When considering the major failures of recent American governance – the 2008-09 financial crisis, the catastrophe that is U.S. policy in the Mideast – the one thing that any honest-minded person must conclude is: Nobody meant for things to turn out this way. It is impossible to make precise predictions about the effects of government policy; that is the nature of systems characterized by high levels of complexity. It’s one thing to predict that it’ll be colder during the winter, but another thing to predict down to the millimeter how much snow will fall on a particular acre in rural Maine on the third Wednesday in February, which is really what we expect from our public policy.
Classic cowboy movies, in contrast, are not complex at all: The good guys wear white hats, the bad guys wear black hats, all hats remain firmly affixed to all heads at all times, and that’s that. You can pretty much always predict how an old Western is going to turn out.
But that isn’t how the real world works.
On Tuesday, I had a conversation about Elizabeth Warren and Wall Street, pointing out that the popular version of that story – Senator Warren vs. Wall Street – is so oversimplified as to be not merely useless but misleading. The reality is that there are people working on Wall Street who dislike Senator Warren – investors and bankers, mainly – and people who adore her – notably Wall Street lawyers, who are reliable donors to her campaign and to those of other Democrats. My naïve interlocutor said: “Hopefully, it’s the lawyers that fight against Wall Street,” as though there were such a thing, as though there weren’t nice progressive lawyers in Manhattan who jokingly refer to their yachts as the SS Dodd-Frank.
Spend any time writing about this sort of thing and you’ll hear angry and panicked denunciations of derivatives-trading from people who pretty clearly do not know what a derivative is, just as you’ll hear paeans to Glass-Steagall sung by people who don’t understand the difference between a commercial bank and an investment bank, who don’t know how Goldman-Sachs makes its money or what it is that Standard & Poor’s does.
But they’re quite sure they know who is wearing the black hats.
Kevin Williamson, “Black Hats and White Hats”, National Review, 2015-04-15.
November 24, 2016
QotD: Black hats and white hats
July 26, 2016
Craft brewing has a growing trademark problem
At Techdirt, Timothy Geigner predicts that the craft beer market is getting close to trademark armageddon … they’re running out of punny names they can legally use for their beer:
With all the trademark actions we’ve seen taken these past few years that have revolved around the craft beer and distilling industries, it seems like some of the other folks in the mass media are finally picking up on what I’ve been saying for at least three years: the trademark apocalypse is coming for the liquor industries. It’s sort of a strange study in how an industry can evolve, starting as something artisan built on friendly competition and morphing into exactly the kind of legal-heavy, protectionist profit-beast that seems like the very antithesis of the craft brewing concept. And it should also be instructive as to how trademark law, something of the darling of intellectual properties in its intent if not application, can quickly become a major speed bump for what is an otherwise quickly growing market.
All of this appears to have caught the eye of Sara Randazzo, blogging at the Wall Street Journal, who notes that the creatively-named craft beers that have been spewing out of microbreweries across the country may be running out of those creative names.
As today’s Wall Street Journal explores, legal disputes in the beer world are becoming the norm as new craft breweries spring up at a rate of roughly two per day. Trademark lawyers have gotten so used to the beer disputes that they are now turning on each other. Some dozen lawyers are contesting San Diego lawyer Candace Moon’s attempt to trademark the term “Craft Beer Attorney,” which she says she rightfully deserves.
Within the rest of the post, Randazzo highlights one dispute between craft brewers in order to give a sense of just how small these belligerent parties are. It’s a dispute that escaped even my radar, despite what has become something of my “beat” around Techdirt. Three professionals with day jobs decided to make a go at brewing craft beer and named their company Black Ops Brewing, the pun resting upon “hops” used in their beer, while also serving as a nod to their family members that served in the military. Three guys making beer, but the trademark dispute came almost immediately.
The problem is that once you’ve been granted a trademark, you have to defend it early and often or you’ll lose it. This means tiny companies with a couple of trademarked products are pretty much required to lawyer-up and threaten to go nuclear at the faintest hint of an infringement for fear they’ll lose the right that they’ve claimed. The gains from pursuing a possible infringement are usually tiny and the legal costs almost always outweigh any “winnings”, but the risks of not doing so are potentially huge. This is an example of a perverse incentive in law.
