
This would seem to result in an absurd result. 
 
To complicate matters further, it's not clear what would suffice as a search.  If the government performed an electronic search for certain files before consent was revoked, would the government have the ability to follow up on that search after consent was revoked?  Would the government be prohibited from conducting different kinds of searches thereafter?  Or, would the conduct of a single search pre-revocation open the door to any further kind of search post-revocation?
 
 
But then again, that's why I don't practice in this area. 
12:40 pm edt 

The More Things Change
 . . . the more they stay the same.
 
Senate Democrats are still filibustering administration nominees.  They're dressing up their actions, however, in the cloak of "more information". 
12:32 pm edt 

Inmate Suit Scam
Convicted felons filing frivolous suits from prison . . .get the details from PointOfLaw.com
12:30 pm edt 

Saturday, June 11, 2005

Gun Fight at the Enid Corral
I thought that my recent post on the letter to the editor of the Enid News would soon be forgotten, never to be spoken of again on the peaceful streets of Enid, Oklahoma. 
 
I was wrong.
 
Into the fray steps Alfred Rosenbaum (scroll to bottom of link):
Your response to the article was an absurdity. Apparently, you failed to read the gist of the article, or knowingly chose to attack what you saw as distortions in the article rather than addressing its substantive points. As the article attempted to relate,what "serious proponents" of tort reform believe is truly unimportant versus public opinion as a whole, which serves as the major impetus behind the "reformist" movement. The fact is that the majority of people probably believe these urban legends to be true, and your side is of course reluctant to debunk such theories.
 
A more appropriate response, rather than flippantly discarding the article as "silly", would have been to address why the substantive points of the article were incorrect, namely the role of insurance companies using litigation as an excuse to raise rates on individuals. I think it would be further appropriate for you to disclose the amount of money that is contributed to you, your cause, and your website by insurance corporations. Perhaps you could conclude your disclosure with an addendum that would explain to a single mother why the value of her limbs, were they to be amputated through an unfortunate course of negligent events, would only be worth $250,000. "
Well, Al, as they say in Oklahoma, "them's fightin' words."
 
On the first point, that I failed to address the "substantive points" of the article, I think I stand acquitted. 
 
My argument was that the author was disingenuous by "debunking" an e-mail hoax that had long been debunked. 
 
It is an old trick to knock down a straw man argument.  There are no serious reform advocates that hold out the "Stella Award" cases as true.  Hence, it is illogical to suggest that "refuting" those cases serves any point at all.
 
Mr. Rosenbaum does not dispute that "serious proponents" of tort reform know better than to believe the Stella Award cases.  Rather, he suggests that "the majority of people probably believe these urban legends to be true." 
 
I'll ask the judge for a ruling on this one . . . . Sorry, Al, no dice. 
 
Without some poll results to document this claim, I must disagree that "the majority of people" believe these urban legends to be true.  Even if there were some collection of Americans who do believe these hoaxes, does that really matter?
 
A 2002 study by the National Science Foundation found that nearly 50% of those surveyed believed that human beings lived on the Earth at the same time as dinosaurs.   I'm told that there are still people who believe that the moon landing never took place. 
 
You cannot expect those of us who advocate for a fairer and more efficient legal system to take all of the blame for the educational failings of the rest of America. 
 
Mr. Rosenbaum suggests that my "side is of course reluctant to debunk such theories."  Rubbish.  I just did debunk these fake cases.  I published the link to the Snopes.com article that the original Enid letter failed to cite.  It takes about 10 seconds with a web search engine to learn that these six cases are fake.
 
Mr. Rosenbaum says that I should have addressed "why the substantive points of the article were incorrect." 
 
Frankly, I thought I did.  On further review, however, I can see that the original letter mentions a number of reports that suggest that "tort reform" did not result in a decrease in insurance premiums. 
 
First, the question of whether changes in the law result in changes in insurance premiums is a complex question.  There is no such thing as "tort reform" per se.  Rather, the tort reform community consists of a number of advocates who propound various proposals for improving the law.  Not all of these advocates agree.  Various states have tried various measures to improve their legal systems, but to lump all of these proposals together and call them "tort reform" does not do justice to the multiplicity of changes states have considered or reformers have suggested. 
 
