January 9 roundup

  • Maker of Steinway pianos threatens legal action against owners who advertise existing instruments for sale as used Steinways if they contain other-than-factory replacement parts [Park Avenue Pianos]
  • When the Securities and Exchange Commission settles with defendants, it extracts gag orders forbidding them to talk about the experience. Is it constitutional for the government to do that? [Peggy Little, New Civil Liberties Alliance/WSJ] Update: Cato is suing about this on behalf of former businessman who wants to write book about his experience in court against the SEC [Clark Neily]
  • Judge preliminarily enjoins New York City ordinance requiring home-sharing platforms like AirBnB to turn over to authorities “breathtaking” volume of data about users [SDNY Blog]
  • U.S. Chamber’s top ten bad lawsuits of 2018 [Faces of Lawsuit Abuse] “The Most Important Class Action Decisions of 2018 and a Quick Look at What’s to Come” [R. Locke Beatty & Laura Lange, McGuire Woods]
  • “Small aircraft engines are much less reliable than automobile engines. Why? Well, they all must be FAA certified, and it’s not worth the cost to certify, say, a new model of spark plug.” [John Cochrane, who gives HIPAA and military examples too]
  • “Why logos and art are sometimes blurred on reality TV shows” [Andy Dehnart, Reality Blurred, 2017]

28 Comments

  • Interesting re: aircraft engines.

    Shouldn’t issues like that keep FAA poobahs up at night?

    • As a comment on John Cochrane’s linked article pointed out, some years ago the FAA did authorize a new category of aircraft, which has demonstrated the deficiencies of the ancient Part 23 General Aviation (GA) aircraft and engine rules by flourishing.

      The new category is Light Sport Aircraft (LSA). There are now hundreds of LSA aircraft and engine designs in service which in no way conform to Part 23 GA rules. Their reliability is at least as great as that of GA aircraft, their range, load capacity and speed greatly exceed small GA aircraft as well..

      The unfortunate limitation on LSA aircraft is that their weight cannot exceed 600 Kg, about 50 Kg more than the maximum takeoff weight of the original 1938 Piper J3 Cub.

      This limits interest in LSA aircraft. But LSA enthusiasts have developed and produced excellent aircraft with far greater load capacity (by lowering airframe and engine weight, and increasing engine power), to produce far greater ranges, speed and load capacity than the Piper Cub or its cousins.

      Were the 600 Kg limitation removed, LSA aircraft might become the new GA, and the old GA aircraft would become museum pieces like the original Wright Flyer.

  • RE; SEC gag orders. The answer is no–it is not constitutional. What are they going to do if someone breaks the gag order?

  • An update: Cato is suing about this on behalf of a former businessman who wants to write a book about his experience in court battling the SEC.

    https://www.cato.org/blog/cato-sues-sec-over-gag-orders

    • It will be interesting to see what effect, if any, this has on gag orders such as those imposed in Wisconsin in the John Doe case.

      The issue also extends to things like bank examination reports/records.

      There is a lot more than meets the eye to this litigation.

  • In re piston aircraft engines . . .

    Yes, they are less reliable, but the issue goes beyond regulation. The biggest factor is that aircraft engines typically run at very high power settings, typically 65% or more of fully rated output. To complicate matters, the engine is directly connected to a propeller, spinning at 1600-2400 rpm. These two factors alone impose tremendous stress on the engine, very much exceeding in an hour or two of operation what the typical automobile engine sees in its lifetime.

    Compare the typical automotive engine with its cousin, the racing engine. An automotive racing engine at the NASCAR level runs at full power for just a few hours, and is then entirely rebuilt. It’s very rare for field of competitors to finish a race without multiple engine failures among the 40 or so cars in the race.

    Is there room for improvement in aviation piston engines? Sure. Much of it is happening in experimental aircraft, which are subject to much less regulation. Aircraft engine manufacturers, I suspect, are fine with the status quo, thanks to the General Aviation Revitalization Act of 1994. Any new innovations are sure to invite an 18-year round of liability lawsuits.

    As far as aviation is concerned, plenty of blame can be placed at the feet of the courts and tort law in addition to any blame directed at the regulatory regime.

    Kind regards,
    CS

  • Re: SEC.

    I don’t see this as a first amendment issue. Rather, I see it as a contracts issue. Settlements, after all, are contracts. If one wants to talk, don’t settle. If enough people choose not to settle because of the non-disclosure clause, the SEC will change how it operates. If the CATO objection is upheld it could have serious side affects. Take, for example, national security contracts. If what the SEC is doing, what prevents Lockheed-Martin from revealing state secrets?

