The CoStar/LoopNet merger

So, the big news exciting everyone in the commercial real estate world yesterday was the announcement of CoStar acquiring its rival and sometime litigation adversary LoopNet in a combined stock and cash deal expected to close by the end of 2011.  As always, Retail Traffic has excellent coverage of the deal.  The two companies are, as far as I know, the biggest national players in the commercial real estate information market.  Since I am a lawyer I do not use either service much, other than for news; but on the property information side I do have a preference for one company over the other.

When I saw this announcement, the one question I had was whether the combined company, given the market share it would have, would run afoul of anti-trust laws.  I am not the only one who thought that, as I saw a tweet or two to that effect and received a message from a friend (who can identify him/herself is s/he wants in the comment section) asking the same thing.

My initial reaction was that this might be a problem.  But then three things happened:

1.  Jason Sandquist correctly (and indirectly) reminded me that in many markets (including the small market where I live), the good old MLS is still king.  The commercial service providers are big on the national level but they are not alone for information.

2.  I saw in the press release the law firms working on the merger: Simpson Thacher for CoStar and Davis Polk for LoopNet. No slouches they -- two of the preeminent M&A law firms out there, with armies of folks able to argue that this deal is okay. (The business advisers were JP Morgan and Evercore Partners, respectively.)

3.  Finally, this little wire gem on termination fees: if LoopNet tanks the deal it pays a 3% fee, or $25.8 million.  If the deal tanks for anti-trust reasons, then CoStar pays LoopNet a 6% fee, of $51.6 million.  I don't know what is typical in the business, not being an M&A guy, but I believe the proposed antitrust termination fee for the NASDAQ offer to buy the NYSE is just over 3%.  So a 6% fee to me means someone must be confident it passes muster.

We will all keep an eye on this one, I'm sure.

Supreme Court Decision is Further Evidence of a Radical Pro-Corporate Agenda

In one of the most sweeping victories for corporate interests yet handed down by the Corporate Court under Chief Justice John Roberts, the Supreme Court held yesterday in AT&T Mobility v. Concepcion that the Federal Arbitration Act (FAA) preempts states from protecting consumers and employees from unconscionable corporate contract provisions that require them to waive their rights to class-action arbitration or litigation when the corporation engages in widespread wrongdoing. The Court has essentially given companies a “license to steal” from consumers, and a “license to discriminate” against employees, by preventing states from voiding contractual waivers that prevent consumers or employees from banding together to fight wrongdoing in court.

This case arose after AT&T defrauded thousands of customers who signed a two year service contract for “free” phones by charging them as much as $30 in sales tax on the phones. When the Concepcions filed a class action lawsuit to recover on behalf of themselves and all other customers who had been similarly cheated, AT&T claimed that the Concepcions’ only recourse was to pursue individual arbitration because their service agreement contained a mandatory arbitration agreement and a class action waiver clause. In drafting its take-it-or-leave-it service contract, AT&T knew that very few consumers would file arbitration claims to recoup $30 – indeed, between 2003 and 2007, only 180 of its 90 million customers had filed arbitration claims. AT&T also knew that if it could force consumers into case-by-case arbitration, it could reap millions from its “free” phone deal.

The Ninth Circuit struck down this scheme as unconscionable under a rule announced by the California Supreme Court in Discover Bank v. Superior Court:
“[W]hen the [class action] waiver is found in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money, then . . . the waiver becomes in practice the exemption of the party ‘from responsibility for [its] own fraud, or willful injury to the person or property of another.’ Under these circumstances, such waivers are unconscionable under California law and should not be enforced.”
California’s rule recognized that only class action arbitration and class action lawsuits make the pursuit of small claims worthwhile for claimants and attorneys. Amazingly, the ultra-conservative block on the U.S. Supreme Court struck down this consumer protection rule, thereby reinstating AT&T’s unconscionable contract. This will force the Concepcions and all other consumers to pursue claims individually in arbitration to recoup the wrongfully charged fees. The Court’s decision to overturn the rule demonstrates the degree to which federalism and states’ rights take a back seat when corporate interests are at stake.

Justice Scalia based the Court’s decision on a convoluted reading of Section 2 of the FAA, which states that a contract with an arbitration clause “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Although the California rule applied equally to class action arbitration or litigation waivers, the Court held that it disfavored arbitration agreements, because by disallowing class-action waivers in those agreements, it would force companies into class-wide arbitration where they had committed widespread wrongdoing. Because class-wide arbitration is worse for companies than class-wide litigation, the Court reasoned, the California rule would make it less likely for companies to include forced-arbitration provisions in contracts, which would in turn violate the FAA’s policy against disfavoring arbitration.

The dissenting opinion, authored by Justice Breyer, responded that the FAA only seeks to place contractual arbitration provisions on equal footing with all other contract provisions: “California is free to define unconscionability as it sees fit, and its common law is of no federal concern so long as the State does not adopt a special rule that disfavors arbitration.” Justice Breyer noted that California applied “the same legal principles to address the unconscionability of class arbitration waivers as it does to address the unconscionability of any other contractual provision.” By treating class action arbitration provisions the same as class action litigation provisions, California did nothing that would justify federal preemption by the FAA. The dissent added that the majority could find no support for its decision in Supreme Court precedent.

AT&T v. Concepcion is a landmark decision because many aspects of Americans’ everyday lives are controlled by contracts that individuals must sign to receive a job, a product, or a service. Employment terms, health care coverage, car loans, insurance plans, credit cards terms, cell phone agreements, and hundreds of other things are governed by contracts, most of which have forced arbitration provisions that require individuals to submit any claims for corporate wrongdoing to an arbitrator selected by the company. These mandatory arbitration clauses often go further and require consumers and employees to agree to bring any claim on an individual basis and give up the right to form a class when the company’s wrongdoing has affected thousands of people. After AT&T, these clauses are likely to appear as a matter of course.

The Supreme Court’s ruling in this case ensures that companies can eliminate the possibility of being sued in a class action lawsuit. Now companies will be able to defraud their customers or mistreat their employees, knowing that they could never be held fully accountable because at most a small subset of injured parties would ever seek to arbitrate their grievances.

