Around the Blogosphere: June 2008

* Spain has declared by statute that Apes are legal persons. (U.K. Guardian). Also, last month, the EU Court of Human Rights accepted an appeal on the issue of whether Apes are legal persons under the EU Charter. (LiveScience, Associated Press). Fans of Arthur C. Clark, a Science Fiction author famed for accurately predicting many scientific and cultural developments of the past century, may recall that his second-to-last book, Sunstorm, published in 2005, describes a not-to-distant future where apes and highly advanced artificial intelligence systems are considered "legal persons (non-human)."

* According to a post on the Consumer Law and Policy Blog, "Bounce loans, the Fed rule and the unbanked," the Federal Reserve is now considering a rule to curb abusive overdraft fees by banks.

* Although the deadline for submissions has already passed, Above the Law was recently looking for a full time writer. Apparently you can actually make a living doing this.

* From the WSJ Law Blog, the Ninth Circuit recently ruled that federal employees have a right to privacy under the Fourth Amendment that extends to work phones and e-mail accounts.

* At the New York Personal Injury Law Blog, Alan Turkewitz is posting a play-by-play from his recent motor vehicle trial. Among the interesting points, he explains that he used a peremptory challenge on a juror who's son is going to Iraq because he does not want the juror comparing his client's trauma to what his son is going through, and struck another juror because she never smiled. He also structured his opening starting from the middle so as to emphasize how the accident changed his client's life.

* The US Supreme Court overturned Washington DC's gun ban, rendering its first Second Amendment decision in many, many years. (WSJ Law Blog).

* Carolyn Elefant at Law.com's Inside Opinions has two great posts on law firm marketing: one on the need for video entries on your website, here ; and the other linking to ten law firm marketing tips from Larry Bodine at The Law Marketing Blog, here.

* LinkedIn - a professional social networking site -- has been valued at 1 Billion dollars. (Law.com: Inside Opinions). More importantly, I recently opened a LinkedIn profile.

* In an employment discrimination fee award decision, Rozell v. Ross-Holst , courtesy of Daniel Schwartz' Connecticut Employment Law Blog, the SDNY approved a $600 per hour fee for a partner specializing in employment law

* Over at How Appealing, Howard Bashman and Judge Richard Posner are engaged in an entertaining reparte. According to Mr. Bashman, the phrase "ostriches when frightened bury their head in the sand" would imply that multiple ostriches share a single head; but Judge Posner retorts that to say "ostriches hide their heads in the sand" would imply that each ostrich has multiple heads.

Superman!

While researching a matter I have in the Central District of California, I came across the March 26, 2008 decision in Siegel v. Warner Bros. Entertainment, wherein the heirs of Jarome Siegel -- co-creator, with Joseph Schuster, of Superman -- are trying to reclaim their copyright over the Supreman character. District Judge Stephen Larson's lovingly crafted 72 page decision denied summary judgment to Warner Brothers, and found that Siegel's heirs are intitled to some compensation from the copyright.

In addition to its discussion of copyright law, the decision contains a detailed history of the Superman franchise, with pictures, and appends a reproduction of the first Superman comic book.

As Judge Larson explains, Superman started as a newspaper comic strip, and was first published as a comic book in 1938 by Detective Comics under the name "Action Comics." On March 1, 1938, prior to publishing Action Comics Number 1, Detective Comics paid Siegel and Scheuster $130 for their work (representing the $10 per page rate they had agreed on) and asked them to sign a form stating that they were granting Detective Comics "all the goodwill attached... and exclusive right[s] [to the Superman Character] to have and hold forever."

Needless to say, the Superman franchise became quite valuable. In 1947, Siegel and Schuster brought an action in the New York State Supreme Court, Westchester County, seeking to rescind the copyright grant. The parties settled for $94,000, and Siegal and Schuster acknowledged that Detective Comics was the exclusive owner of the Superman copyright.

By the mid-1960's, however, the Supreman copyright was up for renewal, and Siegel and Schuster sued again. They argued that, as the creators of the work, they owned the renewal rights. Siegel and Schuster lost the suit but, in light of the bad publicity, Warner Communications (which then owned the copyright), agreed to give them creator credit, pay them an annual stipend and provide them with health insurance for the rest of their lives (with the stipend and insurance to go to their spouses if they died before a certain date.  In the 1980's, the insurance agreement was renegotiated to apply if the Superman creators predeceased their spouses, without respect to any particular timeframe).