Second, in those states that have adopted some kind of legal change to reduce the incidence of litigation, the results are somewhat mixed on the impact on insurance rates.  Unfortunately, this topic is itself quite complicated, and cannot be addressed easily here.  Consider this background piece by Jim Copland on the problem of dealing with insurance statistics and accept the conclusion that the jury is still out on how insurance rates correspond with changes in litigation procedure. 
 
Third, and most importantly, however, is that the relationship between legal reform and insurance rates is only one small facet of the argument for reform.  Litigation in the U.S. consumes approximately $300 billion every year.  This drain out of our economy equates to nearly $1,000 per person.  I outline the economic impacts of excessive litigation in my book, Out of Balance: Prescriptions for Reforming the American Litigation System.
 
If legal reform succeeds in reducing this economic drain, I really wouldn't care if it affected insurance rates too.  Consequently, you aren't persuasive if you argue that reform is worthless if even you did prove that insurance rates would be unchanged.
 
Mr. Rosenbaum cannot avoid stooping to an ad hominem attack, asking me how much I'm getting paid for my website by "insurance corporations."
 
Sadly, I must confess that I have not been paid a penny by the insurance industry, or any other industry for that matter, for my website, my book, or anything else I've written.  (Memo to industry representatives: If you'd like to pay me, you know where to find me).  Unfortunately, however, Mr. Rosenbaum has no one to blame for my opinions but me.
 
His last barb is my favorite, asking me to "explain to a single mother why the value of her limbs, were they to be amputated through an unfortunate course of negligent events, would only be worth $250,000".
 
Presumably the point behind this non sequitur is to draw me into defending caps on damage claims.  Mr. Rosenbaum does this, even though the original Enid letter made no mention of damage caps, because it personalizes the problem of litigation procedure for individuals.  This is a frequent technique used by trial lawyers because it takes the focus of the argument away from the larger societal problem (the economic impact of litigation) and places it on the sympathies the audience has for an injured individual.
 
Nice try, Al.
 
While caps on damage claims are one kind of "tort reform" they are not all there is to it.  For myself, I think that caps on damages are not the most effective way of reducing the overall impact of litigation.  I favor procedural changes that shift the cost of litigation onto those who pursue weak claims or who make demands that exceed the value of their claims.
 
So put your guns back in their holsters, Mr. Rosenbaum. 
9:43 am edt 

Friday, June 10, 2005

Pryor Confirmed to 11th Circuit
Pryor was placed on the 11th circuit bench in a 2004 recess appointment after his nomination was filibustered by Senate Democrats. 
 
His nomination was one of three agreed upon in the "gang of 14" agreement to avoid a Senate rules change that would have eliminated the filibuster in debates over judicial appointments. 
10:18 am edt 

Thursday, June 9, 2005

Look for Me on PointOfLaw
Jim Copland and Walter Olson have graciously invited me to contribute to the Manhattan Institute blog on PointOfLaw.com.  I look forward to writing from this new vantage point in addition to my personal site here. 
1:49 pm edt 

The Facts on William Pryor
According to the Birmingham News:
There's the Bill Pryor Alabamians know.
 
Then there's the Bill Pryor portrayed by liberal special-interest groups.
 
One is smart and level-headed, who holds great respect for the rule of law. As Alabama attorney general, he demonstrated great courage by standing up to the state's biggest demagogue since George Wallace, in the form of former Alabama Chief Justice Roy Moore.
 
The other, according to some civil rights, environmental and pro-choice groups, among others, would roll back individual rights and use a federal judgeship to espouse his extreme political and ideological beliefs.
 
"It is very hard to reconcile the two points of view," Sen. Dianne Feinstein, D-Calif., said.
 
Actually, it's not. All Feinstein and other Senate Democrats have to do is quit relying on the distorted information of the liberal special-interest groups fighting Pryor's judicial nomination and talk to some Alabama Democrats.
Those Alabama Democrats include Representative Artur Davis, a black Democrat elected to Congress in 2002, who gave Pryor a "ringing endorsement"  and the chairman of the Alabama Democratic Conference, Dr. Joe Reed, who called Pryor a "first-class public official" who "will be a credit to the judiciary and will be a guardian for justice."
 