To provide a telling example, consider the case of Wal-Mart, which has been sued for widespread discrimination against more than a million of its female employees. If Wal-Mart inserted in all of its employment contracts a mandatory arbitration clause with a class-action waiver, no matter how many women it cheated of pay and promotion opportunities, it could never be held accountable by those employees banding together as a class. As soon as the women employees would have filed a class action, Wal-Mart could have forced employees out of court and into case-by-case arbitration, knowing that only a tiny handful of the women it discriminated against would ever file individual arbitration claims.

This decision should not be allowed to stand. Senators Al Franken (D-MN) and Richard Blumenthal (D-CT), and Representative Hank Johnson (D-GA) intend to introduce the Arbitration Fairness Act next week to undo the Court’s mangled reading of the FAA.

For more information on the case, click here for AFJ’s special report.

Gay Marriage Foes Attempt Desperate and Bigoted Recusal Motion

Last August, California District Court Judge Vaughn Walker struck down Proposition 8, California's 2008 referendum banning same-sex marriage, as unconstitutional. While the case is on appeal, Prop 8 supporters have filed a motion arguing that Judge Walker's ruling should be vacated because his long-term, same-sex relationship created a conflict of interest requiring recusal from the case.

Today on the Washington Post’s website, Adam Serwer dismantles these arguments. Serwer writes that Prop 8 supporters “are reduced to arguing, essentially, that Walker’s ruling should be vacated because he is gay.” He adds that this “faulty legal reasoning” does nothing to convince anyone that the pro-Prop 8 crowd’s marriage stance “amounts to anything other than prejudice.”
The problem is that this same logic could be applied to a straight, married judge hearing the case. After all, supporters of the same-sex marriage ban are arguing that marriage equality is so damaging to the institution of marriage that the government has a vital interest in making sure gays and lesbians can’t get married. That means that a straight, married judge couldn’t be expected to be impartial, either — after all, according to supporters of Prop 8, “the further deinstitutionalization of marriage caused by the legalization of same-sex marriage,” would directly impact married heterosexuals. Therefore, a heterosexual, married judge could be seen as having just as much “skin in the game” as Judge Walker.

Supreme Court Reviews City Councilman’s Recusal Decision Even as Justices Oppose Review of Their Own

Tomorrow, the Supreme Court will hear oral arguments in Nevada Commission on Ethics v. Carrigan. The case will determine the validity of a state statute requiring legislators to recuse themselves from voting on measures in which they have a conflict of interest. Ironically, while accepting a case to evaluate recusal standards for legislators, the justices oppose any oversight of their own recusal decisions.

Michael Carrigan, the respondent in this case, is a member of the City Council of Sparks, Nevada. Carrigan’s vote in favor of the construction of a hotel-casino was challenged on the grounds that the vote occurred after the developer hired Carrigan’s longtime friend and campaign manager. The State Ethics Commission found that Carrigan violated a catch-all provision in the recusal statute by voting on the development because it would financially benefit his close confidant. Carrigan challenged the Commission's finding, claiming that the law violated his First Amendment right to political speech. The Nevada Supreme Court agreed, finding that the catch-all provision was too broad under a strict scrutiny analysis.

In its appeal, the Commission argues that content-neutral legislative recusal rules have a long history in the United States and that there is no personal First Amendment right to vote in a legislature. The Commission also argues that a strict scrutiny standard is too harsh and would "needlessly endanger a wide range of recusal provisions."

The justices of the Supreme Court also operate under recusal standards, but there is no process to review decisions, as there is in the Carrigan case. Each justice decides on their own whether a conflict of interest exists, and their individual judgment is final. This violates the longstanding principle that no one should be a judge in his or her own case. It is even more important for ethical issues, which evaluate the appearance of bias as seen by outsiders. Judicial integrity depends on how the Court appears to others, not on how the justices feel about themselves.

Alliance for Justice is engaged in an ongoing effort, supported by more than 135 of America's most prominent legal ethicists, to press for mandatory ethical standards and a review process for recusal decisions by Supreme Court justices.

Visit AFJ's website for more information on Supreme Court ethics reform.

CRE, Liquidity, NATO and Social Media

How do you get these three things into one blog post? Read on.

A somewhat encouraging article this morning on increased liquidity and demand for commercial real estate lending makes me happy.  As loans and properties reposition themselves one way or another, lenders have more ability to move money around as the balance improves. So more people -- alas, usually not the original owner in many cases -- make money.  The banks can lend again, the buyers of notes can reposition themselves as owners or restructured get the picture. And we lawyers negotiate all that stuff, for better or worse.

So why NATO? Because it is going away.  I am not, however, talking about the military.  I am talking about the NATO my father always referred to when I was a kid.  For him, NATO stood for "No Action, Talk Only."  And face it: that's all many of us in the business have been able to do for the last few years, too.  But now we seem to be moving into a mode where we can do more than do, and action is a good thing for us all, as it is the only way to make money.

Speaking of money, the NATO trend has slipped into the legal profession, too.  But the worst offenders of NATO, in my not so humble opinion are the so-called "social media gurus" who hound us on blogs, Twitter, etc. telling us they know the secrets to getting rich using social media.  There's only one whom I think is worth his salt.  If you are reading this wondering, "Is he talking about me?" I'm not. He knows who he is and probably isn't reading this post anyway.

So if you will excuse me, I have to go make some money now.  Have a great day!

Senate Leaders Agree on Plan to Streamline the Confirmation of Executive Branch Nominees

Yesterday's New York Times reported on bipartisan legislation that would cut the number of executive branch positions requiring Senate confirmation votes. The proposal would eliminate Senate review for about 200 mid-level executive branch positions.

The bill, S. 697, was introduced by Senator Charles Schumer (D-NY) and is cosponsored by seven Republicans and seven Democrats, including Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY). The bill's supporters say "they want to ease what they call an arduous chore for mid-level nominees trying to navigate the Senate in a supercharged partisan era."

