Wasn't this the Plot of "You've Got Mail"?

Last week, Walmart announced that it would pre-sell ten hardcover books (expected to be best sellers) at the rock bottom price of $9.99. Within hours, Amazon matched; Walmart responded by lowering its price to $8.99; Amazon followed suit; and Target woke up from its afternoon nap and matched. Walmart, not to be outdone, lowered its price to $8.98. (Yesterday, Sears unveiled its Keep America Reading Program to take advantage of the price war, a piece of pure marketing genius.)

Thoughtful readers may think they can just wait another week or so and let one of the big boxes pay them to buy these titles. But, it looks like the race to the bottom might hit a road block.

Today, the American Booksellers Association sent the Justice Department a letter, asking the Antitrust Division to investigate this price war, which it called "illegal predatory pricing that is damaging to the book industry and harmful to consumers."

It'll be interesting to see what comes of this. According to this NYT

piece, the publishing industry as a whole is concerned about the possible ramifications; but it seems to us that most of the impact is sure to be felt by independent bookstores.

Would the Antitrust Division actually define the marketplace in such a way that Walmart and Politics and Prose (for example) would be deemed competitors?

But Could They Countersign by Facsimile?

From the Small Business Law Blog, comes this piece on the unenforceability of contracts written in blood. It seems that the multi-million dollar Stanford International Bank Ponzi scheme was formalized by a blood oath ceremony. NYT coverage here.

According to Stanford's CFO's plea agreement , Allen Stanford entered into the blood oath with the head of Antigua’s Financial Services Regulatory Commission (FSRC) and another FSCR employee to bind them to an agreement to not examine false investment reports that Stanford filed in exchange for regular cash bribes.

The lurid blood ceremony seems extraneous, to say the least; the cash was probably sufficient to ensure performance.

What's the old saw? Never write when you can speak; never speak when you can nod; never nod when you can wink. We guess no one ever told Stanford never seal your illegal deal in blood.

Judging a Digitized Book Settlement by its Cover

We've followed the brouhaha surrounding the proposed settlement of the Google digitized books class action with some interest. (A pdf of the 2005 complaint filed by the Authors Guild can be found at eff.org.)

A Washington Post editorial has good summary of the settlement here.

Earlier, this month, the William Morris Agency advised its clients to object to the proposed settlement, and a flurry of letters, rebuttals, and rebuttals of rebuttals flew between William Morris and the Authors Guild. See coverage here, here, here, and here.

It's no real surprise that literary agents, publishers, and authors have concerns about the potential effect of the settlement. The dueling correspondence between Willaim Morris and the Authors Guild focuses on protecting the rights of authors.

It's not even a surprise that the Justice Department is investigating the settlement, citing possible antitrust concerns.

To us, the surprise was the news that Microsoft, Amazon, and Yahoo plan to join the Open Book Alliance, a coalition of nonprofits, individual authors, and libraries that is forming to oppose the settlement.

Notice Pleading Restoration Act of 2009: Back to the Future

From the BLT and PrawfsBlawg, we learn that Senator Arlen Specter has fired up the DeLorean in effort to re-relax recently tightened pleading standards under Rule 12(b)(6). The good senator has introduced legislation that would return the pleading standard to that established under Conley v. Gibson, decided in 1957.

Consider this post our "short and plain statement" with regard to the proposed act.

Oh, Baby

It's been several weeks since we've posted. What can we say? Work, summer weather, and a lack of interesting (to us, at least) news have conspired against us.

Today we finally were moved to post after reading the Honorable Anita Brody's (E.D. Pa) decision granting class certification in McDonough v. Toys "R" Us.

Judge Brody's decision is of interest because the subclasses it certifies allege that Babies "R" Us (of which Toys "R" Us is the parent) conspired with makers of pricy baby products to restrict competition in violation of federal antitrust laws. In certifying the class, the court applied Leegan Creative Leather Products, the 2007 Supreme Court case that held vertical price restraints are not per se illegal but must be evaluated by the court under the "rule of reason."

