On November 5, 1999, United States District Judge Thomas Penfield Jackson issued an order, spanning 412 paragraphs, that constituted his findings of fact in United States v. Microsoft Corp., 98-1232 (D.D.C. Nov. 5, 1999).  In the final paragraph, His Honor wrote:

Most harmful of all is the message that Microsoft's actions have conveyed to every enterprise with the potential to innovate in the computer industry. Through its conduct toward Netscape, IBM, Compaq, Intel, and others, Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products. Microsoft's past success in hurting such companies and stifling innovation deters investment in technologies and businesses that exhibit the potential to threaten Microsoft. The ultimate result is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest.

The D.C. Court of Appeals largely affirmed Judge Jackson, as it should have.  Further Blawgletter sayeth not.

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The case involved NVIDIA stock, which didn't do too well.

The Ninth Circuit chided a district court today for usurping a right that the panel held belongs to the "lead plaintiff" in cases under the Private Securities Litigation Reform Act of 1995 — the right to choose counsel for the putative class.

The PSLRA, as you'll recall, all but directs district courts to award the lead plaintiff crown to the one that lost the most on his, her, or its securities investment due to the fraud.  The court may demur but only for excellent reasons — as where the biggest loser has gone stark raving mad or lives in a prison cell due to his own financial shenanigans.

The statute also gives courts power to veto the lead plaintiff's choice of counsel for the class.

The district court in Cohen v. United States District Court, No. 09-70378 (9th Cir. Nov. 5, 2009), forgot that a veto doesn't divest the chooser of the right to select.  His Honor named two co-lead plaintiffs as well as two co-lead law firms.  Which seems fine.  But one of the co-lead plaintiffs objected on the ground that the court ignored his pick and appointed as one of the co-lead counsel a law firm he didn't want.  The court rejected his gripe.

The Ninth Circuit disagreed.  It held, on co-lead plaintiff Roberto Cohen's mandamus petition, that the district court lacked power to install its own choice of class counsel:

Although it cannot be contested that the district court had the authority to reject Cohen's choice of lead counsel, it does not follow that having done so it had the authority to select lead counsel of its own choosing.  This argument misses the fundamental point that the PSLRA unambiguously assigns this authority to the lead plaintiff.

Id., slip op. at 14917.

Blawgletter wishes to point out a bonus footnote in the court's opinion.  There the panel poked at an issue that "none of the parties raise" — the question of whether the PSLRA allows more than one lead plaintiff.  "While the PSLRA allows a group to serve as lead plaintiff, it also consistentlly refers to the lead plaintiff and most adequate plaintiff in the singular, suggesting that the district court should appoint only one lead plaintiff, whether an individual or a group."  Id. at 14921 n.4.  Mmmmm.  Dicta.

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A panel of the Tenth Circuit today affirmed an order that denied a motion to vacate an arbitrator's award in favor of Qwest, the telephone company. 

The movant, DMA International, accused the neutral of misdeeds but mainly called him dumb for reading an unclear contract such that he ruled that DMA couldn't get $3.7 million more than the $1.7 million Qwest already paid it.  The court of appeals held that, while DMA might have had a point or two, the arbitrator did his job well enough.  DMA Int'l, Inc. v. Qwest Communications Int'l, Inc., No. 08-1392 (10th Cir. Nov. 4, 2009).

Things grew worse.  Qwest had filed a motion against DMA's lawyers for taking a vexatious and frivolous appeal.  The panel granted the motion under both 28 U.S.C. 1927 and Federal Rule of Appellate Procedure 38.  It explained:

We fully appreciate the financial burden this decision will impose upon DMA's counsel.  But only by imposing sanctions in cases like this case we give breath to the "national policy favoring arbitration."  Hall St. Assocs. [v. Mattel, Inc.], 128 S. Ct. [1396,] 1405 [(2008)].  "If we permit parties who lose in arbitration to freely religitte their cases in court, arbitration will do nothing to reduce congestion in the judicial system; dispute resolution will be slower instead of faster; and reaching a final decision will cost more instead of less."  B.L. Harbert[ Int'l, Inc. v. Hercules Steel Co.], 441 F.3d [905,] 907[ (11th Cir. 2006)].  "If arbitration is to be a meaningful alternative to litigation, the parties must be able to trust that the arbitrator's decision will be honored sooner instead of later."  Id. at 913.  In this case, it was later.  Sanctions are therefore warranted to compensate Qwest for the unnecessary legal fees it was forced to spend defending the arbitration award on appeal.

