Legal Stuff

As DIY Litigants Crowd The Docket, Courts Step In To Help

7 January 2019

Not necessarily about authors and books, but an illustration of a problem that has been around as long as PG has been a lawyer.

From Law360:

Tarikul Khan turned around and whispered, “I’m scared now.”

Waiting in a wood-paneled Brooklyn courtroom for the first hearing in his lawsuit, Khan was watching U.S. Magistrate Judge Lois Bloom grill a plaintiff also representing himself, in an unrelated matter, about his failure to hand over evidence.

When he eventually stepped before Judge Bloom, though, the judge’s first remark was about how Khan’s complaint for disability benefits was unexpectedly shipshape.

Khan, 68, wouldn’t have been able to create that document without behind-the-scenes help from a key consultant.

“Ms. Cat made this. She did help, everything,” Khan told Law360 in the court cafeteria before the Nov. 8 hearing. “I can’t make this thing myself. I finished high school only, no college — a little bit of college. I have nothing like this.”

“Ms. Cat” is Cat Itaya, the director of the Eastern District of New York’s legal assistance clinic for “pro se,” or self-represented, litigants; it lives inside the courthouse and is run by the City Bar Justice Center. Khan visited Itaya beginning four months before his first hearing, and over six or eight visits — a couple with volunteer lawyers, but most with Itaya — she digested his story and put together a complaint in language the court could parse.

While they remain rare for now, clinics like the one in the Eastern District of New York appear to be catching on in federal court as a way to aid self-represented litigants, for whom putting together a legally coherent complaint can be an insurmountable barrier.

Link to the rest at Law360

PG says there is plenty of blame to go around.

– Laws are made by legislatures. Federal laws are made by the Congress of the United States. State laws are made by the legislatures of each state.

Most legislators are not attorneys. Theoretically, legislatures have access to attorneys who may help in drafting the language of the laws the legislatures pass. In practice, political or business advocacy groups may draft language that friendly legislators then submit for passage.

The legislative process involves a lot of negotiations and the results of those negotiations can be various provisions of the statutes that aren’t consistent with each other or that carve out exceptions to the general application of the statutes. Amendments to the statutes to solve perceived problems may generate additional problems.

It is very unusual for a legislature to simply eliminate laws that prior legislatures have passed without providing replacements. The net result of this behavior is a collection of laws that grows larger and larger over time. The first Congress of the United States met from March 4, 1789, to March 4, 1791 and subsequent congresses have been passing laws ever since.

– Many laws authorize federal or state agencies to write regulations to implement the laws. These regulations typically have the effect of laws. Once passed, regulations may be amended by the agencies without going back to Congress for approval.

Every working day, The Federal Register, publishes agency rules, proposed rules and public notices regarding agency rules and practices. During the past several years, The Federal Register has released 70,000-90,000 pages of new federal regulations each year.

To remain current on every regulation released by The Federal Register, an individual attorney would have to read 200-250 pages of new federal regulations per day every day of the year with no time off for weekends, vacations, holidays, etc.

– A popular idea for providing legal assistance for indigent individuals is to require attorneys to provide free pro bono (from the Latin pro bono publico,”for the public good”) services for such individuals.

For reasons that may already be obvious, no attorney is competent to handle every type of legal matter that may arise under state or federal law. The finest patent attorney in the United States would almost certainly have no idea how to handle Mr. Kahn’s disability claim described in the OP.

Speaking from past professional experience, PG can say that indigent individuals have different legal problems and requirements than school teachers, doctors, and bankers. The types of legal issues that indigent individuals face are within the realm of expertise of a very small number of attorneys. The reasons for this will be obvious – If you wish to earn your living as a lawyer, representing bankers is a better professional decision than representing indigents is.

– Can’t U.S. Magistrate Judge Lois Bloom help out Mr. Kahn with his problems as described in the OP?

A magistrate judge or “magistrate” is what amounts to an assistant judge operating under the direction of one or more US District Federal Judges. (A US district judge is one who conducts trials in cases that fall under federal laws. State trial judges do the same things for cases arising under state laws. In the US, there are many more trials conducted by state judges than federal judges.)

Under US law, judges are supposed to be neutral arbiters of the disputes that come before them, favoring neither side.

The OP doesn’t go into detail, but PG suspects Mr. Kahn’s claim for disability insurance was being pursued because the US Social Security Administration had denied Mr. Kahn’s claim for disability benefits for one reason or another. The SSA is the adverse party and Magistrate Judge Bloom is supposed to decide the dispute between Mr. Kahn and the SSA on the basis of the law and facts as she finds them without unduly favoring either side. If she coaches Mr. Kahn, she compromises her obligation to be a neutral arbiter.

Additionally, most Magistrate Judges are enormously busy handling a flood of various cases, including criminal cases in which the constitutional rights of the accused require speedy trials.

