- “American Express Settlement Collapses Amid Charges Of Collusion” [Daniel Fisher]
- Some on Capitol Hill would like U.S. Treasury to return money seized from South Mountain Creamery in now-notorious structuring case [Washington Post, our earlier coverage]
- CEO pay shaming theory has been tried and failed twice, but why not one more try? [Marc Hodak, earlier]
- Another big courtroom reverse for SEC in use of in-house administrative law judges [Reuters]
- Judge Easterbrook on competitive federalism, Delaware, and incorporation [Robert Goddard, Corporate Law and Governance quoting Corre Opportunities Fund, LP v. Emmis Communications Corp.]
- How far will California go to tax one wealthy ex-resident? Consider saga of Gilbert Hyatt vs. Franchise Tax Board [Lloyd Billingsley, Daily Caller]
- Apparently so: “Is Securities Litigation’s Future Secure?” [Nick Goseland, Above the Law]
- Colorado solon’s lawsuit claims direct voter initiatives are unconstitutional. Nice try but no go [Ilya Shapiro]
- Gail Heriot and Alison Somin on creative interpretations of the Thirteenth Amendment [Fed Soc]
- Ted Olson’s work on punitive damages provides clue to his approach on originalism [Mike Rappaport]
- Yes, Prof. Seidman, there is an Origination Clause [Shapiro, my related take]
- Justice Roberts and legislative deference [PoL]
- Easterbrook, Barnett and others: video of panel on federalism and federal power [Fed Soc] Constitutional law treatise available free online through Library of Congress [Volokh] New Podcast: Who violates the constitution–statutes or individuals? [Nick Rosenkranz, PoL]
- National Endowment for the Arts uses creative misreading to conjure up a constitutional charter for its existence [Roger Pilon/Cato]
Judges move slower than markets but faster than the economics profession, a deadly combination.
— Judge Frank Easterbrook, “Comparative Advantage and Antitrust Law” (California Law Review, 1987).
A federal appeals court on Wednesday put the kibosh on a shareholder antitrust suit against the board members of Sears Holding Corp, finding that the suit only served to enrich the plaintiffs’ lawyers.
The ruling from the Chicago-based U.S. Court of Appeals for the 7th Circuit marks the latest victory for Ted Frank, of the Center for Class Action Fairness, who argued that the suit was an abuse of the legal system and conferred no benefit on Sears shareholders at large. The 7th Circuit agreed.
“The only goal of this suit appears to be fees for the plaintiffs’ lawyers,” Judge Frank Easterbrook wrote for a unanimous three-judge panel.
More: Dan Fisher.
- Maricopa-cabana: Sheriff Arpaio uses tank (with Steven Seagal along) to raid cockfight suspect [KPHO, Coyote, Greenfield, Balko]
- Malpractice reform in New York is about more than money (though it’s about that too) [Paul Rubin, TotM; NYDN]
- EEOC initiative combats alleged employer bias against unemployed job applicants [Bales/Workplace Prof, Hyman]
- After court rejection of Google Books settlement, where next? [Timothy Lee/ArsTechnica, David Post]
- When your lawyerly conduct has been eviscerated by Judge Easterbrook, you know it [Above the Law]
- Ninth Circuit rules on legality of keyword advertising using other firms’ trademarks [Coleman]
- Election showdown over future of Wisconsin Supreme Court [PoL, more, Esenberg, Althouse]
- Legal battle follows NYC’s attempted application of sidewalk bicycle ban to unicyclist [AP]
The losers of a union election sued the winners in federal district court in Chicago, but it wasn’t a very impressive lawsuit. One plaintiff claimed that the threat of being fired caused an asthma attack, but since she in fact got a raise, and she had been having asthma attacks for 25 years, and there wasn’t any threat, her claim of intentional infliction of emotional distress didn’t get very far. The district court issued $80,000 in sanctions under Rule 11, just a fraction of the $200,000 that the defendants claimed to have paid in legal expenses, but James Gordon Banks objected to even this amount on the grounds that he was poor (though this was in some doubt, because of the assets in his wife’s name) and because he was only recently out of law school. Unfortunately for him, he drew Judge Easterbrook on the appeal, and we know that the judge does not suffer fools lightly:
If Banks really is a bad lawyer (as he depicts himself), and is poor because people are not willing to pay much, or at all, for his services, then he should turn from the practice of law to some other endeavor where he will do less harm. No court would say, in a medical-malpractice action, that a doctor whose low standards and poor skills caused a severe injury should be excused because he does not have very many patients. No more is a bad lawyer excused because he has few clients.
Relevant to a recent comment discussion, words of wisdom from Judge Easterbrook in IFC Credit Corp. v. United Business & Indus. Federal Credit Union:
Ever since Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), enforced a forum-selection clause printed in tiny type on the back of a cruise-ship ticket, it has been hard to find decisions holding terms invalid on the ground that something is wrong with non-negotiable terms in form contracts. See also, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991) (unequal bargaining power does not justify refusal to enforce an arbitration clause in a form contract); Seawright v. American General Financial Services, Inc., 507 F.3d 967 (6th Cir.2007). As long as the market is competitive, sellers must adopt terms that buyers find acceptable; onerous terms just lead to lower prices. See, e.g., Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir.1997); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir.1996); George L. Priest, A Theory of the Consumer Product Warranty, 90 Yale L.J. 1297 (1981). If buyers prefer juries, then an agreement waiving a jury comes with a lower price to compensate buyers for the loss-though if bench trials reduce the cost of litigation, then sellers may be better off even at the lower price, for they may save more in legal expenses than they forego in receipts from customers.
