Saturday, April 5, 2014

Diploma Privilege: Why Some Believe Bar Exams Should be Eliminated

Are Bar Exams really necessary? The Iowa State Bar Association isn't so sure. In this episode of Lawyer2Lawyer, hosts Bob Ambrogi and J. Craig Williams interview Iowa State Bar Association President Guy Cook and Clinical Professor of Law John Whiston to learn why Iowa could soon offer Diploma Privilege for its law graduates. Cook is the current president of the Iowa State Bar Association. He is an Iowa native who has been practicing law for over 30 years. Guy is a board certified trial attorney, former federal prosecutor, and senior partner for Grefe and Sidney, P.L.C. where he practices exclusively in litigation. He also serves on the Board of Counselors of Drake University Law School. Whiston is a clinical professor of law at The University of Iowa College of Law. He teaches in the Clinical Legal Programs as well as courses in Evidence, Deposition Practice, Worker's Compensation, and Trial Advocacy. John is a former partner with Rossbach and Whiston, P.C. and has been admitted to practice before the Supreme Court of the United States. Special thanks to our sponsor, Clio.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2014/01/diploma-privilege-believe-bar-exams-eliminated/

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Friday, April 4, 2014

Acrobat Tips and Tricks for Lawyers

In this edition of The Digital Edge, hosts Sharon Nelson and Jim Calloway invite Ernie Svenson, commonly known as "Ernie the Attorney," to discuss his recently published ABA book Acrobat in One Hour for Lawyers and unveil all the abilities, outside of just viewing, that PDFs offer. Topics include the benefits of the professional version versus the standard version, specific features for lawyers such as bookmarking, Bates stamping, redaction, quick tips, and more.
Svenson started his career at mid-sized New Orleans law firm where he learned how to do more with less, and at less cost. This made an easy transition to a solo firm where he continued working on the same kinds of commercial litigation cases he handled at his former firm. He then started PaperlessChase.com to help share what he learned from using technology in his law practice.

Source: http://legaltalknetwork.com/podcasts/digital-edge/2014/01/acrobat-tips-tricks-lawyers

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EA fails to become this year's worst US company (Albuquerque Journal)

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Source: http://news.feedzilla.com/en_us/stories/law/video/366858056?client_source=feed&format=rss

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Mark Cuban Says SEC Plays Unfair With Evidence

It's been nearly six months since a federal jury cleared Mark Cuban of insider trading, but he apparently has no intention of burying the hatchet with the Securities and Exchange Commission.

Source: http://blogs.wsj.com/law/2014/04/04/mark-cuban-says-sec-plays-unfair-with-evidence/?mod=WSJBlog

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Public Speaking: Conquer Your Fears, Deliver Your Message, and Change Lives

“Say something to make them put down their salad fork,” public speaking coach Deb Sofield said. The window of opportunity to engage an audience is small, and your introduction is a key factor in success. In this episode of The Paralegal Voice, Paralegal Mentor Vicki Voisin hosts a lively discussion with Sofield covering public speaking basics, how to conquer fears of public speaking, and general standards to advance your career and daily life.

Sofield is a public speaker, author, and coach. Her goal is help her clients find their voice and deliver their message so that is is impactful and it is heard. She frequently presents on the basics of how to succeed in public speaking worldwide.
Special thanks to our sponsor, NALA.

Source: http://legaltalknetwork.com/podcasts/paralegal-voice/2013/12/public-speaking-conquer-your-fears-deliver-your-message-and-change-lives

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Behind the sounds of Infamous: Second Son (Albuquerque Journal)

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Source: http://news.feedzilla.com/en_us/stories/law/video/367177515?client_source=feed&format=rss

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Enhanced 911, The FCC, and a Grandfather’s Mandate for Direct Dial

In an emergency, seconds count. What if you couldn't call 911 because you couldn't reach an outside line? On this episode of Lawyer 2 Lawyer, host J. Craig Williams interviews Henry "Hank" Hunt, the man petitioning for Kari's Law, and FCC Commissioner Ajit Pai. Together they discuss the importance of uniform dialing for 911.
Henry Hunt's nine year old granddaughter, through no fault of her own, could not reach 911 to save her mother. Despite her multiple attempts, the calls would not connect because the hotel's phone system required dialing 9 to get an outside line. In the wake of these events, this Texas grandfather started the Kari's Law petition which calls for mandated direct-dial 911.
Ajit Pai serves as FCC Commissioner focusing on regulatory environments where competition and innovation flourish. He is the former Associate General Counsel at Verizon. In addition, he has served as Senior Counsel with the Department of Justice and Chief Counsel to the Senate Judiciary Committee's Subcommittee on the Constitution, Civil Rights, and Property Rights.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2014/02/enhanced-911-fcc-grandfathers-mandate-direct-dial

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Medical Marijuana at Work: The Side Effects for Workers’ Compensation

With recreational and medical use of marijuana now approved in some states, concerns of workplace use are being raised. The impacts of this trend range from employee right to treatment and increased employer liability to OSHA regulations and ADA holdings. On this episode of Workers Comp Matters, host Alan Pierce discusses these issues along with medical studies, toxicology reports, and the intoxication defense with experts Jim Andrews and Albert Randall.
Jim Andrews has served as an executive in the pharmacy industry for the past 30 years. Currently, he is the Executive Vice President of Pharmacy Services for Healthcare Solutions and a frequent presenter on industry topics. He is also a renowned writer and thought leader in pharmacy journals.
Albert Randall is a principal at Franklin and Prokopik where his practice concentrates in employer defense for labor and employment, workers' compensation, tort liability, administrative and regulatory matters, and general civil litigation. He is also a member of the National Defense Lawyers Network and counsel to Maryland Motor Truck Association.

Source: http://legaltalknetwork.com/podcasts/workers-comp-matters/2014/02/medical-marijuana-work-side-effects-workers-compensation

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6th DUI Conviction, And You Think That’s A Stiff Sentence?

drunk%20driving%20urinal%20cake%20call%20for%20a%20ride.jpg

If you are convicted of driving under the influence SIX times, you should be doing a hell of a lot more time than this bloke. As reported by phillyburbs.com:

A Warrington man will have to spend 11½ to 23 months in the Montgomery County prison for his sixth drunken driving offense.

Robert Cuthbert, 47, of the 1200 block of Folly Road, also will have to serve an additional three-year probation sentence after he completes his parole time.

Assistant District Attorney Nathan Schadler on Friday explained that the reason for the stiff sentence is because this is Cuthbert’s sixth driving under the influence conviction.

“Stiff sentence” my arse. And check out how drunk he was. “He had way too many,” said Schadler, noting that Cuthbert had a blood alcohol percentage of at least 0.243 percent. That is three times the state’s legal driving limit of 0.08 percent.