An article in the April 10, 2003 Mobile Register also claims that Pryor has been praised by former Alabama Supreme Court Justice Terry Butts (a Democrat) and former Democratic Alabama Attorney General Bill Baxley.
 
When Pryor's appointment was filibustered by Senate Democrats in 2003 he was given a recess appointment by President Bush to the 11th Circuit Court of Appeals.   Pryor's pending nomination would make that appointment permanent. 
 
These plaudits from his home state opponents haven't softened the criticism of the usual chorus of left-wing groups from the People for the American Way (who called him "unfit to judge") to SaveOurCourts.org ("extremist agenda"). 
 
Intellectually honest liberals, however, like GWU law professor Jonathan Turley, concede that Pryor is well qualified.  In a recent interview, Turley describes his personal knowledge of Pryor and Pryor's performance in following the law, even when it conflicted with his personal beliefs:
Well, I actually know Pryor. Back when we were we both clerked on the 5th Circuit for different judges. And back then he was known as sharp as a whip.
 
We weren't close back then, but he was well known even then as being a real bright light. And I think he's gotten a raw deal, quite frankly.
 
He's very conservative, there's no question about it. But I think it was very telling that he believes very strongly that the Ten Commandments can be shown in a monument or in a display. And yet, when there was that confrontation with Chief Justice Moore in Alabama, he carried out his duties.
 
He prosecuted Moore, even though he agreed with Moore. And so with Pryor, I think that he's gotten a uniquely raw deal, because he's proven that even against his own views, he will carry out the law.
Ultimately, Turley concluded that there was no principled reason for Democrats not to confirm Pryor. 
8:09 am edt 

Janice Rogers Brown Confirmed
As expected, the Senate confirmed Janice Rogers Brown yesterday to a spot on the D.C. Circuit Court of Appeals. 
 
Next up: Former Alabama Attorney General William Pryor. 
7:34 am edt 

Wednesday, June 8, 2005

Just Released: Out of Balance: Prescriptions for Reforming the American Litigation System
I'm happy to announce that the publisher has released Out of Balance.  You can buy copies through the publisher's website here.
 
In the next few weeks, the book will become available through Amazon.com, Barnes & Noble, Ingram's and other resellers. 
 
The book recounts the problem of excessive litigation in America, how civil litigation procedure encourages the filing of weak and even frivolous cases by forcing defendants to pay legal fees without hope of recovery if they prevail.  Out of Balance also surveys a number of competing proposals for reform, ultimately endorsing statutory caps on punitive damages (based upon a ratio with compensatory damages) and fee-shifting offer of judgment rules.
 
My thanks go out to everyone who helped with the book - from proofreading and commenting - to Steven Hantler and John Sullivan, who provided advance reviews for the book and back-cover quotes.
 
Buy a copy today: it makes a great stocking stuffer! 
3:37 pm edt 

Tuesday, June 7, 2005

Criticism of Georgia's Tort Reform - Expert Testimony
Writing at PointOfLaw, Walter Olson notes several critiques of Georgia's recent offer of judgment rule. 
 
In particular, he notes criticisms offered by David Bernstein and Peter Nordberg (Blog 702) on what appears to be a loophole in S.B. 3's adoption of the Daubert rule for civil cases, but not for criminal cases. 
 
Bernstein's criticism, in particular, seems to suggest that the Georgia legislature intended to open the scope of admissible expert testimony in criminal cases to permit "junk science" which restricting the scope of admissible evidence in civil cases.
 
While this may prove to be the practical effect of the law, I think there is a more charitable interpretation of the legislature's intent.
 
As those of us practicing in Georgia know, Senate Bill 3 was pushed through the legislature in large measure by the Medical Association of Georgia on the basis of medical malpractice concerns. 
 
While there was a fair amount of discussion behind the scenes among legislators (whether to lump all of the reforms together into an omnibus bill or whether to take each issue separately) the Senate went first, putting all of the proposed reforms into S.B. 3. 
 
