Tuesday, June 28, 2011
The proposed settlement involves a February agreement by Encore Capital Group Inc., the nation's largest debt buyer by revenue, to pay $5.7 million to settle all class-action lawsuits accusing the San Diego company of violating U.S. or state laws with flawed or phony affidavits.
A U.S. District judge in Toledo, Ohio, ruled in 2009 that Encore employees used false and misleading affidavits to collect credit-card debts. As part of the case, one employee testified in a deposition that he signed 200 to 400 affidavits a day, few of which were reviewed for accuracy.
This month, the 38 state attorneys general asked the federal judge to throw out the proposed settlement. They contend that approval of the deal would help the debt-collection industry dodge enforcement actions by state officials. A Raleigh corporate lawyer agrees.
According to the state attorneys general, Encore could use the settlement as a precedent throughout the U.S., arguing that other allegations of flawed affidavits should be thrown out because of the Ohio deal. Some observers said the outcome could shape the industry's legal strategy for defending itself in enforcement actions.
A man, who led the Federal Trade Commission's Bureau of Consumer Protection from 2001 to 2004, said the deal could hamper state enforcement efforts by making it harder for them to argue that there's anything left to go after that hasn't been addressed by the settlement.
The move is a sign of friction between U.S. and state regulators who police the business of collecting debts. An increase in bad debts following the recession has led to a number of lawsuits against borrowers, but some federal and state judges along with regulators have accused some debt collectors of using incomplete, sloppy and even fraudulent documents in courts. Debt-collection firms often submit affidavits to courts as proof of what a borrower owes.
In the most extreme instances, a small number of borrowers have ended up in jail because of bad paperwork.
The debt-collection industry is regulated through a patchwork of laws, with federal oversight divided between the Federal Trade Commission and the new Consumer Financial Protection Bureau, which begins operations in July. State officials generally are more aggressive than federal agencies, according to a collections law firm Raleigh.
Minnesota Attorney General called the proposed settlement wholly deficient because plaintiffs in the class-action suit would get $10 each from Encore. More significant, she said, the deal could throw a monkey wrench in enforcement of the debt-collection industry. She accused Encore in a state-court lawsuit in May of including defective affidavits in debt-collection lawsuits against Minnesota residents.
Encore's president and chief executive, declined to comment on the objections by state officials. In a statement, Encore said the proposed settlement is fair. The company said it is confident the court will uphold the agreement.
Terms of the proposed settlement call for about 1.4 million borrowers included in the proposed federal class-action suit to drop claims against Encore in return for $5.7 million.
Final approval of the deal could leave Encore and other debt-collection firms free to assert wrongful debt-collection practices across the U.S.
Last year, the FTC received 140,036 complaints against debt-collection firms, up 17% from 2009 including those with doing Raleigh debt collection. Since the start of 2010, the agency has brought five enforcement actions against debt-collection firms under the primary federal law used to oversee the industry, resulting in civil penalties of several million dollars, according to the FTC.
In a statement, director of the agency's financial-practices division, said the FTC has broad authority but limited resources. As a result, the agency focuses on the larger collectors and usually relies on state officials to police smaller companies, he said.
A spokeswoman for the Consumer Financial Protection Bureau declined to comment. The agency was formed by last year's Dodd-Frank financial-overhaul law.
Encore and rival debt-collection firms buy delinquent loans in bulk, sometimes filing lawsuits to collect the money. Roughly 94% of collection cases filed against borrowers result in default judgments in favor of the debt buyer, according to industry estimates. Few borrowers have a lawyer, some don't know they are being sued, and others don't appear in court, both federal and state judges said.
Last year, Encore collected $266.8 million from 425,000 lawsuits filed against borrowers, up 15% from $232.7 million in 334,000 suits filed in 2009.
A number of cases brought by debt buyers are plagued by faulty documentation, according to 20 judges around the country interviewed.
In the Ohio case, the judge ruled that Encore employees determined the validity of a debt based entirely on a printout. Encore said in February that it modified affidavit practices, without specifying the changes.
