Today, the Eleventh Circuit reversed dismissal of a diversity-and-RICO case for lack of subject matter jurisdiction over claims that non-diverse subsidiary corporations assigned to their diverse parent.  The court did uphold the dismissal to the extent it tossed out the civil RICO counts for failure to state a viable claim, but it went on to conclude that the pre-suit assignment didn’t defeat diversity of citizenship jurisdiction.  The court refused to apply a presumption that the subsidiary-to-parent assignment involved collusion for the purpose of creating diversity.  Ambrosia Coal & Construction Co. v. Morales, No. 05-14255 (11th Cir. Apr. 2, 2007).

Barry Barnett

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The Eighth Circuit held today that a bankruptcy trustee has standing to sue third parties for harm to the debtor in bankruptcy despite a possible in pari delicto defense.  The court rejected the Second Circuit’s approach, which treats in pari delicto as a standing-killer.   In re Senior Cottages of Am., LLC (Moratzka v. Morris), No. 05-3867 (8th Cir. Apr. 2, 2007) (applying Minnesota law).

Barry Barnett

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By a 5-4 vote, the U.S. Supreme Court today rejected the Environmental Protection Agency’s views (1) that the Clean Air Act doesn’t require regulation of carbon dioxide emissions from motor vehicles and (2) that, even if the Act does mandate regulation, the EPA may choose not to.  Massachusetts v. Environmental Protection Agency, No. 05-1120 (U.S. Apr. 2, 2007).  The decision represents a significant victory for environmental advocates. 

Justice Stevens wrote the majority opinion; the Chief Justice and Justices Scalia, Thomas, and Alito dissented.

Barry Barnett

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A little over a month ago, Blawgletter pointed to a curious lag in antitrust law enforcement:

Blawgletter notes, with concern, that the U.S. Department of Justice’s Antitrust Division hasn’t brought a single new price-fixing case in 2007.  Worse, in all of 2006, the Division filed only one — against a magazine paper manufacturer — according to a review of its press releases.  What has the group done instead?  Pursued small-time bid-riggers and liars(!) and wrung its hands over whether antitrust laws inhibit monopolists too much.

Another month has passed without any new criminal price-fixing charges — indeed, without disclosure of any new investigations into possible price-fixing violations. 

Call Blawgletter cynical, but we continue to doubt that price fixers have foresworn criminality.  In the words of Adam Smith:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.  It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.  But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Barry Barnett

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Fredo Corleone didn’t survive the fishing
trip.

Six days ago, Blawgletter pondered "Who Hires Weak Lawyers?"  We answered that clients who don’t respect lawyers do. 

Today, Blawgletter goes a step further, plumbing the question of what kind of lawyer helps weak lawyers do the master’s bidding.

Current events supply context.  Consider the resumes of Fredo‘s two principal assistants in the U.S. Attorney firings:

• Chief of Staff.  Age:  37.  Years since law school:  11.  Criminal experience:  Unclear.  Served as "special assistant" to U.S. Attorney in suburb of Washington, D.C.  But his name never appears on court dockets in PACER.
• Senior Counsel and White House Liaison.  Age:  33.  Years since law school:  8.  Criminal experience:  Six months working in U.S. Attorney’s office in the same suburb.  Her name shows up on dockets for a total of three cases, none of which resulted in a trial.

Let’s not forget Fredo himself:

• Attorney General.  Age:  51.  Years since law school:  25.  Criminal experience:  None before 2 years as Attorney General.

Or the White House Counsel:

• White House Counsel.  Age:  61.  Years since law school:  37.  Criminal experience:  None.

