Coyote Blog

Here they go again.  Another company is attempting to commit public relations suicide by blowing up the negative commentary of a small, low-traffic blogger into a national story.

An unlikely Internet frontier is Paris, Texas, population 26,490,
where a defamation lawsuit filed by the local hospital against a
critical anonymous blogger is testing the bounds of Internet privacy,
First Amendment freedom of speech and whistle-blower rights.

A state district judge has told lawyers for the hospital and the
blogger that he plans within a week to order a Dallas Internet service
provider to release the blogger’s name. The blogger’s lawyer, James
Rodgers of Paris, said Tuesday he will appeal to preserve the man’s
anonymity and right to speak without fear of retaliation.

Rodgers said the core question in the legal battle is whether a
plaintiff in a lawsuit can "strip" a blogger of anonymity merely by
filing a lawsuit. Without some higher standard to prove a lawsuit has
merit, he said, defamation lawsuits could have a chilling effect on
Internet free speech.

"Anybody could file a lawsuit and say, ‘I feel like I’ve been defamed. Give me the name,’ " Rodgers said.

The blog about problems at Essent Healthcare is here, called The-Paris-Site.

Interestingly, the hospital, owned by a company called Essent Healthcare, appears to be using the medical privacy act HIPPA as a bludgeon to try to stifle criticism.  To make a case against the hospital, general criticisms about poor care and medical mistakes are best backed up with real stories.  But the hospital is in effect saying that real stories can’t be used, since doing so violates HIPPA.  I don’t know if this is or is not a correct application of HIPPA, but it is a danger of HIPPA that I and others warned about years ago.  The hospital goes on hilariously about how they are not really worried about the damage to their reputation, but for the poor patients whose medical details ended up in the blogger’s hands.  Memo to health care workers in the future:  If you think the hospital screwed up my care, you have my blanket permission to release the details of said screw-up.

Before starting my own company, I have worked in a number of senior jobs at publicly traded companies and a few soon-to-be-f*cked Internet ventures.  In several of these cases, I and my fellow managers came in for pretty rough and profane criticism.  In many cases the posts were hilarious, positing well-oiled multi-year conspiracies from a management team that was just trying to survive the day.  Most of us were pretty rational about these sites – the more you try to respond to them, the more attention you give them.  The best response is to ignore them except maybe on Friday night when you can drink some beers and laugh out loud reading the commentary.  But there were always a few folks whose ego just got inflamed by the comments, even though they were seen by maybe 12 people worldwide.  They wanted to put a stop to the commenters.

I am sure that this is what is happening here.  Because any good PR person who has been in the business for more than 5 minutes would tell you that the worst thing you could do for a critic with a small audience is to a) turn them into a martyr and b) increase their audience about a million-fold.  These guys at Essent are just nuts, and in the heat of ego preservation are in the process of making a massive mistake.

I am reminded of TJIC’s response when a lawyer threatened to file a BS copyright suit against him:

With regards to your statement that you’ve been “looking forward for a
class action lawsuit on a case like this”, I, too, would enjoy such a
lawsuit. The publicity that we would derive from defeating your firm in
court over a baseless allegation of copyright infringement, brought
about by a law firm and a lawyer that does not understand the First
Sale doctrine, and which are entirely ignorant of the Supreme Court
case law on the topic, would be of incalculable value to us, and would
be a very cost efficient way to further publicize our service.

Hat Tip to Overlawyered for the link.

Update: The blogger appears to have been around since 2005.  The article said that as of June, or after about 2 years of operation, he had 170,000-ish page views.  He now appears to be at about 230,000 just three months later and only a few weeks after the story went public.  Q.E.D.

Update #2:  I forgot to include my opinion on the case.  There has got to be some higher legal bar to be cleared to strip the anonymity of a blogger than just asking for it to happen during discovery on a lawsuit.  If the legislature is not going to establish this bar, then a higher court is going to have to do so. 

Many of us remember the old Pepsi challenge commercials, where blind taste tests vs. Coke showed people preferring Pepsi.  One of the interesting results of these commercials was that Pepsi gained market share, but Coke did not lose it — much of the Pepsi market share gain came from other brands.  In essence, the commercials established in consumer’s minds that the cola choice was Coke or Pepsi, and so it did as much for Coke as it did Pepsi.

So now take this experience to anti-smoking commercials.  It turns out that they may backfire:

The more anti-smoking ads middle schoolers see, the more likely they are to smoke, according to a study in the August issue of Communication Research.
Hye-Jin Paek, an assistant professor at the University of Georgia’s
College of Journalism and Mass Communication, and Albert Gunther, a
professor of life sciences communication at the University of
Wisconsin at Madison, analyzed data from surveys that asked middle
school students about their exposure to anti-smoking messages and their
intention to smoke:

They found that, overall, the
more the students were exposed to anti-smoking messages, the more
inclined they were to smoke. The exception—where exposure to
anti-smoking ads correlated with a reduced intention to smoke—occurred
among students who said their friends were influenced by anti-smoking
messages.

In the context of other advertising research, such as the old Coke/Pepsi campaign, this is not surprising.  It is even less surprising for this type of ad, where a certain amount of anti-authoritarian response can be expected.  In fact, I have seen a number of ads that use this anti-authoritarian streak and distrust of the government as a feature.  Ads that say "The government doesn’t want you to know about X" or "What the oil companies don’t want you to know."

I wonder when the first member of the plaintiff’s bar will initiate a lawsuit against the tobacco companies for promoting teenage smoking by running… anti-smoking ads.

Patterico has a link to this interesting account of a week in the life of Jarek Molski, who makes a living from filing ADA suits (emphasis added):

For example, in Molski v. El 7 Mares Restaurant, Case
No. C04-1882 (N.D. Cal. 2004), Molski claims that, on May 20, 2003, he
and significant other, Brygida Molski, attended the El 7 Mares
Restaurant for the purposes of dining out. Molski alleges that the
restaurant lacked adequate handicapped parking, and that the food
counter was too high. After the meal, Molski attempted to use the
restroom, but because the toilet’s grab bars were improperly installed,
he injured his shoulders in the process of transferring himself from
his wheelchair to the toilet. Thereafter, he was unable to wash his
hands because of the lavatory’s design.

