Blawgletter adores cases that involve energy — oil, gas, wind, sun, nuclear, electric, tidal, you name it. We tried one last May in Texas and another last month in Louisiana — and look forward to trying a Great Many others, within Texas and without.

Which made us smile today at Judge Posner's opinion yesterday in a case involving coal and coal bed methane (natural gas). The parties to the lawsuit had signed a letter of intent. The LOI provided — in a non-binding way — (a) that the Party of the First Part, a coal mining company, hoped some day to grant the right to produce coal bed gas to the Party of the Second Part, an owner of options to mine coal, and (b) that the Party of the Second Part would assign to the Party of the First Part the options to mine the coal.

Because of the non-binding nature of the LOI, the Party of the Second Part couldn't enforce it. So the POSP sued the POFP for fraud.

The district court would have none of it. Neither would the Seventh Circuit. Reasons included the fact that the POFP's failure to do what the POSP said it promised by itself provided no evidence of fraudulent intent. BPI Energy Holdings, Inc. v. IEC (Montgomery), LLC, No. 10-3871 (7th Cir. Dec. 8, 2011) (applying Illinois law).

AT&T Wireless tried for T-Mobile in what looks like an attempt at building a bridge too far. Which Blawgletter thought from the get-go.

[Let's ignore for now the thing the editors of our — and AT&T's — hometown paper wrote about the FCC's failure to shoo the AT&T/T-Mobile deal through. Let's just say they'd have done better if they'd said we want one of our biggest companies to get even larger because we hope that'll help the local economy. But they instead wrote that the deal would produce more jobs, better service, lower taxes, longer daylight hours, fewer murders, and slower global warming.]

Now we hear that the very most gigantic wireless company, Verizon, just inked a deal with two of the very most titanic cable firms, Comcast, Time Warner, and Bright House, to — get this — stop trying to compete for wireless customers!

The cable guys will cede to Verizon the spectrum that belongs to their wireless joint venture, SpectrumCo. In return, Verizon agrees to pay $3.6 billion and to sell subscriptions to Comcast, Time Warner, and Bright House cable.

Can you say "market allocation"?

The fact that these deals happen out in the open doesn't, by the way, make them legal. AT&T's with T-Mobile made front pages, but that didn't stop the Federal Communications Commission from moving to block it.

The WSJ takes the view that the FCC has no business using "antitrust theory from the industrial era" to block the AT&T/T-Mobile deal because, even though the merger would "enhance" AT&T's "market power", giving AT&T more market power "[is] not the same as harming competition."

Alrighty then.

We can trust AT&T to do nothing but good. 

Forgive us for thinking not.

The Eastern District of Texas got Volkwagen II and then TS Tech — a one-two punch that knocked some wind out of the venue's rep as a patent solar plexus (or should Blawgletter say omphalos?).

Today, the Federal Circuit rounded on another IP hot spot — the District of Delaware.

As it did in In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008), the court ordered a district court to transfer a patent infringement case to another district under 28 U.S.C. § 1404(a). In re Link_A_Media Devices Corp., Misc. No. 990 (Fed. Cir. Dec. 2, 2011) (per curiam).

Link_A_Media seems to portend an end to the practice of basing venue for patent lawsuits in Delaware solely on the ground that one or more of the parties incorporated in the First State.

The plaintiff in the case, Marvell International, had sued Link_A_Media Devices for infringing Marvell patents relating to "read channel devices", which have something to do with electronic data storage and transfer. But Marvell, a holding company from Bermuda, didn't employ the inventors; a Marvell sub in Silicon Valley did. And Link_A_Media, a start up, likewise did most of its work in the Northern District of California and none in Delaware.

The only link to the colony that voted first in favor of forming the Union? Link_A_Media got its corporate charter in Wilmington.

The Federal Circuit held that the birth of an entity in a forum state by itself couldn't beat a transfer motion under section 1404(a). Nor did the panel buy the "everybody's doing it" argument:

Finally, Marvell argues to this court that the case should remain in Delaware because "the District of Delaware's judges are highly experienced in patent infringement litigation. . . . It appears that Marvell is confusing the public interest factor relating to a trial court's familiarity with "applicable state law," . . . which is not relevant here. Marvell's claims arise under the federal patent laws, for which there is uniformity nationwide, and which the Northern District of California is equally equipped to address.

We have, by comparison, considered a district court's concurrent litigation involving the same patent to be a relvant consideration, if the court's experience was not tenuous and the cases were co-pending. . . . Here, the asserted experience is with patent cases generally and not with the patents at issue. There is no evidence, moreover, that the District of Delaware's acknowledged experience in this area translates to speedier resolution of patent cases than occurs in the Northern District of California.