Compare these credentials with those of the U.S. Attorneys whose performance they judged unacceptable (some numbers approximate):

• Patrick Fitzgerald.  Age:  46.  Years since law school:  22.  Criminal experience:  22 years as federal prosecutor in New York and Chicago.
• Daniel G. Bogden.  Age:  50.  Years since law school:  29.  Criminal experience:  29 years as federal prosecutor in Reno, Nevada.
• Paul K. Charlton.  Age:  45.  Years since law school:  28.  Criminal experience:  26 years as federal prosecutor in Phoenix.
• Margaret Chiara.  Age:  63.  Years since law school:  28.  Criminal experience:  6 years as federal prosecutor in Grand Rapids, Michigan, and 14 years as state prosecutor in Cass County, Michigan.
• H. E. "Bud" Cummins III.  Age:  50.  Years since law school:  18.  Criminal experience:  3 years as law clerk to federal trial judges and six years as federal prosecutor in Arkansas.
• David Iglesias.  Age:  48.  Years since law school:  23.  Criminal experience:  21 years as Judge Advocate General (including time in Reserve), a stint as state prosecutor in Santa Fe, and 6 years as federal prosecutor in New Mexico.
• Carol Lam.  Age:  48.  Years since law school:  22.  Criminal experience:  21 years as federal prosecutor in San Diego.
• John McKay.  Age:  51.  Years since law school:  25.  Criminal experience:  2 years as special assistant to FBI director and 6 years as federal prosecutor in Seattle.
• Kevin Ryan.  Age:  49.  Years since law school:  24.  Criminal experience:  11 years as state prosecutor, 8 years as state criminal judge, and 5 years as federal prosecutor in San Francisco.

So, we have lawyers with a total criminal experience of, at best, 4 years assessing the prosecutorial performance of lawyers who average 20.  Say it ain’t so.

Barry Barnett

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Andy Warhol’s 100 Cans (1962).

Campbell Soup today won affirmance of a post-trial judgment in a case arising out of Campbell’s 1998 spin-off of its Vlasic Foods subsidiary.  The plaintiff, the successor to Vlasic Foods, alleged that Campbell made a constructively fraudulent transfer and knowingly participated in a breach of fiduciary duty by loading Vlasic with $500 million in debt just before setting it free.  The district court held a bench trial and found that the plaintiff failed to prove a central element of its claims — that Vlasic’s taking on the debt made it insolvent.  The Third Circuit affirmed in all respects.  VFB LLC v. Campbell Soup Co., No. 05-4879 (3d Cir. Mar. 30, 2007).

Mmm, mmm, good.

Barry Barnett

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The Federal Circuit today modified its test for jurisdiction to hear cases that seek declaratory judgments of patent invalidity or non-infringement.  The court noted that the U.S. Supreme Court, in MedImmune, Inc. v. Genentech, Inc., 127 S.Ct. 764 (2007), expressly rejected the Federal Circuit’s "reasonable-apprehension-of-imminent-suit" test in favor of an "under all the circumstances" inquiry into whether a "substantial controversy" that justifies declaratory relief exists.  The court then pointed to Teva’s denial, in an application to the Food and Drug Administration, that it infringed any of Novartis’s five patents relating to its Famvir drug.  Although Novartis never threatened to sue Teva for infringement of four of the five patents, the court held that the FDA application presented a sufficiently substantial controversy to warrant declaratory judgment jurisdiction.  Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., No. 06-1181 (Fed. Cir. Mar. 30, 2007).

Blawgletter notes that the ruling may encourage potential infringers to create a controversy — by, for example, denying infringement in an agency filing — and run to court for a declaratory judgment.  Blawgletter also suggests that the decision makes a nice parallel to the Federal Circuit’s recent ruling that a patent holder may sue for infringement even if the potential infringer promises not to file a lawsuit during licensing negotiations.

Barry Barnett

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Today, the D.C. Circuit invalidated an exemption that the Securities and Exchange Commission granted by rule to securities brokers and dealers from the Investment Advisors Act.  The IAA itself exempts broker-dealers only to the extent that they give advice "solely incidental to [their] business as a broker or dealer" and "receive[] no special compensation therefor."  The SEC’s exemption, the court held, wrote the "no special compensation" requirement out of the statute and, therefore, exceeded the agency’s authority.  One judge dissented.  Financial Planning Ass’n v. SEC, No. 04-1242 (D.C. Cir. Mar. 30, 2007).

Barry Barnett

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