Although this complaint appears credible standing alone, its
validity is undermined when viewed alongside Molski’s other complaints.
In Molski v. Casa De Fruta, L.P., Case No. C04-1981 (N.D. Cal. 2004),
Molski alleges that he sustained nearly identical injuries on the exact
same day, May 20, 2003. In Casa de Fruta, Molski alleges that he and
significant other, Brygida Molski, patronized Casa de Fruta for the
purpose of wine tasting. On arrival, Molski was again unable to locate
van accessible parking. Once inside, Molski again found the counter to
be too high. After wine tasting, Molski again decided to use the
restroom, and again, injured his upper extremities while in the process
of transferring himself to the toilet. Thereafter, he was once again
unable to wash his hands due to the design of the lavatory.

This was, apparently, not the end of Molski’s day. In Molski v.
Rapazzini Winery, Case No. C04-1881 (N.D. Cal. 2004), Molski once again
alleges that he sustained nearly identical injuries on the exact same
day, May 20, 2003. Molski, again accompanied by Brygida Molski, claims
he visited the Rapazzini Winery for the purpose of wine tasting. Again,
Molski complains that the parking lot lacked adequate handicapped van
accessible parking. Upon entering the establishment, he discovered that
the counter was too high. After tasting wine, he again needed to use
the restroom. In the course of transferring himself from his wheelchair
to the toilet, he injured himself yet again. Thereafter, he was again
unable to wash his hands due to the lavatory’s design.

The Court is tempted to exclaim: “what a lousy day!” It would be
highly unusual — to say the least — for anyone to sustain two injuries,
let alone three, in a single day, each of which necessitated a separate
federal lawsuit. But in Molski’s case, May 20, 2003, was simply
business as usual. Molski filed 13 separate complaints for essentially
identical injuries sustained between May 19, 2003 and May 23, 2003. The
Court simply does not believe that Molski suffered 13 nearly identical
injuries, generally to the same part of his body, in the course of
performing the same activity, over a five-day period. This is to say
nothing of the hundreds of other lawsuits Molski has filed over the
last four years, many of which make nearly identical allegations. The
record before this Court leads it to conclude that these suits were
filed maliciously, in order to extort a cash settlement.

For several years, I have been wondering why punitive damage awards like this one, that punish a company for various misdeeds, don’t create a double jeapardy situation where defendents must pay over and over for the same "crime" (since the next individual suing also gets punitive damages).

Here’s the problem:  A jury in Texas already hit Merck with $259
million in punitive damages*.  This number was based on a lot of
testimony about Merck’s sales and profits from Vioxx, so it was
presumably aimed at punishing Merck for "errors" in their whole Vioxx
program.  So if that is the case, how can Merck end up facing a jury
again coming up with a separate punitive damage award for the same
"crime"?  Sure, it makes sense that Merck can owe actual damages to
individual claimants in trial after trial.  But how can they owe
punitive damages for the whole Vioxx program over and over again?
Aren’t they being punished over and over for the same misdeed,
violating their Constitutional protection against double jeopardy?

In the recent Supreme Court decision involving a judgment against Philip Morris, the SCOTUS didn’t really take this issue on, but did take on a related issue, arguing that punitive damage awards that take into account damages against more than just the defendant violate due process, since these other damages were not tried on the facts in that case.

Today, in a decision involving an astonishing $79.5 million punitive
damage award to the widow of an Oregon man who died of lung cancer
after smoking Marlboros for 42 years, the U.S. Supreme Court ruled
that a jury in a civil case may not punish a defendant for harm to
people who are not parties to the case. To do so, the five-justice
majority said,
violates the defendant’s right to due process because he cannot defend
against hypothetical damage claims by people who are not involved in
the lawsuit. Furthermore, the Court said, "to permit punishment for
injuring a nonparty victim would add a near standardless dimension to
the punitive damages equation." Although this makes sense to me, the
Court’s proposed solution—that juries may consider harm to nonparties
in judging the "reprehensibility" of a defendant’s conduct but not to
"punish a defendant directly" for that harm—seems untenable.

A few weeks ago I wrote about the changing relationship between attorney and client:

It used to be that clients would suffer some sort of injury and seek
redress in the courts.  To do so, they would hire an attorney to help
them.  The attorney was the hired help, compensated either hourly or
via a percentage of any awards.

Today, the situation is often reversed.  It is the attorney who is
identifying lawsuit targets for class actions and shareholder suits,
and then seeking out clients who can maximize his chances of success.
Clients, who typically make orders of magnitude less than the attorney
in class actions (think 50-cent coupons and $8 million attorney fees)
are selected because they are sympathetic, or give access to a
particularly plaintiff-attractive jurisdiction, or, in cases such as
ADA suits in California, because they have effectively become partners
with the attorney in serial torts.

At that time, the issue was Bill Lerach suing his clients for dropping him as attorney (Because, after all, it was really his lawsuit and not theirs).  This time, the issue is in a class action against Microsoft (emphasis added, via Overlawyered)

Judge Scott Rosenberg ruled Friday that Microsoft attorneys could
not ask the named plaintiffs about their relationship with attorney
Roxanne Conlin. The company’s lawyers wanted to question the
plaintiffs, arguing that Conlin had referred to them during jury
selection as "just regular people who bought software" and who
volunteered to step forward to sue Microsoft.

The lawsuit was brought by Joe Comes, a Des Moines businessman who
owns a chain of pizza restaurants, and Patricia Anne Larsen, a retiree
from northwest Iowa, and two business _ Riley Paint Inc. of Burlington
and Skeffington’s Formal Wear of Iowa Inc. of Des Moines.

Microsoft attorney David Tulchin said Larsen has been a friend of
Conlin’s since 1982, when Larsen held fundraisers for Conlin’s failed
run for governor. In 1999, Conlin represented Larsen in an employment
discrimination case against Larsen’s former employer, Eaton Corp.

Tulchin said Comes has been Conlin’s son’s best friend since high school.

Microsoft attorneys claimed Conlin recruited these friends to act as
plaintiffs in the case so she could sue the company and that her
comments during jury selection opened the door for Microsoft to
challenge the plaintiffs’ motivation in filing the lawsuit.

