Blackstone
William Blackstone (1723-80).

We’ve enjoyed a slow day in the progression of federal appellate law as it trends ever upward towards its ultimate perfection.  Especially so, Blawgletter holds, in the areas of interest to business trial lawyers. 

Yes, one appeals court did uphold the majesty of the right to jury trial today by reinstating the full amount of a verdict.  Taylor v. Otter Tail Corp., No. 06-2589 (8th Cir. Apr. 10, 2007).  And Blawgletter applauds the court’s wisdom.

But the dearth of business law decisions prompted our mind to wander, as it often does this time of year.  And it drifted back in time to that great English jurist, William Blackstone.  He said, in his Commentaries on the Laws of England (1765), a great many things of supreme interest even today, when legal perfection seems so much nearer to our grasp.  Among them:

In all tyrannical governments, the supreme magistracy, or the right both of making and of enforcing the laws, is vested in one and the same man, or one and the same body of men; and wherever these two powers are united together, there can be no public liberty.

Amen, Brother Blackstone.  Amen.

Barry Barnett

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Last Thursday, according to news reports today, U.S. District Judge Phyllis Hamilton in San Francisco dismissed the price-fixing complaint of Sun Microsystems and Unisys Corp. against several manufacturers of dynamic random access memory (DRAM) chips.  Ever curious, Blawgletter took a peek at Her Honor’s opinion and and found, as we suspected, that it turns on the Foreign Trade Antitrust Improvements Act and the impact of the Supreme Court’s application of the FTAIA in F. Hoffman-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004).  Judge Hamilton concluded that Sun and Unisys hadn’t done a good enough job differentiating between domestic harm and foreign harm arising from the price-fixing conspiracy.  She ordered:

Specifically, and should plaintiffs choose to file an amended complaint, plaintiffs must amend their complaint to allege for each plaintiff:  where the price for the DRAM purchases upon which plaintiffs base their claims was negotiated; where the DRAM purchases upon which plaintiffs base their claims were actually made; whether plaintiffs themselves, subsidiaries, or third parties made the actual purchases of DRAM; where any subsiciaries or third parties making DRAM purchases on plaintiffs’ behalf were located; where the DRAM was ultimately delivered or distributed.  In addition, plaintiffs must specify which particular claims are being alleged by plaintiffs as indirect purchasers rather than direct purchasers.

Sun Microsystems, Inc. v. Hynix Semiconductor Inc., No. C 06-1665 PJH, slip op. at 8-9 (N.D. Cal. Apr. 5, 2007).  Got that?

The court helpfully added in a footnote:

Plaintiffs have some degree of flexibility regarding the degree of specificity they should employ in alleging the existence and location of various worldwide subsidiaries and/or third party entities. The court is simply seeking to understand the volume of DRAM purchases and distribution taking place outside the U.S. as contrasted with that taking place inside the U.S., for which plaintiffs seek recovery of overcharges. To that end, if the number of plaintiffs’ subsidiaries and third party entities numbers into the hundreds, for example, it would be sufficient for plaintiffs to simply identify by country and percentage number the subsidiaries and third party entities making DRAM purchases or taking deliveries of DRAM on behalf of plaintiffs.

Simple, right?  Sun and Unisys have until May 4 to amend their complaint.  Blawgletter suspects that they’ll need every minute.

Barry Barnett

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A wholesale produce merchant and two of its owners lost their petition today to overturn sanctions under the Perishable Agricultural Commodities Act for bribing a federal produce inspector.  The petitioners argued that PACA only prohibits merchants from lying to each other and doesn’t cover fraud resulting from a false inspection certificate.  The D.C. Circuit held that a vice president’s bribery of the inspector supported the Secretary of Agriculture’s decision to revoke the merchant’s license to sell fresh fruit and vegetables and to ban the owners from the industry.  Coosemans Specialties, Inc. v. Dept. of Agriculture, No. 06-1199 (D.C. Cir. Apr. 9, 2007).

