May It Please The Court
Quote of the Day - The cost of settling private class action securities fraud litigation continues to rise. The price of poker is going up.
In Response To CAFA, Federal Class Actions Plummet; State Class Actions See Slight Uptick
Perhaps it's not a trend yet, but all indicators point to a shift in filing class action lawsuits from federal courts to state courts. First, we've seen a sharp drop in federal class action filings, largely in response to the Class Action Fairness Act, which makes it harder to mount a federal class action suit. According to Stanford's records, federal securities class actions peaked in 2001 with nearly 500 such actions filed. With more than half of 2007 now in the books, we've seen only 66 such filings so far. The downturn in securities class action lawsuits are of little comfort, however. Companies must now satisfy stringent SOx requirements.
Companies are just marching to the beat of a different drummer. In fact, I'm not sure most companies would consider the trade away from Plaintiff's lawyers to the SEC's enforcement a welcome change.
Even so, the insurance companies have noticed the downward drop in class action filings, but complain because even though the number of class action lawsuits overall has decreased, settlements have spiked upward. That variance makes sense, however. Since Congress has made it harder (but not impossible) to file class action suits, those that are filed receive more attention from Plaintiff's attorneys, who knowing the increased expectations to survive defense challenges, bring better cases rather than more cases.
On the other hand, we've seen a slight uptick in state court class action filings, at least in California, according to the Class Action Defense blog from mega-firm Jeffer Mangels, a point echoed on the Corporate Counsel blog. That latter post turns its focus to the supposed chilling effect of the indictment of partners from class-action superpower law firm Milberg Weiss. This indictment, however, is likely more of an attempt to "let's make an example" rather than cause Plaintiff's lawyers to stop filing class actions.
Indeed, the statistics available show continued filings, with the indictment bringing not much more than a hiccup instead of the expected breather. At most, Plaintiff lawyers have shifted their focus, and it hasn't even slowed down Milberg Weiss, who recently announced the filing of a nationwide class action lawsuit against pet food manufacturers.
Heck, even State attorney generals are getting in on the act.
It remains to be seen whether CAFA, the indictment of Milberg Weiss and the upswing in SEC enforcements will cause a substantial and sustained downturn in class action filings. According to the Rand Corporation, class actions were on a sharp increase in 2002, well before CAFA was enacted.
You can count on one thing, though. Class actions aren't going away. A strong defense is the best way to kill them off.
Mr. Bumble Will Have His Day In Court; Disabled Plaintiffs Cry Foul Over Dismissals
Self-styled Bounty Hunter Attorney Frustrated With Orange County Judges
One Orange County Superior Court judge has made it to the front page of this week's Courthouse News by dismissing disability discrimination suits as frivolous, despite representation by Morse Mehrban. See the article where the judge is accused of misquoting Mr. Bumble in dismissing these cases. Mr. Mehrban refers to himself as a bounty hunter.
In response, the two disabled plaintiffs, David Gunther and Karl Rountree, have filed suit against the California State Court system in Federal Court in Fresno. The allegations also include other Orange County Superior Court judges, the Honorable Greg Lewis, the Honorable John M. Watson, the Honorable Charles Margines, the Honorable Tam Nomoto Schumann and the Honorable Dennis S. Choate, and surprisingly an unnamed clerk of court from Orange County North Court Department N18 (see paragraph 47), who Mehrban threatened with an FBI investigation when she couldn't find his trial documents.
Judge Lewis and Chief Justice of the California Supreme Court (along with another Kern County judge) are defendants in the case. You can read Plaintiff's characterization of Judge Anderson's "Mr. Bumble" comment here in paragraph 39.
Despite Plaintiffs' claims that the California court system has stopped them from petitioning to protect their rights as disabled individuals, MIPTC bets the Honorable Margaret Anderson along with the other judges will be upheld on this case.
Orange County Courts Outsource Data Entry Of Traffic Tickets To Mexico
A local law enforcement listener called Los Angeles radio station KFI and revealed that the Orange County Courts outsource data entry of traffic tickets to Nogales, Mexico, prompting outraged citizens to call (mistakenly) the Orange County Board of Supervisors. The County Board has no authority over the Court system, which is a state-run entity. The shock jocks at the radio station advised listeners to call the Supervisors, apparently not completely understanding governmental organizational boundaries. They've now straightened out their confusion. In response, however, the Orange County, California Superior Court issued this press release, assuring the public that their private data was safe.