When President John F. Kennedy took office in 1961, there were about 280 confirmable posts in the executive branch; today, that number is over 1,400. This legislation is intended to reverse that explosion, making space on the Senate's calendar for other business, such as judicial confirmations and legislation.

Senator Susan Collins (R-ME), a strong supporter of the proposal, said that "we are losing very good people because the process has become so onerous, so lengthy and so duplicative... Why should there be a full F.B.I background check back to age 18 for an individual serving on a part-time board?"

Despite the bill's strong bipartisan support, it does have some detractors. David S. Addington said that this bill would give President Obama "kingly power" to appoint mid-level executive staff. Addington, who as chief of staff to former Vice President Dick Cheney championed policies that sought to maximize executive power, is apparently wary of executive power now that George W. Bush is no longer president.

Click here
to read the full article.

On the Other Hand, the Good News Department - Local Retail Vacancies Below 10%

THIS is what I want to read.  And my retail developer clients want to read it even more.  Thank you Crains and thank you CBRE for the optimistic report.

The even better news?  Net asking rents are up about 3% from the previous quarter. So even though some retailers want to curb store size (Kohl's being the latest big box to join the trend, according to this WSJ piece today), they will want the store fronts. Let's see if it holds.

The CRE Market - Good News and Bad News on Deal Volume

Jones Lang LaSalle has a capital markets research report out that says commercial real estate volumes surged to just under $90 billion in the first quarter of 2011.  I guess that is good news.

But the surges were mostly in Asia, with Japan being the biggest player there.  (This was before the earthquake, tsunami and nuclear accident, by the way.)  Europe?  Activity slowed compared to Q4 of 2010. Year end deals?  Ditto the Americas: a "modest drop-off."  JLL takes pains to say that the worldwide volume is still up from Q1 2010, but then there was nowhere to go but up, right?

One thing I didn't notice was whether the volume, reported in dollars, made any difference because of the dollar's decline against most all other currencies. That, of course, is an entirely different subject that I will let the currency experts and economists figure out.  

The report also notes:
"There are sound reasons for investors to be looking at commercial property: its perceived inflation hedge; supply shortages in many gateway markets; appealing risk-adjusted returns when compared to more volatile assets; still-attractive pricing outside some of the prime markets which corrected earliest; and even a pick-up in both debt issuance and securitization. We expect a further $290-310bn in direct commercial real estate transaction volumes in the remainder of this year."
Translation: maybe a 5-10% pickup in deal flow over the rest of 2011.  Right?  Not bad, not great.  At this point you take what you can get.

What I see?  Big deals get done.  Little deals?  They take a back seat.  Mid-market deals, the ones in my sweet spot, are taking a long time to close, as due diligence is both due and diligent and everybody (rightly) dots the Is and crosses the Ts in making a deal.

If you see something different, please do not be shy.  We call have different perceptions. We discussed that at a planning commission committee meeting last week and it was a great reminder that my reality is another person's fantasy, and vice versa.

Long Term Health Effects of Oil Spill Remain Murky

While it is clear that the Gulf oil spill took an immeasurable toll on the ecosystem and natural resources of the Gulf region, the spill’s effect on the health of residents and cleanup workers remains largely unknown. What is known is that over 200 million gallons of oil, as well as approximately 1.84 million gallons of dispersants used in an attempt to break up the oil were dumped into the Gulf of Mexico. There have been widespread reports of symptoms like headaches, eye irritation, nausea, and coughs by residents and cleanup workers, which they attribute to exposure to oil and/or the chemical dispersants.

Cleanup workers like Andre Gaines say they’ve developed dry coughs, nausea, and even skin rashes, but have seen no public health response to their claims. In a New York Times story yesterday, Gaines described leaving hospital visits with no answers about his symptoms. “Who do we call? Our government is not talking about this,” Gaines says in the article. “They took advantage of us.”

The Times-Picayune reports that one three year-old who visited the Gulf on vacation after the spill had blood levels with three times the normal level of ethylbenzene (a toxin). This result is mirrored in blood tests conducted on a broad swath of Gulf residents.

One survey conducted by the Louisiana Bucket Brigade found that “Almost three quarters of respondents who believed they were exposed to crude oil or dispersant also reported experiencing symptoms.”

As the New York Times article reports, however, assessing the long-term health effects, and holding the responsible parties accountable are complicated endeavors. “The problem, advocates say, is that there is little access to health care or specialists familiar with treating oil and chemical exposures. Further, they say, no reliable registry of these health problems exists, though a $10 million federal study of the health effects of an oil spill was recently launched.”

The question remains as to whether BP will foot the bill for spill-related health screening and treatment of those who may have been exposed to oil or dispersants. The oil giant has contributed $10 million for a National Institute of Environmental Health Sciences study that will analyze the long-term health effects of the spill on cleanup workers. But advocates have raised major concerns about the study, including the cost of the delay in financing the study, and the fact that the study only includes cleanup workers. Moreover, there is no treatment associated with the study for those who evidence health-related problems from oil or dispersant exposure.

More information about the health effects of the BP oil spill is available here.

Supreme Court Set to Hear Halliburton Securities Fraud Case

The Supreme Court will hear oral arguments in Erica P. John Fund v. Halliburton on Monday. At stake is the ability of investors to hold corporations accountable for deceptive practices designed to inflate stock prices. The Court must decide whether a plaintiff in a securities fraud action will only obtain certification of a class action if the plaintiff establishes by a preponderance of the evidence that a corporate defendant’s correction of its false statements caused its stock price to drop. The Erica P. John Fund claims that Halliburton made false statements that harmed investors in violation of securities law.

Specifically, they claim that Halliburton deceived investors and tried to inflate stock prices by underestimating the company’s liability in an asbestos lawsuit and overprojecting both the cost-saving benefits of a merger and the revenue from construction contracts. Halliburton’s stock price dropped when it corrected these misstatements. The Erica P. John Fund filed a class action lawsuit to recover financial losses suffered by the Fund and similarly situated investors that they claim occurred because of Halliburton’s misrepresentations.

