Overlawyered: Chronicling The High Cost Of Our Legal System

Blame the messenger: Overstock’s $3.5 billion suit

With EPS of negative $3.14, Overstock.com CEO Patrick Byrne is regularly named as one of the worst CEO’s; as MarketWatch’s Herb Greenberg writes, “Byrne has done an atrocious job, proving himself inept at running a public company. And while his idea for Overstock is intriguing, his execution has been a failure, especially relative to what he led shareholders to expect. Worse, he has spent shareholder time and money using innuendo and lies to create a conspiracy theory that includes journalists (including yours truly), regulators, politicians and others as his company’s performance plummeted.” Overstock, apparently unable to make money through its business plan, has a new business plan: sue investment banks for $3.5 billion in California state court, blaming them for the 77% decline in stock price. The suit alleges shenanigans on controversial practices of naked short selling, but the economic theory of price manipulation and damages is simply bogus: if the perpetually-money-losing Overstock were really worth billions more, investors would have every incentive to squeeze the short-sellers, who don’t have the market power to manipulate the price. Forbes writes a sympathetic and unskeptical account of the lawsuit.

Disclosure: I lost an embarrassing amount of money investing in Overstock in 2006 by failing to sell it immediately when Byrne started blaming the company’s problems on short-sellers.

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Meet John Edwards’s new blogger-in-chief

Well after the revelation of the undisclosed DNA results, the ATM, taxi and dorm alibis, the umpteen times the stripper has changed her story, Amanda Marcotte still is willing to blast the Duke Lacrosse Three as guilty, guilty, guilty; and what do you know, the John-Edwards-for-President campaign has just saluted Marcotte’s acuity by naming her its blogger-in-chief (Pandagon, Jan. 21, foul language galore; Edwards blog, Jan. 30; Blogger News Network, Jan. 30, via Taranto; LieStoppers, Feb. 1). It’s enough to distract attention from all the comic joshing over the Friend of the Downtrodden’s gigantic new residence, or “Suing-’em Palace” as Mark Steyn calls it (NRO “The Corner”, Jan. 30; Dean Barnett, Jan. 30).

Update: Marcotte has now (1 p.m. Friday) yanked down her original post of Jan. 21, and appears also to have deleted several comments, but GoogleCache still has it for the moment. Here is its text, in the spirit of Fair-Use-ery:

Naturally, my flight out of Atlanta has been delayed. Let’s hope it takes off when they say it will so I don’t miss my connecting flight home.

In the meantime, I’ve been sort of casually listening to CNN blaring throughout the waiting area and good f**king god is that channel pure evil. For awhile, I had to listen to how the poor dear lacrosse players at Duke are being persecuted just because they held someone down and f**ked her against her will—not rape, of course, because the charges have been thrown out. Can’t a few white boys sexually assault a black woman anymore without people getting all wound up about it? So unfair.

111 Responses to “Stuck at the airport again…..”

Further update (1:20 p.m. Friday): Here are two comments that Marcotte appears to have deleted from the original thread. The “In her part of the country” comment had already drawn criticism from readers on the LieStoppers site:

Amanda Marcotte Jan 21st, 2007 at 12:54 pm

Yes, how dare a rape victim act confused and bewildered like she was raped or something.

# Amanda Marcotte Jan 21st, 2007 at 2:03 pm

Natalia, do you know the details of the case? If so, why do you think a women enthusiastically jumped into a sexual situation with men making slavery jokes at her? Furthermore, what is your theory on why she supposedly looooooved having sex with guys holding her facedown on the bathroom floor? There’s no “if” they behaved in a disrespectful manner. We have conclusive evidence that happened.

This is about race and class and gender in every way, and there’s basically no way this woman was going to see justice. In her part of the country, both women and black people are seen as subhuman objects to be used and abused by white men.

Plus: I see that K.C. Johnson (“Durham in Wonderland“) is on the case in typically thorough and powerful fashion. Marcotte also provides this further comment reacting to her critics (“if I see the words ‘Duke’ or ‘lacrosse’ in an email that has the whiff of accusatory tone, I’m deleting it and simply not going to reply to it”).

And again (11:30 p.m. Friday): In a further post, K.C. Johnson cites chapter and verse about how Marcotte’s hiring won much praise for the Edwards folks as a shrewd way of reaching out to progressive netroots forces. More discussion: TalkLeft forums, Betsy Newmark, Jeff Taylor at Reason “Hit and Run” (R-rated), Outside the Beltway, Patrick Ruffini, South of Heaven, Little Miss Attila, Brainster; & welcome Glenn Reynolds, Kevin O’Keefe and Michelle Malkin readers.

Further updates: see Feb. 4, Feb. 7, Feb. 8, Feb. 12 (Marcotte quits Edwards post), Feb. 16.

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Overzealous Trademark Enforcement Files: National Pork Board

A breastfeeding activist promotes, inter alia, t-shirts with the slogan “The other white milk.” This has the National Pork Board, with its slogan “The other white meat,” up in arms, and a Faegre & Benson attorney issued a ceast-and-desist letter. The shirt wasn’t a big seller (and CafePress quickly acceded to the threat), so it’s really not about the money, but Jennifer Laycock isn’t happy about the bullying (h/t W.C.).