The vice president, by the way, bribed the inspector to give poor ratings to produce that the vice president’s company wanted to buy.  The inspector’s certificates allowed the company to negotiate a lower price with the seller.  But — as the veep, his employer, and its owners found to their chagrin — the inspector had gone under cover and turned them in.

Barry Barnett

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News reports disclosed last week that Verizon obtained a permanent injunction barring Vonage from signing up new customers and that the Federal Circuit promptly granted Vonage a temporary stay.  But the docket sheet in the district court case reflects that the judge heard arguments on April 6 and then "reserved ruling until Thursday, April 12, 2007 @ 10:00 a.m."  Verizon Services Corp. v. Vonage Holdings Corp., No. 1:06-cv-00682 (E.D. Va.) (minute entry).

The docket sheet in the Federal Circuit meanwhile does disclose issuance of a stay on April 6:

Ordered: Verizon et al are directed to respond to the motion for stay pending appeal of injunction issued by USDC/EDVA no later than 4/13/07.  Injunction is temporarily stayed pending receipt of response and court’s consideration of the papers.

Verizon Services Corp. v. Vonage Holdings Corp., No. 07-1240 (Fed. Cir. Apr. 6, 2007).

So, unless Blawgletter has misread the docket entries, the Federal Circuit stayed an injunction that the district court has postponed signing, if at all, until April 12.  What gives?

Barry Barnett

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Blawgletter just ran across a four-part series of articles about Alberto Gonzales.  The author, Andrew Cohen, writes the "Bench Conference" blog at The Washington Post.  He entitled the series "Rough Justice — The Case Against Alberto Gonzales."  It reviews the current Attorney General’s career as George W. Bush’s lawyer, first in Texas and then in Washington as White House Counsel and later as AG. 

Alas, poor Fredo!

Barry Barnett

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Blawgletter’s telephone hasn’t exactly rung off the wall since we offered our pro bono publico help to prepare Alberto Gonzales for his Senate testimony on April 17.  Possibly his handlers absorbed our 10 talking points and need our personal assistance not.  Blawgletter so hopes.

But the augurs for our Attorney General look more and more like daggers.  Stuart Taylor, Jr., for example, lately wrote an item describing Mr. Gonzales’s knowledge of the law as "superficial", his legal analysis as "shallow", and his evasions in confirmation testimony as "pathetic".  Ouch.

Alexis de Tocqueville devoted a chapter, in his Democracy in America (1835), to the usefulness of co-opting of lawyers by placing them in government.  His words strike Blawgletter as timely: 

I am therefore convinced that the prince who, in presence of an encroaching democracy, should endeavor to impair the judicial authority in his dominions, and to diminish the political influence of lawyers, would commit a great mistake:  he would let slip the substance of authority to grasp the shadow.  He would act more wisely in introducing lawyers into the government; and if he entrusted despotism to them under the form of violence, perhaps he would find it again in their hands under the external features of justice and law.

We don’t mean to imply that Mr. Gonzales believes that he supports despotism.  Not at all.  But one must wonder why a superficial, shallow, and pathetic lawyer has received such high position in government.  Perhaps we’ll learn the answer April 17.

Barry Barnett

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In a 2-1 decision, the Fourth Circuit today upheld a summary judgment and jury verdict relating to allegations that Waffle House violated the rights of a family when an employee told a family member that "we don’t serve niggers here."  The majority decided that the jury’s decision purged the error in the district court’s granting of summary judgment against the family members who didn’t hear the slur first-hand.  It also concluded that the district court didn’t commit reversible error by refusing to cure a false statement, by Waffle House’s lawyer, attributing the slur to a non-employee.  Eddy v. Waffle House, Inc., No. 04-2505 (4th Cir. Apr. 6, 2007).

Blawgletter doubts that the Fourth Circuit’s ruling will detract from the court’s reputation as the most conservative appellate court in the federal system.