– Legal Aid or other legal assistance organizations as described in the OP can be a very good solution to the challenges PG has described. Essentially, such organizations include groups of lawyers who specialize in representing poor people in the types of legal matters in which poor people are commonly involved.

Unfortunately, funding for such organizations is always a problem. Most are funded by state legislatures. In some cases, the state bar association kicks in some money. In large and wealthy cities like New York City, city government and/or the city bar association may also help provide funding.

Whatever the sources of funding, there are always more indigent people with problems than there are salaried lawyers at a legal assistance organization to provide competent legal assistance.

A significant number of private attorneys provide voluntary legal assistance to indigents, either directly or through legal assistance organizations as described above.

Attorneys who specialize in the more remunerative areas of the law are often not of much use in assisting indigents because of their lack of knowledge about the law outside of their specialties. Attorneys in general practice, who, as a group, earn less than legal specialists, are of the most use to legal assistance organizations because of the general practitioner’s broader and more general scope of legal knowledge.

In a former life, PG was an attorney in general practice in a small town located in an area not known for its wealthy residents and represented a lot of poor people, either through the local legal assistance organization or on his own. He was also a member of the board of directors for that organization for several years.

Although he won’t go into detail, PG will say that some of the most personally-satisfying cases he handled in his former practice were for some of the indigent clients referred to him by that legal assistance organization. The term, “deserving poor,” has most definitely fallen out of favor, but some of PG’s former clients were excellent exemplars of that term.

As he said at the outset, this post is not necessarily about books and authors, but more for the general education of US visitors to TPV. PG knows little about similar problems and solutions in other countries other than to know they exist to a greater or lesser extent.

TPV receives visits from more than a few attorneys and they, along with everyone else, are invited to comment.

 

Amicus Brief of Scholars of Corpus Linguistics

22 December 2018

While more than a little of what attorneys do when they write legal documents is dull craftsmanship, every once in a while, they’ll do something enormously interesting (at least for PG).

The following OP refers to an Amicus Brief filed in the United States Supreme Court. Amicus is short for amicus curiae, Latin for “Friend of the Court.”  Amicus briefs are legal documents filed in appellate court cases by non-litigants (thus, “friends” of the court, not those involved in the court fight) with a strong interest and special expertise in the subject matter which is part of the litigation. The briefs advise the court of relevant additional information or arguments that the court might wish to consider.

This particular amicus brief relates to a large software copyright infringement case, Rimini Street, Inc. v. Oracle USA Inc. Oracle sued Rimini for copyright infringement and ultimately received a damages award of $124 million.

Under a provision of the Copyright Act, a prevailing litigant is entitled to “full costs” in addition to actual damages incurred as a result of the copyright infringement.

Litigation “Costs” in US federal courts definitely include what are called, “taxable costs” – Statutory fees for the court clerk and marshall, attendance fees for witnesses under subpoena as set by statute ($40.00 per day and $.57½ per mile, round trip from the witness’ residence to where they must appear), etc.

However, actual costs in major litigation are much greater than the taxable costs described in various statutes.

Expert witnesses can charge the litigants tens or hundreds of thousands of dollars (depending on how rare their particular brand of expertise is) to help the litigants craft the technical elements of legal documents, answer interrogatories (written questions from the opposing parties that must be answered in writing and accurately) participate in depositions, testify at trial, etc.

Some prior court decisions have held that “full costs” only refer to taxable costs while others have held that taxable costs are only one part of “full costs” and the statutory language means the prevailing party is entitled to recover other necessary costs arising from the litigation.

The question that the parties want the US Supreme Court to decide is whether the “full costs” provision in the Copyright Act means “taxable costs” or the actual litigation costs of Oracle, the prevailing party at trial.

With that somewhat dull background, the Amicus Brief referenced in the OP is filed on behalf of eleven “scholars of a methodology for answering questions of interpretation in a systematic, rigorous manner—a methodology known as “corpus linguistics.”

[C]orpus linguistics is an empirical approach to the study of language that involves large, electronic databases,” which are used to “draw inferences about language from data gleaned from real-world language in its natural habitat―in books, magazines, newspapers, and even transcripts of spoken language. Because judges―like linguists and lexicographers―are interested in the “original public meaning” of historic texts and the “ordinary meaning” of modern texts, amici believe these databases can be invaluable in resolving difficult questions of constitutional and statutory interpretation.

So, how do the corpus linguistics scholars summarize their findings about the meaning of “full costs?”

The meaning of adjectives is determined by the nouns they modify, not the other way around. That is why we judge a “tall seven year old” by a different standard of tallness than a “tall NBA player” and why the word “long” means one thing when modifying “story” and something else entirely when modifying “table.” Furthermore, the linguistic evidence shows that “full” in Section 505 should be considered a “delexicalized” adjective — meaning its purpose is to draw attention to and underline an attribute that is already fundamental to and embedded in the nature of the noun. “Full” often serves to emphasize the completeness of an object that is already presumed to be complete, like “full deck of cards,” “full set of teeth,” and “full costs. As applied here, then, “full costs” merely means all the costs that are otherwise authorized by the relevant law—not all costs that might be imagined. “

Now that he has come to the end of his pontifications, PG is having second thoughts about how universal his reaction to this matter as “enormously interesting” might be.

