Sunday, December 30, 2012

New laws take effect on New Year's

originally appeared in USA Today:

In 2013 in Illinois, motorcyclists will be able to "proceed through a red light if the light fails to change." In Kentucky, releasing feral or wild hogs into the wild will be prohibited. And in Florida, swamp buggies will not legally be considered motor vehicles.

On Jan. 1, as crowds of people toast to a new year, more than 400 news laws across the country will take effect — and possibly improve life for some. A top Chicago car accident lawyer is available to evaluate your claim …

The laws that state governments deal with are really the laws that impact people on a daily basis, according to a spokesman for the National Conference of State Legislatures, which tracks the bills. Whether amending or updating laws or enacting brand new legislation, it was an active year.

In addition to the new laws of 2013, more than 29,000 laws were passed by state legislatures this year, he said. Many dealt with health care, education, gay rights, child safety and the Internet.

In several states, including Maryland, New Jersey and Delaware, lawmakers made it illegal for employers to either require or request social-media passwords from job applicants or employees. Some of those laws are already in effect. However, similar bills passed in Illinois and California become law Tuesday. Consult an expert New Orleans Bankruptcy Lawyer here.

My legislation protects workers' privacy, said the speaker pro tempore of the California State Assembly and lead author of her state's social-media bill. The legislation is necessary because there is a hole in existing law that prevents employers from intruding into an employee's legal off-duty conduct.

She added that California could potentially be the new model for how other states deal with social media and the workplace.

Meanwhile, Alaska became the 31st state to require health insurance companies to cover the diagnosis, testing and treatment of autism spectrum disorders for people up to the age of 21. The legislation's passage continues a trend among states that began in 2007, according to the NCSL's spokesman.

Other states could follow with similar bills, and a higher number of laws could take effect when the clock strikes midnight in 2014 because four state legislatures — Montana, Nevada, North Dakota and Texas — were out of session in 2012.

Some new laws in 2013:

Same-sex couples in Maryland will be able to marry.
California clergy members will not have to perform same-sex marriages if they object.
Partial birth abortion by physicians and non-physicians will not be performed in New Hampshire except to save the life of the mother.
Sex offenders in Illinois will not be able to dress up as Santa Claus or the Easter Bunny or give out candy during Halloween.
Employers in Oregon will not be allowed to advertise a job opening if they won't consider applicants who are unemployed.

Friday, December 28, 2012

Trade, Insurance Sanctions Against Iran in U.S. Defense Bill

originally appeared in Insurance Journal from Reuters:

A final version of new U.S. economic sanctions against Iran would give the Obama administration more time to implement measures aimed at its energy, shipping and port sectors, but otherwise was little changed from an initial draft released last month.

The sanctions are part of a massive defense policy bill expected to go to the full Senate and House of Representatives for a final vote this week before being sent to President Barack Obama for his signature.

The package also includes measures to stop the flow of gold from Turkey into Iran.
Locate a Minneapolis Insurance Defense Lawyer.

Senator Carl Levin, the Michigan Democrat who is chairman of the Senate Armed Services Committee, said lawmakers rejected the White House’s requests to broaden the exceptions to the sanctions. Find a Denver Insurance Defense Lawyer.

But the administration will have 180 days to implement the new measures, up from 90 days in the initial Senate plan, which was developed by Senators Robert Menendez, a Democrat from New Jersey, and Mark Kirk, a Republican from Illinois.
Turn to an Atlanta Insurance Defense Lawyer.

Here are the key elements of the final package:

Transactions for goods and services with Iran’s energy, oil, port, shipping and ship-building sectors could be sanctioned. You can trust a Charleston Insurance Defense Lawyer.

Exceptions: oil imports to countries that have obtained a formal “exception” for cutting oil purchases; natural gas purchases as long as importers hold payment for Iran in an account to be drawn on for permissible trade.

New exception for reconstruction aid or economic development for Afghanistan, if the administration deems it essential to U.S. national interests.

Waivers for up to 180 days only in cases shown to be vital to U.S. national security.
Food, agricultural commodities, medicine, medical devices, humanitarian aid are exempt.
Sanctions trade with Iran in precious metals, graphite, raw or semi-finished metals, like aluminum and steel, metallurgical coal and software for integrating industrial processes in Iran’s energy and shipping sectors. It pays dividends to work with a Jacksonville Insurance Defense Lawyer.

Sanctions insurance or reinsurance providers for trade with Iran in energy, shipping and ship-building sectors, as well as with designated persons and entities.

Sanctions foreign banks that handle transactions for Iranians who have been designated by the United States. Locate a qualified Indianapolis Insurance Defense Lawyer.

Blacklists the Islamic Republic of Iran Broadcasting (IRIB) and its president, blocking assets and preventing others from doing business with the IRIB.

Requires the administration to report every 180 days on whether Iran is using any of the sanctioned materials, such a precious metals, graphite or steel, in barters or swaps.

Requires the administration to report within 180 days on vessels that have entered Iranian ports controlled by the Tidewater Middle East Company, and on airports where sanctioned Iranian aircraft have landed.

Lessons From Recent Decisions on Bad Faith Litigation

originally appeared in Insurance Journal:

A rising tide of first-party bad faith decisions is defining the contours of the bad faith cause of action.

Recently, three courts have found first-party insurance companies liable for bad faith claims handling. However, there are also two recent bad faith decisions in favor of the insurance company. Key aspects of each of these important cases are discussed below.

Pro-Policyholder Bad Faith Decisions

• Delish v. Metropolitan Adjustment Bureau was a case of a fire loss. The original claims handler had hired an adjuster who handled the claim fairly. The new claims handler brought in a new adjuster, and together they made new demands for information during their 20-month investigation. Locate a Las Vegas Insurance Bad Faith Defense Lawyer.

The arbitration panel found that [t]he issue of business interruption losses, which were denied due to a technical failure of proof and accounting losses, would not have been an issue at all had [the insurance company] simply and promptly paid that which was not subject to reasonable dispute. Find a Honolulu Insurance Bad Faith Defense Lawyer.

• In Miller v. Safeco Ins. Co.  of America, the policyholders (homeowners) purchased a house and later found water damage that led to mold and the loss of use of the house.

The insurance company denied coverage because the homeowners allegedly had prior knowledge of the water damage.  Turn to a New York Insurance Bad Faith Defense Lawyer.

Safeco alleged prior knowledge on the grounds that the policyholders had previously reviewed inspections of the home that suggested existing water damage. 

However, when the policyholders began to renovate the home after purchasing the policy, they discovered new damage that was significantly worse than anything revealed by past inspections. Trust a San Diego Insurance Bad Faith Defense Lawyer.

First, the U.S.  Court of Appeals for the Seventh Circuit found that there was no prior knowledge and that Safeco lacked a reasonable basis for denial. 

Second, the court rejected Safeco’s argument that it could rely on exclusions in the policy, since the Millers had not even received the policy when the damage was discovered. It pays dividends to work with a Phoenix Insurance Bad Faith Defense Lawyer.

Safeco had argued that even if it acted in bad faith by denying coverage, there would have been no coverage in the first place if the policy exclusions applied, so there could be no bad faith. The Seventh Circuit rejected this argument.

• In Bello v. Merrimack Mutual Fire Ins. Co., a retaining wall on the policyholders’ home sustained significant storm damage.

The insurance company’s claims adjuster sent an individual to inspect and found that the damage to the wall was caused by its preexisting condition.

As a result, Merrimack denied the claim. When the homeowners protested to a supervisory employee at Merrimack, the supervisor repeated the denial. Despite the fact that Merrimack later reversed itself and paid the claim, the New Jersey Superior Court found that Merrimack had acted in bad faith.

Pro-Insurance Company Bad Faith Decisions

• In Millennium Inorganic Chemicals v. National Union Fire Ins. Co. of Pittsburgh, PA, the policyholder suffered business interruption after an explosion at its facility in Australia. Millennium argued that National Union made its coverage decision prematurely.

Rejecting the bad faith claim, the U.S. District Court for the District of Maryland, applying New Jersey law, found that the coverage question was fairly debatable and thus bad faith could not be shown.

Interestingly, the court held that if National Union were required to cede to its policyholder, it would never be entitled to test through litigation the merits of a reasonably debatable coverage position. That would require not good faith but rather rote acquiescence to any [non-frivolous] claim.

• In Palmisano v. State Farm Fire and Cas. Co., the policyholders discovered structural issues in their home and determined they were caused by a ruptured sewer main under the house. 

Plaintiffs alleged, among other things, that State Farm violated its fiduciary duty to them, engaged in an adversarial relationship with them, and failed to fairly and properly investigate the claim.

The U.S.  District Court for the Western District of Pennsylvania endorsed a prior court’s statement that bad faith claims must show the “who, what, when, why or how” of the insurance company’s bad faith.

The policyholder’s “bare bones” and “conclusory” allegations were insufficient to survive the insurance company’s motion to dismiss the bad faith claim.

