What does "net worth . . . as shown on the balance sheet" mean if the balance sheet doesn’t show anything it calls "net worth"? 

The Ninth Circuit held today that it means what people usually mean by it:  the difference between total assets and total liabilities.  Because under that definition the net worth of Merrimack Pharmaceuticals exceeded $5 million, the company’s articles of organization obligated it to redeem Albert D. Bolt’s shares of Series A Preferred Redeemable Stock.  Bolt v. Merrimack Pharmaceuticals, Inc., No. 05-16282 (9th Cir. Sept. 11, 2007) (applying Massachusetts law).

Merrimack did have some arguments.  It said that its balance sheet showed net worth but described it as "Total stockholders’ deficit".  The court made short work of that point.  But then the company urged that "generally accepted accounting principles" would classify about $12 million of Series B Preferred Redeemable Stock as a liability instead of an asset.  That forced Their Honors deep into the wily ways of GAAP, but they emerged with Mr. Bolt triumphant.

Barry Barnett

Our feed appreciates the difference between a lightning bug and a lightning bolt.

A 2-1 panel of the Ninth Circuit today held that a "price squeeze" theory of monopolization under section 2 of the Sherman Act survived the decision in Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004).  LinkLine Commmunications, Inc. v. SBC California, Inc., No. 05-56023 (9th Cir. Sept. 11, 2007).  The court thus joined the Eleventh Circuit, see Covad Communications Co. v. BellSouth Corp., 374 F.3d 1044, 1050 (11th Cir. 2004), and parted ways with the D.C. Circuit, see Covad Communications Co. v. Bell Atlantic Corp., 398 F.3d 666, 673 (D.C. Cir. 2005).

For those among us who don’t know a price squeeze from a nice breeze, the former refers to a tactic by which a dominant supplier squeezes all the profit out of a retail competitor’s business.  The little guy has to pay a wholesale price to the big guy for goods or services that the little guy then sells to retail customers in competition with the retail operation of the big guy.  If the big guy charges high wholesale prices to little guy but the same or only slightly higher prices to retail customers, he’s got the little guy in a vise, and before long the little guy’s business tanks.

In the case before the Ninth Circuit, LinkLine alleged that SBC did just that.  The district court declined to grant SBC judgment on the pleadings but certified the price squeeze question for interlocutory appeal.  The Ninth Circuit affirmed.

Barry Barnett

Some subscribers find our feed squeezably soft.

The Second Circuit today vacated a decision not to certify a price-fixing case as a class action under Rule 23(b)(3).  The court held:

• The fact that the putative class representatives bought their antitrust claims didn’t preclude them from adequately representing the class.
• The district court erred in concluding that the fact-of-injury issue didn’t pose a question common to all class members.

Cordes & Co. Financial Services, Inc. v. A.G. Edwards & Sons, Inc., No. 06-2143 (2d Cir. Sept. 11, 2007).  The court remanded with instructions to reconsider certification under Rule 23(b)(3).

The case involves allegations that a bunch of initial public offering underwriters conspired to fix the fees they charged for underwriting mid-size IPOs (ones ranging between $20 million and $80 million).

Wall Street groaned.

Barry Barnett

Our feed rolls when it doesn’t rock.

Blawgletter tries to avoid political stuff.  We have enough challenges attempting to understand law stuff.  But we couldn’t help observing yesterday how much the persuasiveness of the administration’s case for its Iraq strategy depends on the personal character — the ethos — of General David Petraeus.

We couldn’t avoid noticing it because both sides harped on it.  The againsters (particularly MoveOn.org) tried to trash the general, suggesting that he’ll misrepresent facts and "betray us" while the pros built him up as the greatest military genius since Napoleon.

But we don’t think a military officer’s ethos can win the argument.  Nor usually do mere words and logic prevail.  We imagine that pathos — the gut emotional reaction — will decide the issue.  Do the Iraqis deserve more deaths of our sons, daughters, husbands, and wives?  When you put it that way . . . .

Barry Barnett

Yes, we do remember that clear blue day six years ago. 

The D.C. Circuit hasn’t published an opinion on its website since August 24, 2007.  Blawgletter can’t figure out why.

The court didn’t exactly set a decision-issuing record before it went radio-silent more than two weeks ago.  In the entire month of August, D.C. Circuit panels wrote only 10 opinions.  Last year, twice that many came out during the same almost-end-of-summer month.  And in July 2007 more than 30 issued.