Who would even imagine such a thing?  In this class action, as in many, the class members will probably get coupons while Conlin makes millions.  Or, as Microsoft observes:

Tulchin claimed that Conlin and her co-counsel, Richard
Hagstrom of Minneapolis, have the most to gain in the lawsuit

Attorneys like Conlin know they are vulnerable on this

Conlin said Microsoft wants the jury to believe that class-action
lawsuits are attorney-driven cases brought for money when in reality
they are a way for individuals with small claims to come together to
take on large, powerful companies.

"Businesses like Microsoft have poisoned the public view of these
forms for seeking redress by spending billions of dollars to spread
propaganda. Now they seek to collect on their investment by improperly
suggesting to the jury that the plaintiffs are not real plaintiffs,"
she said.

You think?

Overlawyered today provides a link to this article in Roger Parloff’s blog at Fortune

The nation’s leading class-action lawyer, Bill Lerach, is currently in
an ugly scrape in federal court in Dallas, where the sole lead
plaintiff in a high-profile shareholder suit against Halliburton (HAL)
no longer wants Lerach or his firm to act as its co-lead counsel. (I’ve
posted about it before here and here.)
To recap, the fund has said that it is concerned about all the
distractions and the sleaze factor now surrounding Lerach and his prior
firm, Milberg Weiss Bershad Hynes & Lerach (which Lerach co-ran)…

The squeamish plaintiff, the Archdiocese of Milwaukee
Supporting Fund, has asked that Lerach Coughlin be replaced by David
Boies and his firm, Boies Schiller & Flexner, which firm has
indicated that it is ready, willing, and able to assume the role.

Needless to say, Lerach is fighting the uppity plaintiff to keep control of the case.

Parloff goes on to question some of Lerach’s statements in the case.  However, I want to make a different point.  This points out fairly clearly that Lerach and other top litigators have adopted a whole new theory of litigation and of the relationship between lawyer and client.

It used to be that clients would suffer some sort of injury and seek redress in the courts.  To do so, they would hire an attorney to help them.  The attorney was the hired help, compensated either hourly or via a percentage of any awards.

Today, the situation is often reversed.  It is the attorney who is identifying lawsuit targets for class actions and shareholder suits, and then seeking out clients who can maximize his chances of success.  Clients, who typically make orders of magnitude less than the attorney in class actions (think 50-cent coupons and $8 million attorney fees) are selected because they are sympathetic, or give access to a particularly plaintiff-attractive jurisdiction, or, in cases such as ADA suits in California, because they have effectively become partners with the attorney in serial torts.

So if you wonder why Lerach is suing his client for not using his services, and if that makes you wonder who is working for whom, now you know.

Update: By the way, this reversal of the relationship between attorney and client is one of the recurring themes in my novel BMOC.

This is a weird case, via Radley Balko:  A court issues a search warrant for a bullet, correctly stating the specific location to be searched and the reasons the bullet is needed.  No problem so far, but unfortunately, the bullet is inside someone and must be surgically removed.

In the middle of Joshua Bush’s forehead, two inches above his eyes,
lies the evidence that prosecutors say could send the teenager to
prison for attempted murder: a 9 mm bullet, lodged just under the skin.

Prosecutors
say it will prove that Bush, 17, tried to kill the owner of a used-car
lot after a robbery in July. And they have obtained a search warrant to
extract the slug.

But Bush and his lawyer are fighting the
removal, in a legal and medical oddity that raises questions about
patient privacy and how far the government can go to solve crimes
without running afoul of the constitutional protection against
unreasonable searches and seizures.

They go on to mention this problem:

Police then obtained a second search warrant and scheduled the
operation for last week at the University of Texas Medical Branch
hospital in Galveston. It was postponed again, however, after the
hospital decided not to participate for reasons it would not discuss.

Prosecutors said they continue to look for a doctor or hospital willing to remove the bullet.

Duh.  No private doctor or hospital is going to do this procedure.  Whoever removes this bullet is 100% guaranteed to get named on at least one lawsuit seconds after the procedure.  Even if they win the suit, the cost of defending themselves will outweigh anything they might get paid for the procedure.

Via Captains Quarters:

The fundamental attack on free speech that McCain-Feingold foisted upon America has finally received recognition
from the federal judiciary. Portions of the BCRA got struck down today
in a lawsuit filed by a right-to-life group, as a judge ruled that the
campaign-finance restrictions violated the First Amendment…

It’s not for nothing that many have termed the BCRA the Incumbent
Protection Act. The restriction on political speech that keeps groups
from buying advertising that names politicians violates the fundamental
reason for the First Amendment — to allow Americans to criticize their
elected officials. While the court did not recognize the entire
egregiousness of this BCRA provision, it did recognize that the idea of
never being able to name elected officials in advertising within 60
days of an election regardless of the nature of the reference is a
ludicrous standard.

A reader sent me this article on the new proposition F passed in San Francisco. 

Under the Sick Leave Ordinance, employers must provide one hour of paid
sick leave to an employee for every 30 hours worked. The Ordinance
limits the amount of paid leave to a maximum of 40 hours of paid leave
for “small businesses,” defined as employers who employ fewer than 10
employees, and of 72 hours of paid leave for larger employers.

Note that this applies to everyone — part time workers, day laborers, housekeepers, nannies, you name it.  Everyone gets an extra paid hour vacation for every thirty they work.

But Coyote!  How can you say its vacation – the law says sick leave.  Yes, I know, and I am sure supporters can fill any number of 30-second TV ads with heart-rending stories of people who got sick and needed paid time off.  But all of us who have actually worked in real jobs and real companies know how most sick days get used – they become extra vacation days.  Here is a guide to getting the most vacation possible out of your sick days.  For this reason, many companies have done away with the distinction of sick and vacation days and just call them "personal days."

But the law makes sure that employers can’t ask any of those nagging questions like "you don’t sound sick on the phone."  Because you don’t actually have to be sick to take paid sick leave in San Francisco. 

Proposition F, the “Sick Leave Ordinance,” also expands existing state
law “kin care” requirements so that covered employees must be permitted
to use paid sick leave to care for siblings, grandparents,
grandchildren and a “designated person” of the employee’s choice.
Employees must be permitted to use any or all accrued paid sick leave for such kin care.