Also interesting is that the court relied on testimony of economic experts to determine that the plaintiffs satisfied their Rule 23 burden under In re: Hydrogen Peroxide Antitrust Litigation, a fairly recent Third Circuit decision that clarified that more than a threshold showing is required for certification.

The nature of the claims, the costs of the products at issue (Peg Perego and Maclaren strollers, Britax carseats, the BabyBjorn carrier, Medela breastpumps, and Kidsline bedding), and the potential size of the class lead us to believe this case bears watching.

Beat the Market, Buy a Lawsuit?

Here's an interesting NYT piece on funds that invest in lawsuits (typically expensive, potentially lucrative commercial litigation/intellectual property actions).  Before deciding to invest in a lawsuit, the funds seek the input of outside attorneys on the merits of the case.

The article quotes law professor Anthony J. Sebok regarding "potentially tricky legal questions" raised by the use of outside money to finance litigation, but it does not address the questions that popped to our minds:

How does this practice square with the old common law prohibition against champerty and maintenance (still illegal in some jurisdictions)?

What about conflicts of interest?  Do these outside lawyers run conflicts checks before they agree to opine on a case?

Presumably, everyone involved signs a confidentiality/nondisclosure agreement; still, doesn't sharing information about legal strategy with an outsider raise questions about whether the attorney-client privilege or the work product protection has been waived?

Sunshine May Be the Best Disinfectant, but Secrecy Promotes Settlement

Yesterday, the Boston Globe reported that Bausch & Lomb has settled 600 lawsuits (to the tune of $250 million or so to date) arising out of fungal infections that contact lens wearers allegedly contracted from using ReNu with MoistureLoc in 2006.

Redorbit reports that the company went private in 2007, so that it could pursue its  "growth path . . . without . . . outside distraction" (and, we surmise, handle the contact lens disinfectant recall and subsequent settlement of the personal injury lawsuits with minimal public attention).  Forbes.com has more coverage here.  

And, now, excuse us as we take out our contacts because our eyes are suddenly inexplicably itchy.

But Is She a Cat Person or a Dog Person?

From The BLT,  we learn that the ABA's review of Supreme Court nominee Sonia Sotomayor has begun. The ABA Standing Committee on the Federal Judiciary will evaluate Judge Sotomayor's integrity, professional competence, and judicial temperment, but will not take into account her "philosophy, political affiliation, or ideology."

No worries there, the mainstream press and the blawgs are undertaking that review.  CNN's Quick Vote poll asks readers whether they "agree with" President Obama's selection.  When we visited, 341,300 legal scholars had weighed in.  (Not feeling qualified to vote, we didn't.)  It's hard to believe that all the voters had ever heard of Sonia Sotomayor before last week, let alone had any principled basis for agreeing or disagreeing with her selection: maybe they were sports fans?  Deadspin assures us that she is "Not A Squishy, Wild-Eyed Commie, After All".  

Count our vote as  "glad that the ABA will once again be vetting the Supreme Court nominee."

Obama's Preemption Memo: A Return to Normal

Yesterday, President Obama issued a two-page memo that did three things:   First, it recognized that, under the Bush administration, some agencies and departments announced that their regulations preempted state law even when should not really have done so.  Second, it provided that his administration would not do that. 

So far, not a particularly controversial memo, right?.  If there's no legitimate basis to preempt state law, don't do it.  If you think there is a basis to do so, do the legal analysis to make sure.

What has both sides of counsel table all whipped up is the third part.  Because some recently enacted (say, oh, in the past ten years) regulations contained preambles that stated they preempted state law (or codified preemption provisions) even where there was no explicit preemption by Congress or other sufficient legal basis, Obama also ordered all department and agency heads to review their regulations to decide whether those statements and provisions are "justified under applicable legal principles governing preemption."  If a department and agency head determines that a preemption statement or provision cannot be justified, then he or she is to take "appropriate action."

According to the Wall Street Journal and some commentators (including Overlawyered,  The BLT, and The WSJ Law Blog) this is a big win for the plaintiff's bar.

But isn't it really just a return to the, you know, law?  As the WSJ article noted, back in March, in Wyeth v. Levine, The Supreme Court struck down a preemption statement in the preamble to a 2006 FDA regulation, calling it, among other things, "inherently suspect."