According to the press release, "Nogales employees must also be certified by the Sonoran State Police that they have passed a background search and do not have a criminal record. Before entering the segregated work location, employees must check all cell phones, purses, backpacks, and personal items including paper and pens, in a locker. Access to the production area is accessed by approved personnel only."
The Orange County Register, on the other hand, reported that Orange County Supervisor Chris Norby appeared on KFI and "denounced the court's hiring of the outsourcing company. '(DMV information) has to be kept as closely guarded as possible and outsourcing this kind of information outside the country is something this board would never support,' Norby said."
The Court's press release countered, and said it should all be moot sometime in the future: "The Court wants to ensure the public that private data is safe. The Court has taken the lead in facilitating electronic data projects that will, in the future, allow for direct transmission of ticket information from police officers to the Court without the need for a third party."
In the meantime, maybe you shouldn't speed in Orange County.
July 30, 2007 update: The Court has terminated the portion of the contract that allowed public data to be transferred to Mexico.
Lawyer 2 Lawyer Internet Radio Sticks Its Toe In The Pool Of Talent On YouTube
YouTube has played a huge part in the video revolution on the Internet. On this week's Lawyer 2 Lawyer, we will look at the vitality of YouTube as a business and marketing tool . We'll see how law firms are dealing with the popularity of this technology and using it to one-up the competition.
Please join me and my fellow Law.com blogger and co-host Robert Ambrogi as we welcome three guests: Neil Squillante, the publisher of TechnoLawyer, Kevin O'Keefe, the President and founder of LexBlog and Kelly Y. Chang, founder of Law Offices of Kelly Chang and a YouTube user, to discuss this hot topic. Don't miss out on this program!
Britons Ask Their Judges: Have You Lost Your Mind? Where's Your Wig?
A five centuries-old tradition in England has gone the way of the horse and buggy. The Right Honourable Lord High and Mighty Chief Justice of England and Wales, Sir Nicholas Addison Phillips, Baron of Worth Matravers, PC, QC and a host of other pompous and circumstantial (that should read pomp and circumstance, but pompous just sounded better, don't you agree?) awards, has declared them off-limits in courtrooms throughout those two countries.
Judges in Scotland and Ireland, thank you very much, will be allowed to make up their, er, well, own minds, since the authority of the Lord Chief Justice (I made up the part about being high and mighty, but you believed it, didn't you?) does not extend to these other two British colonies - or whatever they're calling them these days.
Holy hairless judges, Batman, how could this have happened?
Perhaps one explanation lies in Judge (dare I call him just that?) Phillips' own clothing choices. Scandalous photographs on the Internet show him wearing a leisure shirt, which strangely enough appears to match the leisure shirt worn by his grandson, who due to his tender years, can't be faulted for his fashion faults. Judge Phillips, on the other hand....
The wigs have apparently gone out of style, according to LCJ Phillips, who said, "while there will never be unanimity of view about court dress, the desirability of these changes has a broad measure of agreement."
The English are masters of the understatement, aren't they? According to London's Business Times, there is in fact little agreed upon at this point: "1,300 judges from the High Court down to the rank of deputy district judge, who sit in civil and family cases, will wear a new, simple gown. There is still no agreement on design. One suggestion is for a dressing-gown style of robe with a simple sash coloured according to rank; another is for a European-style gown buttoning up to the neck."
And to ensure they don't go too far in modernizing the legal profession for the first time since the 1600's, wigs, starched collars and robes will be allowed in criminal proceedings.
We don't wear wigs in court in America, and the Chicago Times article linked immediately below, noted one British barrister's opinion who apparently commented on a televised "white-collar criminal trial in the U.S. and complained that without wigs and robes it was difficult to determine who was a lawyer and who was a defendant."
Just in case you're wondering, there are, according to this Chicago Tribune article, three basic types of wigs, all based on a design patented in 1822 by a London wigmaker named Humphrey Ravenscroft. England originally adopted judicial wigs in 1685, but Ravenscroft's design created "the barrister's wig or tie-wig, which consists of a frizzed crown, five rows of curls and two tied tails; the judge's bench wig or bob-wig, which is frizzed all over and also has two tails, and a judge's full-bottomed ceremonial wig -- the original bigwig." In England, the bigwig will only be allowed for ceremonial dress, under the new ruling.
Don't worry, though. The MIPTC judge above won't lose his wig. The Lord High And Mighty Chief Justice can't order us around anymore.
Time For A Trip Around The Legal BlawgosphereBlawg Review No. 118 is up today at Blawgletter, and gives a humorous look at this week's posts. It's well worth your time to peruse it.