That, Juice readers, is shitfaced.

“Hopefully this sentence sends a strong message to the public and to him that we will do what has to be done to protect our highways from drunken drivers,” said Schadler.

Strong message? More like, you can turn your car into a death machine over and over and over and over and over again, and still get just 1-2 years.

Source: http://rss.justia.com/~r/LegalJuiceCom/~3/ebvCsnVQ_tI/afa.html

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Thursday, April 3, 2014

Roberta Gelb on Technology Training

Roberta Gelb, president of Chelsea Office Systems, talks about how trends such as cloud computing and bring your own device (BYOD) have law firms realizing the importance of training in the adoption of new technologies.

Source: http://www.law.com/jsp/law/sign_me_in.jsp?article=http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202597117056&rss=newswire

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Legal Experts React to Supreme Court’s Campaign-Finance Ruling

Wednesday’s 5-4 ruling on political contributions in McCutcheon v. Federal Election Commission is considered by some legal experts to be a companion to the court's 2010 ruling, called Citizens United v. Federal Election Commission. Here's some early reaction from legal experts.

Source: http://blogs.wsj.com/law/2014/04/02/legal-experts-react-to-supreme-courts-campaign-finance-ruling/?mod=smallbusiness/

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Managing Overflow Work with Freelance Attorneys

When overwhelmed with work, some firms hire freelance attorneys to fill the gap between client demand and firm capacity. Whether it's niche expertise, transactional labor, or long-term temp. assignments, these contract attorneys are well-equipped to support the unique interests of their hiring firms. On this episode of Legal Toolkit, host Jared Correia interviews talent placement experts Leila Kanani from Intermix Legal Group and Gil Schipani from Tempus Fugit Law to learn more about the benefits of freelance attorney placement. Kanani discusses how firms who hire freelance attorneys benefit from improved workflow and enhanced expertise without the need to hire a permanent associate. Tune in to learn more.
Leila Kanani is an IP solo attorney and founder of Intermix Legal. After over 10 years of practice in BigLaw, she left for more control and balance in her life. Her objective in creating Intermix was to provide a flexible framework for experienced attorneys to participate in project-based contract legal services for solos and small firms.
Gil Schipani is the founder of Tempus Fugit Law, which specializes in substitute counsel/court coverage for lawyers as well as single transaction services. He is currently a partner with Schipani and Sinay and former Assistant City Solicitor of Brockton, Massachusetts. His practice area focuses on real estate, personal injury, business, and employment law.

Source: http://legaltalknetwork.com/podcasts/legal-toolkit/2014/03/managing-overflow-work-freelance-attorneys

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Clearly Her Worst Dating Experience

dating date

Dating is always a crapshoot.  This date, though, ended in a very strange way. As reported in the police blotter from the 94th Precinct (Greenpoint–Northside) via brooklynpaper.com:

The victim said she went on a date with the guy and, at the end of the night, he turned cretinous because she did not want to spend the night.

While they were standing between Union Avenue at 1:15 am, the galoot grabbed her phone out of her hand and ran into the subway, she told police.

Bet when the check came he “forgot his wallet.”

Source: http://rss.justia.com/~r/LegalJuiceCom/~3/Rj5FazOh_fU/asfds.html

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How Bad Ideas Grow Legs

Last January, Instapundit lawprof Glenn Reynolds wrote a short essay that became the darling of many folks who take an interest in criminal justice issues entitled Ham Sandwich Nation: Due Process When Everything is a Crime. To be kind, it was a simplistic rehash of long-time, discredited silver-bullet solutions to complex problems. The only virtue was that it came from Reynolds, who was a law professor and thus credible by definition even though he was dabbling at the edges of an area of law about which he knew nothing.

It was excoriated here. Gideon beat it up at A Public Defender as well. Unlike Reynolds, this wasn't a theoretical exercise for us. We lived with the problems, and would wind up living with whatever inane solution seemed like a cool idea to an academic.  Whereas Reynolds' mantle of scholarly credibility was an asset for others whose interest came from a distance, ours was nuts and bolts, from living with the detritus of bad ideas in the trenches.

Radley Balko took us to task for being critical of Reynolds. The Agitator offered a homily of cooperation, arguing that we ought to work with luminaries like Reynolds rather than saying mean things like their ideas aren't fabulous. After explaining what was horribly wrong with a particular idea promoted by Reynolds that Radley found especially interesting (loser pays in criminal litigation), I wrote:

Radley also questioned by twit why I wasn't more open to embracing the ideas proffered by Glenn Reynolds and Conor Friedersdorf, "And it's probably more productive to engage, persuade new allies than to shun and mock them."  Since I hate to be a shunner or mocker, and I try to be relatively informative as reflected in this response to Radley's query, I look forward to Reynolds and Friedersdorf, our new allies, engaging. Engage away, guys. Your turn.

Of course, I was shunning and mocking, just as Radley said. But then, I had no plan to suck up to Reynolds in an effort to gain him as an ally anymore than I planned to teach a pig to sing. As players in punditry go, Reynolds is a major player,* and he enjoys his importance. He doesn't swim with minnows like Gid and me. At most, he eats us for a snack. Radley may have been well-intended, but didn't really appreciate the pecking order.

Of course, there was nothing to stop Reynolds, either before or after he published his Ham Sandwich essay, from speaking with people who were actually knowledgeable about criminal law, whether that was Gid and/or me, or some other trench lawyers, who could explain why good ideas on paper don't play as well in the courtroom.  But no. He didn't. Since it was his essay being published to enlighten the world, it was his duty to get a clue, and his choice not to.

My point to Radley at the time was the when loud voices with ascribed credibility write something like this, bad things happen. Bad ideas are taken more seriously. Other people will mistakenly assume that Reynolds, lawprof and all, has a clue what he's talking about and his ideas must have merit. After all, lawprofs could never be wrong about lawstuff.  And now that Reynolds had rung the bell, it could not be unrung.

George Will, certainly one of this country's leading conservative intellectuals, heard the peal of Reynolds' bell this week. In an otherwise excellent column on Senators Leahy and Rand's efforts to provide a backdoor to mandatory minimums (which raises the question of why they aren't seeking to end mandatory minimums through the front door, but we'll take it anyway they offer it), Will goes from the sublime to the ridiculous:

The House Judiciary Committee has created an Over-Criminalization Task Force. Its members should read “Three Felonies a Day: How the Feds Target the Innocent,” by Harvey Silverglate, a libertarian lawyer whose book argues that prosecutors could indict most of us for three felonies a day. And the task force should read the short essay “Ham Sandwich Nation: Due Process When Everything Is a Crime” by Glenn Harlan Reynolds, a professor of law at the University of Tennessee. Given the axiom that a competent prosecutor can persuade a grand jury to indict a ham sandwich, and given the reality of prosecutorial abuse — particularly, compelling plea bargains by overcharging with “kitchen sink” indictments — Reynolds believes “the decision to charge a person criminally should itself undergo some degree of due process scrutiny.”

