In New Jersey, an “epic” business partnership lawsuit

“There is no reason in the world for a case to be tried 20 years after it was filed,” said Judge Deanne Wilson, who said she knew of nothing matching the case in the New Jersey courts. The judge was highly critical of the conduct of the defendants, a real estate family led by Minnesota Vikings owner Zygmunt “Zygi” Wilf, which she found had misappropriated funds owed to longtime business partners. [Ben Horowitz, Newark Star-Ledger, Minneapolis Star-Tribune and more, Field of Schemes]

Discrimination law roundup

  • Litigious anti-feminist loses case alleging that Manhattan club’s expensive bottle service for old men, free drinks for young women violate bias law [NY Mag, NYDN]
  • “Hospital cannot ban all service animals from psych ward, federal judge rules” [ABA Journal] “New Yorkers use bogus ‘therapy dog’ tags to take Fido everywhere” [NY Post via Althouse]
  • Canada: foes seek to prevent opening of evangelical law school in B.C. [CBC, Jonathan Kay/National Post, Globe and Mail editorial, TaxProf]
  • Related: broad religious exemptions in anti-bias law make good complement to same-sex marriage [Ilya Shapiro/Cato, my take] Gay couples must also live and let live, or else liberty is in for some cake wrecks [Bart Hinkle, Richmond Times-Dispatch]
  • Hiring based on IQ testing: widely regarded as legally suspect, but mostly tolerated in practice? [Bryan Caplan]
  • “‘Borgata Babes’ lose weight bias suit; judge says casino policy was legal” [ABA Journal, earlier]
  • 2009 expansion of federal hate-crimes law headed for a court challenge? [Josh Gerstein, Politico]

Public employment roundup

  • “Retirement benefits cost Connecticut more than half of payroll” [Raising Hale] Jagadeesh Gokhale, “State and Local Pension Plans” [Cato] “In the report Krugman cites, the researchers note (repeatedly) that the trillion-dollar figure is very likely a dramatic understatement of the size of the unmet liability.” [Caleb Brown]
  • California: “Bill would reinstate state workers who go AWOL” [Steven Greenhut]
  • Eyebrow-raising federal salaries at unaccountable-by-design CFPB [John Steele Gordon, Commentary]
  • “North Carolina Ends Teacher Tenure” [Pew StateLine]
  • Not all states would benefit from a dose of Scott Walkerism, but Massachusetts would [Charles Chieppo, Governing]
  • “Prison Ordered to Hire Back Guards Fired over an Officer’s Murder Because Everybody Else Was Awful, Too” [Scott Shackford]
  • “New York State Lags on Firing Workers Who Abuse Disabled Patients” [Danny Hakim, New York Times] NYC educators accused of sex misconduct can dig in for years [New York Daily News]
  • “Pennsylvania’s GOP: Rented by Unions” [Steve Malanga, Public Sector Inc.] NYC’s Working Families Party expands into Connecticut [Daniel DiSalvo, same]

CPSC sues defiant CEO individually in Buckyball case

A year ago, I wrote: “It’s rare for a regulated company to mount open and disrespectful resistance to a federal regulatory agency, but that’s what the maker of BuckyBalls, the popular desktop magnetic toy, is doing in response to the Consumer Product Safety Commission’s effort to ban its product.” The maker in question had devised cheeky, sarcastic ads asking why other products with injurious potential (coconuts, hot dogs) weren’t banned on the CPSC’s logic.

One reason it’s rare to mount open and disrespectful resistance to a federal agency is that agencies have so many ways to make businesspeople’s lives unhappy. This spring, breaking new legal ground, the CPSC reached out and named CEO Craig Zucker personally as a respondent in its recall proceeding. According to a Gibson Dunn commentary,

For the first time, the CPSC is pursuing individual and personal liability against an executive for a company’s alleged violations of the Consumer Product Safety Act. Although it remains to be seen whether the CPSC will adopt this approach in other cases, at minimum, this demonstrates just how far the CPSC is willing to push the envelope.

It’s just the latest example, the law firm says, of a pattern in which “the CPSC has aggressively enforced its governing statute and regulations, repeatedly pushing the limits of its expanded authority.”

As Morrison & Foerster says in its client alert:

Despite [Buckyballs maker] Maxfield and Oberton’s aggressive publicity campaign against the CPSC, the CPSC continued to pursue its complaint. Maxfield and Oberton folded and the company dissolved in December 2012, making the complaint moot. In February 2013, the CPSC moved for leave to file a second amended complaint naming the former CEO, Craig Zucker, both individually and as an officer of Maxfield and Oberton. The CPSC requested the same relief against Zucker as it had against Maxfield and Oberton—i.e., recall, refund, and compliance reports.

While Zucker has “argued that he could not be liable as he did not personally manufacture, distribute, or sell the product at issue,” CPSC has invoked something called the responsible corporate officer doctrine, approved by the Supreme Court in U.S. v. Dotterweich (1943) and U.S. v. Park (1975), which “permits responsible corporate officers to be held liable for the actions of the corporation, even in the absence of personal guilt on the part of the individual.”

Especially when the individual has helped promote Internet memes making fun of the CPSC.

P.S. Zen Magnets LLC of Denver, which markets a similar product which it says has not been linked to injury reports, and which has refused to withdraw its product from the market despite CPSC’s demands, is calling attention to a poll that it says shows the U.S. public overwhelmingly in favor of leaving recreational rare earth magnets on the market labeled for adult use (& Brian Doherty, Reason, Joe Patrice/Above the Law, Alexander Cohen/Atlas; cross-posted in slightly different form at Cato at Liberty).

P.P.S. Noted at the Cato version: “If the move succeeds, Zucker could be ordered to foot the bill personally for offering consumers full refunds for all products sold, reimbursing retailers for recall costs, and various other expenses potentially reaching into the millions.”

“Race-based claims thrown out in Paula Deen lawsuit”

The deposition-extracted tidbits were enough to bring down Deen’s culinary empire, but that doesn’t mean they were actually relevant to anyone’s legal case against her: “U.S. District Court Judge William T. Moore Jr. ruled Monday that [Lisa] Jackson, who is white, has no standing to sue them [Deen and her brother] for race discrimination.” [USA Today]