In 1976 the Copyright act was amended to include a provision that any grant of copyright awarded before a certain could be terminated. Siegel's heirs (and Schuster's, seperately) terminiated the copyright grant and, after a series of unsuccessful negotiations, sued.

In the March 26, 2008 decision, the Court denied summary judgment. Warner Brothers argued, among other things, that by accepting the stipend and health insurance after sending a termination letter Mrs. Siegel had waived her termination rights, but the court did not buy that argument. Instead, the Court found that the the termination was valid. The court did find in Warner Brother's favor on the issue of foreign profits, holding that termination of a U.S. copyright does not automatically effect intellectual property rights in other countries.

The court set the case down for further proceedings related to two issues: first, what extent the Superman franchise is based on the original comic book, as opposed to later developments; and, second, whether Siegel is entitled only to a share of the licensing payments that WB Entertainment (a WB subsidiary) paid Warner Brothers, or whether -- due to a sweetheart deal on the licensing payments -- Siegel is entitled to a share of WB Entertainment's actual profits.

Business Law: The De Facto Merger Doctrine

As a general rule, a corporation does not assume a predecessor’s liability by purchasing assets, unless “(1) it expressly or impliedly assumed the predecessor's tort liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations.” Schumacher v. Richards Shear Co., 59 N.Y.2d 239, 245 (1983). Although generally cited for setting forth New York’s “de facto merger” doctrine, in Schumacher the Court of Appeals actually found that a de facto merger had not occurred but that the successor corporation was nonetheless liable for failure to warn because it continued to service machine in question and touted its expertise.

An example a case where the court found a de facto merger is Matter of AT&S Transp., LLC v. Odyssey Logistics & Tech. Corp., 22 A.D.3d 750, 753 (2d Dep't 2005), where the Second Department explained that:

substantially all of the assets of Rely and Acquisition Corp. were purchased or licensed by Odyssey. The real property of the predecessor corporation was transferred or assumed by Odyssey. Odyssey offered employment to its predecessor's employees, hired two of its predecessor's management personnel, assumed the contracts of independent contractors, agreed to honor the predecessor's customer service contracts, and received the predecessor's business insurance policy. Moreover, pursuant to the transfer agreement, Rely could no longer use its trade name and the transaction was deemed a liquidation of Rely. Furthermore, upon liquidation, the shares of Odyssey stock were to be distributed to Rely's preferred stockholders. The fact that Rely did not immediately liquidate is not dispositive. So long as the acquired corporation is shorn of its assets and has become, in essence, a shell, legal dissolution is not necessary before a finding of a de facto merger will be made.

In 2006, the Court of Appeals declined to add a fifth exception to the De Facto Merger doctrine, the “products line” exception, whereby continuation of the same product line, by itself, exposed a successor corporation to liability. Semenetz v. Sherling & Walden, Inc., 7 N.Y.3d 194, 818 N.Y.S.2d 819 (2006). The one New York State decision to interpret Semenetz thus far makes clear that Semenetz did not change the fact that “the policies that guide an assessment of successor liability include the concept that a successor that effectively takes over a company in its entirety should carry the predecessor's liabilities as a concomitant to the benefits it derives from the goodwill purchased, and the desire to ensure that a source remains to pay for the victim's injuries." Morales v. City of New York, 18 Misc. 3d 686, 688 (Kings County, 2007)

Morales went on to explain that “the hallmarks of a de facto merger are the continuity of ownership; cessation of ordinary business and dissolution of the predecessor as soon as possible; assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the acquired corporation; and a continuity of the management, personnel, physical location, assets, and general business operation. These factors are analyzed in a flexible manner that disregards mere questions of form and asks whether, in substance, it was the intent of the successor to absorb and continue the operation of the predecessor. Policy considerations dictate that, at least in the context of tort liability, courts have flexibility in determining whether a transaction constitutes a de facto merger." Morales, 18 Misc. 3d 686, 690-691; But see Employee Rels. Assocs. v. Xperius, Inc., 196 Misc. 2d 485 (Monroe County, 2003)(courts have been more flexible in finding de facto merger for the purpose of Tort liability than Contract, and in contracts at least, continuity of interest is a strict requirement). Although multiple factors are considered, the key factors (generally described as necessary requirements) are: (1) continuity of ownership, which can be shown by any “indicia of control over or continuing benefit from the sold assets;” and (2) cessation of the predecessor corporation’s business. Morales, 8 Misc. 3d, 691.

