Chrysler Got Legal Shield in Chapter 11

 Under traditional tort law doctrines, a plaintiff who successfully proves that a product is unreasonably dangerous can recover compensatory damages including medical bills, lost wages, and pain and suffering. In addition, in certain cases and in some states, juries are allowed to award punitive damages, which are damages beyond what is required to compensate the plaintiff, but instead is awarded to deter the defendant from engaging in future wrong conduct. Plaintiff groups argue that punitive damages are important because without them, companies may decide it's cheaper to pay compensatory damages than to recall or fix dangerous products sold to consumers.

In an interesting twist to punitive damages involving faulty Chrysler vehicles, more than 28 million cars and trucks sold by Chrysler are exempt from punitive damage awards. While it was in bankruptcy, Chrysler requested a bankruptcy judge to exempt punitive damage liability from the company after it emerged from bankruptcy and was sold to Fiat. The judge agreed to do exactly that, and the implications of that decision are starting to be felt throughout the country, as the Wall Street Journal reports.

When you go to the grocery store, you may see "Del Monte" branded bananas, such as the ones shown in a Philippines packing plant, above.  You may also see "Del Monte" branded canned fruit and vegetables. What you may not know, however, is that they come from two different companies, who are now suing each other in federal court over trademark and contract issues.  The two companies were created in 1989 when their parent company, RJR Nabisco, was taken over.  The two companies were allowed to use the "Del Monte" trademark on separate products.  The company called Fresh Del Monte could use "Del Monte" on fresh fruit, fresh vegetables, and fresh produce, while the company called Del Monte Foods could use the "Del Monte" label on canned and preserved fruits and vegetables.  Now, Del Monte Foods has expanded into cut and prepared fruit products, sold in plastic tubs on refrigerated shelves.  Fresh Del Monte objects, as this New York Times article explains.

Health Care Act Offers Roberts a Signature Case

On March 26, the Supreme Court will begin hearing arguments on the constitutionality of a key part of the Health Care reform law that is President Obama's signature legislative accomplishment.  The section of the law is called the Individual Mandate, and requires all Americans to purchase health care either from a private insurance company or through an insurance exchange set up by states.  The case is scheduled for six hours of oral argument -- the last time a case took more time was in 1966, when the court considered the constitutionality of the Voting Rights Act.  The last time the Court overturned a major economic law that was passed by Congress under its power to regulate commerce was in 1936.  This case, then, is being seen as a case for generations -- by far the most important case heard by the Court since Chief Justice John Roberts was confirmed in 2005.  How Chief Justice Roberts might rule, and the implications this case may have on his legacy, are explored in this New York Times article.

Source: New York Times

Out of Jail, ex-Professor and his Crossbow Fight S. Korea's Judiciary

In S. Korea, mistrust of judges is high.  Judges there are selected strictly by their scores on an annual written examination, and are trained by a government program.  As a result, they are seen as out-of-touch with common citizens, and highly insular.  Recent reforms to implement formal legal training, a bar exam, and limited trial by jury have met with mixed success.  Today, the New York Times profiles Kim Myung-ho, a former math professor at Sungkyukwan University who sued the university for wrongful termination after he was fired.  He lost his case, and started a crusade against the judges who ruled against him.  That crusade ended with a confrontation with a crossbow and a four-year prison term.  Now, Mr. Kim has written a book, "Judges, Who Do You Think You Are," and the book and subsequent film have sold millions of copies as S. Koreans rally to his cause.  Read more at the New York Times.

Source: New York Times

Letter from Ford Counsel Regarding Silverado Commercial

This commercial ran during yesterday's Super Bowl.  Notice that the commercial mentions two trademarks by name:  Ford and Twinkies.  Now, Ford's lawyers are complaining that Chevrolet violated advertising and trademark law by making false claims about Ford trucks.  The letter that Ford attorneys sent to Chevrolet is at the link below.  Twinkies probably aren't too happy either, at the suggestion that Twinkies would suggest an apocalypse.

Note, however, that while Chevrolet might claim that parody protects their use of these names under the First Amendment, no such parody was being made at Barry Manilow, who performed the song used under the commercial.  That song would therefore have to be used under license and presumably, with a license fee.