July 25, 2016
QotD: The Nac Mac Feegle
“They think written words are even more powerful,” whispered the toad. “They think all writing is magic. Words worry them. See their swords? They glow blue in the presence of lawyers.”
Terry Pratchett, The Wee Free Men, 2003.
December 24, 2015
So what about that Mens Rea stuff anyway?
Scott Greenfield on an important legal quirk:
The inclusion of a specific mens rea requirement is common in criminal laws. For example, first degree murder usually requires the “intent to kill,” whereas lesser degree murders or manslaughters may only require “recklessness.”
So why do some laws lack a mens rea requirement? They tend (though are hardly so limited) to be regulatory laws that are backed up by criminal sanctions. There are tens of thousands of laws that demand people do or not do some remarkably inconsequential act, such as not throwing undersized fish over the side of a boat.
The way Congress compels compliance with these trivial regulations is to enforce it with a criminal sanction, such as “failure to do X is a felony punishable by up to seven million years imprisonment.” And there are, literally, tens of thousands of opportunities to visit Club Fed.
These laws have been subject to strict liability, not because they are so evil and harmful, as they are almost invariably malum prohibitum laws, wrongs only because Congress says so, not because they reflect some inherent immorality. The problem, as was made clear in the fish case or the Gibson guitar case, is that no one knows all the tens of thousands of regulations the government enacts, creating a trap for the unwary when there is no rational reason to believe that conduct is wrong, no less criminal.
Of course, as the DoJ points out, the maxim that “ignorance of the law is no excuse” (except if you’re a cop) has been around for centuries. What hasn’t been around for centuries, however, are the tens of thousands of trivial regulations that can land someone’s butt in prison just as well as a nice drug conspiracy. So Main Justice didn’t show Sensenbrenner’s bill the love.
If the bill passes, the result will be clear, said Melanie Newman, the Justice Department spokeswoman. “Countless defendants who caused harm would escape criminal liability by arguing that they did not know their conduct was illegal” she said.
By “countless,” she means too few to count. Or she means nothing other than a new law would limit prosecutors to only those defendants who deserved to be prosecuted. That would cause sad prosecutor tears.
October 24, 2015
The (vicious) economic model of the music industry
A post by Kristine Kathryn Rusch from a few years ago, talking about the “standard” abuses musicians were subject to under 1990s-era studio contracts:
Those of us who exist on the periphery of the music industry have heard for years that new artists and even established ones can’t make money in the traditional music industry.
I didn’t understand that until I read Jacob Slichter’s So You Wanna Be A Rock ’N Roll Star several years ago. He wrote about a system in which a musician who signed a deal with a major record label could end up owing the label tens if not hundreds of thousands of dollars. He delineated it all out in a long book that showed just how the label ended up taking a naïve artist and putting him into debt.
Slichter said this was why so many rock bands disbanded — because the band itself was a legal entity and as a legal entity it was in hock to the studio. The only way the musicians could continue to perform and try to earn money from their music was to create a new legal entity and abandon the old one. Otherwise, they were working in a kind of indentured servitude.
Think this is just sour grapes from one musician who didn’t make it big? Look at a link that a reader from last week gave me. It’s from a magazine I’ve never heard of called Maximum Rock ’n’ Roll and was written by rock producer named Steve Albini. I’m not so sure how dodgy this website is that I’m sending you to — I don’t know if they violated Mr. Albini’s copyright by reproducing this piece. I’m going to trust that they didn’t, because y’all need to see these numbers.
For those of you who can’t be bothered to check the link, Albini lays out the line-by-line “costs” that the musicians agreed to when they signed their record deal. The musicians received a $250,000 advance. But by the time the album got released and the tour was completed, the advance was gone — and the musicians owed the record label $14,000.