"Yep, old Uncle Ed is sick again.  I won’t be coming in today but you still have to pay me."  And who’s to say "care" for uncle Ed shouldn’t include companionship in the form of some fishing.  After all, California recognizes a service animal designation for companionship only.

But just to make sure that the employer does not ask any nagging question when Uncle Ed needs care on nine Fridays in a row, the law includes this:

In addition, Proposition F prohibits an employer from taking any
adverse action against an employee who exercises his or her rights
under the Ordinance. An employee’s mistaken but good faith complaints
of employer violations of this Ordinance are protected. Any adverse
action by an employer against an employee within 90 days of the
employee’s exercise of a right under the Ordinance creates a rebuttable
presumption of employer retaliation….

The Office of Labor Standards Enforcement has authority to
investigate alleged violations of the Ordinance. If the Office
determines that a violation has occurred following an investigation and
hearing, it may order relief including reinstatement, back pay, the
payment of any sick leave unlawfully withheld and various
administrative penalties.

The Ordinance also permits civil actions by the Office of Labor
Standards Enforcement, the City Attorney, “any person aggrieved by a
violation” (the term could encompass affected employees but also any
person for whom the employee sought to care or aid), and “any other
person or entity acting on behalf of the public as provided for under
applicable state law.” The prevailing party may recover all “legal or
equitable relief as may be appropriate to remedy the violation”
including, but not limited to, reinstatement, back pay, the payment of
any sick leave unlawfully withheld, liquidated damages, injunctive
relief; reasonable attorneys’ fees and costs. Employees and plaintiffs’
attorneys who sue employers on behalf of similarly-effected employees
and the general public may be entitled to equitable and injunctive
relief, restitution, and reasonable attorneys’ fees and costs.

So, any violations by employees will be called "good faith" mistakes and are protected from any punishment.  Employers, on the other hand, are liable for penalties and lawsuits should they make even a good faith mistake.  Attempting to determine if an employee is cheating on his sick day designations will be treated as "retaliation" and punished.  Note that while the office of labor standards have investigation abilities, all the investigative actions listed in their purview are employer violations.  For example, there is language about employers reimbursing employees for sick days they should have paid, but where is the language about employees reimbursing employers for sick days taken fraudulently?

This is exactly how the unemployment system works.  There is a heavy state enforcement arm, but only aimed at fraud by employers, not employees. Pick any state unemployment office at random and look at their web site.  They will probably have a link for filing complaints.  When you click on it, you will quickly see that the complaints they accept are only for employer fraud or impostor fraud, not employee cheating.  In fact, as I wrote here about people taking vacation on unemployment, I was threatened with a lawsuit by an employee and with fines by the state agency in California for even suggesting that an employee was lying when he said he was "looking for work" (when I knew for a fact he was on a winter-long vacation in Mexico).

Unemployment insurance is a disaster for a seasonal business like mine.  As background, most of my employees are retired, and don’t really need to work.  They work for me in the summer, and then frequently take the winter off.  Unfortunately, some of the more unscrupulous ones will file for unemployment over the winter, telling the state office they are looking for work (usually a requirement) when in fact they have no intention of working.  I had two employees last year for whom I received a notice of their unemployment filing the very same day they called me to tell me what a great time they are having over the winter fishing in Mexico.

For those who don’t know how it works, if I get a lot of unemployment claims I am punished with a higher rate the next year, despite the fact that by the nature of the business I have absolutely no work I can offer people in the winter.  Not surprisingly, I guess, my worst problems with such behavior are in the three Pacific coast states (CA, OR, WA) where the prevalent culture of big government benefits and limited individual responsibility combine to make people feel totally OK about such malfeasance  (this behavior is 20 times more prevalent for me in these three states vs. the other ten we operate in).  In fact, I have challenged several people who I knew were not looking for work and cheating me and the unemployment system and, rather than deny the charges, they threatened me with a lawsuit if I either reported them to the state or disciplined them in any way.

I’m not really going anywhere with this — this is just my annual rant I post every year when I get my unemployment insurance rates for CA and OR.  I pay over 6% of wages as premiums in CA, and there is not a thing I can do about the fact that all the facilities we run are under 10-20 feet of snow in the winter and don’t need employees.

Via Overlawyered, this is the hilarious account from a Doctor Hebert about finding out that he was suing Cisco.  He was a little non-plussed by this:

Did I want to sign up for the largesse, it inquired. It politely
offered me the option of declining, saying, "IF YOU DO NOT WISH TO BE
INCLUDED IN THE CLASS AND YOU DO NOT WISH TO PARTICIPATE IN THE
PROPOSED SETTLEMENT DESCRIBED IN THIS NOTICE, YOU MAY REQUEST TO BE
EXCLUDED." (The capitalization is theirs. I am not usually that
annoying.) Well, THANK GOD, I said. I can opt out of a lawsuit that was
filed in my name without my approval if I should have, well, you know,
scruples.

Except, as lawyers like to say, don’t neglect to
read the next sentence. And the next, and the next, and the next, and
the next. Somewhere in there is the  gotcha. "TO DO SO, YOU MUST SUBMIT
A WRITTEN REQUEST FOR EXCLUSION THAT MUST BE RECEIVED ON OR BEFORE
OCTOBER 31, 2006."

All right, now. I got the letter on
November 13, 2006. Admittedly the U.S. Post Office is slow, but I’ll
give them credit for getting a letter from the West Coast to
Mississippi in less than 14 days. Unfortunately, the letter was mass
mailed and thus bypassed the local post office. It bore no postmark. In
other words, I got the letter two weeks too late to opt out of the
lawsuit, and I had no postmark to prove it was intentionally mailed out
late to prevent me from refusing to participate. The old expiration
date trick. That was slick, Mssrs. Lerach, Coughlin, Stoia, Geller,
Rudman, Robbins, Levin, Papantonio, Thomas, Mitchell, Echsner, &
Proctor — real slick.

He is even more non-plussed to learn that he is in line for a check for $0.90, while the lawyers are in for $23.9 million.  I feel his pain.  I, for example, have been informed on several occasions that Visa and Mastercard, among others, are being sued in my name, though I never engaged anyone to do so.

Update:  Another huge fee for the attorneys, 50-cent coupons for customers class action is in the midst of an ugly fight over attorney billing rates – ironically in a cosmetics lawsuit alleging overpricing.

