Archive for May, 2011

The new face of frivolous lawsuits?

Friday, May 27th, 2011

The view of judicial-system abuse usually pushed by politicians and lobbyists, including some of the shills in our own Texas legislature, is of the barely-hurt-but-greedy auto accident or medical liability plaintiff who expects to back his truck up to the side of his lawyer’s office and start shoveling his money into the bed.  It’s the welfare mother who wants to live large on the windfall from a lawsuit, rather than get a job or the grandmother who gets millions for spilled coffee.  Tort reformers have made these kinds of stories—whether true or hyperbolic—their bread and butter for years now, and they have led to substantial legal “reforms,” some needed, some not.

But in the internet age, the frivolous litigant has a new face.  Righthaven LLC is a Nevada limited liability company that exists for what appears to be the sole purpose of bringing lawsuits for copyright infringement.  Righthaven is what the Electronic Frontier Foundation calls a “copyright troll.”  Righthaven searches the media for instances of possible copyright infringement—usually unauthorized use of newspaper articles or photographs—and then contracts with the original publisher for an interest in that same article or photograph.  It then turns around and files a copyright infringement suit against the alleged unauthorized user and splits the proceeds with the original publisher.  Being a professional litigant seems to be Righthaven’s only line of business.  (Its sole web presence is www.righthavenlawsuits.com.)  Presumably, this allows publishers to chase lawsuits and try to scratch up a little extra cash on the side without actually getting their hands dirty in the often messy world of litigation.

But Righthaven had a recent setback in a Nevada federal district courtroom.  There, in the case of Righthaven v. Center for Intercultural Organizing, Hon. James Mahan granted summary judgment to the defendant on the grounds that its use of an article from the Las Vegas Review-Journal—a piece of which was sold to Righthaven by Stephens Media LLC, the publisher—constituted “fair use” within the meaning of the federal copyright law.  The gist of the holding was that an assignee that holds a share of copyright purely for litigation purposes has a case that is much more susceptible to defeat by a fair use defense.  Unlike Stephens Media, Righthaven isn’t in the business of disseminating information, selling newspapers, or even licensing news articles and photographs to others.  (The license it purchased from Stephens Media didn’t allow it to do any of these things.)  It’s in the business of filing lawsuits against websites, bloggers, and anyone else against whom it can arguably assert claims.  So a use of the article for its original intended purpose—disseminating information—becomes a transformative use within the meaning of the law and a transformative use falls within the fair use doctrine.

Of course, the claims Righthaven pursues are presumably claims that the original copyright holder feels aren’t worth pursuing if it would actually mean expending any of its own time or resources.  Litigation costs time and money.  It results in an invasion of privacy and a public parading of facts that many would rather have remain private.  The perception that plaintiffs hire a lawyer and then just sit back and wait for the money to roll in seems to be part of what has spurred the tort reform movement.  And if an individual like the hackneyed greedy personal-injury plaintiff or a corporation like Stephens Media can avoid the awkward and time-consuming aspects, the uncertainties and worries, of a lawsuit, by simply contracting them away, it’s bad news for our legal system.  Litigation shouldn’t be painless, but making it painless for its corporate partners is precisely what Righthaven appears to set out to do, while lining its own pocket in the process.  One would hope that it’s not only our federal judiciary that is taking notice of this new breed of litigant.

Tip o’ the hat to Courthouse News Service.

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The wages of sin

Friday, May 20th, 2011

“Sin is a dangerous toy in the hands of the virtuous.  It should be left to the congenitally sinful, who know when to play with it and when to let it alone.”  — H. L. Mencken, “A Good Man Gone Wrong,” The American Mercury, February 1929.

In a week when the Governator has confessed to out-of-wedlock shenanigans and at least one high-powered money man is facing the music of public morality, a more mundane sort of sin—good old fashioned gambling—caught my eye.  There’s no telling whether Edward Payton—the loser in a Mississippi courtroom—is one of the virtuous to which Mencken refers, but it’s certainly fair to say that he didn’t know when to let it alone in his pursuit of the wages of sin.  What’s the worth of those wages?  About 20 bucks, according to a Mississippi appellate court.