You’re understanding me right. The “standard” contractually negotiated costs that the musicians agreed would come out of their pockets came to $264,000. The only way for the artists to recoup that loss was to sign a new deal with the label, often at lesser terms. If the label even wanted to sign them. (That part is courtesy of Slichter)
How much did the label earn — with the same costs deducted?
$710,000. In 1990s dollars.
Albini also lists how much each “player” made. He includes a producer ($90,000), a manager ($51,000), an agent, ($7500) and a lawyer ($12,000).
He writes, “The band is now ¼ of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 in royalties. The band members have each earned about 1/3 as much as they would working at a 7-11, but they got to ride in a tour bus for a month. The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never ‘recouped,’ the band will have no leverage and will oblige.”
October 22, 2015
Eviction notice
The earliest known eviction notice:
Dear Mr. Adam,
I am instructed by my client to serve the enclosed eviction order concerning the property you now occupy.
He feels that he is justified in this action in view of your recent behaviour, which constitutes a breach of the terms of your lease.
You will remember the Clause 4 in your lease permitted you full access to the garden on condition that you undertook ‘to dress it and keep it’, and that my client generously allowed you to take for your own use any of the fruits and flower which grow there. However, he specified quite plainly that you were not under any circumstances to touch the prize-winning fruit tree in the south-east corner. This clause has been broken quite blatantly by your wife, who has freely admitted taking fruit from this tree. Her excuse, that she thought it would be all right, is considered by my client to be inadequate.
I should also like to add that I personally resent your wife’s insinuation that I not only gave her permission to take the fruit, but actually encouraged her to do so.
October 17, 2015
Ken White of Popehat.com Talks Blogging, Anonymous Speech
Published on 13 Oct 2015
Ken White, founder of the influential group blog Popehat, tells FIRE how he got interested in the First Amendment and discusses anonymous speech on the Internet.
White, who writes for Popehat on a variety of issues, including the First Amendment, criminal justice, and the legal system, said a college project at Stanford University “during … one of the upsurges of controversy on campus about speech codes and speech issues,” opened his eyes to the nuances of the First Amendment.
“I wound up doing my senior honors thesis in college with a law school professor on the subject of legal restrictions on hate speech,” White said. “I thought it was very much emblematic of a very American problem, and that is: How do we express our disapproval — our moral disapproval — for bad things like bigotry, while not restricting liberties?”
Popehat seems to be a space created to do exactly that. The forum has evolved into a blog the contributors describe as a “group complaint” about “whatever its authors want.”
That freedom hasn’t always come so easily for White, who blogged anonymously for more than five years due to concerns his honest blogging might harm his career. He still thinks anonymous speech provides both benefits and drawbacks.
“I think the right to anonymous speech is very central in the First Amendment and in American life,” said White. “Throughout American history, people have said unpopular things, incendiary things, politically dangerous things behind the shield of anonymity. A lot of bad things come with that. There’s some really terrible, immoral, anonymous behavior on the Internet.”
White said there’s also a risk to writing anonymously, and that even while he benefitted from posting behind the security of an online persona, he supports the rights of others to try and discover his true identity. Eventually, White said he gave up the pretext and started blogging under his own name.
For more from White, including why free speech “catchphrases” harm First Amendment discourse, watch the above video.
October 13, 2015
July 26, 2015
The problems when you try to resolve complicated discrimination problems with laws
Warren Meyer explains why he — who organized and lead an effort to legalize gay marriage in Arizona — is not reflexively in favour of using the blunt force of the law to “solve” problems of discrimination:
There are multiple problems with non-discrimination law as currently implemented and enforced in the US. Larger companies, for example, struggle with disparate impact lawsuits from the EEOC, where statistical metrics that may have nothing to do with past discrimination are never-the-less used to justify discrimination penalties.
Smaller companies like mine tend to have a different problem. It is an unfortunate fact of life that the employees who do the worst job and/or break the rules the most frequently tend to be the same ones with the least self-awareness. As a result, no one wants to believe their termination is “fair”, no matter how well documented or justified (I wrote yesterday that I have personally struggled with the same thing in my past employment).