We would guess either that Their Honors got their rulings out early or that we’ll see a torrent as the end of the September 30 six-month judicial reporting period approaches.

Barry Barnett

Our feed kicks a flood.

The first Monday in October arrives in three weeks — on October 1, 2007.  And, as U.S. Supreme Court junkies know, then begins the Court’s October 2007 Term.

Blawgletter counts seven Supreme Court cases that fall within, or near, the zone we think of as "commercial".  We offer the following preview:

Preemption

Riegel v. Medtronic, Inc., No. 06-179:  Whether the Medical Device Amendments to the Food, Drug, and Cosmetic Act "preempt[] state-law claims seeking damages for injuries caused by medical devices that received premarket approval from the Food and Drug Administration." 

Argument date:  Pending.

Employment discrimination

Sprint/United Mgmt. Co. v. Mendelsohn, No. 06-1221:  Admissibility of evidence that the employer discriminated against non-parties. 

Argument date:  Pending.

Federal Express Corp. v. Holowecki, No. 06-1322:  Sufficiency of submitting an "intake questionnaire" to satisfy the requirement of filing a "charge of discrimination" with the Equal Employment Opportunity Commission under the Age Discrimination in Employment Act. 

Argument date:  November 6, 2007.

Commodity futures trading

Klein & Co. Futures v. Board of Trade of the City of New York, No. 06-1265:  Whether futures commission merchants lack standing to sue under the Commodity Exchange Act. 

Argument date:  October 29, 2007.

Arbitration

Hall Street Assoc. v. Mattel, Inc., No. 06-989:  Does the federal Arbitration Act allow parties contractually to expand judicial review of an arbitration award? 

Argument date:  November 7, 2007.

Employee Retirement Income Security Act of 1974

Larue v. DeWolff, Boberg & Assoc., Inc., No. 06-856:  Whether section 502(a)(2) of ERISA allows plan participants to sue on behalf of the plan to recover losses to their individual accounts resulting from a fiduciary breach.  How about section 502(a)(3)? 

Argument date:  Pending.

Securities fraud

Stoneridge Investment v. Scientific-Atlanta, Inc., No. 06-43:  Does engaging in transactions that have "no legitimate business or economic purpose exception to inflate artificially [a] public corporation’s financial statements" subject the sham transactor to liability for securities fraud even if they "themselves made no public statements concerning those transactions"? 

Argument date:  October 9, 2007.

We can’t wait!

Barry Barnett

Bidness trial law with a sense of humor.

Linda Greenhouse over at the NYT has an article today on proposals to end life tenure for U.S. Supreme Court justices.  The main one would appoint justices for 18-year terms, after which they’d remain federal judges but wouldn’t regularly sit on the Court.  Ms. Greenhouse cites several books and articles, including UT law professor Sanford Levinson’s "Our Undemocratic Constitution".

From 1789 through 1970, the article points out, justices’ average tenure came to about 15 years.  But in the 37 years since, the average grew to more than 26 years.

The 18-year-term notion would assure that each president has a chance to appoint at least two justices in four years.

Blawgletter suspects that the calls for term limits reflects unhappiness with individual justices’ recent behavior.  Complaints include:

• At 87, the seemingly immortal John Paul Stevens has served on the Court for 32 years.
• Chief Justice William Rehnquist encouraged Justice Sandra Day O’Connor to leave while he stayed until his death.  Their replacements shifted the Court to the pro-business, pro-government right.
• Justice Antonin Scalia went hunting with Vice President Dick Cheney while a case against the VP pended before the Court.
• Justice Clarence Thomas still seems angry about his confirmation hearings.
• Bush v. Gore.

President Franklin D. Roosevelt tried to do something similar in the 1930s.  We doubt that any president, or presidential candidate, will fail to recall the whuppin’ he got for that "court-packing" plan.

Barry Barnett

Pack your electronic briefcase with our feed.

Chief Joseph (1840-1904).

On October 5, 1877, Chief Joseph of the Nez Perce said in surrendering to General Nelson Appleton Miles:

Hear me, my chiefs! I am tired.  My heart is sad and sick.  From where the sun now stands, I will fight no more forever.

Barry Barnett