Lessons Learned From Recent Bad Faith Decisions

Bad faith claims handling does occur, and courts and juries will punish the insurance company that commits it.  However, policyholders must carefully document the bad faith conduct and plead it in sufficient detail to meet the legal thresholds courts use to determine whether the cause of action survives a motion to dismiss.

The pro-policyholder cases above also show that the policyholder must be persistent in pursuing its original claim and fighting for its rights.

The policyholder should respond to the insurance company’s reasonable request for information and build a record of its cooperation in contrast to the insurance company’s delay. Most importantly, the policyholder needs to be aware of its rights and pursue them aggressively.

Following best practices in pursuit of any claim will not only expedite and maximize coverage when claims are honored, but also establish credibility for a bad faith claim when insurance company behavior justifies it. A short checklist:

• Provide immediate notice. Late notice can result in the forfeiture of coverage.  Immediate notice to any potentially involved insurance company is essential.

• Fulfill your duty to cooperate. Often, in the aftermath of a catastrophe, the insurance company is the last person that the policyholder has time for.

However, the policyholder has a duty to cooperate that the courts take seriously. Do not put the insurance company off until everything else is done. Responding to the insurance company must be a priority. Moreover, the insurance company cannot analyze your claim without the necessary information.  Delaying a response to the insurance company will delay the resolution of your claim.

• Be sensitive to delays. Most insurance companies handle most claims in good faith.  Some delay in the process may be unavoidable, and as noted earlier, the insurance company may need a lot of information from you. However, when the delay goes on for too long, or the requests for information become oppressive, think bad faith.

• Engage an insurance professional. Property insurance claims are highly technical, and require substantial analysis.

After the Storm, Suits Roll In

originally appeared in The Wall Street Journal:

When a surge from superstorm Sandy washed over 200 acres of low-lying parking lots at New Jersey's Port Newark, a fleet of vehicles belonging to International Motor Freight Inc. was damaged.

Now, the company is in a legal fight with its insurer over compensation for the damage. The case is among the first of what are likely to be thousands of Sandy-related insurance disputes that will wind up in court.

Find Birmingham Construction Defense Lawyer.

Natural disasters often leave in their wake a jumble of court cases debating insurers' obligations to pay for losses. And Sandy's path through a region that includes New York City and other centers of commerce means more of those claims—and lawsuits—will come from businesses.

Risk Management Solutions Inc., a disaster-modeling firm, predicts that nearly two-thirds, or $16 billion, of the up to $25 billion in estimated private-sector insurance payouts for Sandy damage will go to businesses. The costs are likely to push many insurers to fourth-quarter losses, but the industry has ample capital to pay claims.

Locate San Francisco Insurance Defense Lawyer.

Based on previous disasters, it would not be surprising to see thousands of lawsuits, according to a lawyer with Dickstein Shapiro LLP. Still, it could take months or years before the scope of Sandy-related insurance disputes is known. Litigation often waits until after claims are submitted, evaluated and adjusted, said a partner at Hunton & Williams.

In the International Motor Freight dispute, the company's insurer, National Interstate Corp., filed a complaint in mid-November arguing that the policy caps the total payout at $1 million.

The insurer maintains all damage to the trucking company's vehicles counts as single occurrence. The trucking firm, on the other hand, sees damage to its fleet as a number of occurrences that cumulatively would likely exceed $1 million, court papers say.

Sandy-related filings are expected to be heaviest in New York and New Jersey, but lawyers predict litigation far beyond those boundaries, thanks to disruptions in businesses' supply chains that had links in the hardest-hit states.

To be sure, the vast majority of claims won't result in litigation. After Katrina, fewer than 2% of homeowners' claims were disputed in mediation programs or in court, according to trade group Insurance Information Institute. So far, formal complaints about insurers in New York are running at less than 1% of the total claims filed with the insurers, data from the state's Department of Financial Services show.

Many lawsuits will argue over the size of the claims payment and whether exclusions exist to entirely negate a payment. Some business policies exclude flooding, in line with exclusions in standard homeowners' policies.

Other policies limit or exclude coverage for some types of storms, like hurricanes and tropical storms. Depending on the language in the policy, there may be unresolved legal questions about whether the limits and exclusions were triggered—since the National Hurricane Center downgraded Sandy to a posttropical cyclone before it made landfall, according to a partner at Mound Cotton Wollan & Greengrass, which represents National Interstate.

He declined to comment on the dispute with International Motor Freight. An attorney for the trucking company declined to comment.

Many companies hold "business interruption" and "contingent business interruption" coverage to reimburse for lost profits. But policy provisions are notoriously difficult to decipher, according to a partner with law firm Lathrop & Gage in Kansas City, Mo.

Insurers typically scrutinize a claimant's historic and anticipated sales figures and operational data to assess the loss. It is difficult to predict the outcome of such litigation because coverage almost always is determined by state law, and there are many state jurisdictions involved. It will be a nightmare to sort out which jurisdictions' laws apply, she said.

Other suits may emerge as companies realize they were underinsured against Sandy's wrath. Cardolite Corp., a company that uses liquid from cashew nut shells to make industrial coatings and adhesives, sued its insurance broker, Willis Group Holdings WSH +0.81% PLC, in early December alleging that Willis mistakenly failed to procure adequate flood coverage.

Sandy caused $2 million in flood damage to Cardolite's largest U.S. factory, located near the Passaic River in Newark, N.J., according to the suit. Willis submitted a claim on Cardolite's behalf that asserted the company had $28.3 million in flood coverage, but the insurer, American International Group Inc., AIG -1.09% denied the claim because of a flood exclusion in the policy, according to the suit in New Jersey Superior Court.

A Willis spokeswoman said the firm adheres to the highest standards in insurance placement. We will address the merits of the case in the proper forum. AIG didn't have immediate comment.

Cardolite's attorney from Anderson Kill & Olick, said he expected many more lawsuits against brokers in the months ahead. But suits in New Jersey are more likely to be successful than ones in New York, where the law is much more restrictive about a broker's obligations, he said.

Still, some attorneys say the Northeast presents an unusual dynamic, where aggressive regulators, eager politicians and concentrated media could place unwanted scrutiny on insurers that deny claims.

There is a good chance that insurance companies will want to resolve claims on an amicable basis, according to a lawyer with Willkie Farr & Gallagher, on a webcast hosted last month by insurance broker Marsh Inc., a unit of Marsh & McLennan Cos.

Some insurers may avoid litigation when small-business owners conclude it might cost more to sue than they would recover.

The owner of Floor Craze in Guilford, Conn., filed a claim with the government's flood-insurance program for damage to contents when water rushed in and out of his carpet and flooring store, in a six-hour span. He then turned to his private-sector insurer for reimbursement for lost profits over the next week, when power outages and a nearby road closure hurt business.

According to Floor Craze's owner, the insurer denied the claim, citing a flooding exclusion. The owner argued flooding wasn't the issue with his lost profits, because the water had quickly receded from his showroom. I would have had to hire a lawyer to pursue this, and it wouldn't have been worth the trouble, he said.

Thursday, December 27, 2012

Washington DC Could Get Another Look For Statehood

Story first appeared on Los Angeles Times.

Retiring Sen. (I-Conn.) has introduced the New Columbia Admissions Act to put the issue of Statehood for the District of Columbia on the front burner on Capitol Hill.
 Washington DC Intellectual Property Lawyer awaits more information on this.

It is long past time to give these American citizens who have chosen Washington as their home full participation in our democracy, he said in introducing the bill this week.

The District’s lack of a vote in Congress has long been a sore point in the city, which features Taxation without representation on its license plates. D.C. residents pay federal taxes and can vote for president but have no senator, and only a nonvoting delegate in the House.
A Washington DC Class Action Lawyer would love to see this bill go through.

In 1993, the House  rejected a bill to make the district a state. The idea faced resistance from a number of Republicans because the strongly Democratic district would probably elect two Democratic senators and a Democratic member of the House if it became a state.

A bill that would have added two seats to the House -- one for the District of Columbia and another for Republican-leaning Utah -- died in 2010 after a measure was attached to it that would have weakened D.C. gun laws.

Washington DC Contracts Lawyer agree that the move would be favorable.
A statehood bill introduced last year by a Democrat, the district’s House delegate, has languished in committee in the Republican-controlled chamber.

But lately, the District has been gaining a bit more respect from members of Congress. A defense bill includes a Norton-sought provision that would direct the Pentagon to display the D.C. and territorial flags whenever the flags of the 50 states are displayed. The provision grew out of a complaint from a D.C. couple upset that state flags were flown for each of the graduates at a Naval Station Great Lakes graduation ceremony, but not the home flag of their son.

 Washington DC Complex Litigation Lawyer would like to see this happen quickly.

Although he is leaving the Senate, the first D.C. statehood bill to be introduced in the chamber since 1993 is co-sponsored by Democratic Sens. of California, Illinois and Washington state.

After having had the great privilege of serving here for 24 years, I will soon leave Congress, he said. There is unfinished business, not just for him, but for the United States of America for the 600,000 Americans who live in the District of Columbia who still don't have full voting rights.