Most folks grumble and walk away. But what if one is in a “protected group” under discrimination law? Now, not only is this person personally convinced that their firing was unfair, but there is a whole body of law geared to the assumption that their group may be treated unfairly. There are also many lawyers and activists who will tell them that they were almost certainly treated unfairly.
So a fair percentage of people in protected groups whom we fire for cause will file complaints with the government or outright sue us for discrimination. I will begin by saying that we have never lost a single one of these cases. In one or two we paid someone a nominal amount just to save legal costs of pursuing the case to the bitter end, but none of these cases were even close.
[…]
To make all this worse, many employees have discovered a legal dodge to enhance their post-employment lawsuits (I know that several advocacy groups in California recommend this tactic). If the employee suspects he or she is about to be fired, they will, before getting fired, claim all sorts of past discrimination. Now, when terminated, they can claim they where a whistle blower that that their termination was not for cause but really was retaliation against them for being a whistle-blower.
I remember one employee in California taking just this tactic, claiming discrimination just ahead of his termination, though he never presented any evidence beyond the vague claim. We wasted weeks with an outside investigator checking into his claims, all while customer complaints about the employee continued to come in. Eventually, we found nothing and fired him. And got sued. The case was so weak it was eventually dropped but it cost us — you guessed it — about $20,000 to defend. Given that this was more than the entire amount this operation had made over five years, it was the straw that broke the camel’s back and led to us walking about from that particular operation and over half of our other California business.
July 13, 2015
“Links to this Site are not permitted except with the written consent of TO2015™”
Toronto’s Pan Am Games organizers appear to have been living in a cave without an internet connection for the last 15 years:
The organisers of the Pan American Games in Toronto, which start this week, require that people seek formal permission to link to its website at [toronto2015 DOT org].
Under the website’s terms of use, amid piles of incomprehensible legalese seemingly designed to hide from the fact that social media exists, it is decreed that no one is allowed to use one of those hyperlink thingies to connect to the website unless they first get approval. It reads:
Links to this Site are not permitted except with the written consent of TO2015™. If you wish to link to the Site, you must submit a written request to TO2015™ to do so. Requests for written consent can be sent to branduse@toronto2015.org. TO2015™ reserves the right to withhold its consent to link, such right to be exercised in its sole and unfettered discretion.
Eagle-eyed readers will have noticed that the $2bn sports event – effectively a mini-Olympics – also appears to have trademarked the term “TO2015.” Which makes about as much sense.
Incredibly, this is not a misreading of the terms, and it doesn’t appear to have been a mistake either. Instead, it’s about the increasingly insane approach that intellectual property lawyers are taking to sponsors – and non-sponsors – of sporting events.
Alongside such gems as forcing people to put tape over their own computers if a computer company is a sponsor, and stopping people for drinking anything that isn’t a sponsor drink (if there is a drinks sponsor), now it seems the Pan Am Games lawyers have decided they need to prevent the internet from entering the hallowed sponsor world.
Strictly speaking, anyone who links to the website or even anyone who uses the games’ own hashtag of [hashtagTO2015] is violating its terms, and could be sued. Although not a court in the land would actually enforce it.
Notice that, as I live in Canada, I’ve carefully obfuscated the URL and the hashtag so you don’t accidentally click on them and violate their intellectual property right claims or anything. I suspect this will be the only actual coverage of the games I’ll be posting, just to be on the safe side. Discussion of the financial side, or the disruption to normal life in Toronto caused by the games, of course, is still fair game.
July 1, 2015
The awe and majesty of the Grand Jury
I was not aware that the title “Grand Jury” doesn’t necessarily mean that there’s a jury empanelled to decide “grand” issues of law under US practice:
Over at the Daily Beast, Nick Gillespie attempts to bring religiosity to the fuzzy-wuzzies by describing what it was like to be hit with a ridiculous grand jury subpoena and unprincipled gag order. In response, several Daily Beast commenters trot out an argument I see now and then: “well, citizens on the grand jury thought that there were grounds to issue a subpoena.”
No.
In fact, hell no, or if you prefer, bless your heart, no.