Nonetheless, here’s the Amicus Brief.

Donadio & Olson Files for Bankruptcy

20 December 2018

From Publishers Weekly:

The Donadio & Olson literary agency filed for Chapter 7 bankruptcy December 3 following years of embezzlement by its former bookkeeper, Darin Webb, who was sentenced December 17 to two years in jail for his crimes.

The agency filed for Chapter 7 in the U.S. Bankruptcy Court for the Southern District of New York, listing assets of $47,241.90 and liabilities of $186,613.90. The agency’s authors are owed a total of $2.7 million in royalty payments. The firm has already begun liquidation proceedings.

The two principals in the firm, Edward Hibbert and Neil Olson, explained how the embezzlement led to the downfall of D&O in separate letters to the judge made public at the time of Webb’s sentencing. Olson provided the more complete explanation of what took place, saying that Webb had been the agency’s bookkeeper for about 20 years and, during that time, had taken over most of the agency’s back office functions. What looked like dedication to the job, Olson wrote, was really part of Webb’s scheme to steal $3.4 million.

According to Olson, Webb, over time, stole an “ever larger portion of our and our client’s money. His means of doing this were complex—hidden bank accounts, fraudulent reports, gently squeezing out a part-time assistant who asked too many questions.”

When Webb confessed to the theft, it became clear, Olson wrote, that he did not “have the means to repair what he has ruined, and we do not have the means to continue.” As a result, Olson wrote, the agency “will cease to exist within weeks.” (The letter was dated October 21, 2018.)

Link to the rest at Publishers Weekly and thanks to Kris for the tip.

PG wonders how much money the principals of the agency, including Edward Hibbert and Neil Olson, have received from the agency during the last year or so.

He asks because US bankruptcy laws include what are sometimes called “clawback” rights of creditors for any Preferential Transfers by the bankrupt entity or person.

Here’s one description of preferential transfers:

A preferential transfer occurs when a debtor, prior to filing for Chapter 7 bankruptcy, pays off a particular creditor or group of creditors and by doing so, causes other creditors to get less in the bankruptcy. For example, a debtor may wish to repay a debt to a friend or family member, to make sure that person gets paid in full (and shield the money used to repay the debt, which would instead be divided among all of the debtor’s creditors).

. . . .

Only transfers made within a certain amount of time before you file for bankruptcy count as preferences. The rules depend on your relationship to the creditor:

  • During the year before you file for bankruptcy, any payment of more than $600 to an “insider” creditor — typically, a friend, family member, or business associate — counts as a preference, subject to the clawback.
  • During the 90-day days before you file, any aggregate payment of more than $600 to a regular creditor (someone other than an insider).

The problem with preferential transfers (also called preferences) is that it benefits one creditor at the expense of the rest. Rather than having their debts tossed into the bankruptcy hopper and receiving pennies on the dollar from the bankruptcy trustee (if that), creditors who receive preference payments are paid in full (which leaves that much less money to be distributed to other creditors).

If the agency is a corporation (the Donadio & Olson website identifies the entity as “Donadio & Olson, Inc.”) and the corporation has filed the Chapter 7 petition, it is possible that payments to corporate officers, directors, shareholders or other insiders during the year prior to the bankruptcy filing date or during the 90 days prior to the filing date could be subject to clawback proceedings as described above.

It has been a very long time since PG has worked on any bankruptcy matters, so he’s not current on bankruptcy law, but authors who haven’t received royalty payments the agency collected and spent on salaries and bonuses (if any) for corporate insiders may wish to consult competent bankruptcy counsel to see if they might be able to collect at least some of that money.

It would not be unusual for a single attorney or law firm to represent a class of creditors who are similarly situated rather than each creditor hiring his/her own counsel.

Antitrust, the App Store, and Apple

28 November 2018

From Stratechery:

Yesterday the Supreme Court held a hearing in the case Apple Inc. v. Pepper. “Pepper” is Robert Pepper, an Apple customer who, along with three other plaintiffs, filed a class action lawsuit alleging that App Store customers have been overcharged for iOS apps, thanks to Apple’s 30% commission that Pepper alleges derives from Apple’s monopolistic control of the App Store.

There are three points to make about this case, and they are captured in the title:

  • First, the specific antitrust doctrine at question
  • Second, the question of whether the App Store is a monopoly
  • Third, what the very existence of these questions say about Apple

In my estimation, these three points move from less certain to more certain, and from less important to more important. In other words, whatever the Supreme Court decides matters less than what the very existence of this case says about the state of Apple and its future.