Toyota’s $1.1 Billion Payout: What It Means For Owners And More

originally appeared in The Wall Street Journal:

Toyota has reached a proposed settlement in a class-action lawsuit over cases of so-called unintended acceleration that were reported in 2009-10. The cases, and subsequent recall of more than 8 million cars, were a serious black eye for Toyota, from which the company is only now recovering.

Toyota is set to pay out up to $1.1 billion if the settlement is approved. If you own, or owned, a Toyota in the last few years, it’s worth checking for the details. Once the settlement comes into effect, owners will be able to enter their vehicle identification number at that site, and find out about any compensation potentially available to them.

Toyota owners, past and present:

- If you sold your Toyota, or returned a leased one prior to the lease expiry, a $250 million fund will be established to compensate you for the reduction in the value of your car. If the fund doesn’t have enough money to cover the full loss in value for every owner, it will pay out a pro-rated amount.

- If you are still driving one of the vehicles listed in the settlement, Toyota will pay for a brake override system to be installed in your car, or make a cash payment in lieu of the installation. The system, the settlement says, “will automatically reduce engine power when the brake pedal and the accelerator pedal are applied simultaneously under certain driving conditions.” If your vehicle is not eligible to have the system installed, Toyota will make a cash payment of up to $125.

- Warranties on effected vehicles will be extended for at least three years, and up to ten years or 150,000 miles. The extended warranties will only guarantee specific systems mentioned in the lawsuit: the engine control module, cruise control switch, accelerator pedal assembly, stop lamp switch and throttle body assembly.

Toyota dealers:

It’s a good time to be a Toyota dealer. Not only are sales up almost 30% this year, and the company is again vying for the title of world’s number one auto maker: dealers can now expect a rush of customers coming in to have their cars worked on, with someone else picking up the tab. And while the customers are there to get their free brake override system installed, it would only be prudent to check for anything else that might need fixing, right? Perhaps the air conditioning system needs to be re-gassed? Fuel injectors need cleaning?


The timing of the settlement suggests Toyota is confident it has recovered from the reputational damage of the original controversy and would rather put an end to these legal headaches rather than fight a drawn out battle through appeal after appeal. This is Toyota’s style – it likes to settle these things, rather than fight them to the bitter end. Worth noting here: even though this settlement covers an estimated 16 million cars, not all owners will step forward and claim the compensation offered — according to Consumer Reports, the average response rate to an auto recall is less than 75%.

The lawyers:

In a rare and unexpected development, the real winners here are the lawyers. Who’d have thought? $200 million will be put aside to compensate the lawyers for their hard work, and another $27 million for their expenses — a total nearly as high as the amount allocated to compensate owners for the loss in value of their vehicles. Split between 25 law firms and about 85 attorneys, this case has been a nice little earner for those in on the action. As the WSJ reports, about 18% of the total settlement will go to the lawyers, and that is the largest percentage ever for a class-action payout of more than $1 billion.

$1 billion deal major step in Toyota legal trouble

originally appeared in The Associated Press:

With a proposed payout of more than $1 billion, one major chapter of a nearly four-year legal saga that left Toyota Motor Corp. fighting hundreds of lawsuits and struggling with a tarnished image has ended, though another remains.

The settlement - unprecedented in its size according to a plaintiff's attorney - brings an end to claims from owners who said the value of their vehicles plunged after recalls over sudden and unintended acceleration.

Lawsuits claiming that the defects caused injury or death remain, with the first trial beginning in February unless another major deal comes first.

A lawyer representing Toyota owners, said the settlement is the largest in U.S. history involving automobile defects.

We kept fighting and fighting and we secured what we think was a good settlement given the risks of this litigation, he told The Associated Press.

The courtroom claims began with a highway tragedy. A California Highway Patrol officer and three of his family members were killed in suburban San Diego in 2009 after their car, a Toyota-built Lexus, reached speeds of more than 120 mph, hit an SUV, launched off an embankment, rolled several times and burst into flames.

Investigators determined that a wrong-size floor mat trapped the accelerator and caused the crash.

That discovery, and the accident's grisliness, spurred a series of recalls involving more than 14 million vehicles and a flood of lawsuits soon followed, with numerous complaints of accelerations in several models, and brake defects with the Prius hybrid.

The Japanese automaker has blamed driver error, faulty floor mats and stuck accelerator pedals for the problems.

The runaway Lexus case was settled separately for $10 million in 2010, before the cases were consolidated by a U.S. District Judge.

The judge divided them into two categories: economic loss and wrongful death. He needs to approve Wednesday's settlement, which only applies to the first group of lawsuits. The deal was filed Wednesday and he is expected to review it on Friday.

Toyota said it will take a one-time, $1.1 billion pre-tax charge against earnings to cover the estimated costs of the settlement. The lawyer said the total value of the deal is between $1.2 billion and $1.4 billion.

As part of the economic loss settlement, Toyota will offer cash payments from a pool of about $250 million to eligible customers who sold vehicles or turned in leased vehicles between September 2009 and December 2010.

The company also will launch a $250 million program for 16 million current owners to provide supplemental warranty coverage for certain vehicle components, and it will retrofit about 3.2 million vehicles with a brake override system. An override system is designed to ensure a car will stop when the brakes are applied, even if the accelerator pedal is depressed.

The settlement would also establish additional driver education programs and fund new research into advanced safety technologies.

In keeping with our core principles, we have structured this agreement in ways that work to put our customers first and demonstrate that they can count on Toyota to stand behind our vehicles, according to Toyota's vice president and general counsel.

Current and former Toyota owners are expected to receive more information about the settlement in the coming months.

Plaintiffs' attorneys have spent the past two years deposing Toyota employees, poring over thousands of documents and reviewing software code, but the company maintains those lawyers have been unable to prove that a design defect - namely Toyota's electronic throttle control system - was responsible for vehicles surging unexpectedly.

Both the National Highway Traffic Safety Administration and NASA were unable to find any defects in Toyota's source code that could cause problems.

The company has been dogged by fines for not reporting problems in a timely manner.

Earlier this month, NHTSA doled out a record $17.4 million fine to Toyota for failing to quickly report floor mat problems with some of its Lexus models. Toyota paid a total of $48.8 million in fines for three violations in 2010.

Toyota's President appeared before Congress last year and pledged to strengthen quality control. Recent sales figures show the company appears to have rebounded following its safety issues.

Thursday, December 20, 2012

Child Web Privacy Law Gets Updated

originally appeared in The Wall Street Journal:

In a move to update rules governing children's privacy online to cover new areas like smartphones, U.S. regulators broadened decade-old policies, but amid pressure from the technology industry backed away from proposals that could have made companies like Facebook Inc. and Apple Inc. more responsible for violations.

The Federal Trade Commission said it would change how it implements the Children's Online Privacy Protection Act of 1998, or Coppa, to reflect the growth of social networks and smartphone apps among children.

The commission also expanded the types of information it considers personal under the law. Kids' apps and websites will now have to obtain parental consent before gathering photos, videos or geographic location, and before tracking kids' online behavior and passing along the data to other companies.

But in a departure from rule changes the government proposed in August, the FTC explicitly exempted app stores like those run by Apple and Google Inc. from responsibility for privacy violations by the games and other software that are sold there.

The updated rules, which go into effect July 1, also make clear that software such as Facebook's "Like" button and ads placed by advertising networks will only have to meet child online privacy regulations if companies have "actual knowledge" that they're collecting information through a website or app that targets kids.

The commission's move ended one chapter in the long-running Washington debate over how closely the government should regulate online privacy, but set the stage for new battles.

Consumer advocates said they would continue their push to make Apple and Google more responsible for the data-gathering practices of the apps they distribute, while several members of Congress are pushing legislation to further tighten limits on online tracking of children and teenagers.

Just last week, the FTC put a spotlight on gaps in kids' online privacy with a report that found hundreds of popular kids' apps were collecting data without parental consent.

Coppa governs how companies must proceed when collecting personal data from children under the age of 13. Enforcement falls to the FTC, which has been reviewing how it should approach the law in the age of smartphones and social media for two years. Kids' entertainment and Internet companies have lobbied heavily to blunt the impact of the update.

Apple, for example, met with FTC officials five times this fall, in particular contesting the possibility that the updated rules might hold it responsible for the data-collection practices of the third-party apps it distributes on the iPhone and iPad. Google made a similar point in a filing with the commission.

Google said it was evaluating the changes and would continue to work on effective ways to protect children's privacy and security. Facebook said it was pleased with the FTC's decision on so-called plug-ins, such as the "Like" button.

In several cases, the industry got what it wanted. Reversing a prior proposal, the commission agreed to continue to allow parental consent to be obtained by email as long as apps and websites only collect data for internal use.

The FTC's Chairman said the final rules strike the right balance between protecting innovation that will provide rich and engaging content for children, and ensuring that parents are informed and involved in their children's online activities.

While Apple, Google and Facebook scored partial victories, some smaller developers were disappointed. The president of the Application Developers Alliance, said that the new regulations could prove so burdensome that talented and responsible developers will abandon the children's app marketplace.

One FTC commissioner voted against the updated rules. She argued the commission went too far with the update by holding websites responsible when third parties like advertising networks gather personal data from children.