It's Sunday, And What Does The Real Estate Section Of The Paper Tell Us?
It's Not The Same Thing As MSN's Supposed, Misquoted Reality
Sure, we've all heard The Three Laws Of Real Estate: location, location, location. But if you read the news, it's doom, gloom and bust for the housing market. Just look at this report by Marilyn Lewis for MSN. First, before you read that report and put too much stock in it, you should realize one of the sources she quoted claims she misquoted him, in his post, ".... and That's Not Exactly What I Said." Realize too, she's not a specialist: she covers health and fitness "news," too.
Beyond offering inaccurate quotes, the MSN article looks to two other sources for its information: Standard & Poors' Case-Shiller Home Price Index and the PMI Mortgage Insurance, Inc. U.S. Market rate index. The former looks at history, the latter predicts indices over the next two years.
We all know how accurate predictors are.
Nonetheless, the article comes to the conclusion that home prices in certain areas of the country that have sustained growth in the past will decrease, and others that have had only moderate increases are less risky investments. To quote the article, "Not surprisingly, the riskiest markets identified by the index are located in areas that saw rapid price appreciation, a reduction in affordability followed by a rapid decrease in the rate of price appreciation," and in a subheading, "The Rust Belt Is Less Risky."
There you have it in a nutshell. But before you go too far, let's see what MSN has to say its sources claim are the worst areas for real estate investments (the percentages quoted are the predicted chance for a decline): "Riverside-San Bernardino-Ontario, Calif. (65.2%); Phoenix-Mesa-Scottsdale, Ariz. (64.6%); Las Vegas-Paradise, Nev. (61.4%); [and,] West Palm Beach-Boca Raton-Boynton Beach, Fla. (60.7%)."
Not to be outdone, there's still more doom and gloom predicted for the boom markets (including Irvine, California where I live): "Los Angeles-Long Beach-Glendale, Calif. (58.6%); Santa Ana-Anaheim-Irvine, Calif. (57.7%); Oakland-Fremont-Hayward, Calif. (57.2%); Orlando-Kissimmee, Fla. (56.3%); Sacramento-Arden-Arcade-Roseville, Calif. (56.0%); San Diego-Carlsbad-San Marcos, Calif. (55.5%); Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (54.2%); Miami-Miami Beach-Kendall, Fla. (52.4%); Tampa-St. Petersburg-Clearwater, Fla. (50.6%); Boston-Quincy, Mass. (50.1%); [and,] Washington, D.C.-Arlington-Alexandria, Va.-W.Va. (50%).
Just so you don't think the news is all bad, there are less risky areas to buy a home.
According to MSN your less risk areas are: "Cincinnati-Middletown, Ohio-Ky. (9.7%); Columbus, Ohio (9.3%); Indianapolis-Carmel, Ind. (8.4%); Houston-Sugar Land-Baytown, Texas (7.9%); Dallas-Plano-Irvington, Texas (7.5%); Fort Worth-Arlington, Texas (7.4%); [and,]Pittsburgh (6.4%).
Now don't get me wrong here, the real estate economists I've talked to generally agree the housing market hasn't hit bottom yet, but they disagree that the bottom is two years away, despite the much-hyped "subprime market" crash. Several, including noted real estate economist Dr. Alfred Gobar, believe the downtown will be at its nadir in the next ten to fifteen months, if even that long. More important, however, is Dr. Gobar's take on the Orange County and Inland Empire areas. He believes the prices will not accelerate but instead remain nearly flat, and not decrease.
Lewis's sources, in comparison, aren't real estate economists. They're field-tested real estate agents knowledgeable about their limited "farm" area, not nationwide or even regional trends.
But before you go too far and start checking whether that window on the fiftieth floor of your building can open up far enough to allow you to climb out on the ledge, let's look at what else these two supposed "bust" sources had to say.
Standard & Poors notes that the housing market since 1997 has had an over 10 percent return on investment, second only to a 15 percent return if you had invested in a REIT. Plus, what MSN is not telling you about PMI's report is significant.
It's a brand-new prediction model that hasn't seen the test of time that would vouch for its accuracy.
Oh yes, and then there's logic.
There's MSN's 2004 Best Places to Live, none of which show up on either list above. Or the 2005 Safest Places to Live, likewise missing from these lists above. Irvine is America' safest city, but a bad place for investing, according to MSN. Perhaps it's an oranges/apples comparison, but you can follow the real estate investment trends here. You'll find the return on investment on a home is scanty at best when compared to a home in a coastal area.
But you already knew that.