Antitrust and Standing

The question before the Supreme Court is whether or not Pepper et al. have standing to sue Apple for antitrust violations at all; in other words, the case — which was launched in 2011 — hasn’t even started yet. The Clayton Antitrust Act of 1914 stated that “any person who shall be injured in his business or property by reasons of anything forbidden in the antitrust laws” can bring an antitrust action, but in the 1977 case Illinois Brick Co. v. Illinois, the Supreme Court held that only direct purchasers of illegally priced goods had standing to sue.

The specifics of the Illinois Brick case are helpful in parsing out what makes the Apple case complex; specifically, the Illinois Brick value chain was very straightforward: concrete block makers (including the eponymous Illinois Brick Company) were accused of colluding to fix prices for concrete blocks, which were bought by masonry contractors; masonry contractors in turn submitted bids to general contractors for construction projects, which were ultimately paid for by the State of Illinois. The State of Illinois sued for damages, alleging that the higher prices resulting from the price fixing had been passed through to the State of Illinois.

. . . .

In this value chain it is obvious who the direct purchasers were: masonry contractors; to the extent the State of Illinois suffered harm it was indirect pass-through harm. Thus, the Supreme Court ruled that the State of Illinois did not have standing; if every party in the value chain were to sue, the infringing party could be subject to duplicative recovery for damages (and parsing out the share of damages would be extremely difficult).

Apple vs Pepper

The question in Apple vs. Pepper, then, is who is directly harmed by Apple’s alleged monopolistic practices. According to the plaintiffs, the value chain looks the same as the concrete block manufacturers:

In this case Apple is in between developers and customers; the plaintiffs explain in their petition:

Apple charges apps purchasers a 30% commission on each app sale (unless it is a free app). The price paid by purchasers for an app is the amount set by the apps developer, plus Apple’s own supra-competitive 30% markup, both of which are paid directly to Apple, the alleged monopolist, every time an app is purchased. Apple keeps the entire supra-competitive portion of the purchase price for itself and remits the balance to the apps developers. The apps developers do not sell their apps to iPhone customers or collect any payment from iPhone customers, and iPhone customers are the only purchasers in the entire chain of distribution.

The plaintiffs argue that this makes consumers “direct purchasers”, giving them standing to sue:

Since Illinois Brick was decided 40 years ago, courts throughout the nation have had no trouble applying its “direct purchaser” standing requirement to various factual settings, including cases in which some form of payment is made to an alleged monopolist prior to the monopolist’s sale of a product.

Apple’s argument is that this misrepresents the transaction; the company wrote in its petition:

There is no basis for Respondents’ argument that pass-through damages claims are permitted whenever there is direct interaction between the plaintiff and alleged antitrust violator. This argument openly exalts form over substance by turning entirely on the formal identification of a “direct purchaser” and prohibiting any “further inquiry into the specifics of a case.”

Rather, Apple argues that the value chain looks like this:

Specifically, the company argues that “Apple does not buy and resell apps”:

Respondents suggest for the first time that Apple “has adopted the role of a retailer functionally buying from developers as wholesalers and selling to iPhone owners as consumers.” But their complaint does not allege that. And Respondents have repeatedly acknowledged that only consumers buy apps; Apple does not. The Apple developer agreements cited by Respondents confirm this: developers “do[] not give Apple any ownership interest in [their] [a]pplications.” So Apple is fundamentally unlike a traditional retail store.

Rather, Apple acts as an “agent” for developers:

As Respondents note, [the Developer] Agreement confirms that “Apple acts as an agent for App Providers in providing the App Store and is not a party to the sales contract or user agreement between [the user] and the App Provider.” Thus, Respondents concede that the direct sale is actually between developers and consumers, facilitated by Apple as an agent and conduit.

Along those lines, Apple argues that developers set the price of their apps, which determines Apple’s 30% cut, and to the extent developers set prices higher to compensate for that cut they are passing on alleged harm to consumers — which means consumers don’t have standing to sue.

Link to the rest at Stratechery

PG says there’s nothing more bracing in the morning than a bracing dose of antitrust law. It tones up the mind and prepares it for broad gauge analytical work in any field.

Attorneys for Parneros, Barnes & Noble Meet in Court

14 November 2018

From Publishers Weekly:

At a 20-minute initial conference, lawyers for Demos Parneros portrayed the fired CEO as a respected executive who is now “unhirable” after being wrongly dismissed for alleged sexual harassment. Lawyers for Barnes & Noble said they have “a different view of the facts.”

. . . .

In the brief opening conference, [Judge] Koeltl asked attorneys for each side if they’d be willing to at least confer about a settlement with the help of a magistrate judge. And while neither side sounded optimistic about a deal (Parneros’ attorney Anne L. Clark told the court that settlement discussions had been broached at one point but “didn’t get far”) neither side offered “an unequivocal no,” Koeltl observed, prompting him to say he would refer the parties to U.S. Magistrate judge Gabriel Gorenstein for a settlement conference. The signed scheduling order gives the parties until December 3 to notify the court “if such a referral would be useful for purposes of a settlement.”