In the court filing in a Ohio federal court seeking to block the proposed settlement, the state attorneys general said documentation-related lawsuits such as the Ohio case are potentially valuable, citing a federal judge's February ruling awarding a borrower $723,000 in damages against Encore and another company.
Encore said in a statement that the February ruling has nothing to do with the issues in the Ohio case. The company said it takes the Minnesota allegations seriously but believes its paperwork procedures are legally sound.
The Supreme Court has ruled in favor of Wall Mart in a massive sex-discrimination lawsuit. The labor law case split the court 5-4 along its ideological divide, with Justice Antonin Scalia's majority opinion concluding the allegations against Wal-Mart were too vague and the evidence too weak to establish the common injury essential to encompass all women employed since 1998 in the roughly 3,400 U.S. Wal-Mart stores.
The decision is sure to reverberate in other employment class actions, with lower courts scrutinizing more carefully the factors that constitute a class for the purpose of bringing mass claims.
Wal-Mart defense attorney said the ruling would have a significant impact on other pending gender class-action suits, including against Costco Wholesale Corp and minorities who want to find a lawyer. The Costco suit alleges a "glass ceiling" for women at the store level. Costco, which has denied the allegations, declined to comment Monday. A lawyer for the Wal-Mart plaintiffs who also represents the Costco plaintiffs, said the latter case is far narrower, focusing on two job classifications—store manager and assistant store manager—and is unlikely to be affected by Monday's ruling.
The impact of the ruling on other cases will depend in part on companies' personnel policies, said a law firm that represents employers. Regulated industries—including utilities, transportation and telecommunications—generally use rigid formulas for personnel decisions that remain open to class-action suits, if they produce work forces that significantly disadvantage employees of a particular race or sex. In contrast, high-tech companies in competition for engineers tend to make ad hoc salary and promotional decisions that lack the commonality Justice Scalia wrote was essential for class actions.
Even before the ruling, the case was affecting pending class-action suits. Last week, workers and Best Buy Co. agreed to settle a case that alleged the electronics retailer systematically discriminated against women and minorities in hiring and promotions. The company agreed to change its personnel policies concerning professional liability and pay monetary awards of only $290,000, to be divided among the nine named plaintiffs.
Long Road to High Court
Six current and former employees of Wal-Mart Stores Inc. sued the retailer in federal court in San Francisco, charging it discriminated against women in pay, compensation and promotions.
A federal judge in San Francisco ruled the suit could proceed as a class action.
The Ninth Circuit Court of Appeals, in a divided opinion, upheld its earlier decision that the suit could proceed as a class-action case but removed as plaintiffs former workers who weren't employed at the time the case was filed.
Wal-Mart asked the U.S. Supreme Court to review the Ninth Circuit decision upholding the class action.
Supreme Court agreed to review the case.
March 29, 2011
Supreme Court heard oral arguments in the case.
June 20, 2011
The Supreme Court ruled that the suit cannot proceed as one large class action.
The pending Wal-Mart decision was an "incentive for both sides to settle," said the attorney for the Best Buy plaintiffs. "The Wal-Mart decision reaffirms the settlement we did was a good one."
The Supreme Court's conservative majority gave businesses another shield against class actions in an April case from California, upholding an AT&T Inc. cellphone contract that required consumers to go through individual arbitration.
The Wal-Mart lawsuit, filed in 2001, accused the world's largest retailer of systematically paying female workers less than men and providing them fewer opportunities for promotion. Wal-Mart consistently denied the claims, which could have resulted in billions of dollars in back pay and punitive damages, and said it had a strict policy against discrimination.
Wal-Mart praised the ruling. "As the majority made clear, the plaintiffs' claims were worlds away from showing a companywide discriminatory pay and promotion policy," it said in a statement. The company said it is a good place for women to work and "will continue its efforts to build a robust pipeline of future female leaders."
Lawyers for the women who claim they were victimized said they would regroup.
The attorney who argued the case on behalf of the three named plaintiffs seeking to represent the class of 1.6 million, said the legal team would seek to fashion smaller, more focused class-action suits that could target regions or stores. In addition, he said the team would encourage women who believe Wal-Mart discriminated against them to file individual complaints with the Equal Employment Opportunity Commission.