Sure, people are still moving out of California at a greater rate than they're moving in, but MSN isn't reporting where that trend is headed. California's economy, especially in Southern California, is in part driven by rising jet sales. But that's just part of it. There's more out there, if you look.
The answer lies in the three laws of real estate.
Do We Still Need The EPA? What Will The Future Bring? How About Social Capital?
We've moved from Love Canal where the government had to force cleanup of environmental contamination to commonly understood requirements for current cleanups, and even to Voluntary Cleanups, which were restored to economic viability by the Supreme Court within just the last month after it (I think mistakenly) decimated them three years ago. Now we're looking to the future of government regulation of environmental contamination as we stare down an upcoming presidential election.
Conventional wisdom wags predict more regulation and environmental cleanup if we switch to a Democratic administration. But is that really the relevant question? Where is the current system of environmental regulation headed?
Sure, the USEPA is responsible for clean air, soil, water and even groundwater. But so are the several states. Well, more like all fifty of them. And virtually each one of them has their own "mini-EPA" acts.
Given 50 versions of the same thing, do we still need one big one?
Now I'm not one to invoke either the Federalist papers or even a nationalistic view that more is better and so is centralized administration, but the US Constitution has this little thing called the Commerce Clause (for fellow lawyers, even the Dormant Commerce Clause). For those who didn't spend at least four weeks in a law school ConLaw class going over in excruciating detail the multitude of variations in the Commerce Clause, I can reduce it to one relevant point for the purpose of this discussion. If the federal government has evidenced its intent to "occupy the field" of regulation, then the states can't regulate the same thing, unless the states enact stricter standards and don't interfere with interstate commerce, subject to some balancing of discriminatory effect and varying levels of inquiry, but the two latter tests are beyond the scope of this analysis.
It's a lot more complicated than that, but that short little definition should suffice for the purposes of the headline's question. It's pretty obvious that Congress intended to regulate the environment through the USEPA, as it has since 1972 when it convulsed in reaction to Love Canal and spit out Superfund, one of the first comprehensive set of environmental statutes adopted in the country. It's equally obvious, however, that the several states wanted their own say.
So that each state could deal with its own unique environmental issues - say burning everglades in Florida (prohibited) and burning fields in Idaho (permitted) - each state subsequently and separately over the last 30 years or so created its own set of environmental laws, each universally more strict than those regulations adopted by the USEPA. But Federalism has its merits. There is for the most part an oddly unique similarity of each state's environmental laws to those adpoted by Congress and the regulations promulgated by the USEPA.
It's a massive monster that moves very slowly and produces enormously difficult to understand and even harder to implement guidelines, which are treated as gospel within the industry. That level of detail simply can't be independently produced by a single state, so collectively, we have the USEPA to create that kind of pain.
On the other hand, by now the consultants and the regulators have that dance down to a science. We understand what is required to comply, and the consultants, lawyers and businesses comply. Heck, even the oil companies just voluntarily clean up leaking underground storage tanks in gas stations around the country. They hardly have to be told to do it any more.
We have even informally developed a system of relegating contamination cleanups between the USEPA and the states based on the logical criteria of the size and amount of the contamination. The USEPA takes the big ones, the states take the small ones and the ones in the middle are usually kicked back to the states by the USEPA. But even without this division of responsibility, the marketplace has become a major driver.
As MIPTC noted just recently, the Supreme Court restored sanity to voluntary cleanups. Those who cleanup contamination without being ordered to do so by the federal government can sue others who contributed to the contamination, even if the company conducting the voluntary cleanup also contributed to the contamination. Good old capitalism comes to the rescue.
Certainly cleanups don't always work voluntarily, and the number of lawsuits brought by both the USEPA and the various state enforcement agencies confirm the need for some level of regulation. Capitalism can't cure everything, but neither can a socialist approach.
But I think a combination of the two can do a better job than either independently. Imagine an incentive-based government agency. Sure, it's been proposed before, and dismissed with the alacrity of someone trying to marry Machiavelli's The Prince with Karl Marx's The Communist Manifesto.
But imagine, for a moment, a successful marriage of the two. In a way, as I've described above with the cooperation of businesses and the government, we've already got a version of it. There are many kinks in the current process, but the compatibility of social goals of clean air, soil, and water merge with business goals of profit, especially where both goals have a common understanding established by statute and regulation.
MIPTC predicts that the future of environmental law will involve some version of business and government cooperation to replace both the USEPA, the state regulatory agencies and the independence of business to form a new socially capitalistic venture.