Overlawyered: Chronicling The High Cost Of Our Legal System

NLRB: we’re coming after franchisors and subcontractors

In a long-feared ruling, the Obama National Labor Relations Board has ruled that a company that employs subcontractors or engages in franchising can over a wide range of situations be deemed a “joint employer” for purposes of liability for labor law violations and obligation to bargain over wages and working conditions with subcontractors’ or franchisees’ work forces. The decision imperils many of the most successful business models on the American economic scene. I’ve got a write-up at Cato observing that the ruling is likely to wreak havoc with, among many other sector, Silicon Valley and sharing-economy launches and asking “One wonders whether many of the smart New Economy people who bought into the Obama administration’s promises really knew what they were buying.”

More coverage of the NLRB’s Browning-Ferris ruling: Reuters (quotes me on the not-bright prospects for Hill action); Seyfarth Shaw; Tim Devaney, The Hill; “Good week to change name of NLRB to National Labor Resuscitation Board.” [Jonathan Segal] And, from standpoints supportive of the ruling, Al-Jazeera and Prof. Catherine Fisk/On Labor.

P.S.: At the Weekly Standard, Andrew B. Wilson notes that Obama wage/hour czar David Weil doubles as a key ideologist of the kill-outsourcing crowd.

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“Pennsylvania AG, Facing Trial for Perjury, Uses Twin Sister as Courthouse Decoy”

In case you had any doubt that the Kathleen Kane ethical saga in Pennsylvania is destined for a Hollywood treatment [Kathryn Rubino, Above the Law; Beth Ethier, Slate, whence the above headline] Relatedly or otherwise, our friends at the Competitive Enterprise Institute have named their pick of the nation’s six worst state attorneys general, with Kane topping the list [Hans Bader/CEI, and thanks for link]

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Magistrate recommends dismissal of Apple-made-me-watch-porn action

A federal magistrate has recommended dismissal of an action by a Tennessee attorney representing himself who “contends that he should not have been inadvertently allowed to view pornography on the Internet,” and that Apple is liable for not including a default filter against such images on its devices. The plaintiff blames the resulting viewing for a host of physical and other ills, including the breakup of his relationship with his wife, who “simply could not compete with the endless stream of ageless cyber vixens, who ‘never say no’.” His earlier litigation against Google and other defendants likewise fell short. [Sevier v. Apple] [edited Aug. 31 to clarify that plaintiff was attorney representing himself, h/t David N. in comments]

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Eric Schneiderman’s herbal-supplements adventure

“Never apologize, never explain” is not a maxim to recommend for a state’s top law enforcer, and that goes for New York’s Attorney General Eric Schneiderman, the subject of my recent City Journal piece. Early this year Schneiderman charged that herbal supplements on sale at GNC, Walmart and other major retailers, when subjected to special tests arranged by his office, were found to lack DNA associated with the advertised herbs. Within days close observers and experts in the field had deduced why Schneiderman’s tests had produced such remarkable results: he had relied on testing methods badly unsuited to identifying active ingredients in substances that, like most of the supplements, had undergone extensive processing [see, e.g., Nicola Twilley, New Yorker; Live Science; Bill Hammond, New York Daily News]

Other officials might have beat a timely retreat. Schneiderman’s office instead dug in, refusing to apologize, back down or even publicly disclose key facts about its testing methods. I’ve done a Cato Daily Podcast with Caleb Brown about the whole episode, including what is perhaps the most ominous aspect: such is the legal leverage of a New York attorney general that the targets chose to settle anyway. City Journal piece, again, here.

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Environment roundup

  • Safe Drinking Water Act along with other federal laws helped scare consumers away from public fountains and tap water, with unintended bad consequences for health and the environment [Kendra Pierre-Louis, Washington Post]
  • Austin, Tex. ban on plastic bags isn’t working out as intended [Adam Minter, Bloomberg View]
  • After BP’s $18.7 billion settlement with five Gulf states, here come huge private lawyer paydays [Louisiana Record]
  • Energy efficiency in durable goods: mandates “based on weak or nonexistent evidence of consumer irrationality” with government itself hardly free of behavioral biases [Tyler Cowen]
  • “How Trophy Hunting Can Save Lions” [Terry Anderson and Shawn Regan, PERC/WSJ]
  • CPSC’s hard line on CPSIA testing of natural materials in toys based on “precautionary principle run amuck” [Nancy Nord]
  • Is the ideal of sustainability one we ultimately owe to hunter-gatherers? [Arnold Kling]

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The very model of a Left attorney general