Among the alleged abuses were
bills of $195 an hour for work by paralegals who were paid just $30,
claims that attorneys and paralegals worked 24-hour or even 72-hour
days, and charges of $90 an hour or more for cleaning desks and
filing….

                           
                           
                              

According
to records filed with the federal court, individuals at one legal group
representing the class, the Law Offices of John Burris in Oakland,
billed as much as 72 hours in a single day for document review and, in
dozens of instances, billed for 24-hour days.

Of course the attorneys had a strong rebuttal to these revelations:

The lawyers accused of overstating their hours and expenses responded
by strenuously objecting to Judge Armstrong about the public disclosure
of their billing records, which the attorneys said were confidential.

"These very simple guidelines,
You can rely upon:
You’re gouging on your
prices if
You charge more than the rest.
But it’s unfair competition if

You think you can charge less!
"A second point that we would make
To
help avoid confusion…
Don’t try to charge the same amount,
That would
be Collusion!
You must compete. But not too much,
For if you do you see,

Then the market would be yours –
And that’s Monopoly!

That is from the Incredible Bread Machine by R.W. Grant.  And it seems to sum up the position of gasoline retailers given this story from Denver, where a grocery store chain was successfully sued for $1.4 million because it provided gasoline discounts to customers who bought over $100 of groceries.

Gasoline retailers can’t win. One day, they’re
accused of "gouging" us at the pump with outrageously high prices; the
next, they’re accused of "predatory pricing," which means giving us a
deal so good it’s illegal….

The effect of the $1.4 million jury verdict against Dillon Co.
means that two of its grocery chains, King Soopers and City Market,
will no longer give customers gas discounts based on grocery purchases.

Safeway wasn’t a defendant but it got the message and likewise
suspended its discount program at 43 of its fuel centers. Discounts
sponsored by other supermarket or big-box chains are also expected to
end.

The lawsuit was based on Colorado’s 69-year-old "Unfair
Practices Act," which prohibits selling a product "below cost." The law
is supposed to be enforced by the attorney general’s office, but the AG
hasn’t brought an action for years because of the near impossibility of
proving that gas sales are below cost when so many grocery products are
also involved.

But the law also permits private civil suits in which winning
plaintiffs are entitled to treble damages. The plaintiffs here were a
couple of independent gasoline dealers in Montrose spurred on by a
trade group representing the state’s independent petroleum marketers….

The theory behind predatory pricing laws is that a large
company will sell certain products below cost in order to drive out
competitors. Once the competitors are gone, goes the hypothesis, the
big company will jack up prices to a monopoly level.

The only problem is, this never happens. New competitors always
move fast into markets where prices are unjustifiably high.
Predatory-pricing suits are generally filed by existing companies
unable or unwilling to meet competition provided by more efficient
firms. Legal restrictions on cutting prices invariably work against the
consumer.

I pointed to a similar situation a while back in Maryland.  Thanks to Overlawyered for the pointer.

Yet another nutty jury has decided that it should be national policy to have warning signs every few feet on a railroad to warn trespassers against danger:

Jeffrey Klein and Brett Birdwell were 17 "when they trespassed onto
railroad property and climbed atop a rail car" because they wanted to
see the view from there. They were shocked by a 12,500-volt wire and
severely injured. The incident took place in Lancaster, Pa. but through
the miracle of forum selection the lawsuit against Amtrak and Norfolk
Southern landed before a jury in Philadelphia, a locality notably more
favorable for plaintiffs than Lancaster. An attorney said the railroads
should have posted signs for the benefit of trespassers warning of the
overhead hazard and also should have had the electricity turned off at
the time.

This is by no means the first such verdict.  I featured another here:

By the way, the exact wording on the complaint against the railroad is even better than I thought:

"The
[engineer] did not stop the train in a timely manner, and failed to
yield the right of way to a pedestrian walking along the tracks in
plain view"

A freight train’s topping distance is measured in miles, even with full emergency braking.

She and her attorney’s further argue:

that
the railroad was negligent for failing to post signs warning ‘of the
dangers of walking near train tracks and that the tracks were actively
in use

Lets leave aside the obvious point
about individual responsibility, and ask what would happen if this were
the legal standard, to have such signs.  To make sure someone saw one,
you would have to have one say every 30 feet.  Since there are just over 200,000 miles of freight railroads in the North America that works out to a bit over 35,000,000 signs that need to be posted.  At $100 per sign this would cost $3.5 billion.

With the proviso that I don’t know anything about the people involved, I will say this controversy seems to be about nothing. 

Maryland Lt. Gov. Michael S. Steele accused a leading Democratic
congressman yesterday of racial insensitivity for saying the Republican
candidate has "slavishly" followed the GOP.

Steele, an African
American running for the U.S. Senate, was reacting to remarks by House
Minority Whip Steny H. Hoyer, who characterized Steele this week as
having had "a career of slavishly supporting the Republican Party."

To say someone is "slavishly following" or showing "slavish devotion" is so common that I think you have to give the benefit of the doubt that the intention was not racial.  Here are some Google searches:

• Slavish devotion: 221,000
• Slavish supporter: 161,000
• Slavish follower: 49,900

This is perhaps the dumbest fake-racial-gaffe since the kerfuffle in Washington about the word "niggardly" or the airline passenger lawsuit against saying "eenie meenie minie moe."  I could not find even one article in a quick scan that seemed to have any racial context — these are merely very common phrases used in political discourse because they imply someone is somehow an unthinking tool of some organization rather than a person who thinks for himself.

By the way, it’s illuminating to see the Republicans play the race / political correctness card in the
heat of political battle just as fast as the Democrats would.  Which, ironically, seems to be just as fast as Democrats are willing to play the "Don’t vote for the gay guy" card, which is usually thought of as a Republican political tool.  Can anyone still believe that there is any real difference between the two parties?

From the Boston Globe today:

"We do not understand the natural internal variability of climate
change" is one of Lindzen’s many heresies, along with such zingers as
`"the Arctic was as warm or warmer in 1940," "the evidence so far
suggests that the Greenland ice sheet is actually growing on average,"
and "Alpine glaciers have been retreating since the early 19th
century, and were advancing for several centuries before that. Since
about 1970, many of the glaciers have stopped retreating and some are
now advancing again. And, frankly, we don’t know why."

