January 2001 archives, part 1


January 10 – Dangers of tax farming. Attorney Nicholas Panarella, billed as the “tax commando”, was hailed as a savior of big-city finances in the early 1990s: cities like Philadelphia would let him collect their delinquent taxes, he would keep a contingency fee for his “Municipal Tax Bureau” firm of between 15 and 33 percent, and everyone (except the people he dunned) would be happy. He also made himself into a huge source of donations and consulting fees for public officials, Democratic and Republican alike, and eventually sold his firm to municipal bond insurer MBIA. But last month the Philadelphia Inquirer reported that Panarella was expected to plead guilty to a felony charge of aiding and abetting a scheme to defraud the constituents of former Pennsylvania Senate Majority Leader F. Joseph Loeper, who resigned his seat after pleading guilty in October to obstructing a tax investigation. (Ken Dilanian, “Lawyer will admit playing felony role in Loeper case”, Philadelphia Inquirer, Dec. 13; U.S. Attorney’s office, E.D. Pa., news release, Oct. 24).

One of the reasons Panarella’s work proved controversial, per AP, was that (in good contingency-fee fashion) he tended to take extremely aggressive positions as to who owed his clients money and how much: “The company sent out 78,500 letters on behalf of New Jersey in 1995; at least half of the recipients owed the state no taxes.” Jurisdictions that signed up for his services included Detroit, Kansas City, Pittsburgh, Oklahoma and at least 35 others. (David Kinney, “Computers and can-do creativity: The new face of tax enforcement”, AP/Detroit News, Sept. 1, 1997; complaint by taxpayer Samuel Lonky raising the due process implications of letting a law enforcement official’s income depend on the severity of his enforcement efforts). Didn’t we learn from the Roman Empire about the dangers of contingency-fee tax collection, otherwise known as tax farming? (more on bounty hunting) (& letter to the editor, Jan. 16).

January 10 – Do as the Douglases do. Western Australia “couples are signing legally binding pre-nuptial agreements with ‘no-cheating’ clauses. Family lawyers refer to it as the Michael Douglas clause, after the film star’s pre-nuptial agreement, which promised wife Catherine Zeta Jones millions if he cheated on her.” Last month a newly passed law made pre-nuptial agreements legally enforceable in Australia. (Bruce Butler, “No-cheating clauses in pre-nuptials”, Sunday Times (Australia), Dec. 31; “Zeta-Jones ‘backs down over pre-nuptial terms’”, The Age (Melbourne), Oct. 9).

January 9 – Drive 60K miles, collect $273K. A jury has ordered DaimlerChrysler and one of its dealerships to pay $273,000 for not adequately bringing to a customer’s attention that the used car she was buying had had prior mechanical problems. “‘I am so happy. Now people will know that not all car dealers are honest,’ said Angela L. Pearn, 30, of Akron.” The dealership said Pearn had signed a document disclosing the prior repairs, but she testified that she just breezed through the stack of papers without paying attention to what she was signing, and the dealership had apparently held onto the lemon-disclosure form she had signed without providing her with a copy. Pearn’s attorney pulled the German-owned automaker into the case on the theory that it should have supervised its dealers more closely; he unsuccessfully asked for $50 million to teach the company a lesson. The car never actually broke down during its 60,000 miles under her ownership, but Pearn said there were times when she thought the brakes weren’t working properly. (Christopher Jensen, “Jury lets car buyer squeeze $273,000 from a lemon”, Cleveland Plain Dealer, Dec. 21).

January 9 – Dot-bomb blame. Following the NASDAQ rout of the past year, lawyers representing individual investors are going to be casting about for ways to shift their clients’ losses onto someone whose name ends with an Inc. Some may pursue claims against Wall Street firms whose analysts touted tech stocks, pointing out the conflict of interest to which many such firms are subject, when they receive investment banking and other fees from the same companies whose stock they recommend. (Gretchen Morgenson, “How Did So Many Get It So Wrong?”, New York Times, Dec. 31 (reg); “Sue to reverse your loss?”, CNNfn video, Jan. 5).

January 8 – Sen. Kennedy flies the trial-lawyer skies. Sen. Edward Kennedy (D-Mass.) has accepted private-jet rides from, among others, “a powerful Texas trial lawyer with a huge stake in bills limiting liability lawsuits. … Under a well-known campaign law loophole, Kennedy was able to use the luxury jets for a fraction of their actual cost … During a western fund-raising swing last year, Kennedy hitched a ride aboard a jet provided by prominent trial lawyer John Eddie Williams Jr. (Sept. 1, May 22, Oct. 12, 2000), whose successful Houston firm has been a leader in the high-stakes tort reform fight on Capitol Hill. … Kennedy in recent years used jets from Ness Motley Loadholt Richardson and Poole (Nov. 1, 1999, Oct. 6, 2000, July 17, 2000) whose partners have been active in the liability lawsuit battle, reimbursing the firm $4,856.” (Andrew Miga, “Ted K flies on wings of high rollers”, Boston Herald, Dec. 26).

January 8 – Postrel online. Reason editor-at-large Virginia Postrel, whose commentaries are often cited in this space, has launched a weblog commentary at her “Dynamist” site. Among recent items she’s added are links that help explain why it’s too facile simply to blame “deregulation” for California’s electricity crisis (USA Today, “Prices spike as Calif. bungles deregulation”, Jan. 3; Michael Lynch, “California Scheming”, Reason Online, Jan. 4). Postrel follows a number of well-known commentators who have who have embraced the weblog format, including Mickey Kaus and Andrew Sullivan.