My lengthy profile of New York Attorney General Eric Schneiderman in the new City Journal ranges over many topics, including mortgage and Wall Street settlements; Uber, Lyft, AirBnB and the sharing economy; unions’ efforts to light legal fires under fast-food operators; the unreconstructed Left politics of Manhattan’s Upper East Side; and much more, including Schneiderman’s dubious campaign against herbal supplement retailers. One section that I hope is of interest beyond New York is a sidebar on the politics of state attorney general offices. An excerpt:

…State attorneys general really took off as players on the national scene in the 1970s and 1980s, a period in which the number of staff attorneys in AG offices quadrupled, according to figures in Paul Nolette’s new book, Federalism on Trial. Once the National Association of Attorneys General, or NAAG, began to take a more active role in helping beef up and coordinate formerly scattered efforts, multistate AG litigation, in which many state offices band together to file suit, began to grow, from fewer than five cases a year three decades ago to 40 to 50 cases a year more recently.

Is this a spontaneous upsurge reflecting the decentralized genius of our system? Not quite: as Nolette explains, Congress was, in fact, busy over this period funneling federal grants to state AG offices to build up their strike-force capacity against business defendants, while revamping laws to give them more enforcement power. The executive branch helped, too: “[F]ederal agencies have aggressively promoted [state AG] litigation working groups,” Nolette writes….

The tobacco episode — and the idea it encouraged that AGs should step in to reform national industries through litigation and master settlement when the U.S. Congress declined to do so — changed everything. One of its consequences was to send hundreds of millions, even billions of dollars in settlement money sloshing through the formerly sleepy AG offices:

…It’s common for AGs’ offices to keep at least enough money from settlements to cover their own investigation; state laws vary widely, however, on whether they have to turn over surplus money to a general fund. When they don’t do so, the AG office can quickly become a power center, handing out (in effect) appropriations that bypass the state legislature’s scrutiny. In states like Arkansas, Massachusetts, and West Virginia, AG offices have channeled settlement funds to health nonprofits, police and fire charities, and agencies of their own choosing within state, county, and local government. Other favored beneficiaries include legal-aid programs, bar associations, and law schools—the legal profession being, of course, a key political constituency of any AG’s office. With control over big money flows, smart AGs can populate a political landscape with grateful allies. …

Last week I linked a sidebar on the legal system’s failure to protect businesses (small banks, in this case) from the exercise of arbitrary authority by officials like Schneiderman. While my piece is critical of his enforcement actions, it also makes clear that most of what he’s up to simply applies the set of far-reaching powers assembled by earlier state attorneys general before him, from Eliot Spitzer and Andrew Cuomo in New York to figures in other states like Jerry Brown, Richard Blumenthal, Jim Hood, and even Bill Clinton. Whole thing here.

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August 26 roundup

  • Government as source of product misinformation [David Henderson notes my City Journal discussion of NY AG Eric Schneiderman’s crusade on herbal supplements]
  • “Under Armour is suing pretty much every company using the name ‘Armor'” [Washington Post]
  • Maryland police unions defend LEOBR (“bill of rights”) tenure laws [my Free State Notes, Ed Krayewski, Scott Greenfield]
  • Someone uses an iPhone to transact Islamic State business; could a court find Apple liable for providing material support for terrorism? [Benjamin Wittes, Zoe Bedell, Lawfare]
  • Maybe green-lighting a union for tax collecting staff wasn’t such a hot idea in the first place [Washington Post]
  • Seventh Circuit: “Appeals court apologizes for literally misplacing case for five years as lawyers wondered what was taking so long” [Jacob Gershman, WSJ Law Blog]
  • For the sake of professional dignity, in future employ authorized methods only: “Italian lawyer steals French tourist’s wallet” [The Local, Italy]

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“New book asks if lawsuits and lawyers are taking the fun out of Disneyland”

“The vast majority of operational changes at Disneyland in the last 10 years have been the result of lawsuits past, or in anticipation of lawsuits in the future,” [author Dave Koenig] said…. “People just have no common sense. Most activities have some inherent risk. It’s to the point where Disney’s tolerance for risk is zero. It used to be they expected that people would have some common sense.” [Orange County Register, profiling Koenig’s new book “The People v. Disneyland: How Lawsuits & Lawyers Transformed the Magic.”]

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“Lawyers smelling blood in wake of Ashley Madison hack”

Anonymous hackers having exposed customer data from a much-hyped adultery website, “class-action attorneys are currently following the Ashley Madison blood trail in hopes of winning a monetary payday for themselves and the site’s millions of members. In the last week, the Rosen Law Firm of New York began an outright solicitation for Ashley Madison users to join a prospective privacy and consumer fraud suit against the Ashley Madison site.” [David Kravets, ArsTechnica]

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