When
Lindzen published similar views in The Wall Street Journal this spring,
environmentalist Laurie David, the wife of comedian Larry David,
immediately branded him a "shill." She resurrected a shopworn slur
first directed against Lindzen by former Globe writer Ross Gelbspan,
who called Lindzen a "hood ornament" for the fossil fuels industry in
a 1995 article in Harper’s Magazine….

For no apparent reason, the state of California, Environmental
Defense, and the Natural Resources Defense Council have dragged Lindzen
and about 15 other global- warming skeptics into a lawsuit over auto-
emissions standards. California et al . have asked the auto companies
to cough up any and all communications they have had with Lindzen and
his colleagues, whose research has been cited in court documents.

"We know that General Motors has been paying for this fake science exactly as the tobacco companies
did," says ED attorney Jim Marston. If Marston has a scintilla of
evidence that Lindzen has been trafficking in fake science, he should
present it to the MIT provost’s office. Otherwise, he should shut up.

"This
is the criminalization of opposition to global warming," says Lindzen,
who adds he has never communicated with the auto companies involved in
the lawsuit. Of course Lindzen isn’t a fake scientist, he’s an
inconvenient scientist. No wonder you’re not supposed to listen to him.

My position on global warming and the state of global warming science is here.

I think it was George Carlin (?) who used to ask "Do you know what the worst thing is that can happen when you smoke marijuana?" His answer was "Get sent to prison".  The implication, which I have always agreed with for most drug use, was that it is insane as a society to try to save someone from doing something bad to himself by … doing something worse to him.

I think of this whenever I get in a discussion about security responses to 9/11.  The worst thing that can happen to this country as a whole  (as differentiated of course from the individual victims of 9/11) is to turn the country into a police state to combat potential future terrorist actions.  I personally would greatly prefer to live with a 1 in 100,000 chance of being the victim of terrorism than find myself living in an America that has abandoned its constitution.  I wrote more on this topic here.

To this end, though I tend to be slow to believe these type of stories, this one (via Reason) about domestic NSA wiretapping is pretty frightening:

AT&T provided National Security Agency eavesdroppers with full
access to its customers’ phone calls, and shunted its customers’
internet traffic to data-mining equipment installed in a secret room in
its San Francisco switching center, according to a former AT&T
worker cooperating in the Electronic Frontier Foundation’s lawsuit
against the company….

The source is just one low-level guy, so this story is still pretty soft.  I hope the investigation is allowed to play out.

A guy in Lodi, California seems to have discovered the lawsuit-equivalent of perpetual motion by suing himself (via Overlawyered)

When a dump truck backed into Curtis Gokey’s car, he decided to sue the
city for damages. Only thing is, he was the one driving the dump truck.
But that minor detail didn’t stop Gokey, a Lodi city employee, from
filing a $3,600 claim for the December accident, even after admitting
the crash was his fault.

Wow, up to this point, you needed an accomplice for this kind of thing, but now you can just do it yourself — hop in the company car, run it into your house (or maybe the wife and kids for a really big payday) and sue the company.  Genius.

Oakland is fed up with high school kids that litter, throwing the lunch wrappers from their Big Mac on the ground rather than putting them in the trash.  The city is arguing that these folks’ inconsiderate littering is making a mess of the town and costing the city a fortune in clean up.  The city wants to send a clear message to its kids that this is not going to be tolerated and they expect people to take responsibility for this, so the City Council has boldly passed a new law to … tax McDonalds to clean up after the little darlings.

So City Council Member Jane Brunner is proposing to charge major fast
food restaurants a fee of $2,400 to hire crews to pick up garbage
around town. She says a study shows fast food restaurants account for
20-percent of Oakland’s litter.

Vince Thomas, Kentucky Fried Chicken franchise owner: "I don’t have any control over it once it leaves my lot."…

The Restaurant Association reminded the council it could be getting itself into a discrimination lawsuit.

Johnnise Downs, California Restaurant Association: "Because it singles
out and penalizes one specific group of businesses, and basically
places the entire burden of Oakland’s litter problems on those
businesses."

You know what this reminds me of?  It’s as if parents were frustrated that their kid never cleaned up after himself and always left messes around the house, so they choose to deal with it by hiring a maid to clean up after him.  What about actually, you know, enforcing litter laws.

By the way, here’s another question.  We all know how little of the tobacco settlement that was ostensibly to fund health care actually went to health care.  I wonder in this case how much will actually go to incremental trash pickup and how much will just be dumped into general revenue.

Those on the left and the right often try to laugh off libertarians, ascribing to "paranoia" our fear of the power of government. 

Well, I could argue that if this is paranoia, I share a similar phobia with men like Thomas Jefferson and James Madison, whose fear of government power permeate all their writings, as well as the Constitution they helped to produce.  They believed that even good men could be corrupted by the government, and they were proven correct in an incredibly short time by John Adams.  Adams is by all accounts a good man, dedicated to freedom and democracy, and one of the chief intellectual architects both of the Revolution and the Constitution.  But it was Adams that signed into law the Alien and Sedition Act, perhaps the worst piece of illiberal and unconstitutional legislation in the history of this country.

Or, if I didn’t want to make the founding father’s / original intent argument, I could just point to this (hat tip Marginal Revolution):

A federal judge in Texas, calling the Federal Deposit Insurance Corp. a "corrupt
agency with corrupt influences on it," awarded a Houston financier $72 million
to cover his legal fees in a decade-long suit involving a failed savings and
loan and the government’s efforts to take control of a stand of endangered
California redwood trees in the 1990s.

The FDIC, a regulatory agency that insures deposits at banks and
savings and loans, filed suit against Charles E. Hurwitz in 1995, seeking to
collect more than $800 million because Hurwitz indirectly controlled a Texas
S&L that failed in 1988. The FDIC, after a series of legal setbacks, dropped
its suit against Hurwitz in 2002….