Link_A_Media, slip op. at 7 (citations omitted).

The "uniformity nationwide" and "equally equipped" likely will sting the most.

Blawgletter gets calls each work day from people who want to sell something. It happens to you, too. When you pick up the phone, you hear dead air for a second or two before a person comes on the line. The "agent" often asks if he can speak with "[your name here]".

The tell-tale lag means that the caller forms part of what Blawgletter knows as "outbound telemarketing" — and that the agent used a "predictive dialer" to reach our line. Our source for all facts whose accuracy doesn't matter — Wikipedia — tells us:

Predictive dialers use statistical algorithms to minimize the time that agents spend waiting between conversations, while minimizing the occurrence of someone answering when no agent is available.

The dialer raises the time when an agent speaks with a callee from about 40 minutes per hour to around 57.

What, you demand to know, does that have to do with e-discovery. Just this: A growing number of fancy-pants e-discovery vendors claim that their software programs vastly enhance the efficiency of looking for stuff — in this case, hot documents instead of hot prospects for buying Veg-a-Matics, credit repair services, and hair-weaving devices.

But does the hype match the True Facts? Because if it does a lot of lawyers will spend a lot less time searching through terabytes of electronic documents to find things relevant to lawsuits. And clients will spend a lot less money paying for all that doc-review time.

Call us slightly more on the side of the hypers. Slightly.

Using algorithms to locate hot docs makes a ton of sense for that first cut through the Great Mass of E-matter that you image from your client's gargantuan server. The process does better than having lawyers do "keyword" searches, not least because keyword searches can go on and on and on. The big gain from using the software should come from having more faith that the program will catch the right documents. If you do it over and over again, though, you haven't done much more than find a new way to waste time.

And yet you just might do that. Per the ABA Journal:

Essentially, the software works by delivering results based on a barrage of keyword inputs, which are tweaked by a seasoned attorney who then continually refeeds the best resulting documents back into the system as examples until the software “learns” what the attorney is really looking for.

So you still need someone who can teach the software what types of docs to sort into the human-review pile. But one person instead of dozens. Which should improve consistency but makes the value of the whole effort depend on how hard and well the one person does the job.

Who should play the role? We say someone who has Tried a Case. Because we don't care how smart a lawyer you have culling through the docs that make the first cut. If that person doesn't have a good idea of what you can do with the hot docs in front of a judge or jury, you'll likely get a big pile of docs that will never see an exhibit sticker.

So, we like the tool. Sort of. But like any tool it will save time only if you use it with planning and discipline.

Seventh Circuit Judge Richard Posner likes to riff on things that tickle his fancy. He does it a lot in his legal writing, of which he does a great deal. Just this week he wrote about how to tell if you should take an offer to settle:

Determining the reasonableness of a settlement requires comparing the amount of the settlement to the net expected gain of seeking a litigated judgment. The "expected gain" is the gain if the judgment is favorable, discounted (that is, multiplied) by the probability of a favorable judgment. The qualification "net" signals the need to subtract the cost of pressing ahead to judgment in order to estimate the value of litigating to judgment rather than of settling. Suppose the setttlement is $1 million, and a litigated judgment favorable to the plaintiff would be $4 million but the probability of obtaining the judgment would have been only 10 percent and the cost of obtaining it (the litigation cost) $100,000. Then the net expected gain from litigating to judgment would have been only $300,000 ($4 million x .10 = $400,000; $400,000 – $100,000 = $300,000) — much lower than the $1 million settlement. And so the settlement would be reasonable.

In re Fort Wayne Telsat, Inc., No. 11-2112, slip op. at 7-8 (7th Cir. Nov. 23, 2011) (affirming bankruptcy judge's okay of trustee's settling of claim by debtor).

Last February, Blawgletter wrote about a case that struck us as taking the issue of parties' "citizenship" to a Whole New Level. We said:

The Sixth Circuit today booted a case because it couldn't tell if it belonged in federal court or not.

The lawsuit pitted a Keystone State corporation (with a Pennsylvania principal place of business, which as Blawgletter knows from yesterday coincides with the firm's "nerve center") against a limited partnership. The complaint alleged diversity of citizenship as the basis for jurisdiction (under 28 U.S.C. 1332). It also averred that the limited partnership belonged to two limited liability companies and an "S.A.R.L." from France.

As the Sixth Circuit pointed out, the citizenship of LLCs depends on the citizenship of their "members" (owners). Plus, if an LLC member itself takes the LLC form, its citizenship likewise equals the citizenship of its members. And so on and so on (and scoobie doobie doobie) until the end.

Kind of like those Russian nesting dolls.