Payton was playing the Millionaire Blazing Sevens slot machine at the Boomtown Casino in Biloxi, on Valentine’s Day 2004 (what a romantic way to spend the day!), and when he hit three Blazing Red 777s, the machine moved him into a bonus feature, where he could compete for a progressive jackpot from $5 up to $2.2 million.  And then . . . the machine locked up.  Despite the efforts of casino personnel and the gaming machine manufacturer, the machine couldn’t be unlocked, and Payton never got his bonus spin (though apparently the casino did offer him free play on another machine).

An engineer from the Mississippi gaming commission examined the machine’s computer—the actual brain that decides between winners and losers—and determined that the machine was on track to give Payton four re-spins and a payout of $20.  Not content with this evaluation, Payton took the case to an administrative hearing that generated 600 pages of testimony and exhibits over two days and ultimately awarded Payton . . . $20.  Payton then pursued his claim in a trial court, which agreed with the hearing examiner, and to an appellate court that summarily ruled that Payton had received all the process that was his due.  And that process almost certainly cost him a lot more than $20.

Judge Larry Roberts of the Mississippi Court of Appeals noted in the court’s opinion that even Payton’s own expert agreed that the odds of his winning the full $2.2 million jackpot on that fateful Valentine’s Day were long—“one in a million,” to be exact.  And that means that $20 was actually a pretty decent payout—a one in a million shot at $2.2 million being worth about $2.20 on the mathematical probabilities.  But gambler’s luck and high-profile indiscretions are both based on an expectation of beating the odds, and, as Mencken advises, they should probably both be left to those who can afford to lose.  “Winning,” after all, is a relative term.

Tip o’ the hat to Courthouse News Service.

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Loser pays; who wins?

Thursday, May 12th, 2011

As a rule, I try to stay away from politics on this blog.  But once in a while, our Legislature threatens to do something so foolish, so utterly short-sighted and one-sided, that I feel the need to say something.  Recently, our immaculately coiffed State chief executive, Governor Rick Perry, has been opening his mouth on the subject of litigation reform.  The bills that follow any Perry declaration of an “emergency” are almost inevitably either pointless or disastrous, but the latest, HB 274railroaded through the House with minimal debate—sets a new standard.  All in all, it seems that handing the keys to our Texas legal system to the current Legislature is rather like handing a box of kitchen matches to a four year old and saying “go have fun.”

The portion of HB 274 that has garnered the most attention so far is the “loser pays” provision that would ostensibly level the playing field for all those big corporations and insurance companies that have been so hard done by in recent years.  “Loser pays” is a solution desperately looking for a problem.  Its proponents seem to assume that there is a torrent of frivolous lawsuits plaguing our court system.  (Some of those proponents are defense lawyers, who should really know better.)  Apparently, these are people who have not set foot in a Texas courthouse in some time.  A 2005 survey of Texas judges—with 78% of judges responding—found 86% responding that they saw no need for additional legislation to stop frivolous suits.  And it’s not as if Texas courts don’t already have plenty of ways to address frivolous suits right now.  The truth is that the frivolous lawsuit brought by the greedy plaintiffs’ lawyer is the boogeyman that Perry seems to resurrect every time he needs to draw attention away from his dreadful fiscal record.  HB 274 is just another in the string, from that standpoint.

But, that being said, HB 274 doesn’t take aim at frivolous suits.  It takes aim at losing ones.  Or at suits where the plaintiff wins, but just not as big as an offer of settlement might have been.  Any trial lawyer will tell you that, just because a case loses at trial, that doesn’t make it frivolous.  Quite honestly, the suit that can’t be lost hasn’t been invented, and just because a defendant feels a suit was unjustified doesn’t make it unjustifiable.  Anything can happen on any day when it comes to a jury in court.  So the case that wins a plaintiff $80,000 at trial, following a $120,000 settlement offer, could wind up costing him $200,000 or more in the other side’s attorneys’ fees.