Source:  Detroit News

GOP Candidates Told Don't Use the Verses, It's Not Your Song

 

Survivor, an 80's band (above) that performed the hit song "Eye of the Tiger" for the Rocky movies, has filed a federal copyright lawsuit against Newt Gingrich's presidential campaign.  Federal copyright law makes it illegal to publicly broadcast copyrighted music, even if the song was legally acquired for personal use.  The issue comes up often in Presidential campaign, which try hard to motivate the audience ahead of a campaign speech with stirring anthems.  As the New York Times reports, however, the issue may be particularly difficult for Republican candidates as they can't seem to find many rock groups who will lend them permission to use their songs.

Source: New York Times

Japanese Suppliers Pay $548M in Price-Fixing Case

In a signal that the government still takes antitrust enforcement seriously, the Justice Department announced last week that two Japanese companies, Yazaki Corp. and Denso Corp., will pay a total of $478 million in criminal fines to settle charges under the Sherman Antitrust Act. In addition, four Japanese executives from Yazaki will serve prison time ranging from 15 to 24 months. The companies, with large operations in the United States, are accused of price-fixing and rigging bids in contracts for instrument panel clusters with Honda and Toyota. Source: The Detroit News

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Justice John Paul Stevens retired from the Supreme Court in 2010, after a distinguished career starting in 1975 on the country's highest court. At the time he retired, he was the oldest member of the Court, and the country's third longest serving. He has since written a book about the three Chief Justices he has served under. Last week, comedian Steven Colbert interviewed Justice Stevens about his career and his book, with some humorous results.

When Lawyers Become "Trolls"

This is John Desmarais, a patent attorney.  In late 2009, he left a multi-million dollar salary at one of the country's largest law firms, Kirkland & Ellis, to start his own company and firm, Round Rock LLC.  The company is a "non practicing entity," which means it buys and owns thousands of patents it does not actually use.  Instead, these companies (also known as patent trolls) make money by licensing their patented technology to other companies, and if those companies don't pay, face litigation by the non practicing entities.  NPEs are mushrooming in number as more and more companies find value in forgotten or discarded patents.  They are now under criticism for not adding any value to the system of creating intellectual property, but instead add tremendous transaction costs.  The Wall Street Journal has the story today.

Source: Wall Street Journal

Justices Rule for Inmate After Mailroom Mix-Up

Cory Maples (above) was sentenced to death after a jury in Alabama convicted him of murdering two people during a drinking spree in 1997.  Maples was represented at his murder trial by public defenders, who were paid $40 per hour for their time in court and $20 per hour for their time out of court with a $1000 cap for out-of-court work.  His public defenders did a poor job representing him, and didn't even raise an intoxication defense for the jury to consider.  After being sentenced to death, he was appointed lawyers with a top law firm, Sullivan & Cromwell.  In August 2001 they filed an appeal, arguing that the trial lawyers were incompetent and ineffective.  The next summer, they left the firm.  In May 2003, the state court denied the appeal, and sent copies of the denial to the firm.  A mailroom clerk stamped them as "Return to Sender" and never opened them.  As a result, Maples missed a deadline to appeal his case any further.

Yesterday, the Supreme Court ruled that Maples should be given another chance to file his appeal.  In a 7-2 decision (with Justices Scalia and Thomas dissenting), Justice Ginsburg wrote that "no just system" would allow the missed deadline to be held against Maples, especially in a death penalty case.

Source: New York Times

Bills to Stop Web Piracy Invite a Protracted Battle

Many people, especially college students, know that downloads of movies, music and books are only a few mouseclicks away, even if they are illegal.  Online piracy of copyrighted material is a major concern for the owners of those copyrights, as they bleed profits.  These content owners, represented by strong lobbying groups such as the MPAA representing the movie industry and RIAA representing the recording industry, are major drivers behind twin legislation in the Senate and House to implement strong new laws such as the Stop Online Privacy Act (SOPA).  The laws would ban search engines from displaying any links to websites that host material that post copyright-infringing materials.  In addition, the laws would give content owners powerful new tools to use the judicial system to ban such websites from existence, including forcing the Internet naming system to essentially block these sites from recognition, meaning they would become inaccessible.  The reaction to SOPA has been swift and strong, especially on concerns that many websites including blogs routinely post small amounts of copyrighted material and could be shut down often enough they would stop publishing.