With an overwhelming Republican majority, the Senate quickly passed the bill and it went over to the House.
 
Importantly to Professor Bernstein's point, the version of S.B. 3 that passed the Senate on February 1, 2005 did not contain the problematic language that appears to open the scope of permissible expert testimony in criminal cases.  (Compare Section 7 of the two bills; the Senate version replaces O.C.G.A. 24-9-67; the final version replaces that code section and also creates new O.C.G.A. Section 24-9-67.1).  If the Senate version of S.B.3 had become law, it would have extended the Daubert rule to both civil and criminal cases. 
 
After passing the Senate, the bill was reported out of the House Judiciary Committee and was passed by the House, but with amendments.  The version of the bill that was passed by the House on February 10 added the language that Bernstein noted, clarifying that the new Daubert rules would only apply to civil cases (note the interlineation at the beginning of Section 7). 
 
Within days the Senate approved the House's revision and sent the bill to the Governor for signature.
 
Here the history of O.C.G.A. 24-9-67 becomes important.  Prior to the 2005 amendment, the statute read simply, "The opinions of experts on any question of science, skill, trade, or like questions shall always be admissible; and such opinions may be given on the facts as proved by other witnesses."
 
As a result, while the House amendment limited the impact of the Daubert rule to only civil cases, that amendment did not have the effect of widening the scope of permitted testimony in criminal cases.  It merely kept the pre-amendment law in place for criminal cases.  If Georgia law now admits too much junk science in criminal cases, that shortcoming was already present in the law prior to the 2005 amendment. 
 
Bernstein and Nordberg's implication that the Daubert rule should be extended to criminal cases, however, is well taken and perhaps should be considered by the Georgia legislature in the future. 
 
8:26 am edt 

Senate to Vote on Janice Rogers Brown Today
After several years of waiting, it appears that the Senate will vote today on her appointment to the D.C. Circuit Court of Appeals. 
7:38 am edt 

Monday, June 6, 2005

More Fake News from American Trial Lawyers
An update on the letter to the editor in the Enid News that debunked the well-known fake tort cases:
 
The bulk of the letter is actually modeled from two pages on the ATLA website
 
The letter to the editor in the Enid News, purportedly written by one Bradley A. Gungoll of Gungoll, Jackson, Collins, Box & Devoll, P.C., begins with a summary of six supposed "examples" of frivolous lawsuits.  Mr. Gungoll's letter then informs us that these cases are fake and that the "Stella Awards", named after Stella Liebeck  (the woman alleged burned by McDonalds coffee) reference other cases that are fake.
 
This is no surprise, of course, as Snopes.com de-bunked this 2001 e-mail hoax years ago.
 
What makes the author's repetition of his fake "debunking" letter galling, is not only that it's old news, but it's old news that copied from the ATLA's website. 
 
Just like Mr. Gungoll's letter, the ATLA website runs through the six fake cases (which it claims come from a 2002 email hoax) and then returns to the Stella Liebeck case, telling us why her coffee burn claims weren't frivolous after all.
 
Mr. Gungoll's letter lists seven bullet points about the Stella Liebeck case.  Compare those seven bullet points to the similar section in this 1997 letter by Howard Twiggs, then-president of the ATLA. 
 
The letters are sufficiently different that I can't say that Gungoll's 2005 letter is a copy of Twiggs' 1997 letter, but both letters cover substantially the same points in the same order.  Gungoll's letter is largely a restatement of the concepts already published on the ATLA website.
 
Of course the real question is why an attorney would publish a letter that responds to arguments that no one has made.   
 
Perusing Mr. Gungoll's website gave me one possible answer: The firm is now soliciting persons who have taken Vioxx and Bextra for possible lawsuits against the manufacturers. 
 
As the saying goes, there's no such thing as bad publicity. 
12:41 pm edt 

Sunday, June 5, 2005

3:17 pm edt 

Faking Out and Fouling Up - Enid News Scooped by Fake Tort Reform Letter
A letter to the editor appearing in the online version of the Enid News, of Enid Oklahoma purports to debunk "the myth of the value of tort reform" by claiming that six "examples of frivolous lawsuits" are in fact myths.
 