Let’s talk about how federal grand jury subpoenas actually work. These days the U.S. Attorney’s Office prints them from fillable pdfs. Given that we were still typing them when I left the USAO in 2000, they probably achieved this technical benchmark in 2012 or so. Assistant United States Attorneys — that is, snot-nosed punks like I was at twenty-six — issue a grand jury subpoena by filling it out, or more likely, asking their secretary to fill it out. Nominally, the subpoena is issued on behalf of the grand jury. But it is not by any stretch of the imagination, issued by the grand jury. The AUSA need not — and never does, in my experience — ask the grand jury for permission. When the target of the subpoena produces documents, most often the Assistant U.S. Attorney lets the case agent — some Special Agent of the FBI or DEA or whatever — hold on to them.
So is the grand jury involved at all? Well, sort of. If and when the federal prosecutor seeks an indictment relying in part on documents produced in response to a grand jury subpoena, they’ll summarize the results of the subpoena to the grand jury. But that could be years after the fact. Prior to that, the acknowledged “best practice” is for the AUSA to appear before the grand jury, tell the grand jurors that a subpoena has been issued on their behalf, briefly outline the nature of the investigation, and ask their consent for the case agent to maintain custody of the documents produced — which, because they have been produced “to the grand jury,” are governed by secrecy requirements.
Does that always happen? No. Even when it does happen, it’s rarely a significant check on the use or abuse of grand jury subpoenas. First, when I was an AUSA, I never once had a grand juror ask about why I was issuing such a subpoena or exactly what I got back. I don’t know that any of them ever looked up from their newspapers. The common practice is to make a report so perfunctory that the grand jurors have no context from which to determine whether a subpoena is appropriate — and you’d only be reporting the subpoena after the fact. Second, there’s often no continuity of grand jurors. In a small district you might have only one grand jury that meets once a week, and those grand jurors could, in theory, write things down in their notebooks and keep track of them over time. But in many districts there are many federal grand juries. In Los Angeles, for instance, there was a different one meeting every day of the week. AUSAs don’t necessarily report subpoenas from the same investigation to the same grand jury over time. And federal grand juries turn over after a year and a half (unless extended), which means that the grand jurors hearing you report a subpoena this year won’t necessarily be the same ones hearing you report the next subpoena in the investigation next year.
June 27, 2015
QotD: The corporate tax game
You can think of corporate taxation as a sort of long chess match: The government makes a move. Corporations move in response — sometimes literally, to another country where the tax burden is less onerous. This upsets the government greatly, and the Barack Obama administration in particular. Treasury Secretary Jack Lew has written a letter to Congress, urging it to make it stop by passing rules that make it harder to execute these “inversions.”
I’ve got a better idea: What if we made our tax system so attractive to corporations that they would have no interest in moving themselves abroad?
The problem with this extended chess game is that every move is very costly. First, it adds to the complexity of the tax code. With every new rule — no matter how earnestly said rule attempts to close a “loophole” — it becomes harder to know whether you are in compliance with the law. This is true on both sides; corporate tax law has now passed well beyond the point where it is possible for a single expert to be familiar with its ins and outs. This makes it harder to plan business expansions, harder to forecast government revenue, and it requires both sides to hire more experts in order to determine whether corporations are compliant. It also means more lawsuits, and longer ones, as both sides wrangle over how this morass of laws should be applied to real-world situations.
You can think of it this way: Every new law has possible intersections with every other tax law in existence. As the number of laws grows, the number of possible intersections grows even faster. And each of those intersections represents both a possible way to avoid taxes and a potential for unintended consequences that inadvertently outlaw something Congress never intended to touch. This growing complexity makes it more and more difficult for either companies or lawmakers to forecast the ultimate effects of new tax laws.
Megan McArdle, “We Don’t Need a Corporate Income Tax”, Bloomberg View, 2014-07-16.
April 20, 2015
The Wright Brothers – early practitioners of lawfare
David Warren casts his thoughts into the air, but a hundred years ago the Wright Brothers’ lawyers would have been doing their legal damnedest to bring him back down to earth in a hurry:
Work on powered, controlled flight in the United States was far behind that in France, or England, but fell farther behind thanks to the Wright brothers. Fixated on the problem of converting invention into wealth, they pursued rival aviators around the USA with teams of lawyers. Their numerous, voluminous, cumbersome lawsuits were based on often fanciful patent claims, emerging from their own intensely secretive research.