Over the weekend, companies opposed to SOPA (including some notable tech giants such as Google) received a welcome boost when the Obama administration announced it was opposed to key parts of SOPA.  The MPAA and RIAA have vowed to continue their fight, however.  Both bills are still pending, and it remains to be seen whether they can overcome opposition from the public, or a potential Presidential veto, before becoming law.

Source: New York Times

Religious Groups Given Exception to Work Bias Law

The First Amendment guarantees freedom of speech, but it also guarantees freedom of religion.  It is designed to keep the government out of religious activities, to prevent a Church of England type of establishment.  On the other hand, the Civil Rights Act and Title VII are meant to provide equal treatment for employees in the workplace.  What happens when Title VII and the First Amendment clash?  Title VII has always provided a "bona fide occupational qualification" or BFOQ exception for religious groups, so that a Catholic church may legitimately hire only Catholics to become priests.  Once someone is hired by a religious organization, however, they may also lose their rights under Title VII, according to a unanimous Supreme Court decision issued last week, Hosanna-Tabor Evangelical Lutheran Church v. EEOC.

In the case, a school teacher who taught in a Michigan school run by the second largest Lutheran denomination in the United States.  She developed narcolepsy, a disability protected by the Americans with Disabilities Act.  After a dispute with the school, she was fired.  She then filed suit based on the ADA, claiming discrimination on the basis of her disability.  The Supreme Court held that her lawsuit is barred under a "ministerial exception" to civil rights laws, saying religious groups must be free to choose and fire their leaders and employees (at least those who spend some time carrying out religious duties such as teaching religion or theology) without governmental interference.

The case is a big win for proponents of religious freedom.  The Obama administration had argued the case for the EEOC, arguing that teachers at religious schools should be treated as if they worked for any other group with free association rights.  That argument was soundly rejected by the Justices.

Source: New York Times

Welcome to 2012 and Happy New Year!

One business executive who almost certainly did not have a Happy New Year is former HP CEO Mark Hurd.  Right before the New Year, a federal judge in Delaware released the contents of a letter from attorney Gloria Allred, who represents Jodie Fisher, an event hostess and actress.  In the letter, Fisher makes certain embarrassing allegations about how Hurd used his position and expense account at HP to lure her into a sexual relationship.  When the allegations first surfaced in August 2010, HP's Board of Directors fired Hurd, in spite of his performance in turning the company to profitability and record stock prices.  Hurd went to work for HP rival Oracle, where he is still co-CEO.

If allegations in the letter turn out to be true, they represent a textbook definition of quid pro quo and hostile environment sexual harassment.  You can read the lurid details for yourself below.

Follow up story here.
Read the letter that brought down HP CEO Mark Hurd‎

American Lands in Bankruptcy

Yesterday, AMR Corp (parent company for American Airlines) filed for bankruptcy protection in a N.Y. federal court.  Under federal law (there is no state bankruptcy law), AMR is seeking to reorganize (as opposed to liquidate, a far more drastic course).  This means AMR can walk away from contracts it has entered into with employees, suppliers, and bondholders.  By doing so, AMR hopes to emerge from bankruptcy with a far lower cost structure, enabling it to compete with its competitors (see chart above).  It is not unusual in an industry with small numbers of competitors for all players to enter bankruptcy if one enters, as controlling costs are a key factor in competitiveness.  The public won't see much difference in operations, but key creditors and employees will end up hurting in this bankruptcy.

Source: WSJ

Facebook Targets Huge IPO

Social media giant Facebook is still a private company, meaning ownership is restricted to a small group of investors. When private companies go public, they do so in a process called an Initial Public Offering (IPO), something most companies typically do when they reach $100 million in annual revenue. Facebook makes much more than that, but has so far resisted an IPO. That may change next year, with reports indicating Facebook is considering raising $10 Billion next year in an IPO that would value the company at $100 Billion. Since founder Mark Zuckerberg owns 24% of the company, that would put his share of the company at $24 billion. The Wall Street Journal has the story.

Source: WSJ