On Tuesday evening, Hughes issued a scathing, 131-page ruling. In it, he cited
evidence that the FDIC brought the case largely because of pressure from
environmental groups, members of Congress and the Clinton administration. The
reason: Hurwitz’s Pacific Lumber Co. owned 3,500 acres of endangered redwoods in
Northern California. Hughes found that the FDIC, in close concert with
environmental groups, sued Hurwitz to pressure him into a "debt-for-nature"
swap, in effect giving the government his trees in exchange for his supposed
liability in the failure of the United Savings Association of Texas….

Hughes said FDIC officials and lawyers, in depositions, "ranged from
manipulative evasiveness to plain perjury." He cited records of two years of
communications, including extensive discussions of legal strategy and political
matters, between the FDIC and environmentalists over the proposal to use a
banking-practices lawsuit as pressure on Hurwitz to give up the
redwoods.

Hughes said FDIC officials "discarded the mantle of the American
Republic for the cloak of a secret society of extortionists. If the vice
president called, they responded. If a congressman called, they responded. If a
lobbyist called, they responded. They heeded every call but that of duty and
honor."

Wow.  I know many people are paranoid about the lack of accountability of major corporations, and felt vindicated by the Enron case, over which the press spilled acres of ink.  However, Enron is nothing compared to this.  While fraud is bad, Enron at least was never able to use the coercive regulatory and police power that the government has to seek its ends.

I could fill this blog with litigation horror stories, but there is no need when Walter Olson does such a good job.  If you read his blog much, one of the themes than runs through the cases he highlights is the ever widening search in every case to find the deep pockets.  Unfortunately for trial lawyers, the person who is truly at fault, ie the drunk driver that runs down a pedestrian, seldom has deep enough pockets to produce a really satisfying fee.  So you gotta be creative.  This is to be expected.  What is not to be expected is the lengths to which the judicial system goes to validate this search (via Overlawyered):

The state Supreme Court has ruled that store owners can be sued for causing
injuries in a drunken driving accident if they sold gas to an intoxicated
driver.

The court ruled in a lawsuit filed by two men who were severely
injured in 2000 when they were struck head-on by Brian Lee Tarver, who later
pleaded guilty to vehicular assault and driving under the influence.
Before the accident, Tarver bought gas at an Exxon owned by East
Tennessee Pioneer Oil Company.

Fortunately, I guess, Exxon is used to getting sued for damages by drunk drivers. 

This case I wrote about previously is one of the best examples I have seen of how liability goes to the deep pockets, not the guilty:

Car veers into
truck’s lane…and so a jury has ordered the trucking company, Auction
Transport Inc., to pay $22.5 million over the resulting injuries to a
young passenger in the accident, which occurred at rush hour on Kansas
City’s I-435. Mary Coleman’s car, allegedly sideswiped by a third
vehicle, had careened in front of the truck, but attorneys argued that
the truck driver had been "driving too fast in congested traffic and
not watching the road." The jury found the trucking company responsible
for just less than half the fault of the accident — a greater share of
fault than the allegedly sideswiping driver — and Coleman for hardly
any of it.

So, surprisingly enough, three
vehicles involved, two with limited resources and one with deep
pockets.  Guess who is liable – the deep pockets of course, despite the
fact that he was the only driver among the three who stayed in his lane!

Now, here is the thought experiment.  Move the truck with
deep pockets into any of the other two roles.  Imagine first that it
was the car that nudged the plaintiff into the other lane.  Imagine
next that the truck was the one nudged into oncoming traffic and hit
the plaintiff.  In these two cases, if they had gone to trial, who
would have gotten the blame?  I would bet you that in either case, the
truck with the deep pockets would have been given most of the blame in
either of these cases.

So where is the fairness?  Why should blame be based on
bank account size, and not actual actions?  Is there anything more than
coercive wealth transfer going on here?  Does this constitute justice?

Law

The town of New London, CT, is assessing nearly 5 years back rent on Susette Kelo and other property holders whose land the Supreme Court recently allowed the city to confiscate.  As it stands, if New London has its way, Kelo will not only lose her house, she will also be wiped out financially, all for the crime of owning the land where New London wanted condos and hotels.

The U.S. Supreme Court recently found that the city’s original seizure of
private property was constitutional under the principal of eminent domain, and
now New London is claiming that the affected homeowners were living on city land
for the duration of the lawsuit and owe back rent. It’s a new definition of
chutzpah: Confiscate land and charge back rent for the years the owners fought
confiscation.

In some cases, their debt could amount to hundreds of thousands of dollars.
Moreover, the homeowners are being offered buyouts based on the market rate as
it was in 2000...

The New London Development Corp., the semi-public organization hired by the
city to facilitate the deal, is offering residents the market rate as it was in
2000, as state law requires. That rate pales in comparison to what the units are
now worth, owing largely to the relentless housing bubble that has yet to burst.

"I can’t replace what I have in this market for three times [the 2000
assessment]," says Dery, 48, who works as a home delivery sales manager for the New London Day . He soothes himself with humor:
"It’s a lot like what I like to do in the stock market: buy high and sell low."

And there are more storms on the horizon. In June 2004, NLDC sent the seven
affected residents a letter indicating that after the completion of the case,
the city would expect to receive retroactive "use and occupancy" payments (also
known as "rent") from the residents.

In the letter, lawyers argued that because the takeover took place in 2000,
the residents had been living on city property for nearly five years, and would
therefore owe rent for the duration of their stay at the close of the trial. Any
money made from tenants, some residents’ only form of income, would also have to be
paid to the city….

An NLDC estimate assessed Dery for $6,100 per month since the takeover, a
debt of more than $300K. One of his neighbors, case namesake Susette Kelo, who
owns a single-family house with her husband, learned she would owe in the
ballpark of 57 grand. "I’d leave here broke," says Kelo. "I wouldn’t have a home
or any money to get one. I could probably get a large-size refrigerator box and
live under the bridge."

I want to barf.  Hat tip to Reason’s Hit and Run.

Yesterday I mentioned employment at will in this post about police officers who were fired for assaulting a handcuffed man and who successfully sued for wrongful termination.

Via George’s Employment Blawg comes this article on employment at will and things a small business should consider to reduce the possibility that fired employees will sue:

Here’s where things get tricky. In between employment at will and the law is a whole mess of claims, counterclaims, lawsuits, disputations and confusion. It’s enough to make anybody scratch their head.