The Supreme Court previously held that plaintiffs in a securities fraud action enjoy a rebuttable presumption of reliance on false statements. This is essential in a securities fraud case because requiring each class member to prove individual reliance on the misrepresentations would often be impossible and prevent plaintiff shareholders from banding together as a class.

The Fifth Circuit upheld the district court’s denial of class certification, holding that the plaintiff was required to demonstrate by a preponderance of the evidence at the class certification stage that Halliburton’s corrective announcement caused the stock price to drop. The plaintiff argues that adding a causation requirement creates an impossible standard to meet at the class certification stage during which there is minimal discovery.

If the Supreme Court sides with Halliburton, it will raise the standard for bringing a securities fraud class action and make it easier for corporations to deceive the public and inflate their stock prices.

One Year After Spill, BP Tries to Shift Blame from Itself

Oil Giant Claims Transocean Caused the Deepwater Horizon Disaster

One year after the worst oil spill in history, the responsible party commemorated the occasion by pointing the finger at the other companies involved. Yesterday, BP sued Transocean for over $40 billion, including punitive damages, trying to shift blame from itself onto Transocean and the other companies that operated the well.

BP also brought claims against Cameron International, the company that manufactured the faulty blowout preventer, Halliburton, the company that made the allegedly faulty cement casings, as well as other companies.

BP’s complaint against Transocean claimed that “The simple fact is that on April 20, 2010, every single safety system and device and well control procedure on the Deepwater Horizon failed, resulting in the casualty.” BP claimed that Transocean did not adequately maintain the rig, failed to fix engine problems, and failed to properly train the crew to deal with a fire on the rig. Yesterday was the deadline for bringing claims against Transocean under an order issued by the judge overseeing all lawsuits related to the oil spill.

Transocean filed a counter-lawsuit against BP, arguing that it failed to fulfill its contractual promise to indemnify (pay back) any damages Transocean incurred for personal injury and death lawsuits. Meanwhile, Halliburton has also filed lawsuits against BP, Transocean, and other companies, claiming that the explosion was caused by those companies, “and not by any conduct on the part of Halliburton Energy Services.”

In February, U.S. District Court Judge Carl Barbier will oversee the first oil spill trial and determine whether Transocean can limit its liability. At that time, the court will likely also determine how much blame each of the companies involved bears for the disaster.

As the companies responsible for the oil spill pointed fingers and one another and positioned themselves to avoid as much responsibility as possible, the hundreds of thousands of people whose lives have been turned upside down by the spill continue to wait for justice and wonder if they will ever be made whole.

Click here for more information about BP’s claims against the other companies.

Tell Congress: Don't let the Court protect corporate polluters

Last year, Americans watched in horror as the Deepwater Horizon oil rig exploded in the Gulf of Mexico and oil gushed from the ruptured wellhead for three months. The explosion took the lives of 11 rig workers, and the millions of barrels of crude oil that spilled into the waters of the Gulf disrupted the livelihoods of residents who depend on the Gulf ecosystem for their income and survival.

The Exxon Valdez disaster in Prince William Sound, Alaska, is a haunting predecessor to the calamity in the Gulf. After almost 20 years of litigation, the U.S. Supreme Court cut down the punitive damages awarded by an Alaska jury by 90 percent and created a new rule limiting citizens' ability to recover punitive damages in maritime cases.

Senator Sheldon Whitehouse (D-RI) has introduced the Maritime Liability Fairness Act (S. 592), a bill that restore the law to where it was three years ago by removing the unfair cap set by the Supreme Court on liability awards for victims of catastrophes like the BP oil spill and Exxon Valdez. Tell your senators to support this bill!

Gulf residents must make difficult choices when seeking compensation and face a long and uncertain road to justice and recovery. Even one year after the Deepwater Horizon disaster, the fight for justice is often slow, frustrating, and tilted in favor of the corporate interests over individual rights. The Supreme Court has tilted that balance even more in favor of pro-business interests, but Congress can set things right by restoring the ability of victims to be fairly compensated when their lives and livelihoods are wrecked by corporate irresponsibility.

After the Supreme Court took Exxon's side, the oil giant posted a record $11 billion quarterly profit. Exxon didn't need the Court's help, but Gulf Coast residents struggling to get by need ours – as will future victims of offshore oil spills.

Write to your senators today and urge them to support the Maritime Liability Fairness Act. Tell them how important it is that citizens be allowed to hold corporations accountable for disasters like the Deepwater Horizon spill!

Get Your Malls for Sale!

Just one quick note: today's Wall Street Journal had a good piece on the big boys selling portions of their mall portfolios. Take a look here. And have a great Wednesday!

Avoiding the Appearance of Impropriety

In my legal career I have lived by certain standards. One of them is to not just avoid improprieties, as all lawyers should, but to also avoid situations that even create an appearance of impropriety. (I know at least one person who disagrees that I do so, but s/he is, in a word, wrong.)

Case in point: I serve on my local library board and am a director of my homeowners association. I also have the privilege of having been appointed to the county's regional planning commission, which studies and makes recommendations about macro land use issues in the area. Because of that appointment I have regular contact with elected officials and with county staff that might have an impact on matters involving my subdivision, which is in unincorporated territory. Although I didn't have to, out of an abundance of caution I have recused myself from any dealings with the county that involve my subdivision lest I be accused of trying to influence people improperly. I have refused to take on legal matters that I certainly could have for similar reasons. Has it cost me money? Absolutely. But I sleep better at night.

I'm sure my former state representative, Careen Gordon, is an honorable person. I admittedly did not vote for her in the last election because I never saw her touch on the issues; all I read and heard were ads that basically said to me, "Don't vote for my opponent because she is married to a doctor and lives in a big house." Since I am married to a doctor and live in an above-average sized house, I didn't think that was a good reason to disqualify a candidate from office.

After losing in the 2010 election, Gordon's was the crucial vote that raised our state income tax from 3% to 5% in a lame duck session, a vote with which I disagreed for philosophical and political reasons. Two days later, the governor nominated Gordon to serve on the Prisoner Review Board, a position from which Gordon wisely withdrew her name from consideration and to which she may well have not been confirmed.

