Microblog 2008-12-27

Con artists, lawyers, and people who deserve a punch in the face:

The best stings, cons, and capers of 2008, as chosen by Wired. Particularly clever: the FBI’s reverse con of dozens of identity thieves. And who knew that phone phreaks still exist in the age of the internet?
Rod Blagojevich’s attorney seeks to compel testimony from high officials in the incoming administration to resist impeachment, while Patrick Fitzgerald asks Illinois lawmakers to hold back to avoid jeopardizing his criminal case. Question: assuming Blagojevich is guilty, which is more important, that his impeachment proceed promptly, or that his criminal case proceed without political interference? Alternative question: Which is more important, good (or at least less corrupt) government in Illinois, or another notch on Fitzgerald’s belt? Final alternative question: if the Obama team was more involved than its own report suggests, why not let things drag out and get the whole story?
A blog devoted to people who deserve a punch in the face (potentially offensive images, not-work-safe language). Special favorites: “B**** who talks on cellphone at Holocaust Museum” (yes, I have seen this), and “Passive aggressive emoticon user”;
The heroism and defiance of the crew of the USS Pueblo, released from North Korean captivity a little over forty years ago today. If you click on a link anywhere in this post, make it this one (edit: bad link fixed);
Contrary to suggestions from Esquire, Barack Obama is unlikely to end the war on some drugs;
Is OSHA unconstitutional? Is seizing privately owned steel mills unconstitutional? Legal Theory calls this paper “very highly recommended” and I agree;
Should Jewish (and for that matter Muslim, Hindu, or Buddhist) military chaplains be required to wear a cross? The Navy says yes. I say that if we’re going to bail out Chrysler we can afford a few pins which depict commandment tablets or crescents See below for a more interesting discussion from Ron Coleman and others, on something I completely misread;
The right to have children is fundamental, but we remove dogs from conditions that aren’t as overcrowded as those of the Duggar family of Arkansas;
Extraordinary Popular Delusions and the Madness of Crowds: It’s not just the best book on economic bubbles and downturns ever written. It could be the title of this article on how a leading author on scientific skepticism was fleeced by Bernard Madoff. (Via Crime and Federalism);
Speaking of delusions, more details on the methods through which attorney Marc Dreier allegedly stole millions emerge in this Bloomberg story.

Walter Olson will be back soon enough, but I’ll note that I have come to appreciate just how good a blogger he is, and how hard Walter works in keeping this site going over the past few days. Perhaps you might show him your appreciation? Vote early, and vote often.

Filed under: Bernard Madoff, fraud, illegal drugs, Marc Dreier, OSHA, religious discrimination, Rod Blagojevich

Attempt to Conjure Fake Victory Out of Settlement & Subvert Justice Foiled

Guest Post by Victoria Pynchon

This just in from my IP ADR Blog colleague Mike Young of Alston + Bird

I wish I was clever enough to make this stuff up, but I’m not. Only reality can be this bizarre.

A sexual harassment defendant settles the case for $1.3 million. Not satisfied with the usual “no admission of liability” clause found in most settlement agreements, Mr. Harasser insists on an adjudication of NON-liability as a condition to paying the $1.3 million.

Here’s how the parties work it:

As part of the settlement, the harassment dispute will be “arbitrated” based on stipulated facts. The defendant will have sole discretion in the selection of the “arbitrator” and will pay the entire fee. The stipulated facts are, essentially, “defendant is innocent and plaintiff is wrong.”

Not only does the settlement agreement set forth the stipulated facts for the “arbitration,” it also dictates the arbitration award, word for word (essentially “the defendant is innocent and the plaintiff is wrong), and then spells out the press release that will follow the “arbitration,” that the defendant was totally vindicated in the lawsuit by a defense award (leaving out, of course, the part about paying $1.3 million to the plaintiff).

With me so far?

A fake arbitration to be followed by a false press release…and then the defendant pays the $1.3 million.

This is pulling a fast one on the public and a perversion of the justice system since the fake arbitration award would inevitably be followed by an uncontested entry of judgment based on the arbitral award.

