Thanks to guestbloggers

My sincerest thanks to all three of the guestbloggers who (along with Ted) have kept things lively over the past two weeks: George M. Wallace, whose work you can follow at Declarations and Exclusions and A Fool in the Forest; Kevin Underhill of Lowering the Bar; and Skip Oliva of the Voluntary Trade Blog. Well done! I also notice that the comments section has been humming along busily. I should go away more often.

Rambus, Antitrust & the Common Law

In the next few weeks, the FTC is expected to issue a final order in its five-year case against Rambus Inc., a California-based developer of memory technology. Rambus has proven to be the longest and possibly costliest litigation in FTC history. The FTC’s trial costs alone approached $3 million, with over $1 million going to “expert” witnesses and consultants.

The Rambus case started as a patent infringement dispute between the company and several memory manufacturers. Rambus doesn’t produce any memory itself; it develops and patents technologies and licenses them to manufacturers. During the mid-1990s, Rambus participated in a memory standard-setting group, JEDEC, and this is where the trouble began. The manufacturers claim Rambus misled JEDEC into incorporating Rambus patents into certain memory standards. Rambus said it was denied permission to present its technologies for standardization and that JEDEC members simply infringed Rambus’s patents.

Read On…

FTC snares doctors in price fixing trap

The Federal Trade Commission ended its year by prosecuting a 1,900-member physician group in Chicago for price-fixing. Since 2001, the FTC and DOJ have coerced 29 physician groups—some with as few as six members—into signing consent orders that restrict the right of doctors to negotiate contracts.

The FTC and DOJ apply a double standard to doctors and third-party payers. Payers may represent thousands of individual consumers and present doctors with a “take it or leave it” contract offer. But if even a handful of doctors get together to present a counter-offer, it’s a “per se” antitrust violation.

Read On…

Update: Fountain Diet Coke class action

We mentioned the lawsuit over the absence of Nutrasweet in fountain versions of Diet Coke in 2004. In a typical “harm-less” class action, plaintiff Carol Oshana did not see any advertising for Nutrasweet in Diet Coke, knew that fountain Diet Coke tasted different than bottled Diet Coke, and continued to buy fountain Diet Coke after she learned it had saccharin, but demanded to be the representative of a class of all Diet Coke purchasers in Illinois on a “consumer fraud” claim. Via Howard Bashman, the Seventh Circuit affirmed federal jurisdiction and the district court’s refusal to certify a class. Oshana did get a $650 nuisance settlement, which would buy 1000 liters of Diet Coke at my local grocer.

Best of 2006: October

Best of 2006: September

Gross v. Industrial Commission of Ohio

Jonathan Adler beat me to talking about this Ohio Supreme Court case, but I think it presents an interesting example of “hard facts make bad law”—and, in this case, the plaintiff, an especially undeserving fellow, should have won, but didn’t.

David Gross, a teenager, was a callow sort who worked for the local KFC. Among his duties was cleaning out the pressure cooker, but Gross repeatedly ignored explicit instructions not to use water in cleaning it. This was no arbitrary command, for in November 2003, Gross did just that, and the cooker exploded, burning Gross and two co-workers. The franchise investigated and fired Gross in February 2004 for the safety violation, and sought to end their workers’ comp payments to Gross. Their theory: the egregious safety violation was a voluntary abandonment of employment. The administrative agency agreed, the court of appeals reversed, and the Ohio Supreme Court restored the original decision that the franchise didn’t have to pay workers’ comp after it fired Gross.

A Volokh commenter suggests that the fact that the franchise waited to fire Gross means that they’re on the hook. That seems like the wrong rule: it would punish the franchise for taking additional steps to ensure that it was acting fairly to its employees by investigating the incident before firing someone.

That said, it’s wrong to treat the firing, even the for-cause firing, as a “voluntary abandonment.” Workers’ comp is a no-fault regime. Raising the question of fault, even when the fault is as egregious as Gross’s here, inserts a complicating factor into the system. There’s a certain unfairness to assessing liability against the franchise: they told Gross not to do something dangerous on multiple occasions, he did it anyway, and Gross gets to recover. But the alternative is to create an ambiguous rule that gives other employers the incentive to turn workers’ comp hearings into a question of whether a worker’s negligence was really recklessness or intentional disregard for safety rules. One reduces Type I errors, while increasing Type II errors, and substantially decreasing administrative efficiency: straightforward proceedings now have uncertainty, raising expenses for everyone. Perhaps Gross should be criminally prosecuted for reckless endangerment; perhaps a penalty of a criminal conviction should include restitution to the employer. But in the civil proceeding, the legislature made a conscious decision of the tradeoffs here, and it’s not for the courts to decide that those tradeoffs should be recalibrated in individual cases.

Note that valuing efficiency here favors plaintiffs, rather than defendants, putting the lie to the argument of anti-reformers that reformers hide behind efficiency to mask a pro-defendant bias. This reformer favors efficiency because it makes all of us better off in the long run. Efficiency isn’t the only value—a society can rationally choose inefficient procedures because it believes the protected values are worth the additional cost—but the public policy debate shouldn’t ignore the questions of costs and benefits and act as if results can be achieved for free.

Best of 2006: August

Best of 2006: July