Legal News You Can Use

The Buzz thinks the new California cell phone law is silly. You can still eat, play drums, shave, read the newspaper, and put on makeup but you cannot hold your hand next to your ear. Oh, you can still talk on the phone too, you just need to do it on a hands free device. Mind this, you do not actually need any hands on the steering wheel, you just need to be distracted talking on the phone while the phone is not next to your head. As we said, silly! In fact, we think it was merely a revenue grab; an excuse to take $20 ($50 for a second and further offence) from anyone using their phone. Sure the State is short on money, although showing the fiscal restraint of drunken sailors. No...I'm sorry...that’s unfair to drunken sailors. Well, we’re here to help. California Vehicle Code Section 23123(c) provides that, “This section does not apply to a person using a wireless telephone for emergency purposes, including, but not limited to, an emergency call to a law enforcement agency, health care provider, fire department, or other emergency services agency or entity.” SO, if you are using your telephone for any emergency, challenge the ticket. The Buzz says go for it!

-- Paul Marotta

Bon Jour

The Buzz will never forget reading a book about Cambodia, where the friendly greeting “bon jour” was frequently accompanied by a handful of dollars used to bribe whomever was receiving the greeting. Similarly, on June 30, 2008, Iraq sued 50 companies ranging from Chevron, BNP Paribas, and GlaxoSmithKline to Boston Scientific, and AWB, Australia’s largest wheat producer, for taking kickbacks in connection with that textbook example of fraud known as the United Nations Oil-for-Food Program. Surprisingly that fine example of responsible leadership Saddam Hussein received kickbacks. The only really surprising thing here is how gullible we can be when assuming the best about people. Paul Volker headed a commission that found that 2,200 companies in 66 countries paid at least $1.8 billion in kickbacks to Iraqi “officials.” since the Oil-for-Food Program ran some $70 billion, we imagine he only saw the tip of the old iceberg. The recent lawsuit alleges violations of the Foreign Corrupt Practices Act, among other things. One thing that may prove troublesome for the Iraqi plaintiff is that the plaintiff frequently must show “clean hands” before throwing stones. Iraq was represented internationally by a bunch of crooks for so long that it may not be able to do this. We’ll see. Bon Jour!

-- Paul Marotta

Chick Fight

Barbie just won $100 million against Bratz. Former Mattel (Barbie) designer Carter Bryant, developed the Bratz concept for MGA Entertainment, Inc. Most of the damages were related to an employment contract between Mattel and Bryant. MGA was found liable for interference with contract and aiding and abetting Bryant’s breach of fiduciary obligations. Ten percent of the damages were assessed against MGA for copyright infringement. No punitive damages were awarded even though they could have been if intentional interference with contract was found, like in the infamous $11 billion Penzoil v. Texaco case. MGA claimed vindication and said that the amount Mattel was awarded was dwarfed by their demand. Bratz girlz Yasmin, Cloe, Jade and Sasha had taken food out of Barbie’s mouth. They might be right since MGA and its CEO Isaac Larian have built a billion dollar Bratz empire. Barbie sales slid as Bratz gained popularity, adding Bratz Boyz, Bratz Petz and Bratz Babyz. Bryant, maybe seeing the train wreck to come, settled with Mattel on the eve of trial. We’ve know for a long time that “girls toys” consisted of Barbie, while “boys toys” was everything else, so maybe it was time for some competition. Still, with an ounce of prevention……...

- Paul Marotta

Classified Ad Death-Match

Now that eBay and Craigslist are well on their way to putting most newspapers out of business, they have turned on each other. In 2004 eBay bought about 28 percent of Craigslist. Craigslist is still private. eBay apparently started operating it’s own classified service called Kijiji after making the Craigslist investment though the Buzz never heard of it or used it. Now eBay claims that the Craigslist Board did something in January that unfairly diluted its ownership in Craigslist by 10 percent. eBay sued Craigslist last month claiming breach of fiduciary duty. And in an unusual move (probably motivated by one or more confidentiality obligations, and since Craigslist is privately held), eBay filed the lawsuit under seal (now recently unsealed). Craigslist says that eBay never even tried to talk about what they viewed as wrong; they just rushed to court. The unsealed complaint suggests otherwise. Craigslist CEO Jim Buckmaster denies the allegations of the lawsuit and sees sinister motives, citing a possible “hostile takeover.” Of course that only works when you are publicly traded and do not control a majority of the stock. Since Craigslist is private we can’t evaluate the possibility of a takeover but all eBay would have to do is contact other shareholders and offer to buy their shares, not file suit. It looks like maybe the complaint is aimed at re-claiming eBay’s rights of first refusal, which Craigslist argues were lost when the competitive Kijiji site was created. It also looks like Craigslist engaged in questionable dealing to deny eBay it’s Board seat. In any event, the Buzz says get out the popcorn.

- Paul Marotta

Basel II-Much

The Basel Committee on Banking Supervision was supposed to suggest guidelines that would make international banks safer, more depositor trustworthy, etcetera, etcetera, etcetera. The fundamental objective of the Committee’s work was to revise the 1988 Accord (Basel I) and develop a framework that would further strengthen the soundness and stability of the international banking system while maintaining sufficient consistency that ‘capital adequacy regulation’ (read “state protection”) will not be a significant source of competitive inequality among international banks. In other words disallow one country from letting their banks accept more risk. In crafting Basel II, the Committee said that it believed that the revised framework (which adopted three ‘pillars’: minimum capital requirements, supervisory review, and market discipline) will promote the adoption of stronger risk management practices by the banking industry. The bankers themselves felt that Basel II would benefit those banks with better risk management metrics. Now, after years of work, there is some thought that Basel II prescribes exactly the wrong thing for a recession. Basel II requires higher and higher safety margins as portfolios are found to be more and more risky. The result is that banks are tightening credit at exactly the time when credit itself is seen as being too tight. As our government hands back 67 cents in the form of a stimulant (of course, after taking a dollar of your tax money) and begging you to spend it quickly, the banks are telling you that your loan will not be renewed. Maybe all that the government hand outs will go toward paying down debt. Not necessarily a bad thing for economy but certainly not what the wonks in the Wash. intended. We say that the law of unintended consequences trumps all, which is why a little humility from those who think they control anything, would be a good thing.
--Paul Marotta

See you and Raise you

A Harvard Law Professor is protesting a Massachusetts proposal to criminalize online poker, even when no money is being bet. Prof Charles Neeson, founder of the “Global Poker Strategic Thinking Society” at Harvard said, “I don’t think filling our expensive jail cells with poker players is what Massachusetts voters had in mind when they elected Deval Patrick.” Neeson founded the Society to tout poker’s educational benefits. We think the Gov would benefit from a bit of poker himself.

--Paul Marotta

No Chads Here Al

Whatever you think of him or his ideas, you have to admit that Al Gore has been entertaining since giving up the public sector. Now the VP turned VC is taking his TV cable company public. But he’s shown an undemocratic distrust of tyranny of the majority and taken shares with 10 times as many votes for himself. His company Current Media, LLC, will convert into a corporation, issue super-voting Series B Common to Gore and sell mundane Series A Common to investors. The IPO is being underwritten by JP Morgan. The Company owes Gore $2 million and pays him over $1 million a year, but his stock ownership is not finalized yet. We think maybe the Florida hanging-chad had something to do with Gore’s insistence on super-voting stock.
--Paul Marotta