He also suggests banning plea bargains: “An understanding that every criminal charge filed would have to be either backed up in open court or ignominiously dropped would significantly reduce the incentive to overcharge. . . . Our criminal justice system, as presently practiced, is basically a plea-bargain system with actual trials of guilt or innocence a bit of showy froth floating on top.”

While Instapundit is a Big Kahuna on the interwebz and among academics, George Will has a soap box that dwarfs Reynolds. And he's taken Reynolds' "ideas" mainstream, not only crediting Reynolds for his position as an academic, but taking for granted that he's got criminal law chops.  It's unlikely that George checked Reynolds out at Tennessee Law School, where he teaches Administrative Law, Constitutional Law, Law, Science, and Technology, Space Law, Internet Law. See criminal law in there? See anything in his past to suggest even a passing familiarity with the actual practice of criminal law? Me neither.

Yet, I look forward to some fine senators extolling the virtue of a dangerous and hare-brained reform of the law, citing to Glenn Reynolds' Ham Sandwich essays as the font of practical criminal law brilliance.  Because the myth has now been created and George Will gave it legs.

And this is how we end up with monumentally bad ideas being enshrined in law.


* For those who aren't familiar with Instapundit, this from Reynolds' Wikipedia page

Much of Instapundit's content consists of links to other sites, often with brief comments. (His frequent use of "heh," "indeed," and "read the whole thing" have been widely imitated and are often parodied by other bloggers.) Reynolds encourages readers to explore the wider blogosphere and to fully read articles and posts to which he links.
And that's the foundation for being a major player on the internet.




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Source: http://blog.simplejustice.us/2013/07/10/how-bad-ideas-grow-legs.aspx?ref=rss

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Google v. Authors Guild: The 8-Year-Legal Battle Comes to a Close

This landmark case, involving Google’s digitization project of scanning 20-million books to make them searchable through the Internet, was decided in favor of Google. “In my mind, this is a fair-use case that we will never see again,” Andrew Albanese, senior writer for Publisher’s Weekly, said, declaring the case a benchmark for future decisions. It was ruled that Google met the requirements of fair use and all four factors in defense of copyright infringement. In this edition of Lawyer2Lawyer, hosts Bob Ambrogi and Craig Williams chat with Andrew Albanese about the case, whether this constitutes transformative use, and what this case means for the online-media industry as a whole.

Andrew Albanese has been covering Google vs. Authors Guild since it’s inception in 2005. As senior writer for Publishers Weekly, he focuses on copyright wars and how the Internet is changing protected works. His book, The Battle of $9.99: How Apple, Amazon and the “Big Six” Publishers Changed the E-Book Business Overnight, covered the Apple price-fixing case and the introduction of e-books to society.

Special thanks to our sponsor, Clio.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2013/12/google-v-authors-guild-the-8-year-legal-battle-comes-to-a-close

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Thailand PM faces legal challenge for transferring government official

[JURIST] Thailand's Constitutional Court [official website] announced Wednesday that they will hear a case accusing Prime Minster Yingluck Shinawatra [BBC profile; JURIST news archive] of misconduct for transferring her National Security Council [official website, in Thai] chief to another position. The complaint, filed by opposition leaders, accuses Shinwatra of violating the Constitution when in 2009 she demoted Tawin Pleansri from his position as head of the National Security Council to an adviser to the prime minister. The Supreme Administrative Court...

Source: http://jurist.org/paperchase/2014/04/thailand-pm-faces-legal-challenge-for-transferring-government-official.php

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Retirement at different times

In Life After Law: What Will You Do for the Next 6,000 Days? I focused on the options available to the lawyer in the last phase of his / her career and how to prepare for a profitable exit strategy.  What I did not address, however, is the lawyer whose spouse is working and may not yet be ready to retire, travel or otherwise be on the “same page” as the first spouse or significant other…

What to do?  The obvious response, as in so many such life situations, is communication.  Talk with your spouse or significant other.  Discuss the options open to the both of you.  Determine whether it’s o.k. for one to play, e.g., go skiing or traveling, etc., while the other stay home and works, whether the two can survive separate paths for a while and then come back together, and do this from time to time.

This is not a small issue or unimportant discussion, to be taken lightly.  It’s critical.  If not done well, you may find yourself in a divorce.  And if this results, you will feel as though you are in the center of a hurricane, or worse.  Aside from the psychological trauma, your financial projections which permitted the retirement, or change of career, go out the window … and you may be forced back to work, something you may or may not be able to do successfully.

Source: http://feeds.lexblog.com/~r/LawBizBlog/~3/lK1hVAhTE1I/

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Wednesday, April 2, 2014

Colorado’s Gun Laws Go to Trial

Opening arguments began on Monday in a federal trial over the gun restrictions that Democratic Colorado Gov. John Hickenlooper and state lawmakers approved a year ago.

Source: http://blogs.wsj.com/law/2014/04/01/colorados-gun-laws-go-to-trial/?mod=WSJBlog

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NLRB "recess" appointments were unconstitutional; Board lacked a quorum

Noel Canning v. NLRB (DC Cir 01/25/2013)

The DC Circuit this morning held that the President's attempt to make "recess" appointments of three NLRB Members was invalid under the constitution.

On February 8, 2012 the Board issued its decision finding that the employer violated the NLRA by refusing to reduce to writing and execute a collective bargaining agreement reached with Teamsters Local 760. At that time the Board purportedly had five members. Two of these had been confirmed by the Senate. Three of these were appointed on January 4, 2012, purportedly pursuant to the constitution's recess clause.

At the time of the President’s purported recess appointments, the Senate was operating pursuant to a unanimous consent agreement, which provided that the Senate would meet in pro forma sessions every three business days from December 20, 2011, through January 23, 2012. The DC Circuit held that "recess" appointments must occur during an "intersession" recess of the Senate, that is to say, the period between sessions of the Senate when the Senate is by definition not in session and therefore unavailable to receive and act upon nominations from the President.

Because the appointments were invalid, the Board lacked a quorum (three Members) and its order was "void."

Lots of chatter from all over:

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Source: http://www.lawmemo.com/blog/2013/01/nlrb_recess_app_1.html

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Supreme Court to rule on patent appeals

[JURIST] The US Supreme Court [official website] on Monday granted certiorari [order list, PDF] in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. [docket] to determine how the US Court of Appeals for the Federal Circuit is to interpret claims in a patent appeal. Federal appeals courts traditionally review a district court's conclusion only to determine if their decision was "clearly erroneous." However, the Federal Circuit has a long-standing practice of reviewing patent appeals de novo by exercising its own independent...