Happy Birthday Blog!

My blog turned a year old last Friday. It is far from where I want it to be, but I have kept up with it for a year (albeit sometimes sporatically), and I'm proud of that. In light of the occasion, I decided to review and evaluate what I have done with this blog for the past year, and set some goals to make it better.

My blog is still looking for a voice, a name and a direction. In retrospect, my posts can be roughly grouped into four categories: substantive or procedural law; consumer protection; the legal job market for new attorneys; and random legal news.

First, the largest portion of my posts have been substantive or procedural, and these have also been the posts that have received the best response. Within my firm I concentrate on appellate and complex motion practice, mostly Torts, and commercial litigation, but because I am a young attorney I have yet to carve out a specific niche. One of my posts, which was actually an article that I co-wrote with a partner and another associate at my firm on slip and fall litigation, was included in a blog round up from Eric Turkewitz's New York Personal Injury Blog (one of my favorite blogs), which I considered to be a tremendous compliment. Another post on appellate procedure prompted an e-mail from a pro se litigant saying that they had found the information helpful. In the future, I want to expand on these posts. Specifically, I do a tremendous amount of research and writing, and much of that work could be fodder for great blog posts. My plan is to have a regular segment called Little Bit O' Law, which will consist of short research pieces.

Second, many of my posts -- particularly the more opinionated ones -- relate to consumer protection. I suppose technically this could be considered a substantive area, but it is not an area where I currently practice (my firm does not do consumer class actions... yet). The most recent post, here, is a New York Civil Court case I read in the New York Law Journal which touched on an issue -- default credit card rates -- that I believe will become increasingly important in the future. I think I was the only person to comment on that case other than the Law Journal. I have also had two posts, here and here, covering a British case where the U.K. government is challenging bank overdraft fees, and contrasting that case to how U.S. courts have handled the issue. Professor Arnold S. Rosenberg found interest in the same topic, and wrote a law review article that was featured the Consumer Law and Policy Blog, here. I feel like this has been one of my blogs strongest areas, and I plan to continue these posts in a segment called Consumer Advocate.

A third group of posts have related to the legal job market for people who -- like myself -- recently graduated with a decent rank, from a decent law school, and were shocked to discover that a law degree is not a golden ticket. There have been hundreds of similar posts on other blogs, but at first I felt like this was ground-breaking information. Shortly after my first post, Loyola2L gained a great deal of publicity. I'll admit I was a little jealous, for a minute, but I am probably better off having not garnered a great deal of publicity for complaining about law school tuition. I in no way regret having gone to law school. The only thing I would have done differently, if I had a more accurate picture of the job prospects for a top-50-ish school, would be to have more seriously considered a public or lower ranked school. That said: I love being an attorney; I believe that I am extremely good at what I do; and I am sure it is just a matter of time before my education pays off financially. Over the past year, the issue of return on intvestment for legal education has been greatly publicized, and I am glad to have put in my two cents. I cannot, however, keep re-posting on the same topic. I have had a few staggered posts about practical lessons I've learned, and my plan is to combine these categories and expand them to include a broader range of topics relevant to young (or prospective) attorneys. I'll include regular (maybe quarterly?) articles about the legal job market, but also pieces with practical lessons that I have picked up. I need a catchy name for this one, but my working title is: I'm a lawyer, now what?

My fourth category of posts over the past year have related to random law related news, but these posts have not had a unifying theme. What I plan to do is have an Around the Bloggosphere segment, where I'll include links and comments to other blog posts that I find interesting.

What Kind Of Job Can You Get With A Law Degree?