This might have been an interesting piece if it weren't for two troublesome facts: (1) no credible author who advocates for tort reform holds out any of the six "examples" as real and (2) the six "examples" were actually exposed as fake more than four years ago.
 
The pretend lawsuits and the firm that supposedly brought them, "Hogelman, Hogelman & Thomas" never existed. 
 
The urban legend website, Snopes.com, has published an article debunking the non-existent "Hogelman" law firm and these six non-existent cases since May 2001.
 
While I'm not familiar with the publishing standards of the Enid News, one might hope that the editors of any commercial publisher would at least conduct a 10 second online search to confirm that a proposed letter to the editor is real.
 
It's one thing for an opponent of tort reform to respond to strawman arguments in the course of the debate.  It's quite another to pretend to respond to fake strawman articles.
11:44 am edt 

More Details on Cox for SEC Chair

The San Franciso Recorder has more feedback on the administration's nomination of Christopher Cox to Chairman of the SEC:

Securities lawyers know what they're getting with Christopher Cox, the Orange County Republican congressman President Bush nominated Thursday to be the Securities and Exchange Commission chairman.

But how they 1feel about the former Latham & Watkins partner depends on their side of the aisle.

Defense lawyers hail the longtime plaintiff bar foe as a savior for companies squeezed by the tight regulatory regime of current Chairman William Donaldson, who announced his resignation Wednesday.

Plaintiff lawyers are less sanguine.

"It's putting the fox in the chicken coop. He's the worst possible nominee imaginable," said plaintiff-side securities lawyer William Lerach. "He's blindly pro-business and anti-investor."

The partner at Lerach Coughlin Stoia Geller Rudman & Robbins said he expects Cox to roll back enforcement of Sarbanes-Oxley provisions, reduce penalties for violating SEC regulations and give companies more leeway to delay compliance with corporate responsibility laws.

For the most part, the defense bar agrees.

For myself, if Bill Lerach says that he is the "worst possible nominee imaginable" that says alot.

11:27 am edt 

Saturday, June 4, 2005

A Bad Law Near-Miss in California
Writing at PointOfLaw, Walter Olson notes some of the controversy surrounding California's Assemby Bill 528. 
 
The bill, which was tabled on June 2nd (meaning that it cannot proceed in the current session of the legislative but may be re-opened in the winter session) would have created a private right of action that would have allowed private litigants in California to sue defendants over virtually any environmental law. 
 
What made the bill especially noxious was that it expressly empowered "any person with a beneficial interest in the outcome" to file suit against any defendant for allegedly violating any one of more than a dozen enumerated environmental laws. 
 
By empowering private litigants in this way, the bill removed the traditional legal concept of "standing" that requires a plaintiff to have had a legally enforceable interest before filing suit.  The bill's choice of the phrase "beneficial interest in the outcome" was significant because this phrase has no meaning in the law and arguably required an interest that was less than a "legally enforceable interest". 
 
The California Civil Justice Association rightly called the bill an "end run around Proposition 64. 
 
Proposition 64, of course, was the citizen referendum that amended California's notorious UCL 17200 by restoring the concept of standing to that law.  Without the standing requirement, the aw had become the subject of abuse because, as some lawyers had sued on behalf of non-existent clients solely for the purpose of generating attorneys' fees. 
7:53 am edt 

Administration Over-Emphasizes Med-Mal
At a speech last night for Senate candidate Jim Talent, President Bush made his familiar remarks regarding the need for litigation reform.  He said:
You know, when I went to Washington, I said, well, most of these legal matters can be solved at the state level -- until I began to look at the effect on the federal budget of these junk and frivolous lawsuits against docs. Because of these lawsuits, doctors either get run out of business, or the premiums go up, which cost you or the taxpayers more money, or they practice defensive medicine in order to stay out of the courts. It's estimated that these lawsuits cost the federal government about $28 billion a year. That's a lot -- even for all the money we spend, that's a lot. (Laughter.) And it's not necessary. We want people to have their day in court if they get injured by a lousy doc; but we got to do something about these frivolous lawsuits.
Why is it that every time this President speaks about litigation reform he characterizes the need for reform in terms of medical malpractice cases? 
 