Barry Barnett

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In 1998, Congress enacted the Securities Litigation Uniform Standards Act to keep state courts from handling state law claims in securities lawsuits that the Private Securities Litigation Reform Act of 1996 made harder to win.  SLUSA makes state law class actions that relate to a "covered security" removable to federal court.  Today, the Second Circuit recognized a hole in SLUSA.  It held that an insurance "rider" doesn’t count as a "covered security" under SLUSA just because it rides on a security (a variable life insurance policy) that does.  The court directed the district court to remand the case to the state court from which it originated.  Ring v. AXA Financial, Inc., No. 05-0616 (2d Cir. Apr. 6, 2007).

Blawgletter can’t estimate the size of the SLUSA hole but can say that the Second Circuit’s decision reflects a healthy reluctance to suck all state law class actions concerning any kind of "securities" into the SLUSA black hole.  SLUSA limits "covered securities" to those that list on a national securities exchange or that an investment company issues under Securities and Exchange Commission authority.  That definition sweeps in lots of securities but hardly all.  The Second Circuit simply applied the definition.

Barry Barnett

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At his Senate confirmation hearing on January 6, 2005, Alberto Gonzales concluded his statement with these words:

I look forward to answering your questions not just at this hearing, but if I am fortunate enough to be confirmed, in the months and years ahead as we work together in the noble and high calling of the pursuit of justice.

(Full statement here.) 

One may wonder how fortunate Mr. Gonzales now feels to have won confirmation as Attorney General of the United States.  But, two years later, one may safely bet that he would just as soon skip answering Senators’ questions about the ignoble and low firing of eight U.S. Attorneys.  Surely he’d rather go fishing than spend more than a week submitting to "mock testimony sessions".

Blawgletter respectfully suggests that Mr. Gonzales could make better use of his time by practicing to tell the truth.  It would take less than a day.  And Blawgletter will gladly contribute the preparation time for free.

Mr. Gonzales needs to say the following:

  1. I knew about White House wishes to replace U.S. Attorneys — at first, all of them — from the beginning.  I objected because I thought a wholesale change would hurt the Department of Justice too much.
  2. I knew no later than November 2006 that Karl Rove wanted to replace a U.S. Attorney in Arkansas with a specific person who had worked for him.
  3. I met for an hour on November 27, 2006, with my chief of staff Kyle Sampson, White House liaison Monica Goodling, and others to discuss a plan for firing specific U.S. Attorneys.  I knew the names of the firees.  I asked about the likely political fall-out.  My staff told me it wouldn’t arouse much attention, if any.  I asked whether the White House approved firing the eight individuals.  My staff told me that it did.  I asked whether we could justify the firings.  My staff assured me that we didn’t need to.  I didn’t know whether any of the U.S. Attorneys had performed well, poorly, or average; and I didn’t ask or care.
  4. I approved terminating the eight U.S. Attorneys, first, because the White House wanted me to and, second, because I thought the Department would not suffer unduly from their loss.
  5. I would not have thought to let any of the eight go if the White House hadn’t pushed me and my staff.
  6. Nobody evaluated the performance of the eight in any systematic way.
  7. Nobody considered the impact of firing the eight on existing investigations or prosecutions.
  8. I thought that the whole thing would blow over.  I still thought that when I wrote in USA Today that the firings amounted to an "overblown personnel matter."
  9. I didn’t anticipate that the U.S. Attorneys would defend themselves when one of my deputies testified that we fired them for "performance-related" reasons.
  10. I put the political wishes of the White House ahead of the good of my Department and the noble and high calling of the pursuit of justice.  I owe the American people, the Department of Justice, and the eight people who lost their jobs through no fault of their own a sincere apology.  I am sorry.

The testimony, Blawgletter concedes, will reveal Mr. Gonzales as a weak lawyer who has little or no ability to bring independent professional judgment to bear against White House wishes.  But we aim at the truth.  And only that, in all its ugliness, can save Fredo — or, at least, his self-respect — now.

Barry Barnett

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