Source: http://jurist.org/paperchase/2014/03/supreme-court-to-rule-on-patent-appeals.php

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THE CAREERIST: Magic Circle Partner Rates Up

Magic Circle partners' rates are up to 850 pounds per hour, which is about $1,376. That represents an increase of 62 percent since 2005, but the Brits don't make as much as the Yanks.

Source: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202631240493&rss=rss_nlj

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What Would Atticus Have Done?

Hearing that the mob was going to storm the jail and lynch Tom Robinson, the fictional Atticus Finch stood at the doorway to block their entrance. Among criminal defense lawyers, Atticus Finch is revered as a paragon of honor. Not all lawyers saw it that way.

In 1992, Monroe Freedman, a legal ethics expert, published two articles in the national legal newspaper Legal Times calling for the legal profession to set aside Atticus Finch as a role model. Freedman argued that Atticus still worked within a system of institutionalized racism and sexism and should not be revered. Freedman's article sparked a flurry of responses from attorneys who entered the profession holding Atticus Finch as a hero, and the reason they became lawyers. Critics of Atticus such as Freedman maintain that Atticus Finch is morally ambiguous and does not use his legal skills to challenge the racist status quo in Maycomb.
Monroe H. Freedman, ""Atticus Finch, Esq., R.I.P.,"" 14 LEGAL TIMES 20 (1992); Monroe H. Freedman, ""Finch: The Lawyer Mythologized,"" 14 LEGAL TIMES 25 (1992) and Monroe Freedman, Atticus Finch – Right and Wrong, 45 Ala. L. Rev. 473 (1994).
While Atticus might have fulfilled the highest calling of a lawyer, Freedman saw the character as failing his calling as a human being in a racist society, and considered that to be a fatal flaw.

Yesterday was Race Day at the New York Times, where two op-eds argued the failure of a certain verdict in Florida was due to the one word unspoken throughout the trial, race.  In a "surprising" choice that suggests the power of an excellent public relations team, one op-ed was by Gloria Allred's daughter, Lisa Bloom, who, after explaining the basis for her assumption about what was inside George Zimmerman's head, illuminated the race issue with the insightful:

Huh?
In contrast, Cardozo lawprof Ekow Yankah invokes the spirit of his fellow lawprof, Freedman, in writing:

The anger felt by so many African-Americans speaks to the simplest of truths: that race and law cannot be cleanly separated. We are tired of hearing that race is a conversation for another day. We are tired of pretending that “reasonable doubt” is not, in every sense of the word, colored.

Every step Mr. Martin took toward the end of his too-short life was defined by his race. I do not have to believe that Mr. Zimmerman is a hate-filled racist to recognize that he would probably not even have noticed Mr. Martin if he had been a casually dressed white teenager.
This conforms with my assumption as well. I find it impossible to believe that Zimmerman's perception of Martin as being "a punk" wasn't colored by race. Sure, there was also youth and attire, but it was part of the whole package. And to the extent that his skin color played a role in his perception that this was a kid who needed to be followed, who posed a threat of doing something wrong, it is racist.  Maybe not white hooded, cross-burning racism, but racist nonetheless.

This isn't a legal argument, however. Bloom and Yankah are both writing from the legal perspective, but what they are writing about isn't legal. It's sociological, a condemnation of a society that is still racist despite having a black president.  Anyone who thinks it's "problem solved" is delusional.

But Yankah contends that it is "the simplest of truths: that race and law cannot be cleanly separated."  Cleanly? No, it probably can't be cleanly separated, though it's similarly unclear that this constitutes "the simplest of truths." There is nothing simple about it.

It gives rise to a troubling question, that Yankah fails to adequately address and is way over Bloom's head.

What is reasonable to do, especially in the dark of night, is defined by preconceived social roles that paint young black men as potential criminals and predators. Black men, the narrative dictates, are dangerous, to be watched and put down at the first false move. This pain is one all black men know; putting away the tie you wear to the office means peeling off the assumption that you are owed equal respect. Mr. Martin’s hoodie struck the deepest chord because we know that daring to wear jeans and a hooded sweatshirt too often means that the police or other citizens are judged to be reasonable in fearing you.

We know this, yet every time a case like this offers a chance for the country to tackle the evil of racial discrimination in our criminal law, courts have deliberately silenced our ability to expose it. The Supreme Court has held that even if your race is what makes your actions suspicious to the police, their suspicions are reasonable so long as an officer can later construct a race-neutral narrative.

Being fully willing to accept that race factored into Zimmerman's perception, based on my own personal bias, the question that remains unanswered is what should the law have done about it?

Does the introduction of race by the prosecution into Zimmerman's perceptions alter the rule of self-defense? Does it render his subsequent conduct unlawful, even if it would have been lawful otherwise? Should there be two rules of law, one for interactions between people of different races where perceptions of the significance of conduct is assumed to be racially related, if not motivated? 

To point out that we still live in a society where race remains a pervasive unresolved issue is to state the obvious. To suggest that the criminal law should accommodate it is to present an intractable problem. Atticus Finch didn't hesitate to put his life on the line for his client, a black man accused of raping a white woman. But he didn't do enough because he didn't confront the racist society in defending Tom Robinson?

If the prosecution had been allowed, and inclined, to argue that George Zimmerman's conduct was racially motivated, and that his ultimate decision to shoot and kill Trayvon Martin was, at least in the tiniest of ways, based upon his race, would that have rendered his belief that he was about to suffer death or serious injury unreasonable?  If his head was being beaten against concrete by a white youth, as opposed to a black youth, would the harm have been different?

The argument that this scenario would never have commenced had Trayvon Martin been a white youth in a sports jacket and khakis is likely true. It's pure speculation no matter how much your head screams "yes, yes, yes," of course, but still. Yet how would the law have been any different at the point where a shot was fired? 

If we are to have a nation of laws to guide ourselves, how do we draw these vague, fuzzy lines where the law ceases to apply, where it's a free for all, where there is no longer a fixed right and wrong and everything becomes a matter of feelings, assumptions and personal perspective?  Yankah may be right that race and law cannot be cleanly separated in our collective consciousness, but then we cease to be a nation of laws when we ignore one for the other.

You might prefer that to happen here, but will you feel the same when you sit in the defendant's chair?  So what would Atticus Finch have done? He would have defended George Zimmerman based on the law, even if he failed to meet Monroe Freedman's expectation that he not be morally ambiguous. Atticus Finch would have still been the paragon of honor, even in the face of societal condemnation. That's what criminal defense lawyers do. That's what we are sworn to do.