DMA Int'l, slip op. at 8-9.

Blawgletter notes, wryly, that Chief Judge Easterbrook of the Seventh Circuit not long ago said this:

According to Health Grades, access to the information [that the parties to an arbitration agreed to keep secret] would undermine the national policy favoring arbitration.  There is no such policy.

"Party Can't Agree to Keep Docs Secret; Easterbrook the Activist", Blawgletter®, Sept. 3, 2009.  His Honor must've missed the Hall Street memo.

Richard Burton Playing Hamlet 
Richard Burton, as Hamlet, fussed about "the law's delay". 

The Ninth Circuit spans a vastness on our spinning globe — from Window Rock, AZ, to Merizo, GM; from Border Field State Park, CA, to Barrow, AK; plus a lot in between. 

The biggest U.S. court of appeals also claims, oh, nearly 30 circuit judges.

Let's not advert to the degrees of Their Honors' philosophical separation.

Today the court ruled in an en banc configuration (11 out of the nearly three dozen) that none of its 12 brethren/sisteren circuit courts would recognize as such (because all their judges sit together for their en banc sessions).  The mini-full-court held, by the thinnest of margins (six-to-five), that the district court erred as a matter of law (and fact) by awarding lawyers less (a lot less) than the 25 percent contingent fee their clients agreed to pay them for recovering Social Security payments from a stingy federal government.  Crawford v. Astrue, No. 06-55822 (9th Cir. Nov. 3, 2009) (en banc) (sort of).

Two of the judges limited their dissent to the factual part of the ruling.  They agreed with the majority that the district court erred (in the three cases before the court) when it started with the attorneys' lodestar — hours x hourly rates — instead of the fee contracts.  But they added that the court of appeals ought to have let the lower courts apply the right standard in the first instance. 

The other three judges dissented in toto, urging that the district courts' fact-findings about reasonableness of fees must prevail over the attorney-and-client's contract for a 25 percent rate.

Blawgletter notes that, in the newest of the three cases before the court, more than five years had passed since its filing.  The other two involved delays, respectively, of over eight and in excess of 10 years.

The trio of cases presented the question of how to balance the client's interest in keeping as much of the recovery as possible against her or his promise to pay 25 percent of that amount as an attorney's fee.  The lawyers asked for — and, under the court's ruling, will receive — less than the percentage their clients agreed on.  We see no injustice there.

The issue of whether the district court deserved to assess the facts, with more room than the majority allowed it, strikes us as worth talking about.  Judging consists at its core of doing a judge's best to get the law and facts right.

Did the magistrate judges do otherwise?  No.  But they did take an unduly stingy view of the weight the law gives to contingent fee contracts between lawyers and clients.  We agree with the Ninth Circuit's en banc correction of their mistake of the law.

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The first footnote in a Ninth Circuit opinion today tells why Vivendi's lawyers must love their client.

The French corporation . . . also has initiated litigation and arbitration proceedings in Poland, Austria, France, Germany, Switzerland, and the United Kingdom related to this same alleged fraud.

Vivendi, S.A. v. T-Mobile USA, Inc., No. 08-35561, slip op. at 14770 n.1 (9th Cir. Nov. 2, 2009).

Vivendi alleged that Deutsche Telekom, its U.S. and German T-Mobile offspring, and Polish billionaire Zygmunt Solorz-Zak conspired to wrest a Polish wireless telephone company, Polska Telefonia Cyfrowa, from Vivendi's grasp.  Vivendi filed the suit under the Racketeer-Influenced and Corrupt Organizations Act and common law fraud — in the Western District of Washington, home of the Seattle Seahawks, who've gone 2-4 so far this season and lost yesterday to the Cardinals 27-3.

Why would a French telecom giant sue its German rival about who owned a Polish wireless operation in a place that calls itself the Rain City?  The district court couldn't figure out the answer either.  Nor could the Ninth Circuit.  Both ruled that the case belonged in Europe, specifically the Poland part.