One thinks for instance of the great aviator, Louis Paulhan (first to fly London to Manchester), who arrived with two Blériot monoplanes and two Farman biplanes to give flying demonstrations across the USA. Amazed at the workings of the American judicial system, but ignoring legal injunctions to prevent them from flying their machines, they took every prize at the Los Angeles Air Meet in January 1910, setting new records for altitude and endurance.
The Wrights were present, there as elsewhere, though never competing. They and their gaggle of lawyers followed Paulhan and the other foreigners around the country, serving them with process papers, and demanding unbelievably huge sums to call off their dogs, in vile and obvious attempts at extortion. And then they’d hit the local impresarios with additional suits to impound all the cash from ticket sales, &c. Truly: vicious and contemptible men.
To avoid fines or imprisonment in backwoods American jurisdictions, the visitors took to giving their demonstrations entirely for free, but still the lawsuits kept coming. Finally they gave up and went home.
And there’s even a maple-flavoured sidelight in the story:
Part of the reason for Canada’s early advances in aviation (first flight of the Silver Dart at Baddeck in Cape Breton, with its ingenious ailerons, &c) was the migration of American inventors, such as the brilliant motor-mechanic Glenn Curtiss, to safe territory away from the corrupt and unpredictable U.S. courts.
This, I suspect, was among the reasons that the spectacularly inventive Scotchman, Alexander Graham Bell, re-located from his grand mansion in Washington, DC. At first he went north, back to Canada (where he had settled before), only for the summers; but soon he was staying through the winters, too. Not only in flight, but in all the many other areas of his pioneering work (he invented the telephone, &c), he was afflicted with lawsuits from American cranks, with those dollar signs twirling in their eyes and the slick lawyers lining up behind them, ready to exploit a patent regime wide open to political manipulation. For apart from the beauty of the Bras d’Or landscape, Bell was back under the protection of British Common Law.
April 5, 2015
QotD: The function of the law courts
Myself, I am of opinion that had she brought the action she threatened, she would have had no case; but our chief was a man who had had experience of the law, and his principle was always to avoid it. I have heard him say:
“If a man stopped me in the street and demanded of me my watch, I should refuse to give it to him. If he threatened to take it by force, I feel I should, though not a fighting man, do my best to protect it. If, on the other hand, he should assert his intention of trying to obtain it by means of an action in any court of law, I should take it out of my pocket and hand it to him, and think I had got off cheaply.”
Jerome K. Jerome, Three Men on the Bummel, 1914.
February 18, 2015
Listen to the lawyer, gentlemen, and don’t get involved in a BDSM relationship
At The Federalist, Leslie Loftis provides a bit of friendly (lawyerly) advice to men in the wake of the Fifty Shades of Grey bandwagon:
The Fifty Shades of Grey hype has started its saturation run-up to the movie release this week. I expected the music video releases, the Super Bowl commercials. I did not expect the branding promotions.
I am a lawyer. Ever since their first year of law school, lawyers see liability. And in this bondage-for-amateurs fandom that is 50SOG (hat tip to Tracinski for the abbreviation) liability lurks everywhere.
We live in an era of “yes means yes” and “always believe the woman.” Fun or not, consent or not, signed document or not — no man should ever engage in bondage sex behavior. The best of the law doesn’t allow contracts for bodily harm, no matter the parties’ intent. Some of the worst law throws out the constitutional standard of innocent until proven guilty. If a woman regrets and later reports consensual acts as rape and it comes down to her word against his, then he will lose.
In this legal environment, this sort of sex play is high-risk. So I was shocked to learn that mainstream chain Target was selling 50SOG-branded toys. I saw the 50SOG display and my mind immediately went to the McDonalds’ coffee-burn case. They are selling candles … for bedrooms … next to blindfolds. No potential problems here.