 

 

 



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Source: http://blog.simplejustice.us/2013/07/16/what-would-atticus-have-done.aspx?ref=rss

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GM’s Mary Barra Testifies on Capitol Hill

GM Chief Executive Mary Barra is set to tell lawmakers at a Capitol Hill hearing Tuesday that she is still working to get to the bottom of why the auto maker botched an ignition-switch recall that has now been linked to 13 deaths. David Friedman, the acting administrator of the National Highway Traffic Safety Administration, is expected to be asked about whether NHTSA missed multiple chances to identify the defect.

Here is the live blog of the hearing in Washington D.C. and what you need to know about the GM recalls.

Source: http://blogs.wsj.com/law/2014/04/01/gms-mary-barra-testifies-on-capitol-hill/?mod=WSJBlog

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HRW: China pressuring Nepal to impose restrictions on Tibetans

[JURIST] Nepal has imposed increasingly harsh restrictions on Tibetan refugees under strong pressure from China, Human Rights Watch (HRW) [advocacy website] claimed [press release] Tuesday. The statement cites a recent HRW report [text] detailing Nepali authorities' abuses of Tibetans who have come to the country fleeing persecution in China. The report claims that Nepal has blocked Tibetans trying to cross the border and regularly subjects refugee communities to "excessive use of force, arbitrary detention [and] ill-treatment in detention," among other...

Source: http://jurist.org/paperchase/2014/04/china-pressures-nepal-to-impose-restrictions-on-tibetans.php

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SEC Brings Charges Against SEC Registered Investment Adviser for Improperly Allocating Expenses and Other Violations of the Investment Advisers Act of 1940 (the “Advisers Act”)

On February 25, 2014 the Securities and Exchange Commission (the “SEC”) filed public administrative and cease-and-desist proceedings against Arizona-based Clean Energy Capital, LLC (a registered investment adviser, “CEC”) and its founder and Chief Executive Officer Scott Brittenham charging that CEC and Brittenham committed the following violations with respect to the 20 private equity funds sold and managed by CEC primarily under the name of Ethanol Capital Partnership, L.P. (the “ECP Funds”)…

  1. CEC and Brittenham misappropriated more than $3 million from the ECP Funds by improperly allocating CEC’s expenses to the ECP Funds without adequate disclosure to investors.
  2. CEC and Brittenham secretly caused the ECP Funds to borrow money from CEC at unfavorable rates, pledging the ECP Funds’ own assets as collateral, to enable the ECP Funds to pay for these inappropriate expenses.
  3. Beginning in August 2011, CEC changed the calculation of dividend distributions for certain of the ECP Funds, which adversely affected the dividends received by certain of their investors and increased distributions to CEC, without disclosure to investors.
  4. In 2009, CEC and Brittenham falsely induced a previous investor to invest in a new ECP Fund by knowingly misrepresenting the amounts of the investments by Brittenham and another co-founder in the new ECP Fund.
  5. CEC violated the custody rule by failing to use a qualified custodian and failing to segregate fund assets.
  6. CEC’s compliance policy was inadequate because it incorrectly described the custody rule, which resulted in the above violation.
  7. For the ECP Funds offered in late 2008-2010, CEC concealed a co-founder’s SEC disciplinary history in the offering documents for the funds.

Improper Allocations

As described in the SEC’s order, CEC and Brittenham improperly allocated at least $3 million of expenses, primarily for CEC employee compensation and CEC office expenses, to 19 of the ECP Funds. These expenses included CEC’s rent, salaries, office lunches, business cards, employee hiring costs, gifts, CEC registration expenses and other employee benefits such as tuition costs, retirement, and bonuses. Brittenham allocated approximately $1.1 million to himself, including 70% of a $100,000 bonus he awarded to himself.

Improper Loans

The payment of the improperly allocated expenses shrank the cash reserve of the ECP Funds. In order to continue paying for such expenses with ECP Fund assets, CEC made unauthorized “loans” to the funds with inflated interest rates reaching as high as 17.38%. CEC also entered into pledge agreements with these ECP Funds, giving CEC a first priority security interest in the respective ECP Funds’ assets.  The pledge agreements constituted principal transactions between CEC and the ECP Funds, and neither CEC nor Brittenham provided written notice or obtained consent from the ECP Funds prior to such principal transactions.

Improper Distributions

CEC and Brittenham further benefitted when they changed the way that CEC calculated the distribution waterfall in several respects to the detriment of fund investors and with inadequate or no disclosure of these material changes to the investors.

Misrepresentations

Brittenham also lied to an investor of the ECP Funds and told him that he and another co-founder were personally investing $100,000 each in the fund in order to induce the investor to contribute to the ECP Funds. In reality, Brittenham and the co-founder only invested $25,000 each in the ECP Funds.

Violation of Custody Rule and Inadequate Compliance Policies and Improper Disclosure

Rather than utilize a qualified custodian, CEC kept original stock certificates for securities owned by the ECP Funds in its office. CEC also did not send audited financial statements to the limited partners of the ECP Funds until January 2013, at which time it sent audited financial statements for fiscal year 2011. No audited financial statements have been sent since January 2013.  CEC also never obtained a surprise exam.

In addition, some of CEC’s compliance policies incorrectly described the custody rule, Rule 206(4)-2(b) under the Investment Advisers Act of 1940. Finally, the private placement memoranda for certain offerings of the ECP Funds, which were offered and sold to investors from December 2008 through June 2010, did not disclose a co-founder’s previous disciplinary settlement with the SEC.

Violations of Law

The SEC charges that as a result of the conduct described above, CEC and Brittenham willfully violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer or sale of securities and in connection with the purchase or sale of securities.

In addition, CEC and Brittenham willfully violated the Advisers Act and Rule 206(4)-8(a) promulgated thereunder, which, among other things, prohibit fraudulent conduct.  The SEC also alleges that CEC and Brittenham willfully violated the prohibition against principal transactions without proper disclosure and consent, willfully retained custody of clients’ funds and securities without retaining a qualified custodian, willfully violated the requirement to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and its rules and willfully violated Section 207 of the Advisers Act which makes it unlawful to make any untrue statement of a material fact in any registration report filed with the SEC.

In light of these allegations, the SEC has ordered cease-and-desist proceedings to determine whether the allegations are true and what remedial action is appropriate, including, but not limited to, disgorgement and civil penalties.

Next Steps

CEC and Brittenham have twenty days to respond to the SEC order and a public hearing will be held between 30 and 60 days from the service of the order. An administrative law judge will issue an initial decision within 300 days of the date of service of the order.