The court couldn't figure out if diversity existed because the record didn't show the insides of all the LLC nesting dolls. The French S.A.R.L. also vexed the panel, as no one seemed to know whether it counted as a corporation or a non-corporation and thus whether the nesting doll thing applied to it as well.

"As it stands," the court said, "the current jurisdictional allegations are fatally incomplete, leaving us uncertain that diversity jurisdiction exists." V&M Star, LP v. Centimark Corp., No. 09-3249, slip op. at (6th Cir. Feb. 24, 2010).

Well, it happened again. This time in the First Circuit. With the same result. D.B. Zwirn Special Opportunities Fund, L.P. v. Mehrotra, No. 11-1172, slip op. at 8 (1st Cir. Nov. 18, 2011) (per curiam) (ordering plaintiff "not only [to] identify its members and their respective citizenship" but "also [to] trace the citizenship of any member that is an unincorporated association through however many layers of members or partners there may be").

Oddly, the panel didn't mention V&M Star.

The Seventh Circuit split with the Fifth over whether a lawsuit by a state attorney general counts as a “class” or “mass” action that the Class Action Fairness Act [sic] allows defendants to remove to federal from state court. The panel held that CAFA doesn’t reach such a “parens patriae” case if the complaint as a whole discloses that the AG brings it not for the gain of private parties but in the state’s role as righter of wrongs against the whole people of the state. LG Display Co., Ltd. v. Madigan, No. 11-8017 (7th Cir. Nov. 18, 2011) (affirming remand of Illinois AG’s parens patriae action under Land of Lincoln law for conspiracy to fix LCD panel prices).

The court thus parted with the Fifth Circuit, which ruled that any claim that aimed to benefit actual people robbed a parens patriae complaint of its non-class and non-mass valence. Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008).

Who gains and who loses under the Seventh Circuit’s ruling? State AGs, of course, win the freedom to file and stay in the state court of their choice. Defendants, for the same reason, take a hit. They’d much rather make all cases that involve the same sort of claims against them run their course in a federal court of their choosing. Class action lawyers might also feel bad. Giving the AGs more sway tends to reduce theirs in the contest to get credit for making the bad guys pay.

Today the Paper of Record printed a long item on How Law Schools Cheat Their Students.

Not really. The thing tells how poor a job lawyer-mills do at teaching their toils how to “lawyer”. It says the schools worry so much about trade school stigma that they commit the unbusinesslike sins of teaching people how to think instead of how to work and hiring profs who churn out goofy papers rather than teach the little law tykes how to keyboard a motion to dismiss.

Call Blawgletter a skeptic. We think the legal academy does fine work in teaching law students the skill they need most — how to think with pristine good sense when others can’t, won’t, or shouldn’t even try. A knack for using logic to head off trouble or master it keeps on giving year after year, client after client, case after case. And you just don’t get as much of a pure ration of thinking without feeling outside the law classroom.

As for training in stuff that calls for know-how more than wit or brains — how to write briefs, draft contracts, respond to greenmail, answer questions from the Board of Sanitation, blog about Law — we’d suggest two things, both of which law schools do more now anyhow. One: urge students to work in the Real World for a bit before buying a Black’s Law Dictionary. Two: offer more chances to do real lawyer things for credit, maybe even require the doing of such things.

What about law firms, you say? Doesn’t the NYT piece highlight their fading power to bill clients for teaching new law grads the nuts and bolts of law practice?

Yes, it does. And there lies the source of the title for this post. The question of whether clients will pay to train baby lawyers isses-may the oint-pay. Of course they’ll pay for it. They have to. Because if they didn’t the hits to law firms’ profits would cause the law firm model to fall apart.

No, the question comes down to How Big a Share each cog in the machine has to bear of the training costs. The NYT suggests law schools should pay a bigger part of the cost. But the truth comes down to the fact that, in a time of more lawyers and firms chasing a stagnant supply of work that doesn’t demand world-class lawyer work, the client trumps all. The newbies, the schools, and the firms must each take a hit. Econ 101, baby!

Top legal writer Alison Frankel wrote a first class piece on Rambus's stunning loss this week of a price-fixing case against two chip makers that, ahem, had confessed to fixing prices. See .

Rambus accused Hynix and Micron ruined a sweet deal with Intel, which agreed to build Rambus technology into Intel chips. Micron and Hynix said Rambus only pretended that the price-fixing hurt it. In fact, they alleged, Rambus made bad stuff.

Rambus’s stock price fell 61 percent after the verdict.

The thing that seems to have made the difference? As often happens, it involved testimony by a third party, in this case an Intel engineer, who told the jury that Rambus itself messed up its standing with Intel by not putting enough effort into makng the deal good for both parties.

[Hat tip to David Shank.]