The case has never gone to trial, as Wal-Mart fought the plaintiffs' effort to proceed as a single class. The suit alleges that Wal-Mart's personnel policy, which granted individual managers wide discretion over promotions and raises, permitted sex biases that pervaded the corporate culture to deny fair opportunity to women. As a result, the plaintiffs alleged, women remained concentrated in the retailer's low-wage rank and file, while men dominated the managerial ranks.
Those statistics showing pay and promotion differences prove nothing by themselves, Justice Scalia wrote, joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito.
The plaintiffs must identify a "specific employment practice," such as a biased testing procedure, that unlawfully discriminates, Justice Scalia wrote. "Merely showing that Wal-Mart's policy of discretion has produced an overall sex-based disparity does not suffice," he wrote.
Under the Federal Rules of Civil Procedure, which set out the criteria for class-action lawsuits, plaintiffs must demonstrate that the facts and law at issue is "common to the class." While lower courts found the plaintiffs' evidence sufficient to proceed to trial, Justice Scalia all but ridiculed the data and experts the plaintiffs provided.
The plaintiffs' sociology expert couldn't say "whether 0.5% or 95% of the employment decisions at Wal-Mart" could have resulted from bias, Justice Scalia wrote, quoting from the court record. "We can safely disregard what he has to say," he wrote.
Because each manager had such wide discretion, "literally millions of employment decisions" were at issue in the suit, he wrote. "Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say" that all the women could provide "a common answer to the crucial question why was I disfavored."
In dissent, Justice Ruth Bader Ginsburg wrote that the allegations met the test earlier Supreme Court decisions have set out for employment-discrimination suits and civil rights law.
At Wal-Mart, she wrote, the lower court said promotions were made by a "tap on the shoulder" process. "Vacancies are not regularly posted…managers choose whom to promote on the basis of their own subjective impressions," she wrote, joined by Justice Stephen Breyer and the court's other women, Sonia Sotomayor and Elena Kagan.
To the dissenters, the evidence "suggests that gender bias suffused Wal-Mart's company culture."
Wal-Mart says that it has worked hard to expand employment opportunities since the suit was filed.
The plaintiffs' lawyer, said some women had said they got significant raises their managers attributed to the case but said he hadn't seen evidence that all of the plaintiffs' concerns have been addressed.
Friday, June 17, 2011
Since March 2007, when Viacom first accused Google in a $1 billion lawsuit of profiting off thousands of unauthorized copyrighted clips that once appeared on YouTube, most of the conflict had smoldered out of public view.
Once the case documents were unsealed on Thursday, all the spite came back into the open. Google attacked Viacom for chopping up e-mails from YouTube's founders in an obvious attempt to invent sinister-sounding messages. In Viacom's motion for summary judgment, the parent company of Comedy Central and Paramount Pictures railed against Google and YouTube for developing "serial amnesia" during depositions and also for failing "to preserve and produce" key documents--a no-no in civil proceedings.
Lawyers do this kind of thing in trial all the time. The judge and his clerks will probably read the briefs while they're all together and they will probably see through most of the cherry-picked quotes. This is not a very smart tactic in litigation.
It should come as no surprise the parties are playing hardball. There's a lot at stake, including the $1 billion damage amount Viacom seeks. Depending on how the dispute is decided, it could mean content-sharing on the Web will be far more restricted than now. On the other hand, for film studios, music labels, and other content creators, a Viacom loss could mean protecting copyright online becomes much more expensive and labor-intensive.
But the collateral damage from this nasty spat could include the public's right to information. Both sides attempted to keep many of the documents sealed for three years, and Google continues to fight to prevent the release of depositions from Google's CEO, one of Google's two co-founders, and YouTube's CEO and co-founder. Google has not said why it doesn't want the documents made public.
It is disturbing that the papers are permitted to be filed under seal. Whatever happened to 'courts of record?' It used to be virtually impossible to get things filed under seal...now that we finally have the technology to know and share what is really going on in our courts, the parties and/or the courts seem bound and determined to take that away from us.