Commentary

Of particular note to CCOs, we observe that even though the SEC proverbially “threw the book” at CEC and charged CEC and its founder with a number of “minor” violations such as improperly describing the custody rule in CEC’s compliance policies in connection with the more serious fraud charges, the SEC interestingly did not charge CEC’s CCO with any wrongdoing.  The SEC action describes the facts surrounding the CCO’s actions while CEC’s founder was lying to an investor regarding the amount of investment that the founder was making in a newly-launched fund advised by CEC.  The facts state that (i) the CCO accused the founder over email of asking him to lie to the investor about the amount of the founder’s investment in the new ECP fund and (ii) the CCO refused to lie to the investor and resigned over the matter.  We believe that this particular fact pattern shows that a CCO may be able to protect herself from SEC action if she knows that there are occurrences of violations of law at the investment adviser with whom she is associated if she promptly documents the violation and resigns if the violation is not remedied to her satisfaction.

For further information regarding the foregoing, please contact either Thomas Devaney (TDevaney@sheppardmullin.com; 212-634-3042), Jung Yeon Son (JSon@sheppardmullin.com; 650-815-2676), or Lauren Lewis (LaLewis@sheppardmullin.com; 650-815-2672).

Disclaimer

This update has been prepared by Sheppard, Mullin, Richter & Hampton LLP for informational purposes only and does not constitute advertising, a solicitation, or legal advice, is not promised or guaranteed to be correct or complete and may or may not reflect the most current legal developments. Sheppard, Mullin, Richter & Hampton LLP expressly disclaims all liability in respect to actions taken or not taken based on the contents of this update.

Source: http://www.corporatesecuritieslawblog.com/2014/03/sec-brings-charges-against-sec-registered-investment-adviser-for-improperly-allocating-expenses-and-other-violations-of-the-investment-advisers-act-of-1940-the-advisers-act/

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Tuesday, April 1, 2014

Does the Government Need More Ammo to Fight Patent Trolls?

Current and former senior members of the executive and judicial branches say the courts and the Federal Trade Commission may already have the tools to fight patent trolls.

Source: http://www.law.com/jsp/law/sign_me_in.jsp?article=http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1202649226713&rss=newswire

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United States Supreme Court Holds That Section 806 of the Sarbanes-Oxley Act Extends to Employees of Private Companies Who Are Contractors or Subcontractors for Covered Public Companies

In Lawson v. FMR, LLC, No. 12-3, 2014 WL 813701 (U.S. Mar. 4, 2014), the Supreme Court of the United States, in a 6-3 decision reversing the United States Court of Appeals for the First Circuit, held that the whistleblower protection provision in Section 806 of Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”), protects employees of publicly traded companies and employees of privately held companies that are contractors or subcontractors for a covered publicly traded company.  In reaching this decision, the Supreme Court has clarified the definition of “covered employee” under the whistleblower provisions of SOX and expanded the scope of SOX.

Petitioners in this action were former employees of privately held companies that contracted to advise or manage mutual funds, which were publicly traded companies with no employees.  Petitioners each brought separate actions in the United States District Court for the District of Massachusetts, where they alleged unlawful retaliation by their employers in violation of the whistleblower protections of Section 806 of SOX.  Section 806 provides, in relevant part, that “[n]o company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 . . . or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee . . . . ”

Petitioners’ privately held employers moved to dismiss the claims, arguing, in part, that petitioners were not “covered employees” within the meaning of Section 806.  The district court denied the motions, ruling that the SOX whistleblower protection in Section 806 extended to employees of private agents, contractors and subcontractors to public companies.  On appeal, the First Circuit reversed, holding that the whistleblower protections of Section 806(a) do not extend to an employee of a contractor or subcontractor [see blog article here].  The Supreme Court granted certiorari.

The Supreme Court (Ginsberg, J.) reversed.  In its review, the Court looked first to the ordinary meaning of the statute.  The Court held that “nothing in [SOX’s] language confines the class of employees protected to those of a designated employer [and] absent any textual qualification, we presume the operative language means what it appears to mean:  A contractor may not retaliate against its own employee for engaging in protected-whistle blower activity.”  Thus, “based on the text of [SOX], the mischief to which Congress was responding, and earlier legislation Congress drew upon, that [SOX] shelters employees of private contractors and subcontractors, just as it shelters employees of the public company served by the contractors and subcontractors.”

In reaching this decision, the Court chose to disregard the titles and headings within SOX, some of which lend credence to respondent’s arguments, because, the Court explained, SOX “is attended by numerous indicators that the statute’s prohibitions govern the relationship between a contractor and its own employees; we do not read the headings to ‘undo or limit’ those signals.”

The Court found further support by reviewing the underlying purpose of SOX — namely, to prevent “another Enron debacle.”  The Court held that the desire to prevent another Enron debacle was reflected in the legislative record of SOX, a record which focused on the role that contractors had in facilitating the Enron fraud.  Given the extensive legislative record, the Court concluded that “one can safely assume that Congress enacted [SOX] aiming to encourage whistleblowing by contractor employees who suspect fraud involving public companies with whom they work.”

Finally, the Court rejected the dissent’s view that the Court’s ruling was “all too inclusive” and could open the floodgates to SOX litigation.  The majority argued that the dissent’s view that the floodgates would open was simply hypothetical as the “DOL’s regulations have interpreted [SOX] as protecting contractor employees for almost a decade.”

In light of the Supreme Court’s ruling, the definition of the term “covered employee” has been clarified and broadened, and it is now clear that the group of persons potentially covered by the protections of Section 806(a) of SOX include not only employees of publicly traded companies, but also employees of privately held contractors and subcontractors who provide services to the publicly traded companies.

Source: http://www.corporatesecuritieslawblog.com/2014/03/united-states-supreme-court-holds-that-section-806-of-the-sarbanes-oxley-act-extends-to-employees-of-private-companies-who-are-contractors-or-subcontractors-for-covered-public-companies/

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Senate Vote Ends Feud Over Ninth Circuit Seat

The Senate today is expected to fill the longest judicial vacancy in the federal courts with a vote that could end nine years of quarreling over a seat on the U.S. Court of Appeals for the Ninth Circuit.

Source: http://www.law.com/jsp/law/sign_me_in.jsp?article=http://www.law.com/jsp/nlj/legaltimes/PubArticleLT.jsp?id=1202649038021&rss=newswire

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DRC urged to adopt new law to prosecute war crimes

[JURIST] A coalition of 146 Congolese and international human rights organizations released a joint declaration [text, PDF] Tuesday urging the Democratic Republic of Congo (DRC) [BBC backgrounder] to create new mechanisms in its national justice system for prosecuting war crimes. Specifically, the declaration urged the Congolese government and its president, Joseph Kabila [Britannica profile], to establish specialized mixed chambers and adopt legislation implementing the Rome Statute of the International Criminal Court (ICC) [official website] during the current parliamentary session. The...

