The Federal Communications Commission suffered a setback today when the Third Circuit tossed the agency’s imposition of a fine for the baring of Janet Jackson’s breast during the halftime show for Super Bowl XXXVIII on February 1, 2004. The court held that the FCC disregarded its own rules for dealing with fleeting instances of "indecency" over the national airwaves. CBS Corp. v. Federal Comm. Comm’n, No. 06-3575 (3d Cir. July 21, 2008).
The AAI favors vigorous public and private enforcement.
Blawgletter just read a troubling item in Corporate Crime Reporter. The title — "Connor Says Antitrust Division Becoming Increasingly Irrelevant In Fight Against Cartels" — refers to an interview with an Economics professor, John Connor, of Purdue University. Dr. Connor last month finished a 93-page report for the pro-enforcement American Antitrust Institute. Among his findings:
The Division’s dismal performance has provoked us to comment, too. Posts have included:
The Corporate Crime Reporter item also quotes Antitrust Division representative Scott Hammond, who responded thus to suggestions that the private antitrust bar does more than the Division for effective enforcement:
I have been with the Division for 20 years. I am familiar with every single international cartel investigation that we have opened. I can tell you that there is not a single example, not one, where we have learned about an international cartel that was detected by the private bar before we began an investigation. There is not a single case where the private bar has detected the cartel activity before we did where we subsequently brought a criminal prosecution.
Hmmm. The statement means either that the Division always beats the private bar to the punch or that it never brings a case if the private bar uncovers cartel activity first. Mr. Hammond also said:
Furthermore there is not a single case brought by the plaintiff bar where as the result of their discovery they have advanced one of our international cartel prosecutions or investigations.
Those pesky private lawyers are useless!
Last week we heard Mr. Hammond address the Dallas Bar Association’s antitrust section and asked him what policy the Division has for following up on investigations that it hears about from antitrust enforcers in Europe. He said that the Division works quite a lot with the European Commission, but he offered no explanation for why the EC brings so many more cases than the Division does. He nonetheless touted the marine hose prosecution, which principally benefits multinational oil companies. (They use the big tubes to transfer petroleum from tankers to storage facilities.)
Mr. Hammond also praised the Division’s work in foiling bid-rigging plots and kickback schemes, particularly in connection with government contracts and the federal e-rate program. That doesn’t strike us as the core mission of the Antitrust Division, and yet it absorbs 71 percent of the Division’s resources. No wonder, as Professor Connor said, "fewer than 20 percent of the world’s cartels are being investigated and prosecuted."
The Old Stone Fort (1779) in Nacogdoches, Texas.
Starbucks yesterday released The List — of 600 stores it plans to close by early 2009. Blawgletter drank in the new information this morning. We perked up when we got to page 15, where the Texas listings started. Several Dallas outposts, we learned, will grind to an ignominious halt. Then came the jolt — our old hometown’s sole representative of the Starbucks Nation (yes, the one on North Street, across from Stephen F. Austin State University) made the cut. Yay!
Practice pointer: Drink coffee before going to court. It’ll give you an excuse for requesting a break.
They sure don’t look like price-fixers.
Say a company offers to negotiate fees for you and other members of your profession. You and many of your colleagues say fine, knock yourself out. The negotiator then asks each of its client-professionals to name her minimum price for performing specific services. It collects the pricing data and uses the resulting mean and median prices as minimums in negotiating fee contracts with the people who pay the client-professionals’ bills.
Does that sound like price-fixing to you? It did to the Federal Trade Commission — and also to the Fifth Circuit.
Like the FTC, the court concluded that North Texas Specialty Physicians’s compilation of minimum acceptable prices into an amalgam th at it then used in contract negotiations aimed to raise prices above the competitive level. Sure, the court noted, fancy-pants doctors didn’t have to take the price that NTSP bargained with payors (like insurance companies and HMOs) for; but a good many of the healers ended up with more money in their scrubs than they would have taken but for the joint effort to raise the general price level. Federal Trade Comm’n v. N. Texas Specialty Physicians, No. 06-60023 (5th Cir. July 17, 2008)
By the way, the court issued its original opinion on May 14, 2008, but sent it out again after revising it — per usual — in ways the opinion doesn’t disclose. Blawgletter hates when that happens.