In civil cases like this, judges will typically try to safeguard trade secrets and privacy. Viacom lawyers wrote in one of their briefings that there is only a small amount of trade secrets involved in the case. Adding to the confusion about Google's reluctance to disclose the depositions are the details seen from a testimony. Legal experts say it doesn't sound like he was discussing trade secrets.
In October, CNET published a small portion of the deposition Schmidt gave last May in which he said that prior to Google's $1.7 billion acquisition of YouTube in 2006, he valued the video site at between $600 million to $700 million. The CEO acknowledged Google paid a $1 billion premium for the video-sharing site.
Convincing a judge to seal a document isn't close to being the most aggressive tactic employed in this case.
In Viacom's summary judgment motion filed last week, the company said that one of YouTube's co-founder put in an e-mailthat he said for his staff to concentrate all their efforts in building up their numbers as aggressively as they can through whatever tactics, however evil.
A statement like that in a copyright complaint gives the impression that he is prepared to rip off artists or pretty much do anything to grow his site. Viacom, however, omitted important parts of the e-mail. The co-founder claims his statement was,"If I were running the show, I'd say, we concentrate all of our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil, i.e., scraping MySpace."
News Corp., MySpace's parent company, may be unhappy to learn of the plans, but the statement had little to do with Viacom or pirated videos.
Viacom may have taken liberties with the e-mails in its possession. But the New York company claims it didn't receive all the e-mails it was entitled to under the law. Viacom claimed that Google didn't act in good faith in turning over documents. Viacom's lawyers said Google’s CEO handed over only 19 records from June 2006, the month that Google began evaluating a YouTube acquisition. The CEO was asked why a big acquisition like YouTube didn't generate more paperwork from him.
He responded that it has been his practice for 30 years to not retain my e-mails unless asked specifically. He later said it was his practice to delete or otherwise cause the e-mails that he had read to go away as quickly as possible."
YouTube co-founder told Viacom lawyers that he lost his e-mails for the period Viacom was interested in because of a computer crash. Viacom, however, retrieved many of his e-mails from the personal computer of another one of YouTube's three co-founders. When the first co-founder was presented with copies of those e-mails, a skeptical Viacom said in its filing that the YouTube CEO developed serial amnesia.
The American trial system depends on pretrial discovery (in which the parties are required to exchange information). As a general practice, losing or destroying documents is not a good thing. It opens you up to serious sanctions.
The tech sector doesn't have a great record of protecting potential evidence in high-profile copyright cases.
•In May 2008, a federal judge ordered TorrentSpy, a BitTorrent index accused in a film industry lawsuit of copyright violations, to pay $110 million to the Motion Picture Association of America (MPAA) after finding that site operators had hid and destroyed evidence. TorrentSpy, which later went bankrupt, claimed that it didn't intentionally lose any information.
•In the MPAA's copyright face off against RealNetworks over its DVD-copying software, RealDVD, U.S. District Judge sanction Real for losing three notebooks belonging to one of the company's former engineers. Patel ordered Real to pay some of the studios' legal fees and also said she would assume when deciding which way to rule that the MPAA's assertions about what was in the notebooks were correct. Earlier this month, Real settled with the studios and agreed to scrap RealDVD.
•In the music industry's lawsuit against the Usenet network last year, the top four labels accused Usenet of destroying evidence or of failing to produce witnesses on multiple occasions. The federal judge found numerous instances of discovery misconduct by Usenet.
In the end, the winner of this case may be the company that can withstand the most pain...and embarrassment.
In an e-mail exchange released Thursday between CEO of MTV Networks and MTV Networks president, the two discussed Viacom's interest in acquiring YouTube, but they weren't thrilled that the deal wouldn't happen. The two also made what must be some embarrassing criticisms of their own management. One stated that it takes three months and 58 meetings to get a $1 million acquisition done at their company and that they were fast becoming those they scorned.
Wednesday, June 15, 2011
Ford's shares recovered some of their losses, but still closed down 1.6%, or 21 cents, at $13.14 today on news of the $2 billion judgment against it in a class action suit by 3,000 Ford truck dealers. Shares had dipped as low as $12.78, or more than 3%, at midday.