    While the government cannot unilaterally take away a constitutional right, certainly someone may allow to do something that would otherwise be unconstitutional. For example, one can always allow a police officer to search one’s vehicle, even though there is no probable cause. But, you argue, there is coercion. Ok. What about a plea agreement giving up one’s right to a jury trial. Certainly, there is coercion there, given that the prosecutor can (and usually will) use overcharging as leverage.

    • I think you elide a number of key points:

      (1) The government is holding out a benefit, i.e., settlement on agreement to a gag order–in other words, the issue is whether the government can condition its response to alleged wrongdoing on the basis of whether the target will keep quiet. So this is different from a jury trial—could the government decide that it will only settle with women and not men?

      (2) Classified info can be protected without infringing on First Amendment rights, as protection of such info has been upheld.

      (3) The government has no legitimate interest in keeping a lot of this stuff secret.

      (4) What is the government’s remedy here? Vacatur of the settlement?

      (5) Isn’t a better analogy a prosecutor conditioning the dismissal of charges on the waiver of the right to file a civil lawsuit against the cop? (Something fraught with problems, by the way.)

      • SP,

        1. This is not the same as discrimination based on sex. A settlement is a benefit, for sure. But US governments (federal, state, and local) withhold many benefits until someone gives up a right. you can’t go on parole without giving up your right to not be subject to unreasonable searches, for example. You might not be able to be released on bond unless you agree not to drink alcohol or leave the jurisdiction. I guess what matters is whether there is undue coercion.

        2. Why is classified information any different than unclassified information for our purposes?

        3. It is irrelevant for constitutional purposes that there is no legitimate government interest. This is a contract. It is relevant for the purposes of policy (and I believe the policy is bad).

        4. Yes. That is, apparently, what the aggrieved persons seek to avoid.

        5. No. That is another example, but I am not sure it is better than a plea agreement.

        • Classified information is different because it is, and that should be self-evident. Classified information relates to the security of the nation itself, and the government has the right (and duty) to protect it. That’s far different from a gag order that says, among other things, that a person cannot deny wrongdoing. And what’s the argument–the fact that the government can protect classified information means that it gets to keep its hardball tactics from public view? The law is wee bit more nuanced than that.

          Parole is, of course, a much different animal. Parolees obviously have free speech rights, and I doubt that parole could be revoked because someone said, “I didn’t do it.” (Of course, someone denying that they did something could be a reason for denying parole, as it is evidence that they have not learned lesson.)

          I don’t think vacatur is really a practical solution for the government–the penalty for the wrongdoing is embodied in a judgment. Not sure that it can be ripped open.

        • The government owns the classified information. A company is given access to it with pre-agreed to limitations. That’s quite different than the government coercing you into not speaking about your own actions.

    • Here’s Cato’s position. If your boss hands you a contract and tells you to sign an NDA and agree to mandatory binding arbitration with a class action waiver or you’ll lose your job, that’s freedom of contract and how dare you think there’s any problem with this kind of coercion. But if the SEC hands you a settlement agreement, and you negotiate a deal and agree to its terms after receiving advice from your lawyers instead of taking a matter to court, well that must be stopped immediately.

      • I can’t speak to “Cato’s position,” so I’ll just describe mine. Private parties have a right to contract for confidentiality agreements, and that general right ordinarily extends into confidentiality clauses in settlement agreements.

        Government is different. When government wields prosecutorial power, it must submit to some transparency about its use of that power, and it may also not be entitled, the way a private party would, to play hardball in defense of its reputational interests.

        Thanks for the cheap shot at Cato, though.

        • Your position is consistent with freedom–at least in the classical sense. The contrary insinuation is just sophistry.

  • […] indirectly, any allegation in the complaint.” We noted that fact briefly in yesterday’s roundup adding the question: Is it constitutional for the government to do […]

  • but if you agree to settle, then obviously you’re guilty and why should you retain the right to claim innocence afterwards just because it’s a settlement? In fact, the government should play by those rules, i.e. any time they settle they should no longer be able to claim innocence… Goose, gander. 😀

    • No, a settlement is not a criminal plea deal. Companies settle civil cases all the time while maintaining denials of any wrong doing.

  • In re Steinway and as a nod to the aircraft:

    There likely are a lot of replacement parts on those old Cessna 152’s and 172’s. If all those parts aren’t original Cessna parts, or rebuilt / repaired / restored in an official Cessna MRO center, does that suddenly mean the airplane is question is no longer a Cessna?

    No. Its still a Cessna 152 or 172. Always was, always will be.

    Same goes for a Steinway piano similarly maintained or rebuilt.