Koeltl also suggested the two sides consider waiving the jury waiver clause in Parneros’s employment contract, and proceed with a jury. The litigation is currently proceeding as a non-jury case.

. . . .

In today’s 20-minute hearing, Clark portrayed Parneros as a respected, once heavily recruited executive who is now “unhirable” after being wrongly dismissed for alleged sexual harassment. Clark reiterated Parneros’s claim that he did not sexually harass anyone, and said that an incident with an executive assistant cited as the basis for his firing had been “resolved” in-house prior to his dismissal. Parneros, Clark said, also denies being abusive toward other members of the Barnes & Noble’s executive team.

Link to the rest at Publishers Weekly

Social Media and E-Discovery

9 November 2018

For a little introduction, in US civil litigation, following the filing of a lawsuit, each of the parties will virtually always engage in discovery.

In this context, discovery means discovering what information the other side has that will support its case or provide a defense against your claims.

In much civil litagation, there are three classes of discovery:

  1. Document discovery – letters, notes taken during meetings, tape recordings, emails, contracts, promissory notes, etc., etc. that may be used as evidence at trial or lead to the discovery of evidence are produced for the other side to examine, usually in the form of copies. This type of discovery may also apply to things that may be placed into evidence – a defective device that caused harm to one of the parties, for example.
  2. Interrogatories – Written questions that one side serves on the other for which written answers will be provided, attested to be true under oath.
  3. Depositions – The parties (usually) and their lawyers (always) meet in somebody’s conference room Generally speaking, a court recorder or a technician who minds a digital will also be present to make a record of the deposition. The lawyer for one side asks quesitons which the opposing party or a fact witness who may be testifying for the opposing party or an expert (physician, engineer) who may be testifying on behalf of the other party. The witness is placed under oath and is required to answer truthfully to the best of her/his knowledge.

Once a legal fight begins or is imminent, all parties are supposed to take reasonable steps to preserve evidence or likely evidence that is likely to be needed at trial. If a party destroys evidence, the court may be able to treat such destruction as an indication that the evidence would be harmful to that party’s case, impose sanctions, etc.

The OP below talks about issues involved in gathering and preserving Electronically Stored Information (ESI) that is or may become evidence in litigation.

From Legaltech News:

Of the 7.5 billion people in the world, a staggering 3 billion are using social media. Suffice to say, this trendy method of communication stopped being a fad long ago, but the world of law is really just catching up. Woven into our global society, social media provides easy access to groups of like-minded people. These platforms give us the ability to share personal details with our extended circles and be informed in “real-time” of events traditionally reserved for the nightly news. From the lens of the law, the question then becomes, how does social media play a role in current and future litigation?

Based on our normal interaction with third-party platforms like Facebook, Instagram, Twitter and the like, most of us believe our online information to be private and secure. Right? Not really, not at all.

Third Party Doctrine

To be clear, the courts have stated that the Third Party Doctrine is dispositive. Meaning, once an individual provides a third party (like social media) with information, and voluntarily agrees to share that information with someone else (like the newsfeed or followers), that person loses any reasonable expectation of privacy.

Stated in the Yale Journal of Law and Technology, “…If the third-party doctrine governs social media behavior, then published content voluntarily shared among connections within a private social network loses all reasonable expectation of privacy, including any reasonable expectation that a user’s connections will not turn over their social data to investigative authorities.”

Now, how is this doctrine applied within the courtroom? The jury is out on that.

Court Opinions Vary

The court has been inconsistent in how to fall regarding social media discovery. The way the law was applied in these two contrasting cases best characterizes this discrepancy.

Romano vs. Steelcase Inc.

Backstory: Kathleen Romano fell at work. She claimed to be permanently injured due to the fall and brought a case again her employer, Steelcase.

The Role of Social Media: During the proceedings, Steelcase subpoenaed her Facebook and Myspace pages. The request wasn’t immediately granted. However, Steelcase pushed the envelope and moved to compel, stating that public information seen online indicated a lifestyle different than what the plaintiff was asserting in court (traveling, being very active, etc.). The court then decided that her social media presence “didn’t come with a reasonable expectation of privacy.” It granted the motion to compel and gave the defendant full access to the plaintiff’s current and historical Facebook and Myspace pages.

Tompkins v. Detroit Metropolitan

Backstory: Tompkins filed suit with Detroit Metro after slipping and falling at the airport. The plaintiff refused to voluntarily give the defendant unrestricted access to her Facebook information, including items that she has labeled as “private” or unavailable for public viewing.

The Role of Social Media: The defendant moved to compel (similarly to Steelcase) arguing that Tompkins’ publicly available photos of herself brought into question the severity of her injuries. The court made clear that social media was discoverable, even things that were designated as private, but that there were limits to that discoverability. They ruled that the defendant did not, “have a generalized right to rummage at will through information that plaintiff has limited from public view.”