Well, now we get word that Gordon has been given a state job that does not require any confirmation: as an associate general counsel in the Illnois Department of Professional Regulation, apparently to work on matters related to real estate. Hopefully she can start by fixing some of the changes for which she voted that are causing nightmares with small homeowners associations, or so I am reading from my listserv colleagues.

In both instances there were numerous complaints that the appointment/job amounts to a quid pro quo: trading the tax hike vote for a government gig. I cannot opine on that. What I can say is that I would not have accepted the position, at least not so soon after being voted out of office and changing my mind on a critical issues such as this. But that is me. And I wonder aloud whether we need legislation prohibiting those voted out of office from accepting any paid government position for, say, two years after leaving office. It sure would look better while not permanently depriving us of talented people in civil service.

Waiting for judges

In a recent editorial, the Chicago Tribune tackled the growing problem of judicial vacancies by asking the question, "If you wanted to leave your job and your boss asked if you could stick around until your replacement was chosen, how long would you be willing to wait? A week? A month?"

It's a problem faced by many federal judges nearing retirement. With soaring caseloads, many courts simply can't afford to go without a judge, and the Senate has been painfully slow to confirm nominees.

The editorial asks:
What's the holdup? As is often the case these days in Washington, it's partisan politics. Last year, Democrats claim, Senate Republicans delayed confirmation votes in hopes of gaining control of the Senate. This year, they are allegedly putting them off in hopes of winning the presidency next year.

There is some basis for these charges. President Barack Obama has had a tough time getting his judicial nominees confirmed. Only 62 percent of his choices for district judge have made it — compared to 74 percent of George W. Bush's and 86 percent of Bill Clinton's. These are the positions that should be the least problematic, since district judges are the ones who do the grunt work of running trials and processing cases, not the philosophical task of making law.

Click here to read the editorial.

Gulf Coast victims continue to face obstacles

One year after the massive oil spill in the Gulf of Mexico, many are assessing the process of recovery for those who suffered economic losses or property damage. Alliance for Justice released a report today which provides detailed analysis of the continuing struggle for fair and timely compensation one year after the Gulf oil spill, and investigates whether the legal system is working fairly to provide those affected with adequate compensation.

The New York Times reported yesterday that many affected by the Gulf spill have attempted to file a claim with the Gulf Coast Claims Facility (GCCF), only to find that claims have already been filed on their behalf by lawyers they never hired. Vietnamese-Americans in the Gulf coast report being misled into signing legal retainers and being told they were signing up for financial or medical assistance. In many cases they dealt with a contractor hired by local lawyers recruiting clients to the large firms taking part in the multi-district litigation against BP. As the New York Times reports:
“The problem in many cases seems to have started at the ground level. Here in Bayou La Batre, Vietnamese people tell of contractors who allowed relatives to sign them up in absentia, or who encouraged potential clients to sign official-looking forms — in English — without explaining that the forms were legal retainers. The stories vary but the same few names come up.

Having heard similar reports last September, Lan Diep, an Equal Justice Works and AmeriCorps fellow working on the Gulf Coast, visited the office of one such contractor, in a ranch house just outside of town.

Not letting on that he spoke English, Mr. Diep was told by a man at the house that he could get money simply by filling out a form and handing over some financial documents. He was given a retainer for Brent Coon and Associates, a Texas law firm, he said, but was not told that he was signing up for a lawyer nor was he allowed to keep a copy for himself.”
Alliance for Justice’s new report argues that more widespread access to the free legal services available through the GCCF would help protect claimants from predatory lawyering. Information about legal aid must be made more prominent and available. All GCCF claims information, moreover, should be written in non-technical, accessible language, and made available to non-English speakers.

Read One Year After the Gulf Oil Spill: Is Justice Being Served? and learn more about Alliance for Justice’s full list of recommendations and the ongoing fight for justice in the Gulf.

The Myth of "Spillionaires"

Last week, Kim Barker wrote an article that ran in the Washington Post claiming that the oil spill has delivered a "gusher of money," creating a new class of "Spillionaires." The article cites a handful of examples of companies that received windfalls from BP thanks to corrupt local officials who secured lucrative contracts with the companies for political supporters. Barker’s article, Spillionaires are the New Rich after BP Oil Spill Payouts, paints a picture suggesting that the spill was lucrative for many, if not most, Gulf coasters.

But is it true that the most people who are choosing to settle claims with BP are getting the compensation they deserve? A new report by Alliance for Justice that will be released in the coming days suggests it is not, and makes recommendations for ways to ensure that victims are made whole.

While there may certainly be anomalous instances of individual claimants making out like bandits, Barker’s article is misleading in that it does not tell the story of the vast majority of claimants who continue to suffer economically because of BP. Spillionaires acknowledges (near the end of the article) that "those at the bottom earned much less" and that not all have received fair compensation – reinforcing the fact that the Spill has in many cases hit the most vulnerable the hardest.

A new article by the Mobile Press Register paints a picture very different from the one in Spillionaires – telling the story of a handful of the many victims whose life investments have been wiped out because of the spill, and for whom the claims process set up by BP has failed to provide meaningful recompense. For instance, sixth-generation fisherman Paul Johnson received just $10,000 from GCCF, despite the fact that his oyster catch has dropped from 400 to 60 gallons a week. Johnson has chosen not to accept a final payment from GCCF, despite his dire financial situation, and will continue trying to get by on short-term payments from GCCF that do not require him to give up his right to sue BP.

To learn more about the effect the oil spill has had on residents of the Gulf, check out Alliance for Justice's award-winning short film, Crude Justice .

Supreme Court Set to Hear Oral Arguments in Global Warming Case

The Supreme Court will hear oral arguments tomorrow in American Electric Power v. Connecticut. At stake is the ability of citizens to stop corporate polluters from emitting harmful greenhouse gases. The Court must decide whether states and private parties can sue utility companies to cap global warming emissions. Eight states (now six after the Republican governors of New Jersey and Wisconsin withdrew), the City of New York, and three private land trusts allege that greenhouse gas emissions that cause global warming constitute a public nuisance for which polluters should be liable under common law. The defendant utility companies – American Electric Power, Cinergy, Southern Company, Xcel Energy and the Tennessee Valley Authority – are the five largest emitters of carbon dioxide pollution in the United States. The defendants’ combined 650 million tons of annual carbon dioxide pollution constitutes 10 percent of America’s carbon dioxide emissions. The Second Circuit denied a motion to dismiss, allowing the case to move forward. Justice Sonia Sotomayor was on the three-judge panel that initially heard the case but was elevated to the Supreme Court prior to the decision and is recusing herself from the case.