Source: http://jurist.org/paperchase/2014/04/drc-urged-to-adopt-new-law-to-prosecute-war-crimes.php

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Sound The Retreat (Update)

Remember when the word "wilding" was introduced into the general lexicon so that we would have a word to capture the "super-predator" gangs of youths who were intent on destroying society?  It came out of the Central Park Five case, and produced a huge shift in our approach to juvenile prosecution and punishment. 

"Justice," people cried. They demanded justice. Don't let these super-predator kids destroy our world with wilding. 

Except it didn't happen. The kids never beat and raped a woman in Central Park, and were coerced into false confessions.  Of course, we didn't learn that until much later, after the wilding scare had done its damage to our laws, procedures and psyches, to save us from the super-predators and give us justice.

The New York Times has a post-Zimmerman-verdict editorial today that threatens to do the same. It's titled "Trayvon Martin's Legacy," a blatant appeal to emotion. Invoking the name of a dead child has proven one of the most utilitarian methods of manipulation available, and the Times unabashedly uses it to further its point.
But the point of the editorial is just plain wrong:
The jury reached its verdict after having been asked to consider Mr. Zimmerman’s actions in light of Florida’s now-notorious Stand Your Ground statute. Under that law, versions of which are on the books in two dozen states, a person may use deadly force if he or she “reasonably believes” it is necessary to prevent death or great bodily harm — a low bar that the prosecutors in this case fought in vain to overcome.

These laws sound intuitive: who would argue that you may not protect yourself against great harm? But of course, the concept of “reasonable belief” is transformed into something deadly dangerous when firearms are involved. And when the Stand Your Ground laws intersect with lax concealed-carry laws, it works essentially to self-deputize anyone with a Kel-Tec 9 millimeter and a grudge.

It's been explained, calmly and rationally, over and over. It's impossible to believe that the editorial board of the Times, a smart bunch of folks, didn't hear it or grasp it. If so, then what's written here can only be attributed to disingenuousness and a deliberate effort to deceive.

Stand Your Ground laws apply to one aspect of the larger concept of self-defense, and only one: they eliminate the requirement that a person retreat if he can safely do so. To be clear, I believe that Stand Your Ground laws are fundamentally wrong. The balance is a human life, on the one hand, and some machismo principle that a person should not have to endure the humiliation of retreat on the other.

The argument is that they have a right to stand their ground and fight rather than be forced to run away in the face of an attack, even if they can safely do so. Life is not so cheap that it should be taken to protect ego. Many disagree with me, and they're allowed. This isn't a legal judgment, but a moral balance. I come out in favor of life, and have no plans to change.

But that's not how the Times plays the game in its editorial. While blaming Stand Your Ground, they are attacking the basic concept of self-defense having absolutely nothing to do with Stand Your Ground. It's not merely intuitive, which is used to suggest the inherent fight or flight instinct in human beings, but characterized by the Times as some unnatural shift imposed by law to empower "self-deputized" gun nuts with "a grudge."

This is an artfully crafted diversion from the law that existed long before anybody came up with the cool phrase, Stand Your Ground. We always had the right to defend our lives when threatened with death or serious physical injury. If we could safely retreat, then that was the best option and we were required to do so. If not, then we defended our lives.

The underlying gripe is twofold, neither of which have anything to do with Stand Your Ground. The first is playing the race card.  Like most people, I can't let go of the assumption that race influenced perceptions here, even though I have no basis for the assumption. But there is no law, nor can there be, that requires us to behave one way when the interaction is black and white versus white and black, or people of the same race. Does the Times suggest we start writing two sets of laws, maybe more, to accommodate the races of participants?

The second is the gun card, as reflected in the "Kel-Tec 9 millimeter" language. New York, not being at all gun-friendly, is easily shaken by words that make guns sound particularly vicious and high tech. And again, I'm no personal fan of guns, having no interest in strapping one on. But a great many other people are fans, and the Second Amendment protects their right to be fans. It's irrelevant whether that's my favorite amendment, just as it's irrelevant whether cops like the Fourth.

The same Constitution we invoke to protect the rights we favor protects some things that we don't. Either we honor the Constitution or not, and that includes all the parts, even the ones that aren't as dear to us as others.

A guy is cornered, there is no escape. The other guy is big. Huge. Strong. And is about to bash his head in. The cornered guy has a gun (give it whatever nasty gun-type name you want). Should the law prohibit him from using it to save his life? But that's not the facts in Zimmerman, you say. True, but laws don't exist for every conceivable set of facts and circumstances people can come up with, and the law of self-defense applies to this scenario the same as it did in Zimmerman. Would it make you feel better to have the cornered guy die because the law prohibited him from using his gun to save his life?

While the New York Times editorial may fairly argue for racial tolerance and the evils of guns, Second Amendment be damned, what it cannot do is lie to people by claiming that Trayvon Martin would not be dead but for Stand Your Ground laws, and then call for the evisceration of our basic, age-old right to self-defense. The alternative to self-defense when one cannot safely retreat is to die. 

While it's painfully hard to know whether a person's fear of harm was "reasonable," especially when there is only one side to the confrontation who is alive to tell the story, it's a necessary evil in distinguishing whether force can be lawfully used. The choice was made hundreds of years before anyone ever heard of Trayvon Martin or George Zimmerman, and it's been the right choice for all those years since.

As much as many feel that it played out poorly here, it was always understood that some variations in fact on the same theme would touch our sensibilities differently than others. But the flaw was never with the law. The flaw is that we're human and subject to feelings that may defy reason, and not every application of sound and neutral law will make us feel good about what happened.  It's what we must suffer in a society of laws. And the New York Times should know this and be ashamed of itself for engaging in this deception.

Update:  In an interview on Anderson Cooper 360, one of the jurors spoke:

COOPER: Because of the only, the two options you had, second degree murder or manslaughter, you felt neither applied?

JUROR: Right. Well, because of the heat of the moment and the stand your ground. He had a right to defend himself. If he felt threatened that his life was going to be taken away from him or he was going to have bodily harm, he had a right.

This mention of stand your ground gave rise to an apology from Eugene Volokh, who had also written about this Times editorial subsequent to this post.

It thus appears that at least one of the jurors did “consider Mr. Zimmerman’s actions in light of the ... Stand Your Ground provision in Florida’s self-defense law,” and on that the Times editorial was right, and I was wrong to criticize it; my apologies to the editorialists, and to our readers.

While there is no issue that stand your ground had no legal bearing on the case, Eugene apologized for arguing that the aspect of the editorial suggesting that the jury somehow relied on it in reaching its verdict. My view is that these were empty words to the juror, having been uttered too many time in the media before trial, and she offered them in the interview either without any grasp of what they meant or inadvertently.

It was a loose phrase, not a reflection that an unrelated legal concept, mentioned in passing as part of pattern jury instructions, and never argued to the jury, played a role. Loose language shouldn't be taken too seriously and serve as a basis for assuming scholar-like attention to something that scholars universally agree had no place in the case. 