The court ruled that the defendant must make a threshold showing that publicly available information on social networking sites undermines the plaintiff’s claims, and that searching through the entire account was considered overboard. As such, the defendant did not obtain the plaintiff’s private Facebook information.

Link to the rest at Legaltech News

At the end of this post is a link to a court order in a class action suit filed on behalf of a large number of cancer patients who claim they were harmed by taking an anti-cancer chemotherapy drug called Taxotere.

In this order, the trial court is laying out the kinds of electronic documents the plaintiff cancer patients must provide to the defendant drug company.

In this case, the obligation to produce such electronic documents includes the obligation for each plaintiff to diligently search of all the places that ESI may exist because emails, text messages, Facebook posts, blog posts, etc., etc., may contain information concerning the harm the plaintiffs are claiming they suffered during chemotherapy because of Taxotere.

If a chemotherapy patient was texting smiley faces to everyone during and after treatments, maybe he/she wasn’t really hurting all that much.

If PG were required to do the type of search into his electronic past as described in the court order, he would think about whether the court-mandated digging through the enormous mass of his digital detritus was worse than the cancer.

Here’s a link to the court order.

.

Medallion Press Files for Chapter 7 Bankruptcy

30 October 2018

From Publishers Weekly:

Medallion Press filed for Chapter 7 bankruptcy October 18, in the U.S. Bankruptcy Court of Northern District of Illinois. In its filing, the publisher listed assets of $100,001 to $500,000 and liabilities in the same range. It cited between 200 to 999 creditors.

Under a Chapter 7 filing, a trustee will liquidate a company’s assets in order to earn as much money as it can to pay creditors.

. . . .

Medallion was founded in 2003 by Helen Rosburg, a published romance author and great-granddaughter of Wrigley Co. founder William Wrigley. The house initially focused on publishing mass market paperbacks in the categories of general fiction, romance, fantasy, paranormal, science fiction, mystery and thrillers.

After growing steadily from its launch to 2010, Medallion formed with Medallion Media Group and put an eye towards entering the movie and music business.

. . . .

Since word of the bankruptcy started to spread, agents have been working to retrieve the publishing rights of their authors from the company.

Link to the rest at Publishers Weekly

Several lifetimes ago, as a volunteer lawyer working with Legal Aid (an organization that provides legal assistance to poor people in the US), PG filed a lot of Chapter 7 bankruptcy petitions. That said, he has not remained current on bankruptcy law and does not provide any legal advice for those involved in bankruptcy proceedings. He especially doesn’t provide legal advice via blog posts on TPV.

For business organizations, a typical bankruptcy will be filed under Chapter 7 (the business can’t pay its debts and its assets will be liquidated and the proceeds divided among its creditors) or Chapter 11 (if the bankruptcy court will hold the creditors at bay, the business can reorganize itself, stretch out some payments, get out of some contracts and once again become a viable business entity).

The OP says Medallion has filed for a Chapter 7 bankruptcy. If the legal process is carried through to conclusion, Medallion will cease to exist after a period of time during which its assets are sold and, under the supervision of a court-appointed bankruptcy trustee, the proceeds divided among its creditors according to priorities set in the bankruptcy laws. Any current or future lawsuits against the company get rolled into the bankruptcy process along with the claims of all creditors, including authors who haven’t been paid their royalties.

The OP says literary agents have been working to retrieve the publishing rights of their authors from Medallion. Unless the agents have retained competent bankruptcy counsel, that isn’t going to happen. Medallion no longer controls the publishing rights. Upon the filing of the Chapter 7 petition, which has already occurred, the bankruptcy court controls the publishing rights and all other assets owned by Medallion. Whoever may answer the phone at Medallion can’t do anything with publishing rights, regardless of how persuasive a literary agent may be.

PG is not aware of any special provisions of the bankruptcy laws that place authors in a privileged position in a Chapter 7 bankruptcy of a publisher (although he would be very happy to learn such provisions exist).

Absent such provisions, the publishing agreements between Medallion and its authors are assets that the bankruptcy trustee will try to sell for the best price possible to whoever will pay that price. Any claims for unpaid royalties owed to authors will likely be rolled into the pile of unpaid debts of Medallion and cash resulting from sales of assets will be divided among the printer, the utility companies, UPS, the bookstores that have returned Medallion books for a refund and not been paid, etc., etc., etc., and the authors.

Absent unusually valuable assets, PG suspects the authors will receive a small fraction of their unpaid royalties.

But what about the publishing rights the agents are apparently attempting to retrieve?

In a variety of different business contracts, somewhere back in the boilerplate provisions, there is a bankruptcy clause that is worded something like the following:

In the event that either Party files for protection under bankruptcy laws, makes an assignment for the benefit of creditors, appoints or suffers appointment of a receiver or trustee over its property, files a petition under any bankruptcy or insolvency act or has any such petition filed against it which is not discharged within sixty (60) days of the filing thereof, then the other Party may terminate this Agreement effective immediately upon written notice to such Party.