The defendants appeal to the Supreme Court argues that plaintiffs cannot show that global warming is traceable to these defendants, or that it would be alleviated if a court orders them to reduce their carbon emissions; that because the Clean Air Act grants the Environmental Protection Agency (EPA) the authority to regulate carbon emissions, there is no room for a federal common law claim; and that a court is not equipped to evaluate whether defendants emissions are unreasonable.

Most of these arguments are easily rebuttable. For example, it's hard to see how contributors of 10 percent of America's annual emissions of greenhouse gases should not be potentially liable even if there are millions of other contributing sources. Speeders don't get to escape a ticket just because others are driving too fast on the nation's roads. Given the fact these defendants are the five largest carbon dioxide emitters in the United States, a reduction in their greenhouse gas emissions should have some benefit even if it won't solve the overall problem.

The EPA is also hardly covering the field. Although the EPA is currently drafting regulations to regulate greenhouse gases, it took a lawsuit by states—Massachusetts v. EPA—to establish that EPA had this authority. Under the Bush administration, EPA took the position that it had no authority to regulate greenhouse gases. Moreover, the regulations EPA is drafting will not directly affect the defendants’ power plants. EPA's rules will govern mobile sources, like cars and trucks. They will only affect stationary power plants if those plants are new or become modified.

As for whether courts can fashion a remedy to curb the unreasonableness of defendants' emissions, this is something they have done in public nuisance cases as far back as pre-Revolutionary times. The plaintiffs explain that public nuisance claims have been adjudicated in the Anglo-American judicial system since the 14th century. The Supreme Court “has long adjudicated common-law public-nuisance claims brought by States seeking to enjoin air or water pollution that crosses state boundaries, sometimes based on new scientific knowledge about the harm caused by a particular type of pollution.” Thus, once a public nuisance violation has been established, courts have historically been able to craft a remedy. In this case it would not be to solve global warming; it would be to address these defendants level of carbon emissions.

Corporate polluters, including Chevron, Shell Oil, ConocoPhillips, the National Mining Association, and a host of others have filed amicus briefs in support of the defendants. In addition, conservative foundations that have received millions of dollars from Charles and David Koch for climate change denial activities have filed amicus briefs on behalf of the polluters. These include the Cato Institute, which was co-founded by Charles Koch and has received more than $13.6 million from the Koch brothers, and the Washington Legal Foundation, which has received $1.2 million from the Koch brothers.

In an ironic twist, several Republican members of Congress who otherwise have sought to kill global warming regulations and the EPA filed a brief arguing that the Court should block the lawsuit as preempted by EPA's statutory authority to regulate greenhouse gases. One of the brief's signers, Senator James Inhofe, has called global warming “the greatest hoax ever perpetuated on the American people.” Republicans in the House have used budget debates to attempt to prevent the EPA from regulating greenhouse gas emissions and reduce its funding by one-third, more than any other agency.

If the Supreme Court sides with polluters, it will prevent citizens from holding corporations responsible for their contributions to global warming.

Click here for a New York Times editorial urging the Supreme Court to allow the lawsuit to go forward.

Kagan Dissent Demonstrates Strong Counterweight to Scalia

Justice Elena Kagan’s first published dissent -- in Arizona Christian School Tuition Organization v. Winn, a case concerning the ability of citizens to sue the government for violations of the First Amendment’s establishment clause -- demonstrated a strong rhetorical flourish that has caught the attention of many court observers. Arizona had passed a law allowing citizens to receive a tax credit of up to $500 for contributions to school tuition organizations that give scholarships to children attending religious schools. If the contributions had been made directly from the government, it would clearly have run afoul of the First Amendment. But because the funding of religious institutions operated through the mechanism of a tax credit, a 5-4 majority of the Supreme Court, in an opinion by Justice Kennedy, held that affected taxpayers did not have standing to sue Arizona because they couldn't prove that their money was being spent to support religious institutions. The Atlantic’s Garrett Epps wrote that the dissent successfully did what only Justice Scalia has previously accomplished, which is to speak “directly from the bench to ordinary Americans and enlist them on her side of legal disputes.” He quoted the following passage from Kagan’s dissent, which analogized Arizona’s scheme to the bank bailout:

Imagine that the Federal Government decides it should pay hundreds of billions of dollars to insolvent banks in the midst of a financial crisis. Suppose, too, that many millions of taxpayers oppose this bailout on the ground (whether right or wrong is immaterial) that it uses their hard-earned money to reward irresponsible business behavior. In the face of this hostility, some Members of Congress make the following proposal: Rather than give the money to banks via appropriations, the Government will allow banks to subtract the exact same amount from the tax bill they would otherwise have to pay to the U. S. Treasury. Would this proposal calm the furor? Or would most taxpayers respond by saying that a subsidy is a subsidy (or a bailout is a bailout), whether accomplished by the one means or by the other? Surely the latter; indeed, we would think the less of our countrymen if they failed to see through this cynical proposal.

Stanley Fish wrote in the New York Times that Kagan’s argument concerning Arizona’s “end run” around constitutional prohibitions succeeded in “dismantling the majority’s reasoning piece by piece until there is nothing left standing.” Fish discussed another section of the dissent in which Kagan addressed hypothetical tax credits for religious piety:

Next she takes advantage of, without explicitly naming, her own religious identity: “Suppose a state desires to reward Jews — by say, $500 per year — for their religious devotion.” Would it matter to non-Jewish taxpayers “if the state allows Jews to claim the aid on their tax returns, in lieu of receiving an annual stipend” directly? And if Jews are too small a sample, how about subsidizing the purchase by Catholics of crucifixes? The state “could purchase the religious symbols in bulk and distribute them … or it could mail a reimbursement check to any individual who buys her own and submits a receipt … or it could authorize that person to claim a tax credit equal to the price she paid.”