But some government officials made clear Wednesday they would like to place additional regulations on technology companies. Sen. John D. Rockefeller IV (D., W.Va.), a leading advocate on privacy issues, said he viewed the Coppa regulations as a step toward legislation that gives Americans more control of how they are tracked online.

The executive director of the Center for Digital Democracy and a consumer advocate who has been involved in the Coppa debate for years, said the FTC's decision was a step in the right direction but left loopholes for companies to mine kids' data inappropriately.

He said he would continue to push for more scrutiny of the role of the Internet giants that distribute kids' apps.

The FTC's chairman has made monitoring online privacy one of his priorities at the commission. At Wednesday's news conference announcing the revised rules, he repeatedly held up what he said was his 15-year-old daughter's white iPhone to illustrate how much technology has changed in the past decade.

It was enormously difficult for me to pry this away from my child today, he said.

Wednesday, December 19, 2012

Fall of oil exec Roger Parker marked by risky bets gone bad

originally appeared in The Denver Post:

Roger Parker appeared to have it all in 2007. He lived in a historic, $9 million mansion in Cherry Hills Village amid Denver's business and sporting elite. He golfed with John Elway. He traveled by private jet to gamble in Las Vegas and golf in Palm Springs.
Also that year, Parker completed the deal of his career. The chief executive of Denver-based Delta Petroleum sold a $684 million, one-third stake in the growing company to Tracinda Corp., owned by billionaire investor Kirk Kerkorian.

The transaction would be Parker's undoing, marking the start of a remarkable downfall. It played out, friends say, as a close business associate discovered that Parker, then married, was having an affair with his wife.
Parker and Delta struggled with risky bets gone bad. Tracinda forced Parker out after about a year and eventually took Delta into bankruptcy. It pursued Parker for more than $7 million from an unpaid loan but recently found just $46 in his retirement account and $10,000 in his brokerage account. He was living a life that included perks such as use of a private charter jet among other luxury advantages.

On Nov. 27, the U.S. Securities and Exchange Commission accused Parker of tipping off his close friend and another, as-yet-unidentified friend ahead of the Tracinda deal, allowing them to reap hundreds of thousands of dollars in ill-gotten gains.
Two Cherry Hills homes — one Parker bought in 2004 for $9 million and the one it replaced, recently signed over to his ex-wife — are for sale.
An attorney for Parker did not respond to requests for comment for this story. He has not yet responded to the SEC's claims.

Interviews with friends, associates and businessmen, as well as scores of public documents, paint a picture of Parker, 51, as ambitious and aggressive, someone who set out early on a path toward multimillion-dollar success and social prominence.
He achieved both — with the help of a network of well-placed friends — but he took big risks along the way, spent lavishly and seldom settled for second-best.
Roger was a guy who thinks it all works out in spades, according to Delta's former chief operating officer.  At one point, he speculated aloud he would be worth $200 million someday.

Fast success
Parker was a standout student at the University of Colorado business-school program in mineral land management. It trained students to be the property-acquisition brains behind the geologic science that identified potentially drillable resources.
But the 1980s, with the petroleum industry tanking, wasn't the best time to aspire to be an oilman.
There were no jobs, recruiting was down 80 percent, and the only ones likely to find a job after the collapse were those with experience, or new grads, according to an associate who graduated with Parker in 1983. But Roger got involved from the start. While we were all in school, he was getting a feel for the business, getting connections and experience. Parker found fast success from hard work.

Only a couple years out of school, he had the big house, all the trappings of success, according to one source.
That happened at Ampet Inc., a small oil-and-gas company formed by Parker mentor and a family friend, a Breckenridge attorney, and his lawyer father, Parker's parents were investors in the business.
The younger Parker and the junior partner would remain business associates for years, beginning with Parker's seat as executive vice president of Ampet while still a student at CU, records show.
While Parker worked at Ampet, his business partner and an associate formed Delta Petroleum in 1984. Parker was first listed on Delta documents as secretary in 1987.

Golf friendships

Two months later, Parker's father, was nominated to the U.S. District Court bench in New Mexico by President Ronald Reagan.
The elder Parker eventually served as federal chief judge in New Mexico until 2003. Along the way, he invested in oil and gas — including Delta — and as of 2010 was drawing royalties on several Colorado wells, some in the range of $500,000 to $1 million, according to financial-disclosure records required of all federal judges.
Roger Parker's relationships reach deep into Denver's business community and stretch across years.

Boisterous in laughter and quick with a joke, Parker was often found hanging with pals at Elway's, in part because of a friendship with the former Broncos quarterback. Both exceptional golfers, Elway and Parker sometimes partnered in charity events, friends said.
Efforts to reach Elway through the Denver Broncos were unsuccessful.
One of Parker's closest friends is a CU graduate in mineral land management with Parker.
The two are avid golfers — with memberships at Cherry Hills and Castle Pines, among others — and big boosters of CU's athletic program, forming the elite Buff Club Cabinet with others including Van Gilder.
The CU graduate has found a level of success that eluded his friend. He recently sold his Cordillera Energy Partners III for $2.8 billion to the company where he started, Apache Corp. Efforts to reach the college friend for comment were unsuccessful.

Drive for status
Parker, twice divorced, enjoyed living large, primarily through houses, golf-club memberships and jets, friends say.
His drive for status was evident in a years-long pursuit of a home at the very pinnacle of Denver society.
Parker sold his first Cherry Hills house and moved into a two-story Tudor he built in 2001 next to the Cherry Hills Country Club. He borrowed $1.6 million to build it and borrowed another $9 million on it over the years. But friends said he was disappointed with the outcome.
In 2004, Parker bought a $9 million mansion from old-money oilman's family along the exclusive Cherry Hills Park Drive. Next door lived the Broncos head coach, and across the street was their legendary money manager.
But Parker was unable to sell the Tudor home, and it remains on the market. The mansion he bought from the oil family — one of the oldest in that area — also is for sale.
Parker acquired a quarter interest in use of a Citation 10 jet, and he sold half of that to Delta.

On a golf trip to Palm Springs, Parker and friends stopped in Las Vegas — the Bellagio and Venetian were among his favorite haunts — to play the tables. Parker believed he could break the house in blackjack, one associate said.
Parker isn't flashy, most comfortable wearing shorts and tennis shoes, driving an SUV, listening to Aerosmith and drinking rum and Coke, friends said.

Parker often does business with friends. One of those is Denver power broker and Parker's personal and business attorney. Earlier this year, Parker pledged 100,000 shares in Prospect Global Energy as collateral to his attorney's law firm for personal legal help, state corporation filings show. At the time, the shares were worth $1 million. Today, they're valued at $167,000.

His attorney who is not representing Parker in the SEC's insider-trading case, would not comment for this story.
One of the attoney's sons, is vice chairman and co-founder of the Denver company, which mines potash.
A Prospect investor who founded Hexagon Investments in 1992, also is a friend of Parker's. He would eventually loan $24.7 million into Parker's latest venture, Recovery Energy, according to financial filings. Efforts to reach the investor for comment were unsuccessful.

Lucrative introduction
Parker was introduced to Kerkorian by a former chauffeur who entered the oil-and-gas business after marrying the former Denver Post owner. The chauffeur, now a Las Vegas resident, had done business with Delta as far back as 2003.
For the introduction — and the resulting sale of a 35 percent ownership share of the Denver company — Davis landed about $5 million worth of Delta shares. Kerkorian would allege later in a settled lawsuit that Parker had secretly arranged contracts and business arrangements for Davis as part of the deal.
Tracinda bought in at $19 a share — Parker had pushed off an initial $17 bid and pressed for more — on New Year's Eve 2007. The $684 million purchase pushed the company stock up 19 percent in one day. It would eventually hit $24.78 from $15.51, when the Tracinda deal was announced.

The SEC alleges in its civil suit that in the months and days before the Tracinda investment was firm and made public, he sent dozens of text messages about it to his business associate. Insiders said Parker didn't even tell some of his closest board members and company executives about the impending deal.
In a related case, his business associate was indicted on criminal insider-trading charges that he allegedly made about $86,000 on the information. He has pleaded not guilty. The SEC alleges that another unnamed individual who is friends with him and Parker racked up a $730,000 payday on Delta stock.
The government has not accused Parker of profiting from the information.
Delta and Parker had encountered the SEC before. In 2006 and 2007 — prior to the Tracinda deal — the government investigated alleged backdating of stock options that were awarded to Parker and other executives. The SEC later dropped its inquiry, and a pair of shareholder suits alleging the practice were settled.

Margin call

Following the merger, it didn't take long before Parker's business plan — a no-hedge, keep-drilling approach — would weigh on Delta's books and, eventually, its stock price.
Several company insiders say Parker's steadfast refusal to hedge some of the company's natural-gas and oil assets against a potential price drop was its most critical undoing. Typically, energy companies hedge by agreeing to sell a portion of their future production at a set price or range.