Med-mal cases make for easy examples that can be understood by lay audiences, but this continuous emphasis on health care actually undermines the cause of litigation reform.
 
Litigation reform, when properly understood, is a need that extends throughout the economy.  The expense of excessive litigation affects every industry and ripples through the economy in the form of higher prices, acting like an invisible tax that ultimate gets paid by each of us.
 
The President's rhetoric, for far too long now, has marginalized the problem into a struggle between doctors and trial lawyers. 
 
More accurately, it is a struggle between trial lawyers and everybody else. 
7:26 am edt 

Friday, June 3, 2005

Chris Cox Nominated to Chair SEC
Bill Donaldson's resignation as chairman of the Securities and Exchange Commission and the Bush Administration's nomination of Congressman Chris Cox to replace him have brought some focus to the public debate over the role of the SEC.
 
Despite the sea-change in regulations at the SEC in the past four years far too few voters realize the impact SEC regulations have on public companies and the economy at large.
 
The SEC's interpretation of the 2002 Sarbanes-Oxley Act, which was bad enough as written, has further compounded the complexity and ambiguity facing corporate managers.  If the stereotype of a Republican nominee was a person who would represent the interests of business, Bill Donaldson challenged that stereotype.
 
The SEC's decisions of the past four years have increased expenses for business and made compliance more difficult, thereby frustrating the admninistration's aim of restoring faith in the marketplace.
 
Early returns suggest that a Cox chairmanship at the SEC might bring a welcome change.
9:58 am edt 

Thursday, June 2, 2005

European Dis-Union
The headline in the Guardian read, "Crushing Defeat Leaves EU Vision in Tatters" and yet European elites didn't seem to notice. 
 
With the EU Constitution now soundly rejected by the country that drafted it (France) and by the EU's largest tax payer (the Netherlands) what remains is the question of how the EU will proceed in the future.
 
Much has been written in America regarding the rejection of the Constitution.
 
George Will has written that the French rejection springs from a number of inconsistencies in the French political mind
 
The French value their leisurely 35-hour workweeks, but are dismayed at their falling productivity and declining standards of living.
 
The French place great stock in their social safety net and mandatory six-week vacations, but are stumped as to the cause of their double-digit unemployment.
 
Against the backdrop of this cognitive dissonance, a great many French rejected the EU Constitution over their fear that European unification would further threaten their idyllic lifestyles with more competition from Eastern European workers who are willing to work longer hours for less pay.
 
Anne Applebaum, writing in the Washington Post  says the French rejection as a backlash against the political arrogance of French elites.
 
She noted that Chirac's initial reaction to the rejection was to contact his counterparts in Germany and Great Britain to assure them that, notwithstanding the referendum, France was still committed to ratifying the Constitution.
 
In others words, "even though a majority of my countrymen disagree, I know better than they". 
 
But whether the cause is an inconsistency in political thought and reality or a backlash against leadership from above, it seems clear that the basic requirements of a national constitution are lacking in the EU.
 
History is replete with examples, particular in the 19th and 20th centuries, of peoples who have rejected faux constitutions imposed on them from above.
 
The Soviet Union kept the peace in Eastern Europe from 1945 to 1989, but the breakup of the Soviet state presaged at least two decades of unrest as old national feelings, repressed for several generations, sprang up again. 
 
Iran, Iraq, Afghanistan, India and Pakistan are all creatures of post-colonial arrangements, imposed by world powers over arbitrarily selected geographies without regard to underlying national sentiments.
Decades after their creation, many Kurds wish for their own nation apart from Iraq.  Groups in Afghanistan reject the nation that they belong to that country.  India and Pakistan continue to dispute their ownership of Kashmir. 
 
In Africa, the retreat of the European colonial powers in the 1940s and 1950s did not, as hoped, signal a new era of African independence and national growth.  On the contrary, tribal and proto-national groups struggled with kleptocratics (Nigeria, the Congo) with idealogues (Sudan, Chad, Libya) and with racial groups (South Africa, Zimbabwe) but have been unable to forge a success story. 
 