“Now really,” she comments with only a bit of tongue in cheek, “do taxpayers have less reason to complain if the State selects the last of these three options?” (Notice that the question is asked in the negative and thus made at once softer and harder.) This time she doesn’t answer the question, but only says quietly (and devastatingly), “The Court today says they do.”

A promising beginning for Justice Kagan.

New York Times Slams Corporate Court for Backing Wealthy Special Interests Over Campaign Finance Reforms

A New York Times editorial criticized the Supreme Court’s conservative members yesterday for protecting the right of wealthy individuals and special interests to financially overwhelm opponents in political campaigns. The constitutionality of a campaign finance provision in Arizona came before the Court on March 28, 2011 in the consolidated cases of Arizona Free Enterprise Club’s Freedom PAC v. Bennett and McComish v. Bennett. Under the challenged law, candidates in Arizona who accepted public financing could receive increased public funding for their campaigns if they faced attacks from well-financed independent expenditure groups that spent more than statutory limits or if the candidate’s opponent refused public funds and overspent the law’s limits.

The editorial called this reform “one of the most compelling innovations in the country.” Opponents claim that it burdens the free speech of wealthy special interests. For example, during oral arguments, Chief Justice Roberts strongly suggested that he “sees triggered matching public funds as a limit on the privately financed candidate’s speech.” This is counterintuitive, as the law does not in any way limit the spending or speech of privately-financed candidates; it simply provides matching funds for candidates that accept public financing. The Times added that under Arizona's law, “more candidates — not just the wealthy — will be able to run in elections,” which will result in “more political speech, not less.”

If the Court sides with those who want Arizona's public-financing elections system struck down, it will become another in a series of decisions siding with wealthy special interests in election-law disputes. In a 2008 decision, Davis v. Federal Election Commission, the conservative majority of the Supreme Court struck down a federal rule that increased the cap on campaign contributions for candidates outspent by wealthy and self-financing opponents. The majority held that the rule harmed the free speech rights of wealthy candidates by diminishing “the effectiveness” of their spending and speech. The 2010 Citizens United case also unleashed a torrent of corporate money into federal elections. The Times lamented that “money already has far too much sway everywhere in politics,” adding that if the Court continues to strike down laws that facilitate more campaign speech for candidates being drowned out by wealthy opponents, “the damage and corruption will be enormous.”

Click here to read the full editorial.

National Equal Pay Day and the Fight for Fairness

by Leah Tingley

Some may say the earlier you fall behind, the longer you have to catch up. Unfortunately, most women fall behind in earnings right out of the starting block and fight for decades to catch up to their male counterparts. In fact a recent report entitled, Women In America, prepared for the White House Council on Women and Girls, notes, “At all levels of education, women earned about 75% of what their male counterparts earned in 2009.” Forty-eight years after the passing of the historic Equal Pay Act of 1963, the push for pay equity for women continues.

This year, President Obama has declared April 12 as National Equal Pay Day 2011. Equal Pay Day is an annual commemoration of the day when women’s wages finally catch up to those of men from the previous year. Also in commemoration of this date, Senator Thomas Harkin (D-IA) and Representative Eleanor Holmes-Norton (D-DC) have re-introduced the Fair Pay Act. The bill will require employers to provide equal pay for jobs that are comparable in skill, effort, responsibility and working conditions, and it will give workers the information they need to determine when jobs are under-valued.

Senator Barbara Mikulski (D-MD) and Representative Rosa DeLauro (D-NY) have also reintroduced the Paycheck Fairness Act. In the 111th Congress, the Act passed the House (256-163), but was defeated on a procedural vote (58-41) in the Senate. The Act provides incentives for employers to follow the law, empowers women to negotiate for equal pay, and strengthens federal outreach and enforcement efforts. The bill would also deter discrimination by strengthening penalties for equal pay violations and prohibit retaliation against workers who inquire about employers’ wage practices or against those who disclose their own wages. With passage of the Fair Pay Act and the Paycheck Fairness Act, women would take another step forward towards equal and fair pay that they deserve.

Thanks to the hard work of many different organizations, coalitions, and fearless activists like Lilly Ledbetter, women took a progressive step forward with President Obama’s signing of the Lilly Ledbetter Fair Pay Act on Jan. 29, 2009. The fight for equal and fair pay is also currently playing out in the Supreme Court in Wal-Mart v. Dukes, a case where courageous women like Betty Dukes are standing up for their right for equal pay, and for the ability to organize and fight as a class action against a large corporation such as Wal-Mart. Today in local communities across the country, people are commemorating Equal Pay Day by taking action. They are sharing their stories both online and offline, distributing literature about the issue of pay equity and expressing their support for fair pay for women by wearing the color red to symbolize how far women and minorities are “in the red.” In Washington, DC, some activists teamed up to hold a flash mob for equal pay in front of the Lincoln Memorial. Using the hashtag #fairpay, everyone will be able to follow or join in the action on Equal Pay Day on Twitter.

A Powerful Perspective

John Thompson spent 14 years on death row before he was exonerated and set free. But this wasn't a case where advances in forensic technology finally proved a man's innocence; in this case, the prosecutors failed to turn over vital evidence to the defense. Once that evidence came to light, a jury acquitted Thompson after deliberating only 35 minutes.

Thompson sued the district attorney to hold him accountable for failing to ensure that the prosecutors in his office would protect the rights of the innocent. A jury sided with Thompson, and awarded him $14 million -- $1 million for each year he spent on death row.

Last week, the Supreme Court overturned the jury verdict. John Thompson wrote about his experience in a powerful piece for Saturday's New York Times:
I was tried for the robbery first. My lawyers never knew there was blood evidence at the scene, and I was convicted based on the victims’ identification.