The damages ruling in an Ohio state court came late Friday and was based on a February jury verdict against Ford.
A statement from Ford General Counsel emphasized that Ford believes the ruling is wrong and will appeal. They believe the decision made Friday by a state court judge in Ohio is highly flawed, and are appealing.
The judge ordered Ford to pay the dealers $781 million in damages and about $1.2 billion in interest in the suit, which alleged Ford overcharged them for 474,000 600-series and heavier trucks from 1987 through 1997. The suit, filed in 2002, claimed Ford violated its agreements with the dealers by not disclosing discounts on the published wholesale prices that it gave some dealers through its so-called Competitive Price Assistance program (CAP).
Ford’s attorney argued that the evidence they presented at trial showed clearly that the former (CAP) program – which was a common practice formerly used by companies selling in the extremely competitive medium- and heavy-truck market – resulted in thousands of additional sales benefitting customers and dealers, and it did not violate their agreement with dealers.
Ford also took strong issue with the expansion of the suit, initially filed by one dealer, into a class action, leading to the huge award:
They believe among the most egregious errors was the decision to apply alleged damages from this one case to each and every dealer in the class without allowing any evidence of how other dealers might have been affected.
The judge delayed his ruling pending the appeal on the condition Ford post a $50 million bond.
Ford’s statement expressed confidence about the appeal -- and indicated the dealers shouldn't expect a check any time soon. They feel the decision is far outside the bounds of normal legal process, and are confident that the Ohio appellate courts will reach the same conclusion upon review of the matter, which will take several years based on normal timing.
That also would leave time for Ford and the dealers perhaps to settle for a less eye-popping amount.
Monday, June 13, 2011
SEC enforcement lawyers, who have struggled for more than two years to find definitive evidence that the company and its leaders violated securities laws, are concerned that a legal attack on Lehman’s accounting practices would likely fail, the people said, speaking on condition of anonymity because the deliberations aren’t public.
Instead, the enforcement staff may recommend that the agency take the rare step of publishing a so-called report of investigation, also known as a 21(a) report. The commission would have to vote on whether to issue a report and it’s still possible that the SEC may decide to bring legal claims in court, the people said. The 21(a) reports, which lay out allegations of misconduct without imposing penalties, have only been issued six times in the past decade, according to the SEC’s website.
A professor of the School of Law at the University of California stated the SEC can claim that this is decisive action and that they’re on record as to the wrongdoing. It doesn’t meet the inevitable resistance that civil action meets - the possibility of failure.
A spokesman for Lehman, declined to comment.
An attorney for Lehman’s ex- chief executive officer and a lawyer at for former finance chief didn’t respond to e-mails. An SEC spokesman, declined to comment.
Lehman, which filed the biggest bankruptcy in U.S. history in September 2008, was faulted along with its former executives in a report, that a the court-appointed examiner, who said they misled investors with accounting gimmicks. Valukas alleged that Lehman used the technique, known as Repo 105s, to hide billions of dollars in assets and artificially reduce the firm’s leverage. The actions may not have violated accounting rules, making it difficult for the SEC to pursue fraud claims.
If the SEC determines it can’t bring a case, airing its findings may be the best option for fending off criticism from lawmakers and investors who say the agency hasn’t been aggressive in pursuing wrongdoing that fueled the financial crisis.
A securities law professor at Duke University School of Law, said it would be disappointing if the SEC didn’t bring fraud charges against Lehman and its executives, adding that the rebuke is about the least harmful sanction anybody could get.
Congress gave the SEC discretion to publicize findings of investigations in the Securities Exchange Act of 1934. The reports were meant to be a flexible tool to shine a spotlight on questionable conduct that may not support an enforcement action. It was adopted to help get the SEC where it needed to go when the path was not all that clear. The reports tend to be used in borderline situations, where the SEC feels the need to speak out about the broader significance of something but for whatever reason feels it’s just not right to bring a case.
While the agency continues to weigh the possibility of bringing civil fraud claims, it faces several hurdles, according to the people.