Unfortunately, upon the filing of a bankruptcy petition, this contract provision becomes unenforceable.

The bankruptcy court determines what happens under the contracts that are held by the individual or company filing for relief under US bankruptcy law. As stated above, generally speaking, under Chapter 7, the bankruptcy trustee tries to sell the assets owned by the person or company filing for bankruptcy relief to whoever offers to pay the highest price.

As an uninvolved observer (and not as an attorney), PG expects the publishing contracts between Medallion and its authors will be sold to an individual or company and (voilà!) – all the Medallion authors will have a new publisher!

The new publisher might be Random House or it might be Kevin the Krusher, New Jersey junkyard magnate, who buys the publishing contracts as a gift for his spoiled son, Digby, who has always wanted to be a member of the literary set.

If the Medallion publishing agreements include the most unfortunate, but quite common provision by which the author granted Medallion the right to publish his/her books for the full term of the copyright the author owns for the book (typically, the rest of the author’s life plus 70 years in the US), each of the Medallion authors can look forward to receiving royalty statements (or not) from Digby every once in awhile accompanied by royalty checks (or not).

After Digby retires, Digby, Jr., may become the publisher followed by Digby III (or not).

Or, if the circle of life applies to publishing contracts, perhaps Digby will burn through all his father’s money and file a petition for relief under Chapter 7 of the Bankruptcy Code.

EFF calls for reforms – – to the reforms!

25 October 2018

From The 1709 Blog:

As the CopyKat reported earlier this week, the technology sectors are continuing their assault on planned reforms to EU Copyright law, and now the Electronic Frontiers Foundation has joined the likes of Google, YouTube and Facebook in criticising the planned copyright law reforms. In a letter the EFF say has been sent to everyone involved in the upcoming “Trilogues”, the meetings held between representatives from European national governments, the European Commission, and the European Parliament, Cory Doctorow argues that the reforms contained in Articles 11 and 13 of the Copyright Directive are “ill considered and have no place in the Directive”, concluding that instead of effecting some “piecemeal fixes to the most glaring problems”, the Trilogue takes a simpler approach, and removes them from the Directive altogether.

Having previously opined that the vote in the European Parliament that passed the draft Directive “brought the EU much closer to a system of universal mass censorship and surveillance, in the name of defending copyright” and that Articles 13 and 11 would create “upload filters” and the “link tax”, the EFF’s views are perhaps unsurprising – you can make of the points raised as you will, as the letter is set out in full is below:

The Electronic Frontier Foundation is the leading nonprofit organization defending civil liberties in the digital world. 

. . . .

 We believe that Articles 11 and 13 are ill-considered and should not be EU law, but even stipulating that systems like the ones contemplated by Articles 11 and 13 are desirable, the proposed text of the articles in both the Parliament and Council texts contain significant deficiencies that will subvert their stated purpose while endangering the fundamental human rights of Europeans to free expression, due process, and privacy.

. . . .

 Article 13: False copyright claims proliferate in the absence of clear evidentiary standards or consequences for inaccurate claims.

Based on EFF’s decades-long experience with notice-and-takedown regimes in the United States, and private copyright filters such as YouTube’s ContentID, we know that the low evidentiary standards required for copyright complaints, coupled with the lack of consequences for false copyright claims, are a form of moral hazard that results in illegitimate acts of censorship from both knowing and inadvertent false copyright claims.

For example, rightsholders with access to YouTube’s ContentID system systematically overclaim copyrights that they do not own. For instance, the workflow of news broadcasters will often include the automatic upload of each night’s newscast to copyright filters without any human oversight, despite the fact that newscasts often include audiovisual materials whose copyrights do not belong to the broadcaster – public domain footage, material used under a limitation or exception to copyright, or material that is licensed from third parties. This carelessness has predictable consequences: others — including bona fide rightsholders — who are entitled to upload the materials claimed by the newscasters are blocked by YouTube and have a copyright strike recorded against them by the system, and can face removal of all of their materials. To pick one example, NASA’s own Mars lander footage was broadcast by newscasters who carelessly claimed copyright on the video by dint of having included NASA’s livestream in their newscasts which were then added to the ContentID database of copyrighted works. When NASA itself subsequently tried to upload its footage, YouTube blocked the upload and recorded a strike against NASA.

In other instances, rightsholders neglect the limitations and exceptions to copyright when seeking to remove content. For example, Universal Music Group insisted on removing a video uploaded by one of our clients, Stephanie Lenz, which featured incidental audio of a Prince song in the background. Even during the YouTube appeals process, UMG refused to acknowledge that Ms. Lenz’s incidental inclusion of the music was fair use – though this analysis was eventually confirmed by a US federal judge. Lenz’s case took more than ten years to adjudicate, largely due to Universal’s intransigence, and elements of the case still linger in the courts.