Delta's former COO and chief geologist, said Delta could have hedged through 2015 but didn't. We'd still be around today if it had.
When shares in Delta dropped below $4 in November 2008, it triggered a margin call on Parker's brokerage account because he had pledged shares as collateral for loans.
Tracinda loaned Parker $7.5 million to cover the shortfall. It said in legal filings it wanted Parker to pay attention to Delta instead of his failing personal finances.
By January 2009, the situation was, in one insider's viewpoint, desperate. He was the eternal optimist of gas prices coming right back, the insider said.  They didn't.

By May 2009, Kerkorian had had enough. Three board members asked Parker to resign as chairman and CEO. Parker couldn't get along with new co-chairman Daniel Taylor, a Kerkorian board appointee.
Parker left with a severance payday of about $7 million.

New venture
Parker wasn't unemployed for long.
With the help of friends, he staged a comeback through a new venture, Recovery Energy.
While Reiman was the money lender, the oil-and-gas properties that made up Recovery's inventory came from Davis. Van Gilder provided the office space.
Parker paid for much of it with shares in the new company, a tactic he had used before.
Filings show the company's production and revenues followed a downward trend. Revenues in 2010 were $9.76 million but only $8.36 million in 2011. Oil and gas production in the second quarter of 2012 was down 24 percent from 2011.
Interest expenses in 2011 almost equaled the value of the oil and gas the company produced.

Parker engaged in an unusual practice with his Recovery shares that may have been intended to land a bigger payday or ward off a creditor such as Tracinda.
Normally, executives try to obtain the shares they are granted as quickly as possible, a process known as vesting.  Parker, however, amended his employment agreement 14 times over more than two years to push back the date when his Recovery shares would vest and come into his possession.

Tracinda in late August won a judgment for the $7.5 million loan — now $7.7 million — against Parker, who argued he'd been shorted about $5 million in an effort to sell the last of his Delta stock in 2009.

Tracinda has been following Parker with garnishment orders to collect — first on his pension account and then his securities account. Total garnered: $10,745.
It followed with a garnishment order at Recovery for Parker's salary, roughly $21,000 a month, and is making a grab at about 1.3 million of Parker's Recovery shares.
Parker resigned from Recovery on Nov. 14, just ahead of another garnishment effort by Tracinda. SEC notices show his business partner began selling Recovery stock heavily just after.
Two weeks later, the SEC named Parker a co-defendant in its insider-trading lawsuit against another associate.
Friends said he left town on a trip when the case was about to be made public.

Friday, December 14, 2012

Guatemalan judge orders McAfee released

originally appeared in USA Today from The Associated Press:

John McAfee's lawyer said Tuesday a judge has ordered the software company founder released from a Guatemalan detention center where he has been fighting being returned to Belize.

His lawyer said the judge notified him verbally of the ruling, but added that it may take a day for formal written notification to win McAfee's release, possibly as soon as Wednesday.

The Judge involved did not immediately return phone calls seeking to confirm the ruling.

It was ruled that McAfee's detention was illegal, he was ordered him released, and given 10 days to put his immigration situation in order. It was not immediately clear if McAfee could get some kind of temporary or transit visa to allow him to leave Guatemala.

He has said that he wants to return to the United States with his 20-year-old Belizean girlfriend. The judge agreed that that would be his best option.

She said it's best that McAfee go to the United States, that's definitely the country where he will be safest. In Guatemala, he runs the risk that anything could happen to him.

McAfee was detained last week for immigration violations after he sneaked into Guatemala from neighboring Belize. He had been on the lam for weeks before that, avoiding Belizean police who want to question him in the fatal shooting in November of a U.S. expatriate who lived near his home on a Belizean island.

McAfee acknowledges that his dogs were bothersome and that Faull had complained about them, but denies killing the U.S. expatriate. The home was a couple of houses down from McAfee's compound in Ambergris Caye, off Belize's Caribbean coast.

McAfee has said corrupt Belizean authorities are persecuting him, something officials in Belize deny.

In a live-stream Internet broadcast Sunday from the Guatemalan detention center where he is fighting a previous government order that he be returned to Belize, the 67-year-old said he wants to return to the United States and settle down to whatever normal life he can.

McAfee indicated he simply would like to live comfortably day by day, fish, swim, enjoy my declining years.

McAfee is an acknowledged practical joker who has dabbled in yoga, ultra-light aircraft and the production of herbal medications. He has led an eccentric life since he sold his stake in the software company named after him in the early 1990s and moved to Belize about three years ago to lower his taxes.

He told The New York Times in 2009 that he had lost all but $4 million of his $100 million fortune in the U.S. financial crisis. However, a story on the Gizmodo website quoted him as describing that claim as not very accurate at all.

The expatriate's family has said through a representative that McAfee's skillful courting of the media, including blog posts, email messages clandestine interviews, has obscured the main point, that McAfee should submit to police questioning.

Wells Fargo involved in race discrimination

originally appeared in the San Francisco Examiner from Reuters:

Wells Fargo has agreed to pay $175 million to resolve allegations that the financial institution discriminated against qualified black and Hispanic borrowers in its mortgage lending according to the U.S. Justice Department.

In the second-largest settlement of its kind, the biggest U.S. mortgage lender will pay $125 million to borrowers who were allegedly steered into higher-priced subprime loans or who paid higher fees and rates than white borrowers.

Wells Fargo also will contribute $50 million to homebuyer assistance programs in eight metropolitan areas around the country. The government identified those areas as needing the most help in recovering from the housing crisis.

The settlement, which needs approval from a judge, would end the investigation into whether the fourth-largest U.S. bank knowingly targeted minorities between 2004 and 2009 for risky mortgages that came with higher costs, according to documents filed in the U.S. District Court for the District of Columbia.

The U.S. assistant attorney general for civil rights, said at a news conference in Washington, D.C. that this a case about real people, African-American and Latino, who suffered real harm as a result of Wells Fargo’s discriminatory lending practices, people with similar qualifications should be treated similarly. They should be judged by the content of their credit worthiness and not the color of their skin.

The government investigation found that loans submitted to Wells Fargo by mortgage brokers had varied interest rates, fees and costs based only on race and not correlated to the borrowers’ creditworthiness, according to the court document.

The Obama administration has mounted a campaign to closely monitor banks in order to ensure loan discrimination practices that were a part of the housing bust and led to record defaults are eliminated. Bank of America’s Countrywide Financial unit agreed in December to pay a record $335 million to settle similar charges.

Wells Fargo said it was settling the matter solely for the purpose of avoiding contested litigation with the U.S. Justice Department. In the consent order with the government, Wells asserted it treated all its customers fairly and without regard to race and national origin.

Wells Fargo Home Mortgage president said in a statement that he believes it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery.

Homebuilding looking up

originally appeared in Zacks Equity Research:

KB Home, one of the leading homebuilding companies in the U.S., recently acquired lands for 100 luxury homes in the sought after community of Playa Vista in Westside, Los Angeles. The construction of homes will start in spring.

The company intends to build three story detached homes of 2,800 square feet. The homes will have four bedrooms and three and half baths. The company also intends to build single floor condominium homes of 2,000 square feet with private elevator access for each home.

For simple or more complex bathroom remolding projects, consider an outstanding grand rapids bathroom remodel company that does quick, professional work.

Owing to its operational business model KBnxt, KB Home always begins construction only after a purchase agreement is executed. As such, the consumers buying KB homes in Playa Vista will get the liberty to plan their homes according to their preference.

This process also helps the company turn over its inventory more quickly than its peers, thereby supplying capital for reinvestment. In the long run, this reduces the risk of unsold inventory leading to higher returns on invested capital.

Playa Vista is one of the most sought after luxurious communities in Westside, Los Angeles. The acquisition of land in Los Angeles’ Westside is in line with KB Home’s strategic shift in its geographic footprint. The focus is to place the communities in highly desirable land-constrained submarkets that enable it to sell larger, higher-priced homes, thus driving a strong increase in average selling price.

The rising demand for new homes has led to a favorable situation in the housing market, where inventory levels are dropping and prices are moving up. The demand has been particularly strong for luxury homes. Toll Brothers, Inc., another leading luxury homebuilder in the US, has been witnessing strong overall growth over the past few quarters.

Therefore, building adequate number of new homes is necessary in order to maintain the required level of inventory to meet the growing demand for homes. Acquiring lots and lands in the Playa Vista community will help the company to capitalize on the increasing housing demand.

With housing market recovery gaining momentum, KB Home believes its strategic initiatives including overhead reduction, margin expansion, and land investments in higher-priced, better-located communities; and increasing backlog will help it achieve profitability in the upcoming quarters. Though we have faith in KB Home’s strategic initiatives, we believe that it may take time to achieve sustainable profitability as the housing market recovery process is erratic and uneven.

We currently have a Neutral recommendation on KB Home. The stock carries a Zacks #3 Rank (a short-term Hold rating).

Zimmerman sues NBC and reporters

George Zimmerman sued NBC on Thursday, claiming he was defamed when the network edited his 911 call to police after the shooting of Trayvon Martin to make it sound like he was racist.

The former neighborhood watch volunteer filed the lawsuit seeking an undisclosed amount of money in Seminole County, outside Orlando. Also named in the complaint were three reporters covering the story for NBC or an NBC-owned television station.