    • No Name Guy wrote on January 10, 2019 1:08 PM:

      No. Its still a Cessna 152 or 172. Always was, always will be.

      Same goes for a Steinway piano similarly maintained or rebuilt.

      Your assertion is the subject of a longstanding paradox or thought experiment dating at least from Heraclitus and Plato. It is known as The Ship of Theseus.

      You will find it described here: https://en.wikipedia.org/wiki/Ship_of_Theseus

      • The cells in your body are constantly being replaced. Will you still be you tomorrow?

        • Will you still be you tomorrow?

          I don’t know. As a great philosopher once said, it’s tough to make predictions, especially about the future.

          But I think it’s safe to say that Steinway has climbed out on a legal limb with a saw. The question is whether Steinway will saw off the limb, or saw off the tree.

          • “The question is whether Steinway will saw off the limb, or saw off the tree.”

            Steinway does seem to be headed for a Wile E. Coyote moment.

    • Ship Airplane Piano of Theseus?

      • Blah, blah, blah…philosophers.

        The same bunch that says two objects never collide since for any interval, there is always half way to go, the Dichotomy Paradox.

        Except philosophers fail to comprehend the mathematics of limit theorems. Or experimental Newtonian Physics in the simple experiment of their cheek slapping the palm of my hand.

        Philosophers being ignorant of math and physics? Perish the thought.

        😉

        In any event, Steinway is way off base on this.

    • There likely are a lot of replacement parts on those old Cessna 152’s and 172’s. If all those parts aren’t original Cessna parts, or rebuilt / repaired / restored in an official Cessna MRO center, does that suddenly mean the airplane is question is no longer a Cessna?

      There are lots of differences in your plane and piano comparison.

      In the case of a plane, we are talking about model numbers. We are talking about an item that by law has records of when parts are replaced, the make and the mfg of the part, the model number of the part, etc. If one found an old Cessna air frame (just the frame) and put new parts including wings, controls surfaces, controls, electronics, etc, you would have to disclose that the parts were not original Cessna parts as an original plane is worth more than one rebuilt with second market parts.

      In the case of a Steinway, the sound board and the pins are the central parts of the piano. Steinway (as to many manufacturers of pianos) jealously guard not only the casting process but the metal composition of the sound board. If you repair the piano using parts that are inferior to originals and then want to stick a decal on it saying “this is a Steinway,” you lying and arguably harming Steinway and their sound.

      A better analogy would be that if you found in a barn an old Pontiac GTO, fixed the exterior up with parts, replaced the engine, changed the chassis to a modern chassis, put new suspension parts on it, etc, you cannot call it a “numbers matching GTO.”

      You cannot call it an “original GTO.”

      If you replace the sound board and pegs in a Steinway with something other than licensed an official Steinway parts, you should not be able to call it a Steinway piano because it is not.

      It will not have the same sound, the same value or the same history as a true Steinway.

      • “A better analogy would be that if you found in a barn an old Pontiac GTO, fixed the exterior up with parts, replaced the engine, changed the chassis to a modern chassis, put new suspension parts on it, etc, you cannot call it a “numbers matching GTO.”

        You cannot call it an “original GTO.””

        That doesn’t really help Steinway here.

        In this case, the buyer who discovered he bought a restoration, rather than a numbers matching original, could sue the seller for fraud, but Pontiac would not have a valid cause of action to sue the seller.

        By the way, even if the restoration was done use all genuine Pontiac parts, this would still be a fraud.

        “It will not have the same sound, the same value or the same history as a true Steinway.”

        This is true, but it’s a matter of fraud between the seller and the buyer. Steinway has no case here.

        • Steinway has no case here.

          Of course they do MattS. People are using the labels and stickers by putting them on the sound boards to say “this is a Steinway.”

          That’s the same thing as fake Gucci bags or fake cell phones.

          Steinway has the right to protect their product from those whose actions would devalue it through false claims.

          • “Of course they do MattS. People are using the labels and stickers by putting them on the sound boards to say “this is a Steinway.””

            No, this case is NOT about people making fake Steinway pianos. It’s about people reselling real Steinway pianos that had been repaired/restored with aftermarket parts.

            “That’s the same thing as fake Gucci bags or fake cell phones.”

            No, reselling a real Steinway piano (or a Pontiac GTO) repaired/restored with aftermarket parts is in no way, shape or form, equivalent to manufacturing straight up forgeries of brand name products.

            Now, if someone is manufacturing aftermarket parts for Steinway pianos with Steinway logos on them (which the linked article suggests is happening), Steinway would have the kind of case against the manufacturers of the aftermarket parts, but they still don’t have a case against someone re-selling a genuine Steinway piano repaired/restored with those parts.

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