While it was gracious of Eugene to apologize, it was both unnecessary and, perhaps, a mistake to feed misguided understandings about a law which is being blamed for a role it never played.



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Source: http://blog.simplejustice.us/2013/07/15/sound-the-retreat.aspx?ref=rss

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David Crisp To Be Sentenced In Massive Mortgage Fraud Case

Steve Inskeep talks to Gary Silverman of the Financial Times about a real estate fraud scheme that helped make Bakersfield, Calif., one of the home foreclosure capitals of the country.

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Source: http://www.npr.org/2014/03/31/297076367/crisp-to-be-sentenced-in-massive-mortgage-fraud-case?ft=1&f=1070

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Delaware Court of Chancery Grants Summary Judgment Dismissing Breach of Fiduciary Duty Claims In Absence of Evidence of Directors’ “Conscious Disregard” of Fiduciary Duties

In In re Answers Corp. Shareholders Litigation, C.A. No. 6170-VCN, 2014 WL 463163 (Del. Ch. Feb. 3, 2014), the Delaware Court of Chancery (Noble, V.C.) granted summary judgment in favor of defendants in a stockholder class action for breach of fiduciary duty arising out of the merger of Answers Corporation (“Answers” or the “Company”) with AFCV Holdings, LLC (“AFCV”).  Because the undisputed material facts showed that a disinterested majority of the Board of Directors approved the transaction, plaintiffs were required to offer evidence that the Board consciously acted in bad faith or was controlled by an interested party to survive summary judgment.  Plaintiffs were unable to do so.  The Answers decision highlights the high burden stockholder plaintiffs face to proceed with breach of fiduciary duty claims where a merger is approved by an independent/non-controlled board, even where the sale process may have been flawed.  As the court explained, there is a vast difference between “a flawed inadequate effort to carry out fiduciary duties and a conscious disregard for them.”

Answers was a publicly traded Delaware corporation focused on the questions and answers space online.  Approximately 90% of the website’s traffic and 75% of its revenue came from Google.  In March 2010, AFCV, a portfolio company of a private equity firm with a focus on social media and online information resources, submitted an expression of interest to members of the Answers board concerning a possible business combination.  In September 2010, AFCV sent Robert Rosenschein, the Company’s CEO, a letter of intent proposing to acquire Answers for between $7.50 and $8.25 per share.  The Board eventually obtained an offer of $10.25 per share, but refused to grant AFCV exclusivity while it continued to evaluate other alternatives and strategic buyers.

While negotiations were proceeding, the Company’s financial conditions improved significantly when Answers announced its fourth quarter results for 2010.  In January 2011, the financing committee of the Board recommended attempting to increase the offer price beyond the pending $10.25 per share, but to accept that amount if no further concessions on price were obtained.  AFCV responded with its best and final offer at $10.50 per share.  After noting that there were no other offers of the table and recognizing that Google continued to significantly threaten the Company’s core business, the Board unanimously approved the proposed transaction.

Shortly after the announcement of the merger agreement, several stockholder plaintiffs filed complaints in the Delaware Court of Chancery challenging the transaction.  Plaintiffs alleged that Rosenschein (and two other directors) were conflicted and controlled the negotiation process.  Plaintiffs also alleged that the members of the Board breached its fiduciary duties by acting in bad faith to sell Answers before its rising stock price would exceed AFCV’s offer by (1) purposefully engaging in a limited shopping process, (2) failing to act in the interest of the Company’s public stockholders after circumstances had changed to indicate the offer price was too low and (3) exerting willful blindness by ignoring alternatives to the AFCV transaction.

The court granted defendants’ motion for summary judgment.  The court recognized that a disinterested majority of the Board approved the transaction.  Thus, to survive summary judgment, plaintiffs were required to show that the Board consciously acted in bad faith or that it was controlled by an interested party.  Plaintiffs failed to do so.  The directors submitted evidence that they fielded a variety of unsolicited offers and participated in numerous meetings where they discussed transaction alternatives.  Despite discussions with at least seven other possible acquirers, nobody else made a credible offer to acquire Answers.  The directors also caused the Company’s financial advisor to perform a market check.  Moreover, the directors actively negotiated with AFCV on price.  This evidence undermined any assertion of bad faith.

The court discounted plaintiffs’ contention than an email where a director stated that the value of Answers could be as much as $1.50 higher than AFCV’s $10.25 offer price showed “bad-faith” by recognizing that the Board had plausible business concerns regarding the stability and future success of the Company tied to its reliance upon Google for traffic and revenues.  Plaintiffs also ignored the fact that the Board secured additional merger consideration as a result of the Company’s improving financial condition.  As the court explained:

Plaintiffs’ proffered evidence does not create a genuine issue of material fact.  Evidence based upon a few isolated quotes stating the deal was accelerated or reflecting one director’s belief, or perhaps mere bargaining position, of the Company’s value does not state a claim for bad faith in this context.  Such considerations are within the purview of a disinterested Board . . . .  [N]o allegations have been made concerning the Board’s motives for favoring AFCV as a bidder or presenting some other motive for failing to maximize shareholder value.

Ultimately, although plaintiffs argued a “variety of ways in which they believe the process could have been better conducted, they offer no evidence of that extreme set of facts required to show that the board utterly failed to comply with its duties.”

The court also rejected plaintiffs’ claim that Rosenschein and two other directors dominated and controlled the Board to such a degree as to render it not independent.

The decision in Answers confirms that stockholders bear a high burden when challenging a disinterested/non-controlled board’s decision to approve a strategic transaction.  When faced with non-exculpated duty of loyalty claims, Delaware courts will accept a less-than-optimal shop process as long as the directors did not act with a “conscious disregard” of their duty under Revlon, Inc. v. MacAndrews & Forbes Holdings, 506 A.2d 173 (Del. 1986) [see generally here] to maximize stockholder value in a change-in-control transaction.

Source: http://www.corporatesecuritieslawblog.com/2014/03/delaware-court-of-chancery-grants-summary-judgment-dismissing-breach-of-fiduciary-duty-claims-in-absence-of-evidence-of-directors-conscious-disregard-of-fiduciary-duties/

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UN invalidates Crimea referendum

[JURIST] The UN General Assembly [official website] approved a resolution [press release] on Thursday declaring the Crimean referendum to secede from Ukraine invalid. The resolution calls upon all UN states, international organizations and specialty agencies not to recognize any change in status of the Crimean region despite the referendum [JURIST report]. The UN gained broad support for the resolution as 100 states voted in favor, outnumbering the 11 votes against and 58 abstentions. The US Ambassador to the UN Samantha...

Source: http://jurist.org/paperchase/2014/03/un-invalidates-the-crimea-referendum.php

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