Look, we defend companies, so we do understand the concern that returning to established preemption principles could lead to a spate of costly (and certainly some friviolous) lawsuits.  A return to the rule of law might just be worth it.

Oedipus . . . Meh.

News that Microsoft dropped K&L Gates from its list of preferred law firms generated a lot of buzz today.  See, just by way of example, coverage here, here, and here.

The prevailing story line---that Bill Gates fired his father's firm---may be juicy, but it is a work of fiction.  It certainly does not, as has been claimed, sound the death knell for the importance of personal relationships between clients and their counsel.

Yes, the Gates in K&L Gates (the product of a 2007 merger between Kirkpatrick & Lockhart and Preston Gates & Ellis) is Bill Gates, Sr.  Yes, dad's firm took Microsoft public.  Twenty-three years ago.  And, yes, Microsoft dropped K&L Gates from its list of ten preferred law firms.

But this is a hardly a case of "son fires his dad."  First, Sr. retired from the firm in 1998. Second, we suspect (although we could be wrong) that someone other than Jr. decided which firms made the list of preferred providers.  Third, K&L Gates self-identifies as a firm of "1,900 lawyers on three continents" and is dwarfed by Microsoft, which has approximately 90,000 employees---not exactly a cozy family relationship.  And, fourth, Microsoft issued a statement emphasizing that it was not cutting ties with the firm.

Hey, don't let the facts get in the way of a good Greek tragedy narrative, though.

UPDATE:  An interesting contrast from cnn.com, which has a current story about those new Microsoft ads asking WWBGD? and recognizing that Gates isn't making the decisions at Microsoft these days.

Teflon Class Action Dropped

On May 1, U.S. District Judge Ronald Longstaff (Southern District of Iowa) signed an order dismissing the Teflon MDL action against DuPont.  After unsuccessfully appealing the court's denial of class certification to the Eighth Circuit, the plaintiffs have thrown in the towel.  [Ed. note---feel free to thank me for resisting the urge to make the "lawsuit didn't stick" pun that will no doubt abound.]

The opinion denying class cert. was issued in December of 2008 and previously was discussed at some length on the Class Action Defense Blog and the MassTortDefense Blog.  The court found that the plaintiffs could not satisfy several of the explicit and "implicit" requirements of Rule 23. The most interesting part of the opinion, at least to me, was this quote from the court's discussion of the insufficiency of the proposed class definition: 

In other words, certifying a class with a weak definition creates more problems later in the proceeding.  If the parties are unable to establish membership in a particular sub-class in an objective fashion at the commencement of the litigation, it is highly unlikely that liability and/or damages can later be established without relying on lengthy, individualized inquiry.

This issue---the inability to objectively determine class membership---seems to crop up regularly in putative consumer classes seeking economic damages only.  Given that consumers' purchasing decisions are highly individualized, it seems logical that a class of consumers seeking economic damages will call for individualized inquiries.  Maybe the class action vehicle just isn't suited to such consumer classes?

Will PA Expand Products Liability Claims?

Last month, the Third Circuit anticipated that the Pennsylvania Supreme Court would abandon Pennsylvania's particularly strict strict liability standard in favor of the standard set forth in the Restatement (Third) of Torts.  In Berrier v. Simplicity Manufacturing, Inc., the Third Circuit considered whether a five-year-old girl who was injured when her grandfather backed over her foot with a riding lawnmower could recover under Pennsylvania’s strict products liability law.  The lawnmower in question was not equipped with back-over protection.

The Third Circuit predicted that, if confronted with the question, the Pennsylvania Supreme Court would afford a bystander who was not the intended user of a product a strict liability cause of action to recover for injuries sustained while an intended user was operating the manufacturer’s product.  This outcome is consistent with the Third Restatement position but represents a departure from Pennsylvania state law.

Manufacturers will want to watch what the Pennsylvania Supreme Court does in the pending case, Bugosh v. I.U. North America, Inc., 942 A.2d 897 (Pa. 2008), which presents this very question.