In April, the Financial Accounting Standards Board changed its rule for how firms have to account for the short-term transactions that let Lehman temporarily remove about $50 billion in assets from its balance sheet by treating them as sales. FASB’s move may bolster the defense that the rule, not Lehman’s application of it, was faulty, yet this left firms asking how to Find a Lawyer.
Since Lehman is defunct, any enforcement action would likely target individuals. The executives had to sign off that the financial statements fairly presented the firm’s financial position. Even though the Repo 105s were perhaps in technical compliance with GAAP, they were distorting the true economic image of the firm.
Lehman’s auditor was sued in December by then-New York Attorney General Andrew Cuomo, who’s now governor, for signing off on Lehman’s quarterly financial statements. The firm disputes the claims and hasn’t been accused of wrongdoing by federal regulators.
In a May statement, Ernst & Young said regulators have made a series of changes to accounting and disclosure rules since the financial crisis that, with the benefit of hindsight, are significant improvements to the system that existed prior to Lehman’s demise.
The SEC could also focus on whether Lehman’s executives deceived investors by falsely describing the treatments being used, two people said. In September, the SEC proposed a rule that would require companies to provide a comprehensive explanation of short-term borrowings. Defense lawyers could argue that the change shows that Lehman’s disclosures weren’t deficient under current rules.
In response to the report, Ernst & Young said Lehman’s management discussion and analysis were the responsibility of management, not the auditor.
In testimony to Congress last year, Fuld said Lehman shouldn’t be criticized for complying with existing repo accounting rules. He also said he had absolutely no recollection whatsoever of hearing about the Repo 105s.
Defense lawyers for Lehman would likely try to turn any allegations by the SEC back on the agency. Referring to his interviews of executives, Valukas wrote that a recurrent theme in their response was that Lehman gave full and complete financial information to government agencies and that regulators never raised significant objections or directed that Lehman take any corrective action.
SEC examiners monitored Lehman’s financial health as part of the Consolidated Supervised Entities program, which had been set up in 2004 to guard against the collapse of systemically important investment banks. The voluntary program was halted after Lehman declared bankruptcy.
The commission issued two 21(a) reports last year. In August, the SEC published results from a probe of Moody’s Corp. that found the company had chosen not to downgrade inflated ratings on almost $1 billion of debt in 2007 out of concern for the company’s reputation. The SEC said it didn’t pursue fraud claims because the conduct occurred in Europe, raising uncertainty as to whether the agency had jurisdiction.
In March 2010 the agency posted details of a probe involving a JPMorgan Chase & Co. vice chairman, faulting him for raising money for former California Treasurer. A JPMorgan subsidiary underwrote certain California bonds within two years of the donation, even though securities rules bar banks from doing so. The SEC used the report to reaffirm guidance on the rule, warning banks that it also applies to executives of parent bank holding companies.
The SEC has already made some public remarks about Lehman’s accounting. After Valukas released his findings, the SEC sent letters to financial firms in March 2010, asking for information on their use of repos as it sought to better understand their decisions. The agency hasn’t found evidence that inappropriate practices were widespread.
So much of what went on here was neither clearly legal nor clearly illegal. It fell through the cracks in this case, and that makes civil actions very, very difficult. The 21(a) report would be an opportunity for the SEC and everyone else to move on.
Monday, June 6, 2011
The animosity between the two groups is so prevelant that the Hall of Fame in April sued the newer outfit in Las Vegas federal court for engaging in deceptive trade practices. The suit accuses Littell and Apcar of intentionally creating confusion among the burlesque industry and family. The breakaway group disputes that claim.
The Hall of Fame's executive director says the rivalry could have been avoided, and questioned why the rival group chose to do their show on the same weekend.
Mr. Littell, who is also a former boyfriend of Ms. Herbert's stated that he felt the law suit was personal and commented that there's plenty of room in Las Vegas to have multiple shows.
The spat playing out in court and on stages in two Las Vegas casinos comes at a time of peaking interest in traditional burlesque performance a type of dancing that is historically PG-13-rated, or more tease than strip, enthusiasts say.