There is no difference in principle between the content of a seller’s form contract and the content of that seller’s products. The judiciary does not monitor the content of the products, demanding that a telecom switch provide 50 circuits even though the seller promised (and delivered) 40 circuits. It does not matter that the seller’s offer was non-negotiable (if, say, it offered 40-circuit boxes and 100-circuit boxes, but nothing in between); just so with procedural clauses, such as jury waivers. As long as the price is negotiable and the customer may shop elsewhere, consumer protection comes from competition rather than judicial intervention. Making the institution of contract unreliable by trying to adjust matters ex post in favor of the weaker party will just make weaker parties worse off in the long run. Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 282 (7th Cir.1992) (“The idea that favoring one side or the other in a class of contract disputes can redistribute wealth is one of the most persistent illusions of judicial power. It comes from failing to consider the full consequences of legal decisions. Courts deciding contract cases cannot durably shift the balance of advantages to the weaker side of the market; they can only make contracts more costly to that side in the future, because [the other side] will demand compensation for bearing onerous terms.”).
- Easterbrook: “One who misuses litigation to obtain money to which he is not entitled is hardly in a position to insist that the court now proceed to address his legitimate claims, if any there are…. Plaintiffs have behaved like a pack of weasels and can’t expect any part of their tale be believed.” [Ridge Chrysler v. Daimler Chrysler via Decision of the Day]
- Retail stores and their lawyers find sending scare letters with implausible threats of litigation against accused shoplifters mildly profitable. [WSJ]
- Kentucky exploring ways to reform mass-tort litigation in wake of fen-phen scandal. [Mass Tort Prof; Torts Prof; AP/Herald-Dispatch; earlier: Frank @ American]
- After Posner opinion, expert should be looking for other lines of work. [Kirkendall; Emerald Investments v. Allmerica Financial Life Insurance & Annuity]
- Judge reduces jury verdict in Premarin & Prempro case to “only” $58 million. And I still haven’t seen anyone explain why it makes sense for a judge to decide damages awards were “the result of passion and prejudice,” but uphold a liability finding from the same impassioned and prejudiced jury. Wyeth will appeal. [W$J via Burch; AP/Business Week]
- Judge lets lawyers get to private MySpace and Facebook postings. [OnPoint; also Feb. 19]
- Nanny staters’ implausible case for regulating salt. [Sara Wexler @ American; earlier: Nov. 2002]
- Doctor: usually it’s cheaper to pay than to go to court. [GNIF BrainBlogger]
- Trial lawyers in Colorado move to eviscerate non-economic damages cap in malpractice cases [Rocky Mountain News]
- Bonin: don’t regulate free speech on the Internet in the name of “campaign finance” [Philadelphia Inquirer]
- “Executives face greater risks—but investors are no safer.” [City Journal]
- Professors discuss adverse ripple effects from law school affirmative action without mentioning affirmative action. Paging Richard Sander. Note also the absence of “disparate impact” from the discussion. [PrawfsBlawg; Blackprof]
- ATL commenters debate my American piece on Edwards. [Above the Law]
Certainly some corporate defendants deserve to take it in the shorts. Judge Easterbrook, in affirming a well-deserved $16 million FTC fine against a late-night infomercial purveyor of fraud, opines:
For the Q-Ray Ionized Bracelet, by contrast, all statements about how the product works—Q-Rays, ionization, enhancing the flow of bio-energy, and the like—are blather. Defendants might as well have said: “Beneficent creatures from the 17th Dimension use this bracelet as a beacon to locate people who need pain relief, and whisk them off to their homeworld every night to provide help in ways unknown to our science.”
We earlier covered Judge Easterbrook’s opinion in the Redwood v. Dobson case. On Evan Schaeffer’s Illinois Trial Practice Blog I commented:
A censure for instructing a witness not to answer seems strict, considering the practicality that most parties would prefer that result to cutting off the deposition, and one unfortunately cannot be assured of a federal district judge who is as familiar with the current rendition of Rule 30 as Judge Easterbrook is. (Indeed, the district court judge in Redwood erroneously applied Rule 30 according to the appellate opinion.)
If one were to walk the tightrope that Redwood presents us, I would recommend objecting as follows: “We find that question objectionable. I would prefer not to suspend the deposition here to seek a protective order, but Rule 30 offers me no other alternative. Can we agree that you will postpone this question until the end of the deposition, and we’ll seek the protective order then?” By doing this, one demonstrates good faith and places the burden on the questioner of choosing to end the deposition early over this question. That’s not complete protection by any means: the questioner can stand her ground, and then still seek sanctions for the costs of a second day of deposition if the protective order is denied. It’s an elaborate game of chicken, to be sure, and I’ve been on both sides of intimidating junior attorneys and having senior attorneys try to intimidate me in that game.
The Seventh Circuit might have thought the Redwood decision would “defuse . . . the heated feelings” at depositions, but it may well have the reverse effect of making litigation more contentious, potentially turning every deposition into a high-stakes confrontation. Lawyers already play enough chicken, and now they’re going to have to learn a new game-truth or dare.
Lubet complains that Redwood leaves attorneys with only the nuclear option of the expense of seeking a protective order; this isn’t quite the case, as my February comment above shows. But Lubet is correct that there is a problem in treating the victim the same as the originally misbehaving attorney.
Of course, the problem is less with the Seventh Circuit decision as much as with the very clear instruction of Fed. R. Civ. Proc. 30(d)(1) combined with the unwillingness of courts to enforce sanctions or provide adequate protective orders for over-aggressive discovery. If district courts were doing their jobs, that Seventh Circuit opinion wouldn’t look so frightening to practitioners, because attorneys would be behaving in the first place.