The complaint said the airing of the edited call has inflicted emotional distress on Zimmerman, making him fear for his life and causing him to suffer nausea, insomnia and anxiety.

The lawsuit claims NBC edited his phone call to a dispatcher last February. In the call, Zimmerman describes following Martin in the gated community where he lived, just moments before he fatally shot the 17-year-old teen during a confrontation.

The lawsuit claims NBC saw the death of Trayvon Martin not as a tragedy but as an opportunity to increase ratings, and so set about to create a myth that George Zimmerman was a racist and predatory villain.

An NBC spokeswoman said the network strongly disagreed with the accusations made in the complaint.

There was no intent to portray Mr. Zimmerman unfairly," the network said. NBC intends to vigorously defend their position in court.

Three employees of the network or its Miami affiliate lost their jobs because of the changes.

Zimmerman is charged with second-degree murder but has pleaded not guilty, claiming self-defense under Florida's "stand your ground law."

The call viewers heard was trimmed to suggest that Zimmerman volunteered to police, with no prompting, that Martin was black, according to what NBC broadcast, he said [Martin] looks like he's up to no good. He looks black.

But the portion of the tape that was deleted had the 911 dispatcher asking Zimmerman if the person who had raised his suspicion was black, white or Hispanic, to which Zimmerman responded that he looks black.

Rodman must pay $500K in child support

Former NBA star Dennis Rodman has been found in contempt of court and ordered to pay $500,000 in back child support to his ex-wife, her attorney said Thursday.

The flamboyant basketball player known for his off-court antics was sentenced to informal probation, his ex-wife's attorney, told City News Service. The Orange County Superior Court Commissioner warned Rodman could face jail time if he doesn't pay the child support.

Legal actions involving child neglect, divorce and custody can be expertly handled by the right professionals.

Rodman's attorney didn't return an email from The Associated Press and a phone number did not take messages.

Another attorney for Rodman's ex-wife argued in court that Rodman owed his ex-wife about $850,000, but the former NBA standout's attorney, challenged that figure.

The two sides met outside court and agreed to $500,000, which the court approved.

Dennis Rodman and his ex-wife must still work out custody and visitation for their two pre-teen children: a son and a daughter.

A trial is set for Jan. 24 on those issues, but the two hope to work out an agreement before the court date, according to one of the attorney's involved.

This isn't the first time Dennis Rodman has been found in contempt.

Rodman, recognizable by his facial piercings and his hair that's died in brilliant colors, was ordered to perform 104 hours of community service in May after being found guilty of four counts of contempt for failure to pay child support for 2009 and 2010. He is completing that work in Florida, where he lives.

The legal battle between Rodman and his former spouse began in 2004, when his then wife filed for divorce.

Dennis Rodman was a bad-boy star of the Detroit Pistons and won three NBA championships with the Chicago Bulls. He was inducted into the NBA Hall of Fame last year.

The eccentric athlete who once dated Madonna and was briefly married to Carmen Electra lived in California's Orange County before moving to Florida.

He frequently attracted the attention of police with loud parties at his Newport Beach residence.

Celebrations planned as Wash. legalizes marijuana

originally appeared in USA Today from the Associated Press:

People openly lit joints under the Space Needle and on Seattle's sidewalks — then blew the smoke at TV news cameras. To those looking to "get baked," the city's police department suggested pizza and a "Lord of the Rings" movie marathon.

What, exactly, is going on in Washington state?

Marijuana possession became legal under state law Thursday, the day a measure approved by voters to regulate marijuana like alcohol took effect. It prompted midnight celebrations from pot activists who say the war on drugs has failed.

But as the dawn of legalization arrives, Washington and Colorado, where a similar law passed last month, now face some genuinely complicated dilemmas: How on Earth do you go about creating a functioning legal-weed market? How do you ensure adults the freedom to use pot responsibly, or not so responsibly, while keeping it away from teenagers?

And perhaps most pressingly, will the Justice Department just stand by while the states issue licenses to the growers, processors and sellers of a substance that, under federal law, remains very much illegal?

A spokesman for the Washington Liquor Control Board, which is charged with regulating the drug indicated that they're building this from the ground all the way up, the initiative didn't just wave a magic wand and make everybody here an expert on marijuana.

The measures approved on Nov. 6 have two main facets. First, they OK the possession of up to an ounce of marijuana by adults over 21. That took effect Thursday in Washington, though it remains illegal — for now — to buy and sell pot, so people have to keep getting it from the marijuana fairy.

In Colorado, where pot fans will also be able to grow their own plants, the law takes effect by Jan. 5.

The other part of the measures, the regulatory schemes, are trickier. Washington's Liquor Control Board, which has been regulating alcohol for 78 years, has a year to adopt rules for the fledgling pot industry: How many growers, processors and stores should there be in each county? Should there be limits on potency? How should the pot be inspected, packaged and labeled?

To help answer those questions, officials will turn to experts in the field — including police, public policy experts and some of the state's many purveyors of medical marijuana. Smith anticipates undercover monitoring operations to make sure the private, state-licensed stores aren't selling to minors.

With legalization, officials need to look at some of the measures that have been shown to reduce teen drinking, according to the president of the Washington Association for Substance Abuse and Violence Prevention. That includes public education about the risks of pot use and driving while stoned, emphasize patrols to look for stoned drivers, and encouraging cities to adopt laws that hold parents accountable if they host parties at which kids are provided marijuana.

The marijuana will be taxed heavily, with revenues possibly reaching hundreds of millions of dollars a year for schools, health care, basic government services and substance abuse prevention.

Unless, of course, the Justice Department has something to say about it.

Few people question the states' ability to simply remove all penalties under their own laws for marijuana. The federal government would remain free to raid state-licensed growers or stores and prosecute those involved in federal court, just as they remain free to shut down medical marijuana dispensaries in states with medical marijuana laws.

Whether a state can regulate an illegal substance is another question. Many constitutional law scholars say the answer is no: Washington and Colorado's regulatory schemes obviously conflict with marijuana's prohibition in the federal Controlled Substances Act, and when state and federal laws conflict, the feds win out, they say.

So the Justice Department could likely sue to block the regulatory schemes. But will it? What's better, from the administration's perspective — an ounce of weed legalized with regulation or an ounce of weed legalized with no oversight?

The department has given no hints about its plans.

While pot fans wait for an answer, they are partying. Though Washington's law prohibits smoking in public, about 200 gathered under the Space Needle for a New Year's Eve-style countdown to 12 a.m. Thursday. A few dozen gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters.

One of the volunteers at Hempfest said I feel like a kid in a candy store! It's all becoming real now!

The Seattle Police Department emailed its 1,300 officers, telling them not to write any citations for smoking pot in public until further notice. A voter initiative passed in 2003 made marijuana enforcement the department's lowest priority, and for years officers have looked the other way while thousands light up at Hempfest.

Officers will nevertheless advise people not to smoke in public, a police spokesman wrote on the SPD Blotter.  The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to.

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: The Dude abides, and says 'take it inside!'

Thursday, December 13, 2012

Tax Law considerations

originally appeared on

Every time President Obama explains why he wants to increase taxes on the richest 2 percent, Republicans have a ready answer: Most small business owners file their taxes as individuals, and a rate hike would discourage them from hiring new workers.

So when Obama visited the K'NEX factory in Pennsylvania recently to push for his tax plan, House Republicans countered with a campaign-style video, also featuring a Pennsylvania business.

For small business tax help contact this Philadelphia tax lawyer.

In it, Gorski Engineering's owner explains how his company is set up as a "subchapter S" corporation under the tax code. So, however good or bad we do is my income, he says.

But how does that back up the fundamental Republican argument, that a higher tax rate would make it harder for him to hire new workers?

Actually, it doesn't. Which is why, Gorski's owner told NPR in an interview, he specifically avoided saying that in the video. He didn't know that that would be true for his business or a different business unless we understood the complete situation.

Some of these situations, said other business owners, are such that the higher tax rate could actually act as an incentive to hire more employees or invest in new equipment.

Because that would then lower your potential tax rate, according to the owner of Hobby Works, a group of toy stores in the Washington, D.C., area.

If this seems counterintuitive, the answer lies in the way businesses calculate their taxes. Obama's proposal would increase the tax rate, but only for income that exceeds a quarter-million dollars per household.

For some 97 percent of small business owners, that higher rate is irrelevant. They make less than $250,000 a year.

And for those whose income works out to be just over that threshold, one way out of paying that higher tax rate could be to hire one more person — or finally replace that 10-year-old car. These investments would pull net income back under that quarter-million-dollar mark, out of range of that higher rate.

The owner of Paloma Clothing in Portland, Ore., thinks if you're a person who hates paying taxes, hiring another employee for thirty- or forty-thousand a year is a great way to stay below the new so-called marginal rate.

There are situations, though, where Obama's proposed higher rates would make it tougher for particular small businesses to expand.