January 5-7 – A judge speaks his mind. Following a one-car crash on the service road of the Grand Central Parkway in New York City’s borough of Queens, an injured passenger in the car sued Shu Cheuk Ng, a homeowner whose property abutted the parkway, arguing that leaves from trees on her property fell onto the roadway and that she had a duty to clean away those leaves before they became wet and developed into an accident hazard. Dismissing the case on a summary judgment motion as “wholly without merit”, Justice Arthur Lonschein described as “astonishing” the plaintiff’s contention that “liability may be placed on [Ms. Ng] on the grounds that she was observed and videotaped, one year after the accident, cleaning up leaves from the roadway in front of her property. ” The judge began his opinion as follows: “The nature of the plaintiff’s claim and the facts of the accident giving rise to the claim rests on the theory held by some cognoscenti at the bar (a theory not entirely without some foundation) that if an injury is severe enough, a case of liability can be made with creative lawyering to fit the facts of the accident whereby a generous jury will be given the opportunity to award substantial damages or that some insurance company for some unfathomable reason may offer to settle the case. The theory also rests on the proposition that the ‘unfortunate but unavoidable fact of life in the courts that cases are sometimes decided wrongly by both judges and juries’ and based upon that reality, insurance companies will sometimes settle a worthless liability case in order to avoid the possibility of a large verdict against its insured. (Orion Insurance Co. v. General Electric Co., 129 Misc. 2d 466, aff’d sub nom. US Aviation Underwriters, Inc. v. General Electric, 125 AD 2d 567 ‘for reasons stated by Justice Lonschein at Special Term’ app. dismissed 69 NY 2d 1037, lv. to app. den. 70 NY 2d 612.)” (Celestin v. City of New York, New York Law Journal, Dec. 12).

January 5-7 – “Boy faces jail for slapping girl’s bottom”. “A schoolboy who slapped a girl on the bottom for a joke is facing two years in a juvenile prison for sexual harassment. The 13-year-old girl, a classmate, did not complain but a teacher who saw the incident at Espanola Middle School in northern New Mexico reported it to the police. ” (Simon Davis, Daily Telegraph (London), Jan. 3).

January 5-7 – Ecology and economy. Notwithstanding an insta-campaign by the Sierra Club and some other groups to demonize Interior Secretary-designate Gale Norton as a “property rights advocate” (no! anything but that!) a growing school of thought is exploring the chances for compatibility between property rights and the interests of conservation. “Or as Aldo Leopold, conservationist and author of ‘A Sand County Almanac,’ once wrote: ‘Conservation will ultimately boil down to rewarding the private landowner who conserves the public interest.’” (Brad Knickerbocker, “Natural capitalism”, Christian Science Monitor, Jan. 4; “Environmental balance” (editorial), Jan. 4).

January 4 – Cribbage menace averted. Authorities have busted the cribbage-playing club that met regularly in Anchorage, Alaska’s American Legion hall. It seems they were gambling, which you mustn’t do in an establishment where liquor is served (if you do it at all). (Sheila Toomey, “Cribbage club on the street”, Anchorage Daily News, Dec. 21)

January 4 – “The Rise of Antisocial Law”. America has replaced the Hidden Law of custom, convention and ritualized conflict avoidance with today’s madly excessive legalism, argues Jonathan Rauch of the Brookings Institution in this Bradley Lecture before the American Enterprise Institute. The speech describes this website as “marvelous”. (Jonathan Rauch, “Courting Danger: The Rise of Antisocial Law”, AEI Bradley Lecture Series, Dec. 11; see George Will, “When Laws Replace Common Sense”, Washington Post, Dec. 22)

January 4 – Stressed out in New Hampshire. The state of New Hampshire’s Compensation Appeals Board has ruled that an employee of the state Department of Health and Human Services is entitled to workers’ comp benefits to cover job-related disability “caused by employment-related stress arising from her supervisor’s legitimate criticism of her work performance,” to quote the state’s high court, which upheld the award of the benefits. (Appeal of N.H. DHHS, Compensation Appeals Board No. 97-712, Aug. 23).

January 3 – OK to apologize in California. “Living in California means never having to admit guilt when you say you’re sorry. As of Jan. 1, a new state law will allow residents to apologize after an accident and avoid having their statements used against them in civil court. So-called benevolent gestures of sympathy will be considered simple acts of charity, not admissions of guilt.” In California, as elsewhere, some insurance companies advise their insureds not to say they’re sorry after a road mishap for fear of having the statement interpreted as an admission of guilt. The law is modeled after similar statutes in Massachusetts and Vermont. (“Saying ‘Sorry’ Now OK in California”, APBNews/FindLaw, Dec. 29).

January 3 – Saves her friend’s life, then sues her. Six years ago Kerry-Jo Klingbeil, then 11, pushed her seven-year-old friend Amanda Horne out of the path of a truck in Ontario, sustaining injuries from the truck in doing so; she subsequently received one of Canada’s highest bravery awards. Now she and her family are suing Amanda for $5-million (Canadian), saying she sustained lasting injuries after being “compelled” to rescue her friend. (“Girl sues friend for $5M after saving her life”, Canadian Press/National Post, Dec. 29).

January 3 – Apartment smoking targeted. In the Los Angeles suburb of West Hollywood, “the City Council in November passed an ordinance allowing nonsmoking apartment dwellers to file complaints when tobacco smoke drifts into their windows or doors from a neighbor’s unit. Tenants who refuse city arbitration will face fines and eviction.” (Thomas D. Elias, “Apartment smoking may be banned”, Washington Times, Jan. 2) (via FindLaw Legal Grounds).