The U.S. Supreme Court today heard what "fiduciary" means for an investment adviser when it charges mutual funds more than institutional investors pay for similar services.  See Transcript, Jones v. Harris Assocs. L.P. , No 08-586 (U.S. Nov. 2, 2009).  Briefs here.

Blawgletter predicts a close decision — probably by one vote – in favor of mutual fund investors, who claim the adviser breached its fiduciary duty under section 36(b) of the Investment Company Act.

The system for setting fees looks odd to us.  Mutual funds come into the world through the will of a Fidelity, a Templeton, a Vanguard, or some other outfit that aims to make money by selling its investment advice.  The money-making part comes in the form of adviser fees, which the creator/sponsor more or less negotiates with mutual fund offspring.  An independent board must okay the pay. 

But can the board, however independent, guard against too-high fees ex post facto?  In 1970, Congress feared not.  It said "the investment adviser . . . shall be deemed to have a fiduciary duty with respect to the receipt of compensation for services".  15 U.S.C. 80a-35(b).  Congress also created a cause of action to recover excessive fees.  And it provided that the board's clearing of the fees didn't end the inquiry but that the okay “shall be given such consideration by the court as is deemed appropriate under all the circumstances".  `15 U.S.C. 80a-35(b)(2).

The Justices grappled with the idea of a "fiduciary" duty that an independent board mediates but that a court may then review afresh.  Two of them — Chief Justice Roberts and Justice Scalia – vocally doubted the practicability of having judges second-guess board decisions.

Five others spoke more charitably about the excessive fee claim.  The petitioners, who lost in the district court and the Seventh Circuit, pointed out that the fees at issue far exceeded the fees that the same adviser charged its more savvy institutional investors for the same kinds of services.  Justices Breyer, GInsburg, Kennedy, Sotomayor, and Stevens seemed to want to give "fiduciary" more meaning than the courts below did.

Blawgletter sometimes rues the length of court opinions.  We indeed find the feeling more common as we progress a few months into our second half century.  And yet our patience has lately improved.

Judge Richard Posner helped today by explaining, in an ironically long opinion for him, why judicial sound bites can make bad law.  He cited a phrase, "literally false", which a plaintiff brandished as it might a knife that cut its opponents' defense to a Lanham Act claim to ribbons:

This is an unfortunately common example of a litigant misled by general language in judicial opinions.  Opinions would be even longer than they are if judges couldn't use short phrases to denote what may be complex legal doctrines.  When those phrases are taken to be exhaustive statements of entire doctrines with all the necessary qualifications, the result is likely to be a misapprehension of the law.  William Blake declared that "to Generalize is to be an Idiot.  To Particularize is the Alone Distinction of Merit."   That is a bit extreme; but uncritical generalization is a path to error.  One form of uncritical generalization, ironically in view of Schering's invocation of the doctrine of "literal falsity," is reading general language literally.

Schering-Plough Healthcare Products, Inc. v. Schwarz Pharma, Inc., No. 09-1438, slip op. at 20 (7th Cir. Oct. 29, 2009).

The Financial Institutions Reform, Recovery, and Enforcement Act grew out of the last big financial mess, this one during the 1980s and 1990s, when savings and loans and banks went belly up in large numbers.  Speculation and shady practices, you'll recall, accounted for many collapses.

Congress granted the outfit that guarantees deposits, the Federal Deposit Insurance Company, a lot of new powers.  Section 1819(b)(2) of FIRREA, for example, allows the FDIC to remove to federal court a state court case involving a bank once the agency becomes the bank's receiver. 

But what happens after the FDIC exits the case it removed?  May the district court send the lawsuit back to state court?

The Fifth Circuit said no yesterday in Adair v. Lease Partners, Inc., No. 08-60674 (5th Cir. Oct. 28, 2009).  FIRREA requires the federal court to keep the case because section 1819(b)(2) transforms all claims into ones that arise under U.S. law, thus conferring federal question jurisdiction, the court ruled. 

One judge concurred in the judgment only.  He felt that the majority went too far and should've based its decision on the fact that federal claims remained in the case, FIRREA or no FIRREA.