Were I the defendant, I would be pretty careful to select an arbitrator who I knew would go along with this, like my [hypothetical] sociopathic uncle. I certainly wouldn’t select a former judge and one of the State’s top private jurists.

But, what do I know. In this case, the defendant with the unilateral right to select the arbitrator for this “arbitration” selected a former San Francisco judge sitting on the prominent JAMS panel, Daniel Weinstein.

To no one’s surprise except maybe the defendant, the plaintiff didn’t show up for the “arbitration.” Why should she? Based on the stipulated facts, she already “lost” the “arbitration.” For reasons that are not fully explained in the subsequent legal opinion, but probably because Weinstein is smart and ethical enough to know a rat when he sees one running across his conference room table, Weinstein refused to participate in the sham proceeding.

As the defendant, what would you do now? I’d probably pay the $1.3 million and call it a day. Because the case had not been dismissed, the court called the parties in to see what was going on. The plaintiff said she wanted to enforce the settlement. The defendant said the plaintiff breached the settlement agreement by not showing up to the “arbitration,” and that the settlement agreement had a real arbitration provision so that any dispute over the agreement had to be arbitrated (the old fashioned way). The trial court read the settlement agreement for the first time, and then denied the defendant’s motion to compel arbitration.

Now would be a good time to pay up and move on. There’s been no publicity and no public disclosure of this bizarre effort to fool the press and public with a sham arbitration proceeding. But no. This defendant decided to appeal the denial of the motion to compel arbitration, making everything public.

Sure enough, the appellate court issued an opinion, not officially published but available on the web for the world to see at http://www.onpointnews.com/docs/charney2.pdf, in which this entire fake arbitration process is shared with readers like you and me.

Here you have an effort to create a false record for the purpose of issuing a misleading press release to fool the public into believing the defendant was exonerated. It’s certainly fraud but is it actionable by anyone? And because the attempt was foiled by this new Darwin Awards winner, no harm was ever done.

We praise the ethical decision of JAMS neutral Daniel Weinstein in refusing to join in this attempt to use JAMS, and eventually the Courts, to perpetrate a public fraud. Is there any question that an arbitrator who would go along with this sham would be violating his/her professional responsibilities (not to mention undermining JAMS’ sterling reputation)?

But where is the judicial outrage? In the appellate court opinion, none of the justices took the defendant to task. There is no indication that the trial court was shocked or concerned by the possibility that it was overseeing a settlement whose goal was to defraud the public.

The “A” in ADR does not mean “A”nything goes in the pursuit of expedited calendars. It is alternative, not anarchic.

[editor’s note: see also Nov. 16 (American Apparel’s view of episode)]

Filed under: ADR, arbitration, fraud, JAMS, settlement, Victoria Pynchon

Viacom, Kellogg threatened with suit in Massachusetts

Wakefield, Mass., mother Sherri Carlson doesn’t like the commercials on the Nickelodeon network or the fact that Nickelodeon characters appear on boxes of cereal that she disapproves of. Thus (helped by a couple of nanny-state activist groups), rather than cancelling her cable bill, turning off the tv, or saying “No” to her three children, she’s announced plans to sue Viacom and Kellogg for billions of dollars under Massachusetts “consumer fraud” law, sending the required “intent to sue” letter. (Libby Quaid, AP, Jan. 19; Sarah Ellison and Janet Adamy, “Activists Plan to Sue Viacom and Kellogg Over Ads to Children”, Wall $treet Journal, Jan. 19; Hit & Run blog Jan. 19 Sullum and Gillespie). As Sullum notes, the reality-satire lag time is now down to a week.

Other discussion of the misuse of “consumer fraud” laws to interfere with free speech: Jul. 1, 2003; Nov. 30, 2004. As Eric Berlin points out, Ms. Carlson doesn’t even buy the sweetened cereal in question, so she’s asking for billions because she has to say “No” to her children. More on the problem of the injury-free class action at the AEI Liability Project.

Filed under: advertising, fraud, Massachusetts