We have had several instances where employees have threatened legal action over termination.  I have observed at least three reasons for this:

• Employees sometimes have a skewed view of the termination process, thinking that a company must hold to some kind of courtroom "beyond a reasonable doubt" standard in amassing reasons for termination.
• The most inept employees never seem to know that they are inept
• Some employees are far more adept at working the system than they are at their jobs.

We do several things to help make things go smoother:

• Unless the violation was outrageous, where we fire on the spot, we try to give employees written warnings and coaching before they get terminated
• Every new employee signs a 60/90 day probationary period letter.  If there are problems, they almost always occur in the probation period — ie they turn up quickly — and the probationary period gives us more leeway to quickly terminate.  Update:  This article says why this policy can be a mistake, or at least you have to be careful with it.  This is less of a problem for us since most of our employees only work a 5 month season anyway.
• We don’t give references.  I have said that this makes me feel guilty, but negative references about fired employees are a big source of litigation, and frankly, I am sorry to admit, the treat of wrongful termination suit is greatly reduced if the ex-employee finds a good job somewhere else.  Kind of the business version of hot potato.
• Being a seasonal business saves us.  For many employee problems, we limp along until the end of the season when we can terminate the person for lack of work, then we make sure not to rehire them in the spring.

Update: Via Overlawyered, this story in the New York Post (gotta love the headlines) about a teacher fired 17 years ago and still filing suits:

But the Clifton, N.J., instructor never got over it. Instead, he has filed 15 lawsuits in Manhattan federal court and three others in Brooklyn and New Jersey courts, seeking reinstatement and millions of dollars in damages.

Each lawsuit has been tossed out as meritless. But a defiant Malley hasn’t gotten the message or doesn’t care.

I must be going crazy.  First this, and now comes this story, via Overlawyered.com:

A former Inglewood police officer [Jeremy Morese] who was fired for punching a black teenager and slamming him against a patrol car was awarded $1.6 million Tuesday by the jury in a discrimination lawsuit he and his partner brought against the city [note that the teenager was handcuffed at the time]

OK, we won’t even get into the fact that employers should be able to fire "at-will" employees for just about any old reason.  How, though, have we gotten to a world where a police department can’t fire an officer who abused a handcuffed man? 

It gets better, though:

the jury was unanimous in awarding $810,000 to Morse’s partner, Bijan Darvish, who had been disciplined in connection with the 2002 incident.

Darvish was suspended 10 days (presumably without pay) for falsifying a report to cover up for his partner’s abusive actions.  Ignore for a moment whether a 10 day suspension is the right punishment for his actions (I would have fired the guy), but ask – how is $810,000 proper recompense for a 10 day suspension, even if the suspension was totally invalid?  The main damage was lost pay — but on this basis the $810,000 for 10 days pay would represent $29,565,000 for a whole year.   I guess I need to quit my job and go sign up as a police officer in Inglewood, because they sure as heck make more money than I do.

By the way, if I was an African-American, I would sure as hell stay away from Inglewood, or any other community that pays million dollar rewards to cops that beat the hell out of black people.

My company operates campgrounds and other recreational facilities on government lands, and the US Forest Service is our most important partner.  We work day-to-day with about 20 or so district rangers, who are the front-line general managers of the Forest.

My observation over time is that USFS district rangers have a nearly impossible job.  By their enabling legislation, the USFS is tasked with balancing logging, mining, ranching, recreation, forest health and environmental stewardship in running the forest.  In our modern day age of uncompromising special interests and conflict resolution by lawsuit, it is absolutely impossible to make any decision  without sending some party scurrying to the courts.  In particular, environmental groups have become expert at tying up any decision in court, and attempting to block any of the other competing interests.

The current Administration has introduced new rules intended to make this job easier.  As reported in the New York Times via the Commons Blog,

Forest Service officials said the rules were intended to give local foresters more flexibility to respond to scientific advances and threats like intensifying wildfires and invasive species. They say the regulations will also speed up decisions, ending what some public and private foresters see as a legal and regulatory gridlock that has delayed forest plans for years because of litigation and requirements for time-consuming studies.

I hope this is true, because I feel for front line forestry personnel who joined the service mostly because of their love of the outdoors and the environment, and have been forced instead to become amateur lawyers.  However,  I doubt much will change.  I think that intelligent planning and negotiation may be gone forever in working on environmental issues in favor of litigation.

This post could also be titled Reason #634 to be scared of doing business in California.  In a frightening trend, California passes yet another law giving citizens and their lawyers seeking unearned windfalls to police small, picky violations of regulations by filing large and expensive-to-fight suits (see also sue-your-boss law)  From the central Californian Santa Maria Times the story of Jarek Molski, who makes a very good living for himself suing public businesses over tiny, technical ADA violations:

Molski’s suit against the Hitching Post in Casmalia alleged a wheelchair ramp was too steep, and the bathroom wasn’t accessible because the toilet was a half inch too close to the wall; and the sink was three inches too high, and the soap dispenser was too high.

What do such picayune violations cost?  Mr. Molski averages a $20,000 settlement in such cases, though usually demands much more at first.  And, by the crazy Unruh law in California, targets get no time to redress these faults before up to $4000 per day per violation can be extorted sued for.

So is this an isolated incident?  Well, Mr. Molski is but one person in the ADA lawsuit business, and

As of Friday, 528 cases were listed under Molski’s name in federal civil courts

Without reasonable standards, and with huge gains to be made for picayune rules interpretations, one victim summed it up this way:

"I’ve talked to about five people in Solvang and Cambria who have been sued twice in the last year," Stricklin said. "They’re stuck. Unless you close your doors, somebody else can come along and sue you, and that’s why we’re fighting. If they can see that we’re not going to roll over and settle, they’ll think twice about going to trial."

My Proposal

So, I would like to propose my own Unruh II law.  I propose that in California, every citizen now has the right to sue any other person they observe violating any sort of traffic law.  If you observe someone speeding, doing a rolling stop at a stop sign, failing to signal a lane change or turn, with a burned out tail light, not wearing a seat belt, jaywalking, etc, you may now sue them for $4000 per occurrence. 

Coming in future posts, I will propose Unruh III to empower citizens to sue over health code violations, Unruh IV to empower citizens to sue over fire code violations, and Unruh V to sue anyone for any reason if they have a net worth higher than you do.