The Ninth Circuit concluded today that the Class Action Fairness Act of 2005 doesn’t override a prohibition in the Securities Act of 1933 against removal of securities actions from state court.
Section 22(a) of the depression-era statute provides that "no case arising under this subchapter and brought in any State court of competent jurisdiction shall be removed to any court of the United States." 15 U.S.C. 77v(a). CAFA confers a species of federal diversity of citizenship jurisdiction over securities class actions involving at least $5 million in controversy. 28 U.S.C. 1332(d)(2). Another section allows removal of cases that fall within the grant of jurisdiction. 28 U.S.C. 1453(b).
In affirming remand of the case to Los Angeles County Superior Court, the Ninth Circuit held that the specificity of the Securities Act ban on removal overrode the more general allowance of removal in CAFA. Luther v. Countrywide Home Loans Servicing LP, No. 08-55865 (9th Cir. July 17, 2008).
Pocket-size bazooka?
If you’ve got a squirt gun in your pocket, you may have to take it out. If you’ve got a bazooka, and people know you’ve got it…you’re not likely to take it out.
Secretary of the Treasury Henry Paulson, July 15, 2008 (testifying before the Senate Banking Committee about government support of mortgage lenders Freddie Mac and Fannie Mae).
The Judicial Panel on Multidistrict Litigation will convene in the city by the bay on July 31. Their task? To do the important business of "centralizing" complex cases before individual federal judges so they can handle pretrial proceedings.
The Panel’s Notice of Hearing Session reads like a baedeker for the latest corporate disasters. The list for the San Francisco gathering includes, among other notables:
Blawgletter counts at least three that relate to the credit mess. Sign of the times — and more to come, we wager.
The Federal Circuit today invalidated a patent that combined a way to obtain electronic bids from bond underwriters with web browser technology. Prior art allowed underwriters to submit online bids using proprietary software to a secure computer system. The patent holder tried to distinguish the old method by asserting that it didn’t contemplate allowing underwriters to bid using a simple web browser. A jury and the district court went for the patent holder.
The Federal Circuit reversed. It noted that an earlier patent "teaches the use of a web browser both to communicate information associated with a bid over an electronic network and to display information associated with a bid" and rejected the patent holder’s argument "that a person of ordinary skill would not have known how to implement the communicating and displaying steps of the ‘099 patent with a web browser during the relevant time period." Miniauction, Inc. v. Thomson Corp., No. 07-1485, slip op. at 12-13 (Fed. Cir. July 14, 2008) (footnote omitted).
Chalk up another invalidation under KSR Int’l Co. v. Teleflex Inc., 127 S. Ct. 1727 (2007).
A main enabler of mortgage lending excesses now needs you to front it some cash.
Blawgletter just read a NYT article about the feds’ plan for avoiding a bailout of mortgage lending giants Freddie Mac and Fannie Mae. The plan? To bail them out.
The government seems to think that obtaining authority to rescue these private institutions will stave off the necessity of actually tossing them a life preserver full of taxpayer billions. Right.
We enjoy irony every bit as much as the next whiner, but the spectacle of financial wizards taking on super powers to save lenders from their horrifically dumb decisions strikes us as sublimely delicious. Don’t these same people hector us about the moral hazard of guaranteeing outcomes — at least when the beneficiaries chiefly include the working poor? And don’t they also denounce govment regulation as the evil distorter of free market forces?
Too big to fail doesn’t move us. Let ’em crash and burn, we say. Take ’em over and run ’em as actual government agencies instead of pretend ones. The pain will come sudden and sharp. But at least it’ll force the wizards to deal honestly with problems they helped create and hasten effective oversight of our feckless, reckless, and amoral financial markets.
The columnist and Homer Simpson at last agree on something.
No beer, no civilization.
George F. Will, "Survival of the Sudsiest", The Washington Post, July 10, 2008.
"Beer is living proof that God loves us and wants us to be happy." B. Franklin.