In much of Africa, basic living conditions are worse after several decades of independence than they were under colonial rule.
 
Some elites in Europe, whistling past the graveyard of their constitutional effort, have compared their position to that of the founding fathers in the U.S. in the 1780s.  That comparison is telling.
 
While Hamilton, Madison and Jay played a leading role in persuading the people to accept the U.S. Constitution, the people they set out to persuade had within them at least the semblance of nationhood.
 
The American nation in 1789 was mostly Christian, mostly English speaking and mostly familiar attuned to a cultural identity that was English-American.  That nation had recently emerged from a long struggle with Great Britain and was united, emotionally and economically, around the common interest of nationhood.
 
None of these factors are present in Europe.  There is no shared language.  There is no shared sense of identity.  There has been no shared struggle and there is no shared economic or emotional need for unification.
 
Elites have tried to persuade Europeans that unification makes sense, but nationalism is not born out of reason but out of history. 
 
Austin Bay offers a provocative, but perhaps more realistic alternative, when he suggests that the U.S. should offer NAFTA membership to Holland, Ireland and the United Kingdom.  By uniting North America with the leading western market economies of Europe, we could extend the benefits of economic integration to these peoples without asking them to trade their national sovereignty.
 
That approach, at least, avoids the quagmire that now besets Europe: a half-integrated economy consisting of 25 separate nations whose people are unwilling to leverage their national identities and a political leadership that seems not to care that they are swimming against the tide of history. 
9:43 am edt 

Wednesday, June 1, 2005

Arthur Andersen Conviction Reversed
In a unanimous decision, the U.S. Supreme Court has reversed the conviction of Arthur Andersen LLP on charges of corruptly tampering with a witness.  (Arthur Andersen LLP v. United States, 544 U.S. _____ (2005)). 
 
The Court held that the trial court's charge to the jury impermissibly permitted the jury to find the defendant guilty even if the defendant's actions had no dishonest intention.
 
The Arthur Andersen case was a political football from the onset and probabably never should have proceeded as it did.  
 
By trying to criminalize the actions of attorneys and other professionals who were complying with a corporate document retention policy simply because it had the effect of destroying documents the government's case made it impossible for future attorneys to advise their clients. 
 
If attorneys cannot admonish their clients to "[m]ake sure to follow the [document] policy" how can attorneys ever advise their clients in these matters?
 
While the hysteria that continues to pervade the public debate over public company financial reporting makes any intelligent discourse difficult, the reversal of Arthur Andersen's conviction is at least helpful.
 
Unfortunately, this very faint silver lining will do little to benefit the nearly 70,000 people who lost their jobs when Arthur Andersen was destroyed by the government's decision to push a bad hand in this prosecution. 
 
The Wall Street Journal has summarized it best:
Numerous senior Andersen alumni are arguably better off now than they were pre-Enron. Many partners took their clients and vamoosed to one of the remaining Big Four accounting firms, which averted their eyes from any Enron taint. Today their services are in even greater demand thanks to Sarbanes-Oxley and the rash of post-Enron government regulations. It's one of life's political ironies that the fallout from the corporate scandals has enriched the very accounting profession that Congress claimed it was attempting to punish.
 
The Andersen prosecution is an exception to what has otherwise been a good Bush Administration record in prosecuting corporate wrong-doing. The Justice Department needed a political scalp at the time, and it is certainly true that Andersen's senior partners had a lot to answer for. But putting the company out of business harmed the innocent as well and arguably let the most culpable escape.
8:18 am edt 


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Jonathan B. Wilson is an Atlanta attorney at the law firm of Taylor English Duma LLP.  Jonathan B. Wilson provides legal advice to investors, companies and business executives involving corporate law, securities law, SEC matters, intellectual property, website and Internet legal issues, start-ups, limited liability companies, partnerships, 1934 Act matters, outsourcing, strategic alliance agreements, contracts, and other matters of importance to growing private and publicly-traded companies.