In her most recent gigs, the 83-year-old Ms. Storm says she stripped down to lingerie and high heels while dancing.
Burlesque classes are now offered in cities like New York and San Francisco, spurred on recently by celebrities like Dita Von Teese and the 2010 film "Burlesque" that starred Cher.
The Burlesque Hall of Fame was founded in 1981 on a Mojave Desert goat farm by ex-dancer Jennie Lee, the onetime proprietor of Los Angeles's Sassy Lassy nightclub. Ms. Lee and her husband envisioned a burlesque extravaganza along Route 66 with a museum, stripping school and dancer retirement home.
Few of the plans materialized by the time Ms. Lee died in 1990. Ms. Evans, who made her name as the "Marilyn Monroe of Burlesque" in the 1950s, moved to the complex and took an active role. By then, traditional burlesque was suffering, hurt by video pornography and more risque strip clubs. During this time all of the burlesque theaters closed up, and Ms. Storm thinks that porno and total nudity had something to do with it. Ms. Storm, who became a burlesque dancer in the late 1940s, after a promoter spotted her serving patrons at a Los Angeles drive-in. Now she sports pink Jackie O suits and a flaming red bouffant. She plans to headline a cruise next spring in addition to the coming show.
In the 1990s, Ms. Evans built the Hall's collection with items like a trunk that belonged to renowned burlesque dancer Gypsy Rose Lee and the costumes and cremated remains of various burlesque performers. Burlesque-history enthusiasts like Ms. Herbert and then-boyfriend Mr. Littell flocked to help with the collection.
Yet even as burlesque made a comeback, the Hall wasn't able to capitalize on the resurgence. In 2005, Ms. Herbert and other volunteers packed up the Hall's collection and moved it to Las Vegas. They planned to "professionalize" the hall, getting its finances in order as a tax-exempt business. Ms. Evans says she supported the plan, and moved to Las Vegas with the collection.
Ms. Herbert became the Hall's executive director, but the Las Vegas move did little to improve the Hall's finances. Its operating budget hovered at around $50,000 a year, according to Internal Revenue Service filings. These funds come mainly from the annual show and individual donations.
Ms. Evans became frustrated, because much of the collection remained in storage, among other reasons.
Mr. Littell, 37, who was by then organizing the annual show, in 2008 brought in producer Mr. Apcar. Mr. Apcar also joined the Hall's board. The show grew, but proceeds were paltry and tensions within the board mounted.
The show had other problems. Ms. Storm, in underwear and high heels, toppled over near the end of an Engelbert Humperdinck number last year, breaking her hip.
Ms. Herbert says Messrs. Littell and Apcar guaranteed the Hall $30,000 in proceeds from the show, but paid just $19,000. A lawyer for Messrs. Littell and Apcar says the promoters paid $22,479.50, and that the deal memo guaranteeing $30,000 was never signed.
Last fall, Mr. Littell negotiated a deal with the Plaza hotel in downtown Las Vegas, initially hoping the Hall would continue to let him promote the show. But Ms. Herbert organized the Hall's show this year at a different hotel, the Orleans. Having already made a deposit for the Plaza, Mr. Littell says he decided to proceed with his own, separate event.
Tensions peaked this spring. Ms. Evans aligned herself with Mr. Littell's show, which called itself Sassy Lassy. The promoters offered Ms. Storm a deal to appear exclusively at their event, which she accepted. The Hall of Fame event doesn't pay its dancers.
With pro bono help from a law firm, the Hall sued, claiming "Sassy Lassy" was the Hall's intellectual property.
The lawyer for Messrs. Littell and Apcar, argues that the Hall of Fame doesn't own the right to the "Sassy Lassy trademark. Nevertheless, Mr. Apcar last month renamed his event the Dixie Evans Burlesque Show. Other issues, such as whether Messrs. Littell and Apcar still owe the Hall money, remain in litigation.
Mr. Littell says his show has already sold out more than half its tickets. The Hall show has sold 80% of its 800 or so tickets. They say Ms. Evans is still welcome, and they don't begrudge Ms. Storm her decision to take the competitor's offer.