After that, my lawyers thought it was best if I didn’t testify at the murder trial... And now that I officially had a history of violent crime because of the robbery conviction, the prosecutors used it to get the death penalty.
Thompson's story of his legal battles is chilling. Even worse is the possibility that because no action was taken to hold the prosecutors accountable for their misconduct, it could happen again.
Amazingly, I got a miracle. The same day that my lawyers visited, an investigator they had hired to look through the evidence one last time found, on some forgotten microfiche, a report sent to the prosecutors on the blood type of the perpetrator of the armed robbery. It didn’t match mine; the report, hidden for 15 years, had never been turned over to my lawyers. The investigator later found the names of witnesses and police reports from the murder case that hadn’t been turned over either.


The prosecutors involved in my two cases, from the office of the Orleans Parish district attorney, Harry Connick Sr., helped to cover up 10 separate pieces of evidence. And most of them are still able to practice law today.

Why weren’t they punished for what they did? When the hidden evidence first surfaced, Mr. Connick announced that his office would hold a grand jury investigation. But once it became clear how many people had been involved, he called it off.
Click here to read the rest of the column.

Five Nominees Reported From Senate Judiciary Committee, Hearing on Four More Next Week

On Thursday, the Senate Judiciary Committee reported out five nominees: Goodwin Liu, nominee to the United States Court of Appeals for the Ninth Circuit on a party-line vote; Esther Salas, nominee to the United States District Court for the District of New Jersey on a unanimous voice vote; J. Paul Oetken and Paul A. Engelmayer, nominees to the United States District Court for the Southern District of New York on unanimous voice votes; and Ramona V. Manglona, nominee to the United States District Court for Northern Mariana Islands on a unanimous voice vote.

The Senate Judiciary Committee has scheduled a hearing for next Wednesday on four judicial nominees: Henry Floyd to the United States Court of Appeals for the Fourth Circuit; Nelva G. Ramos to the United States District Court for the Southern District of Texas; Richard B. Jackson to the United States District Court for the District of Colorado; and Sara L. Darrow to the United States District Court for the Central District of Illinois.

One Judge Confirmed, Two More Nominated

On Monday, the Senate confirmed Jimmie Reyna to the United States Court of Appeals for the Federal Circuit by a vote of 86-0. Judge Reyna is the first Hispanic American to serve on the Federal Circuit.

On Wednesday, President Obama nominated two people to district court seats: Sharon L. Gleason to the United States District Court for the District of Alaska; and Susan Owens Hickey to the United States District Court for the Western District of Arkansas. Ms. Gleason is currently the Presiding Judge of the Third Judicial District of the Alaska Superior Court in Anchorage, a position she has held since 2009. Ms. Hickey is currently a Circuit Judge for the Thirteenth Judicial Circuit for the State of Arkansas in El Dorado, a position she has held since 2010.

No Court Trial for 9/11 "Mastermind"

Today's New York Times reacts to the symbolism of the Justice Department's decision to reverse course and put Khalid Shaikh Mohammed before a military tribunal instead of a civilian court of law.

According to the Times editorial:
That retreat was a victory for Congressional pandering and an embarrassment for the Obama administration, which failed to stand up to it.

The wound inflicted on New York City from Mr. Mohammed’s plot nearly a decade ago will not heal for many lifetimes, yet the city, while still grieving, has thrived. How fitting it would have been to put the plot’s architect on trial a few blocks from the site of the World Trade Center, to force him to submit to the justice of a dozen chosen New Yorkers, to demonstrate to the world that we will not allow fear of terrorism to alter our rule of law.

But, apparently, there are many who continue to cower, who view terrorists as much more fearsome than homegrown American mass murderers and the American civilian jury system as too “soft” to impose needed justice. The administration of George W. Bush encouraged this view for more than seven years, spreading a notion that terror suspects only could be safely held and tried far from our shores at Guantánamo and brought nowhere near an American courthouse. The federal courts have, in fact, convicted hundreds of terrorists since 9/11. And federal prisons safely hold more than 350 of them.
Click here to read the full editorial.

Senate Schedules Vote on Circuit Court Nominee Jimmie Reyna

Last night the Senate agreed to vote on Monday at 5:30p.m. on the nomination of Jimmie Reyna to the United States Court of Appeals for the Federal Circuit. Mr. Reyna currently serves as a partner and director at Williams, Mullin P.C., in Washington, D.C. He is a leading international trade attorney with significant experience in trade policy, business regulation, and compliance law. Reyna was nominated on September 29, 2010, and he was reported out of the Senate Judiciary Committee unanimously on March 10, 2010. If confirmed, Mr. Reyna would become the first Hispanic American ever to serve on the Federal Circuit.

Senate Judiciary Committee Action on Judges

Yesterday the Senate Judiciary Committee held an executive business meeting at which it reported out four nominees and held over five nominees until its next meeting on April 7th.

John J. McConnell, nominee to the United States District Court for the District of Rhode Island was reported out on a vote of 11-7, with Senator Graham (R-SC) voting with the Democratic committee members. Three other nominees, Kevin Sharp, nominee to the United States District Court for the Middle District of Tennessee, Roy Bale Dalton, Jr., nominee to the United States District Court for the Middle District of Florida, and Claire C. Cecchi, nominee to the United States District Court for the District of New Jersey were all reported out en banc.

Goodwin Liu, nominee to the United States Circuit Court for the Ninth Circuit was held over for the second time, at the request of Senator Grassley (R-IA). Esther Salas, nominee to the United States District Court for the District of New Jersey, J. Paul Oetken, nominee to the United States District Court for the Southern District of New York, Paul A. Engelmayer, nominee to the United States District Court for the Southern District of New York, and Ramona V. Manglona, nominee to the United States District Court for the Northern Mariana Islands were all held over for the first time.

Wal-Mart v. Dukes: At the Supreme Court

The Supreme Court heard oral arguments in Wal-Mart v. Dukes, a sex discrimination class action against the retail giant, on March 29. At issue in the case is whether a class consisting of a million or more women employed by a single employer nationwide can be certified in a class action alleging systematic gender-based pay and promotion discrimination.

Outside the Supreme Court building, activists gathered to show their support for the women who have been harmed by the retail giant's discriminatory practices.