Overlawyered: Chronicling The High Cost Of Our Legal System

Archive for October, 2005

Sentenced at Merrill Lynch

Tom Kirkendall wonders (Oct. 16) why a former energy trader who admitted that he stole $43 million from his employer, Merrill Lynch, just got a comparatively lenient sentence of 3 1/2 years, while former Merrill employee Jamie Olis (May 18, 2004), who “did not receive a dime from the [accounting hype] that is the basis of his alleged crime”, got 24 years:

Let’s see. Embezzle $43 million and, if you get caught, cop a plea and serve 3 1/2 years. Or, do your job, don’t embezzle a cent, defend your innocence against criminal charges even when your employer serves you up as a sacrificial lamb so that the employer can avoid criminal charges, and then endure either as long, or much longer, a sentence if you are convicted.

Correction: my foulup. As I should have remembered, Olis was a Dynegy, not a Merrill Lynch, employee. Tom K. does discuss the sentences handed out to two Merrill employees who, like Olis, were not alleged to have profited personally from their misdeeds.

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At DRI in Chicago Thursday

The Defense Research Institute has been kind enough to invite me to speak on two panels at its annual meeting in Chicago on Thursday. The first panel will touch on topics including litigation-curbing reforms (a topic on which DRI and I have been known to come down on opposite sides), while the second will discuss the changing role of state attorneys general. I know many DRI members read this site: if you see me at the conference, feel free to come up and say hello.

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Student: dorm’s ferret ban violates ADA

At Our Lady of the Lake University in San Antonio, 19-year-old freshman Sarah Sevick has filed a complaint with the U.S. Justice Department saying her rights under the Americans with Disabilities Act were violated by the dorm’s ban on her pet ferret, which she says she needs at hand to calm her during panic attacks related to a physical disability. (“Disabilities complaint filed after ferret banned from dorm”, AP/Houston Chronicle, Oct. 14). For more on claims to accommodation of companion animals under disabled-rights law, see May 5, etc.

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Florida self-defense

” When Florida passed a law in 1987 making it easier for citizens to get licenses to carry concealed firearms, opponents predicted that blood would run in the streets. ‘When you have 10 times as many people carrying guns as you do now, and they get into an argument and tempers flash, you’re going to have people taking out guns and killing people,’ one gun-control activist said.” But instead, Florida’s murder rate has been cut in half since then. “The warnings of gun-control advocates about that law were way off the mark. So when you hear them warn that another law concerning firearms will lead to unnecessary bloodshed in Florida, skepticism is in order.” The “stand your ground” rule is old hat elsewhere around the country, but the Brady Campaign doesn’t go around trying to scare tourists away from the many other states where it’s the law. (Steve Chapman, “Expanding the right to self-defense”, Chicago Tribune, Oct. 16).

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Tobacco: Supreme Court shoots down feds on disgorgement

Just in from SCOTUSBlog, an embarrassing defeat for the tobacco-industry-bashers in both Clinton and Bush administrations on one of their key retroactive-liability demands:

The Court’s refusal to hear the Justice Department appeal in U.S. v. Philip Morris USA, Inc., et al. (05-92) takes off the table in the government’s mammoth lawsuit against the industry the most significant punishment that could be imposed if the tobacco companies are found to have violated federal anti-racketeering law (RICO). The Court gave no explanation for its denial of review; there were no recorded dissents.

For more, see Jun. 21 and links from there.

P.S. As Ted reminds us, this was an “interlocutory” appeal, i.e. one taken before a final judgment, and the Justices almost never agree to hear appeals at that stage; they might still be willing to consider the issue after the court below reaches judgment. That the Justice Department pursued appeal at this stage at all is a part of the embarrassment (and indicates the degree to which the Department is bending to political pressure). More: Jacob Sullum, Oct. 21.

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“The Hidden Cost of Documentaries”

Why can’t you get a DVD of “Eyes on the Prize,” which Henry Louis Gates Jr., chairman of the department of African and African-American studies at Harvard, called “the most sophisticated and most poignant documentary of African-American history ever made”? Because there are 272 still photographs, scenes from eighty archives, and music—and if a single set of rights expire, fear of copyright litigation prevents the entire movie from being shown or distributed. “Today, anyone armed with a video camera and movie-editing software can make a documentary. But can everyone afford to make it legally?” (Nancy Ramsey, New York Times, Oct. 16). American University professors Pat Aufderheide and Peter Jaszi issue an extensive report describing the problem, but draw back from the obvious solution of liability reform, and thus make their recommendations toothless. “Educating gatekeepers about creators’ use rights” will have absolutely no effect so long as it will cost a documentary filmmaker less to pay for rights than to successfully defend a lawsuit against a rights-holder.

Comedian David Cross is learning this: he’s been sued by a nightclub owner who claims that Cross didn’t have permission to record him. Sub Pop Records, which distributed the Cross CD, claims that the permissions were granted.

See also Oct. 10 and links therein.

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Joys of bounty-hunting: internet sales tax

In Chicago, veteran class-action attorney Stephen Diamond has been profitably suing retailers that don’t collect state and local sales taxes from online customers:

Using a state whistle-blower law, Mr. Diamond since 2002 has filed about 95 suits in Cook County court here against retailers that failed to charge him taxes on Internet sales, alleging that they broke the law. In cases where the state of Illinois joins the suits and prevails, he is entitled to up to 25% of the financial damages, with the rest going to state coffers….

Because of settlement agreements between the retailers and the attorney general’s office, the state’s judges have agreed to keep the names of most of the retailers and the settlement amounts confidential.

The retailers, like their mail-order-catalogue counterparts, have in the past often taken the position that the responsibility for making sure sales tax is paid rests with the customer; disputes sometimes arise about whether a particular retailer has sufficient operations within a state to count as present within it for tax-collection purposes.

Mr. Diamond’s targets have included such firms as Wal-Mart, Office Depot and KB Toys. He has taken an interest in expanding his practice beyond Illinois to the three other states with laws allowing private citizens to enrich themselves this way, but his efforts in those cases have been less successful. After he filed about 30 tax suits in Tennessee, lawmakers there repealed their statute authorizing such suits, and passed the word to nearby Virginia which also repealed its similar law. That leaves Nevada, where he has filed 10 suits which the state attorney general has moved to dismiss. In Illinois, he would seem in little danger of being shut down any time soon: the office of state Attorney General Lisa Madigan, a key trial lawyer ally, has been willing to cooperate with his activities though disputing his right to as high a share of the booty as he would like. (Robert Guy Matthews, “Online Retailer Skips Sales Tax? You Might Sue”, Wall Street Journal, Oct. 14)(online subscribers only).

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One car crash…

…eight distinct and different negligent pockets parties, according to the victims’ suit following a fiery crash on the highway near Six Flags St. Louis theme park. All are at fault, said the Dodo, and all must have penalties. (William C. Lhotka, “Relatives file wrongful death suits”, St. Louis Post-Dispatch, Sept. 2)(via Brian J. Noggle, who comments).