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Notable quote

“We cannot permit federal lawsuits to be transformed into amorphous vehicles for the rectification of all alleged wrongs” — a three-judge panel of the 11th Circuit (Chief Judge James Edmondson and Judges James Hill and Phyllis Kravitch), refusing to declare Alabama’s property tax system an unconstitutional cause of racial segregation in its institutions of higher education. (Tom Gordon, “Appeals court says tax system doesn’t segregate”, Birmingham News, Feb. 1; “Ruling backs state in higher-ed case”, AP/Montgomery Advertiser, Feb. 2).

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“Plaintiff strikes out in lawsuit over Angels bag giveaway”

“A judge tossed out a sex and age discrimination lawsuit Thursday against Angels baseball that claimed thousands of men and juveniles were wronged during a promotional giveaway at a Mother’s Day game. The gift – a red nylon tote bag – was offered free only to women age 18 and older.” (Erik Ortiz, Orange County Register, Feb. 2; Lex Icon, Feb. 1). For more on the action by attorney Alfred Rava and his client Michael Cohn, see May 11, May 23, and Aug. 19, 2006.

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UK: gay inns protest anti-bias law

How restrictions on free association can backfire, example #32,785: Hotel owners in Britain who cater to gay travelers say they could be forced out of business by regulations which would make it unlawful to indicate a preference for some guests based on sexual orientation. “At the end of the day, this is our home and as a landlord we have the right to refuse entry to anyone without giving a reason,” says the owner of the Guyz hotel in Blackpool. On the other hand, the civil-rights campaign Stonewall offers no sympathy: “What gay people gain through having an equality law is much more than whether we can just run gay hotels.” (Simon de Bruxelles, “Gay tourist hotels fear equality law”, Times Online, Feb. 1).

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Chew out your lawyers, get sued for defamation

Firing your lawyers? Be careful what you say about them in doing so. William and Elizabeth Margrabe had grown increasingly dissatisfied with the legal work done on their behalf by the firm of Sexter and Warmflash in a Westchester County, N.Y. lawsuit over the sale of a stake in a family business. In a letter firing the firm, Mr. Margrabe charged that its work was “fraught with missteps, poor legal judgments, failure to protect your client’s rights on repeated occasions, and poor, adversarial, or misleading communications with your clients.” He further accused the attorneys of pursuing their own interests over those of clients in seeking a hasty resolution of some issues, and also of charging a usurious interest rate on its fee. He copied the letter to the new lawyers he had hired to take over the matter.

How did Sexter & Warmflash respond? It sued the Margrabes for $1 million for defamation. Trial court judge Shirley Werner Kornreich ruled that its suit could proceed, and ruled outright in Sexter’s favor on the Margrabes’ liability for the “usurious fee” allegation, but an appeals court reversed, ruling that the Margrabes were protected by a privilege extended to statements made as part of a legal proceeding. (Anthony Lin, “Law Firm’s Defamation Suit Against Former Client Dismissed”, New York Law Journal, Jan. 10).

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“These men are remarkably sophisticated consumers of legal talent”

But then the Hell’s Angels have been repeat customers of attorneys’ services for long enough to build up an expertise (Thomas J. Lueck, “After Police Search, Hells Angels Brace for Fight”, New York Times, Feb. 1)(quoting attorney Ronald L. Kuby). More: Feb. 10, 1996 (California county agrees to pay nearly $1 million after police shot and killed three guard dogs belonging to Hell’s Angels club).

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February 1 roundup

  • In “State of the Economy” speech, Bush says litigation and regulation harm U.S. financial competitiveness, praises enactment of Class Action Fairness Act [Reuters; his remarks]

  • How many California legislators does it take to ban the conventional lightbulb in favor of those odd-looking compact fluorescents? [Reuters, Postrel, McArdle first and second posts]

  • Levi’s, no longer a juggernaut in the jeans world, keeps lawyers busy suing competitors whose pocket design is allegedly too similar [NYTimes]

  • Clinics in some parts of Sweden won’t let women request a female gynecologist, saying it discriminates against male GYNs [UPI, Salon]

  • Is the new Congress open to litigation reform? Choose from among dueling headlines [Childs]

  • Anti-SLAPP motion filed against Santa Barbara newspaper owner McCaw [SB Ind’t via Romenesko]

  • Uncritical look at Holocaust-reparations suits against French national railway [Phila. Inquirer]

  • Deep pockets dept.: court rules mfr. had duty to warn about asbestos in other companies’ products, though its own product contained none [Ted at Point of Law]

  • Lawyering up for expected business-bashing oversight hearings on Capitol Hill [Plumer, The New Republic]

  • “King of vexatious litigants” in Ontario restrained after 73 filings in 10 years, though he says he did quite well at winning the actions [Globe and Mail, Giacalone’s self-help law blog]

  • Sen. Schumer can’t seem to catch a break from WSJ editorialists [me at PoL]

  • South Carolina gynecological nurse misses case of Rocky Mountain spotted fever — that’ll be $2.45 million, please [Greenville News via KevinMD]

  • Five years ago on Overlawyered: we passed the milestone of one million pages served. By now, though our primitive stats make it hard to know for sure, the cumulative figure probably exceeds ten million. Thanks for your support!

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