Finally, the low evidentiary standards for takedown and the lack of penalties for abuse have given rise to utterly predictable abuses. False copyright claims have been used to suppress whistleblower memos detailing flaws in election security, evidence of police brutality, and disputes over scientific publication.

Article 13 contemplates that platforms will create systems to allow for thousands of copyright claims at once, by all comers, without penalty for errors or false claims. This is a recipe for mischief and must be addressed.

Article 13 Recommendations

To limit abuse, Article 13 must, at a minimum, require strong proof of identity from those who seek to add works to an online service provider’s database of claimed copyrighted works and make ongoing access to Article 13’s liability regime contingent on maintaining a clean record regarding false copyright claims.

Rightsholders who wish to make copyright claims to online service providers should have to meet a high identification bar that establishes who they are and where they or their agent for service can be reached. This information should be available to people whose works are removed so that they can seek legal redress if they believe they have been wronged.

In the event that rightsholders repeatedly make false copyright claims, online service providers should be permitted to strike them off of their list of trusted claimants, such that these rightsholders must fall back to seeking court orders – with their higher evidentiary standard – to effect removal of materials.

This would require that online service providers be immunised from Article 13’s liability regime for claims from struck off claimants. A rightsholder who abuses the system should not expect to be able to invoke it later to have their rights policed. This striking-off should pierce the veil of third parties deputised to effect takedowns on behalf of rightsholders (“rights enforcement companies”), with both the third party and the rightsholder on whose behalf they act being excluded from Article 13’s privileges in the event that they are found to repeatedly abuse the system. Otherwise, bad actors (“copyright trolls”) could hop from one rights enforcement company to another, using them as shields for repeated acts of bad-faith censorship.

Online service providers should be able to pre-emptively strike off a rightsholder who has been found to be abusive of Article 13 by another provider.

Statistics about Article 13 takedowns should be a matter of public record: who claimed which copyrights, who was found to have falsely claimed copyright, and how many times each copyright claim was used to remove a work.

Article 11: Links are not defined with sufficient granularity, and should contain harmonised limitations and exceptions.

The existing Article 11 language does not define when quotation amounts to a use that must be licensed, though proponents have argued that quoting more than a single word requires a license.

The final text must resolve that ambiguity by carving out a clear safe-harbor for users, and ensure that there’s a consistent set of Europe-wide exceptions and limitations to news media’s new pseudo-copyright that ensure they don’t overreach with their power.

Additionally, the text should safeguard against dominant players (Google, Facebook, the news giants) creating licensing agreements that exclude everyone else.

News sites should be permitted to opt out of requiring a license for inbound links (so that other services could confidently link to them without fear of being sued), but these opt-outs must be all-or-nothing, applying to all services, so that the law doesn’t add to Google or Facebook’s market power by allowing them to negotiate an exclusive exemption from the link tax, while smaller competitors are saddled with license fees.

As part of the current negotiations, the text must be clarified to establish a clear definition of “noncommercial, personal linking,” clarifying whether making links in a personal capacity from a for-profit blogging or social media platform requires a license, and establishing that (for example) a personal blog with ads or affiliate links to recoup hosting costs is “noncommercial.”

Link to the rest at The 1709 Blog

Regarding Article 11, PG suggests that the overwhelming majority of websites currently published on the internet are anxious for others to link to them. Placing any legal or regulatory barriers, hurdles or speed bumps in the path of such longstanding linking practices is an attack on the very nature of the internet. Hypertext and hyperlinks are foundational to both the logical and technical bases of the internet.

A link tax is a regulatory structure that may benefit a minuscule number of online information providers, a drop in the vast ocean of internet sites and the information they offer, by creating a regulation that threatens the entire ecosystem of that ocean.

A far better approach would be to require those who desire to protect their online information from standard internet protections to establish their own shared protocols and technology that will clearly differentiate the online information for which they wish to charge license fees from the vastly larger and more varied open internet. Browsers and other internet access devices can be redesigned to reject connections to sites operating with such protocols, presumably enforcing a paywall or other limitation on use absent a token provided by such sites that permits the browser to accept connections to that site.

Putting the onus on the small group of profit-seeking information providers to develop a common standard that can be recognized by widely used browsers and other means of accessing online information places the costs of such a new system upon those who wish to use it and intend to profit by it in some respect or otherwise achieve a purpose which is served by isolating such information and services from universal online access.

If such a protocol is properly designed, the potential for innocent or unintended violation of the rights of owners of such protected information will be greatly reduced, if not eliminated. In addition to protecting the greater mass of less-sophisticated users from inadvertent violations of the property rights of those protected by this protocol, it will allow such owners and enforcement authorities to focus on the small group of individuals who wish to improperly steal such information or expose it to wider audiences of viewers who have not paid the required license fee.

Next Page »