Owners of franchise restaurants, for example, who need to save up tens of thousands of dollars in cash so they can open up a new eatery, would have a harder time. Such savings are treated as business profit and, therefore, in the case of most small businesses, personal income prior to the reinvestment.

If that money is taxed at 35 percent instead of 31 percent, it would take somewhat longer to get to the necessary goal, according to the CEO of Florida-based Firehouse Subs.

Gorski Engineering's owner similarly faces that higher tax rate when he saves up for a number of years to hire a highly paid employee or a piece of earth-moving equipment.

Gorski Engineering's owner indicated that if he started to build a nest egg again, if I start to invest in equipment and things but I don't have as much to do that, or invest in people, which is our biggest resource, I don't have as much to do that, that's going to be difficult.

Of course, when Gorski finally does hire that expensive employee or buys that pricey backhoe, he will have a large, new expense he can write off — potentially offsetting some or most of the extra taxes he had to pay earlier.

The owner of Hobby Works, says there's really nothing new or unusual about taking the tax code into account when making business decisions.

He indicated the fact of the matter is, businesses, all businesses, large and small, do this all the time.

One business strategy is to continually plow extra profit back into the business to avoid those higher tax rates. Eventually, the owner can sell the business or take it public, and convert those years of deferred income into a big cash payout.

And depending on how it's handled, selling a business can be considered capital gains, taxed at a lower rate right now, a much lower rate.

Right to Work in Michigan

originally appeared in The Wall Street Journal:

In November, unions lost big in Michigan when voters rejected Proposal 2, Big Labor's plan to canonize collective bargaining in the state constitution. Now they're facing a backlash with the happy possibility that Michigan could become the 24th right-to-work state.

Lawmakers have been preparing to introduce a right-to-work bill in the state legislature, and the labor cavalry is heading to the Wolverine state. According to the United Auto Workers website, the union will rally Thursday in Lansing to spook lawmakers out of going through with the bill.

Target No. 1 is Governor Rick Snyder, who held a press conference on Tuesday to say that right to work was on the agenda for "thoughtful discussion." That's a shift for Mr. Snyder, who has tiptoed around the topic since he was elected, saying it wasn't a battle he was looking for. Unions took his soft touch as a sign of weakness and pushed Proposal 2, which would have given them a virtual veto over all union-related legislation.

Meanwhile, the economy has languished. Michigan is the fifth most unionized state in the country and the birthplace of the UAW. According to the Mackinac Center for Public Policy, Michigan has lost 7,300 jobs since January, while next-door Indiana, which became a right-to-work state earlier this year, has been on the upswing.

According to the Indiana Economic Development Corporation, the state has a record number of businesses choosing to expand or set up in the state, including Amazon and Toyota. The 220 companies will create some 21,000 new jobs and invest $3.6 billion. The growth has come despite a decrease in the average tax incentives offered by the state to $8,900 from around $37,000 in previous years.

Republicans hold a 26-12 majority in the Michigan Senate and a 64-46 majority in the state House. According to a recent poll by Mitchell Research & Communications for a right-to-work advocacy group, 51% of Michiganders support a right-to-work law while 41% are opposed.

That's important because if a right-to-work law passed the legislature, unions could still try to repeal it on the ballot, as they did this year with the emergency manager law, which let the Governor appoint emergency financial managers who could redo collective-bargaining agreements. By the time a similar fight could be waged against right to work, voters could have had more than a year to see the law's economic benefits.

The AFL-CIO has said that politicians who oppose Big Labor would pay a steep political price, but it's not turning out that way. In Indiana, Republicans picked up nine seats after the right-to-work law passed and lawmakers who made the law a key part of their agenda won by wide margins. If that's the price they pay, Michigan's politicians should be all in.

Women Notch Progress in Legal, Medical Fields

originally appeared in The Wall Street Journal:

In a major shift from a generation ago, women now account for a third of the nation's lawyers and doctors when those professions were occupied almost exclusively by men, new Census figures show.

Women's share of jobs in the legal and medical fields climbed during the past decade even as their share of the overall workforce stalled at slightly less than half. Women held 33.4% of legal jobs—including lawyers, judges, magistrates and other judicial workers—in 2010, up from 29.2% in 2000. The share of female physicians and surgeons increased to 32.4% from 26.8% during that time.

According to the president of the Institute for Women's Policy Research, a nonprofit group in Washington, that's very significant progress, in the midst of a lot of evidence that women's progress has plateaued, nevertheless we can see that women are still making progress in some very professional, high-wage fields.

Women's gains in these fields follow the rise in their professional school enrollments over time. Harvard Law School, for example, was closed to women until 1950, and the Washington and Lee University School of Law was the last U.S. law school to open its admissions to women in 1972, according to research by Hannah Brenner and Renee Newman Knake of Michigan State University's College of Law. Today, women graduate from law school in roughly the same numbers as men. They make up just under half—45.4%—of medical residents and fellows, or medical-school graduates in training, according to the American Medical Association.

A 26-year-old Miami resident said earlier generations in her family of Greek heritage believed women were meant to stay at home and raise children. While she was growing up, her mother didn't work.

But her parents emphasized the importance of getting an education to achieve a middle-class lifestyle. She earned a bachelor's degree in American history at Columbia University. During school, she worked part-time at a Manhattan law firm feeding off the energy of assisting on big cases, she said.

She graduated from the University of Miami School of Law last year and now is a commercial litigator. Two partners in the Florida firm where she works are mothers raising children, she said that for her, and for other women we're kind of just trying to get a start on our careers and focus on that.

Despite women's greater presence in law and medicine, wage gaps between men and women persist in both fields. In 2007, the median income—the point at which half earn more and half earn less—of female lawyers was $90,000, compared with $122,000 for male lawyers, according to research by Harvard economists.

The median income of female physicians was $112,128, compared with $186,916 for male physicians. Those differences are largely explained by individual choices, including women taking off time to raise children or opting for less-demanding career tracks or positions that pay less. But a small portion of the gap exists for unclear reasons. Discrimination could also be a factor, though it isn't clear how much, according to the economists.

One of the economists said women's gains in medicine have coincided with the rise of corporate-owned hospitals and medical practices, in many cases making it easier for women to balance work and family. Health-care companies have bought up many small, previously male-owned independent practices and raised women's wages closer to men's, while offering more flexible work schedules.

While women have made strides in the legal profession, at law firms few are taking management positions. Some leave for jobs as counsel to corporations, where hours can be more predictable. At large law firms, women make up just 15% of equity partners, according to a survey released in October by the National Association of Women Lawyers. Of the 200 firms surveyed, just 4% had a woman at the helm in the role of firm-wide managing partner.

A lawyer in Oakland, Calif., said biases against women were overt in 1975, when she graduated from the University of California Hastings College of the Law and started looking for jobs.

People would say directly, 'You can't be a lawyer because you're a woman, women are too emotional, their voices are too high,... they aren't tough enough,' she said women still face barriers to leadership jobs at firms, because advancement is largely based on hours worked. You're really trying to break into an established network, coming at it from the perspective of the woman, when most of the structures are designed by men.

A Michigan State University associate law professor, said while women graduate from law school in roughly the same numbers as men, many women leave the field for careers that offer more flexibility in hours and location.

The professor stated, as much as it's good to see the progress, she still remains troubled that we don't see a lot of our law graduates staying in the profession.

Wednesday, December 12, 2012

Royal baby needs new laws passed soon

originally appeared in USA Today:

In all the hoopla over the "historic" new royal baby on the way, some people have forgotten an inconvenient truth: Laws that must be passed to give equal rights to a girl child have not yet been passed.


Not to worry, promise British constitutional experts as well as leading British politicians.
When the palace announced Monday that Prince William and his wife Catherine, Duchess of Cambridge are expecting their first baby, it was especially newsworthy: If this baby is a girl, she will be third in line to the throne even if she has brothers born later.

That's because the U.K. and the 15 other Commonwealth realms that recognize the British monarch as head of state have agreed to throw out ancient laws that say boys always come first in the succession no matter their birth order.

But so far, they haven't even introduced the necessary legislation, let alone voted. By Tuesday, cooler heads among British constitutional experts prevailed, pointing out that if the Cambridge baby is a girl born before all the necessary laws are passed, it could be awkward.

But it will, promises the deputy prime minister. He says a new law on female succession would be introduced in Parliament as soon as possible so that the change can happen before Duchess Kate's baby is born.

Luckily, according to the deputy prime minister, all it takes is a majority vote in Parliament to change the unwritten British constitution, unlike the deliberately time-consuming process and two-thirds vote of the states required to amend the U.S. Constitution. Same for the Commonwealth realms such as Canada, Australia and New Zealand.

Moreover, she says, virtually no one is opposed to changing the gender rules. In part, that's because the change is seen as a tribute to two highly successful, admired and popular queens in the past 150 years, Queen Victoria and her great-great grandchild, Queen Elizabeth II.

Also, the status quo is largely seen as embarrassing and indefensible.
Other areas of possible legislative change, such as the rules against heirs to the throne marrying Roman Catholics, might be more difficult to achieve quickly and thus might be put off.