The truly troubling part about the “loser pays” law, however, is who it will hit the most.  At a time when the earning and hiring power of small business and the spending power of the middle class are increasingly touted as the crucial fuel for our national and statewide economic engine, “loser pays” stands to hit those businesses and individuals the hardest.  If you can afford to pay a big bill for attorneys’ fees, “loser pays” is no disincentive. If you don’t have anything that can be seized to pay a judgment, you’ve got nothing to lose.  But if you’ve got a nest egg or a small business that you’ve worked years to build, that potential six-figure bill for attorneys’ fees (plus your own counsel fees) can be a one-way ticket to the poor house and, thus, a substantial chill on any effort to enforce your rights.  (An interesting online “debate” concerning the efficacy of “loser pays” provisions is here.  The main proponents for a “loser pays” system in that debate are both from the Manhattan Institute for Policy Researcha conservative, market-oriented think tank that receives funding from the Koch Foundation, Bristol-Myers Squibb, Exxon Mobil, and others and that I’m guessing doesn’t actually have any interest in law beyond pushing an agenda; i.e. “we’re paid to ‘think’ this way….”)

There are plenty more problems with HB 274—from its provision of interlocutory appeals for just about anything to its demand that the Texas Supreme Court come up with new ways to dismiss lawsuits and award attorneys’ fees without the bother of looking at tiresome and tedious stuff like evidence—but, at bottom, it is more legislation that we just don’t need and certainly not when our state faces real problems like a budget crisis and a failing education system.  But then responding to a fake crisis is almost always easier than tackling a real one.  And it’s why no one sleeps well when the Texas Legislature is in session.

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Plaintiffs whiff; EA walks

Thursday, May 5th, 2011

An update on Keller v. Electronic Arts, Inc., the case of a former college football quarterback who sued the video game maker for appropriating his likeness in its “EA Sports NCAA Football 2007” game.  I reported earlier on the trial judge’s rejecting several affirmative defenses posed by Electronic Arts here.  On Monday, however, (in a related case now consolidated with Keller’s) she rejected the plaintiffs’ claims against EA on the grounds that all it really did was follow the terms of the license granted to it by the NCAA and the Collegiate Licensing Company—in its own words, “the nation’s leading collegiate trademark licensing and marketing company.” (In a wholly surprising turn of events, a spokesman for EA declared the company “pleased” with the judge’s ruling.)

But at the same time as she granted EA’s Motion to Dismiss, she denied similar motions by both the NCAA and CLC.  Since the focus of the litigation will now be, not on EA’s actual use of college athletes’ public images and likenesses, but on the grant of rights made by the NCAA and, presumably, assisted by the CLC, the plaintiffs may find themselves on firmer ground.  It’s entirely possible that the license granted by the NCAA is substantially broader than the actual use to which that license was put by EA.  Indeed, the plaintiff athletes argue that the license deprived them of their rights in perpetuity, not just for purposes of one year’s video game and possibly not just for purposes of video games, at all.

So, in short, the NCAA may well have some ‘splainin’ to do before all this is over.

Tip o’ the hat to Kotaku.com.

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A life lesson from the bench

Wednesday, May 4th, 2011

This Order on a Motion to Continue has made the round of the legal blogs over the last few weeks, and there really isn’t too much more to say about it.  Nevertheless, recent events in my own practice brought it to mind.

As law students, future lawyers are taught that the duty of zealous advocacy is one of the central—if not the central—duties we owe our clients.  You put the client’s interests above your own.  You put the client’s interests ahead of virtually any other interest, save the integrity of the justice system, itself.  And you sure as hell put your client’s interests ahead of those damned vermin (read, opposing counsel) on the other side of the table, right?  Wrong.  (Well, sometimes.)

U. S. District Judge Eric Melgren of the District of Kansas sounded just the right note in this order, which is why I think it has been referenced so many times.  The plaintiffs in the case—Jayhawk Capital Management—opposed a motion for a trial continuance filed by the defendants.  The reason for seeking the continuance?  One of the defendant’s lawyers wanted to be at his wife’s side for the birth of their first child.

Now, a trial setting is a valuable commodity for a plaintiff, and it’s not something to be given up lightly.  Many times, a recalcitrant defendant will suddenly see reason and come to the settlement table when the alternative is to face a jury in short order.  This may be especially so in personal injury cases, where feelings are often raw and individuals have waited months or years for their day in court.  But this appears to be a commercial dispute between two business entities.  And as Judge Melgren pointed out in his order, judges and lawyers should avoid confusing what they do with who they are, or distorting the priorities of their day jobs with their life roles.  That means putting human concerns ahead of legal ones and basic compassion ahead of gamesmanship.  Or as one blog put it:  just play nice.

It’s a good lesson, and though it’s received plenty of publicity, it still bears repeating.

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