Thursday, December 6, 2012

Three Strikes Law Revised thanks to California Proposition 36

story first appeared on

SAN JOSE -- Cashier Debbie Curry woke up Wednesday to find California voters had given her a priceless gift: hope.

By an overwhelming margin, they'd passed Proposition 36 to revise the state's tough Three Strikes Law.

The new law prohibits judges from imposing a life sentence on most repeat offenders who commit minor crimes. But it also includes a provision that could result in an early release or shorter sentence for Curry's husband -- and up to 3,000 inmates like him who were sentenced to life in prison for nonviolent, relatively minor crimes like stealing a credit card.

In more severe crimes, like those of child abuse, the accused will seek legal counsel from child abuse defense lawyers.

Curry's husband, Charles Airy, has been locked up in Vacaville on a life sentence since 2001 for drug possession. His previous two strikes were for nonviolent burglaries back in the 1960s and 70s, she said.

She's not the only one who envisions a new life for her family. Alberta Manzanares' brother has served 17 years of a life sentence for stealing a credit card in Santa Clara County. His previous strikes also were burglaries, she said.

Work begins

But just how fast lifers get a resentencing hearing before a judge -- and if they get out early at all -- is likely to depend on where they were convicted. The movement on cases might go more slowly in conservative places like the Central Valley, while in relatively liberal Los Angeles County and the Bay Area, things might move along more efficiently.

Jeff Adachi, San Francisco's public defender and a spokesman for the California Public Defenders Association, estimated it will take six months to a year in most counties.

In contrast, Santa Clara County is nearly ready. The county's acting public defender, Molly O'Neal, has already drawn up a list of 127 three-strikers who may be eligible to apply for a shorter sentence or early release.

O'Neal hopes they can begin getting people out before the end of the year.

The process will be much quicker in Santa Clara County because District Attorney Jeff Rosen promised well before the election that he would seek shorter terms or outright release for at least some three-strikers even if Proposition 36 lost. His office has already done much of the necessary research, cutting down on the need for lengthy court hearings in cases where he and O'Neal agree on a solution.

Volunteer lawyer

O'Neal said a Stanford law school graduate who worked on the university's Three Strikes Project is helping with the effort for free. The director of the project, law school Professor Michael Romano, co-authored Proposition 36.

Before public defenders can pursue a new sentence, three-strikers must fill out application forms giving the office permission. They are available on the Santa Clara County Public Defender's website under "Three Strikes Reform Screening Packet.''

In San Mateo County, Public Defender John Digiacinto said he's already received the form back from one eager three-striker.

Digiacinto said he expects it to have a good result.

Los Angeles mother Kathy Lazenby is hoping her son gets out after 11 years, but she's trying hard not to count on it.

She said they still have a long way to go before he's out, but to him it already feels like Christmas.

Tuesday, December 4, 2012

Ecuador Seeks Damages from Chevron for Oil Spill

Chevron Corp. (CVX) is facing its first test of whether farmers and fishermen from the Amazon rainforest will collect $19 billion in environmental damages from the world’s fourth-largest oil company.

A group of 47 Ecuadoreans have asked Ontario’s Superior Court of Justice to seize Chevron assets in Canada, ranging from an oil sands project to offshore wells, to satisfy a 2011 court ruling in the Latin American nation that ordered the company to pay for oil pollution dating to the 1960s. Chevron said the Ecuadorean judgment is outside Ontario’s jurisdiction and that the ruling resulted from bribery and fraud.

A hearing in Toronto today marks the Ecuadoreans’ inaugural step in a global collection effort that includes seizure attempts in Argentina and Brazil. The Ecuadoreans estimated Chevron has $12 billion in Canadian assets, a figure that equates to almost half of the company’s 2011 profit. An adverse Ontario ruling for Chevron would put at risk fuel-manufacturing and oil-production operations across Canada.

Robert Sweet, who helps manage $150 million at Horizon Investment Services in Hammond, Indiana, said it is a cause for concern, and as with all ecological disasters will take a long time to resolve.

The company’s presence in Canada dates back to the 1930s and includes an oil-refining complex in British Columbia, an Alberta oil-sands venture, offshore wells in the Atlantic Ocean, and cash held in Canadian bank accounts.

Every Strategy

San Ramon, California-based Chevron was on the losing side of last year’s ruling by a provincial Ecuadorean court that blamed decades of toxic soil and water contamination on Texaco Inc., which Chevron acquired in 2001. Texaco was found to have discharged into the environment saltwater and other byproducts of oil drilling. Texaco quit the country and its equipment was taken over by the Ecuadorean state oil company in 1992.

The $19 billion ruling handed down last year by a court in Lago Agrio, a town near Ecuador’s border with Colombia, held Chevron accountable for health and environmental damages resulting from chemical-laden wastewater dumped from 1964 to 1992.

The Ecuadorean plaintiffs, from the remote northern Amazon River basin, are seeking enforcement of the judgment outside their home country because Chevron has no refineries, oil wells, storage terminals or other properties in the nation. Pablo Fajardo, their lead lawyer in Ecuador, said during a February 2011 conference call with reporters he would use every strategy and manner at his disposal to collect the award.

Corporate Veil

In a Nov. 23 filing, Chevron argued the Ontario court has no jurisdiction to grant the Ecuadorean judgment because the company’s Canadian units are indirect subsidiaries with independent boards separated from the U.S. parent by several levels of ownership.

The Ecuadoreans face an “uphill battle” because they must convince the court that Chevron and its Canadian operations should be treated as one entity rather than separate companies, said Barry Leon, a partner and head of the international arbitration group at Perley-Robertson, Hill & McDougall LLP in Ottawa.

Chevron rose 0.8 percent to $106.35 at 9:35 a.m. in New York today. The shares have increased 9.1 percent in the past year.

Pending Arbitration

According to Chevron Chairman and Chief Executive Officer John Watson, the Ecuadoreans’ lawyers have blackmailed judges, bribed judges, falsified evidence, falsified expert witnesses, ghostwritten expert opinions and ghostwritten court judgments. If the plaintiffs were confident in the “integrity” of the ruling, they would seek enforcement in U.S. courts with jurisdiction over the parent company, Kent Robertson, a company spokesman, said in an e-mailed statement.

Alan Lenczner, the Toronto attorney from the firm Lenczner Slaght Royce Smith Griffin LP representing the Ecuadoreans, when reached by phone declined to comment on the case.

Leon said  it is likely that the initial decisions will be appealed.

Chevron doesn’t disclose how much it spends on legal fees.

The Hague

Chevron is awaiting a ruling in a related case before the Permanent Court of Arbitration, the 113-year-old panel based in The Hague that handles trade disputes between corporations and nations. Chevron filed the arbitration claim in 2009, accusing the government of Ecuador of reneging on a 1998 contract that absolved Texaco of Amazonian pollution claims. Three days of hearings in the case concluded yesterday, Robertson said.

Chevron’s campaign to avoid payment suffered a setback last month when the U.S. Supreme Court upheld a lower-court decision that rejected the company’s request for a pre-emptive block on collection efforts in Chevron’s home country. The lower court had ruled that it didn’t have authority to thwart payment when the Ecuadoreans hadn’t yet filed such a claim in the U.S.

Unfair Influence

Following the filing of their Canadian seizure request in May, the Ecuadoreans sought similar forfeitures in a Brazilian tribunal in June and in Argentina earlier this month. A judge in Buenos Aires ordered some Chevron bank deposits held in escrow while the case is pending, Enrique Bruchou, a lawyer for the Ecuadoreans, said in an interview on Nov. 7.

Today, in paid statements published in two Argentine newspapers, Chevron urged the local court to release its money from escrow and indicated the company intends to pursue a legal defense identical to that employed in Canada. “Chevron Argentina has never had operations in Ecuador and has no relation with the fraudulent trial in Ecuador,” the company said in the newspapers Clarin and La Nacion.

Transparency International

Chevron has accused the Ecuadorean government of unfairly influencing court proceedings that led to the $19 billion ruling and alleged that a damage assessment provided by a court- appointed expert was ghostwritten by consultants and lawyers hired by the plaintiffs.

Lawyers for the Ecuadoreans including Stephen Donzinger have accused Chevron of engaging in a campaign to discredit them, entrap an Ecuadorean judge that presided over the case and set up dummy corporations in Ecuador to hide Chevron’s alleged role in testing soil samples from the pollution sites.

Ecuador ranked 120th out of 183 nations in Transparency International’s 2011 corruption-perception index, where No. 1 New Zealand is perceived to be the most honest. Albania, Liberia and Lesotho were perceived as less corrupt than Ecuador, according to the index.

US gulf coast officials have yet to comment, while companies like Sarasota Condo Rentals continue their best efforts at business since the 2010 spill.

In February 2011, Chevron filed a racketeering lawsuit that’s ongoing against the Ecuadoreans and their lawyers in New York for “leading a fraudulent litigation and PR campaign against the company.”

Exxon Mobil Corp. (XOM) is the world’s biggest oil company by market value, followed by PetroChina Company Ltd. and Royal Dutch Shell Plc (RDSA), according to data compiled by Bloomberg.