I just posted an answer on WikiAnswers.com, and I thought I'd share.

The question: What kind of job can you get with a law degree?

My Answer:

The most obvious answer is: an attorney. After obtaining a law degree from an ABA accredited law school, a person becomes eligable to take a state bar exam and, if they pass the bar exam, may then practice law within that state. An attorney who has passed the bar exam is allowed practice any field of law, with the exception of maritime law and patent law (which have their own national bar exams -- note, the patent bar exam requires a minimum amount of science credits). Although a person may specialize in tax law without also being a certified public accountant, prior tax experience is generally required for any position specializing in tax law.

In most states, attorneys are also eligable for other licenses, including a real estate license, allowing them to become a realtor or broker, as well as a notary public license. Common alternative careers for persons with a law degrees include business administration, human resources, government administration and non-attorney positions within the insurance industry. Entertainment and media are also not uncommon field for former attorneys: notable figures ranging from John Grisham to Geraldo Rivera were once attorneys.

Generally, a legal training indicates that a person is skilled in analytical reasoning and argumentation, and has the ability to distill large amounts of information or complex fact patterns. Although law school is considered a "professional" education, aspiring law students should realize that the law, by itself, is either an academic or political discipline, and law practice generally draws on skills from other fields. Although not required, if a person has a desire to practice a particular field of law, then a background in a particular industry is helpful before entering law school.

The notion of entering law school because it is supposedly a "versatile" degree has been heavily challenged, and aspiring law students should take caution that a law degree is not an alternative to an MBA. A non-legal job is generally considered a backup for a person with a law degree, and as a general rule a person seeking such a job either tried and hated actual law practice, failed to achieve success as an attorney, or some combination of the two. A law degree is expensive and, generally, meant for persons who intend to practice law (or teach law, if you can get into a TOP school).

When an aspiring law student indicates a desire to enter law school because they do not know what they want to do and they perceive law school as a spring-board to a successful career, a good admissions consultant will encourage them to gain real world experience (either in other industries or within the legal profession) before entering law school. In fact, many top law schools will consider prior experience as a non-quantatative factor in making an admissions determination.

As a side note, there has been a series of terrific articles on alternative careers for lawyers at the Above The Law Blog, here.

Related Posts:

* Lack of Financial Responsibility Prevents Admission to the Bar: is it "Character And Fitness," or is "The Man," holding us down?

* How Law School Rankings Take Advantage Of Prospective Law Students

* Not Every Law Graduate Makes 160k

* False Advertising in Legal Education

* What Kind of Job Can You Get With A Law Degree

New York Decision Favors Consumers: Citibank v. Mahmoud, 2008 NY Slip Op 51091U (Richmond County Civ. Ct, 2008)

I read the surprisingly consumer friendly decision in Citibank v. Mahmoud in today's NY law journal.  The case is in the Richmond County (Staten Island) Civil Court, and involves a $16,000 Citibank credit card debt, plust a claim of $3000 in attorneys' fees. Apparently, however, much of the debt is derived from a default rate that Citibank began assessing in 2006 of 31.240% for purchases and 56.148% 3 for advances.

As Judge Phillip Straniere explains, under the National Banking Act, 12 USC 85, "national banks, such as plaintiff, are permitted by federal law to charge the highest rate of interest allowed by the state where the bank is located." The judge ruled, however, that a hearing was required to determine "if the practices of Citibank are in conformity with the federal law so as to entitle it to summary judgment in this and similar actions." The judge also asked, "Parenthetically, is it possible that there is a link between the inability of homeowners to keep their mortgages current, the subsequent high default rate in home mortgage loans and the inability of many of these individuals to timely pay their credit cards accruing interest charges of 30% or more?"

Judge Straniere goes on to comment that "recognizing that federal statutes have preempted the rights of the states to protect their citizens from usurious loans, at some point an excessive interest rate, although not usurious by federal standards may shock the conscience of the court and violate the public policy of New York law. The New York State Banking Board sets the generally effective civil interest rate, which is currently 16.00% per annum (3 NYCRR. 4.1; L. 1980, ch. 883). The courts of New York may not be able to void the rates charged in this case by plaintiff or other federally regulated creditors because of this policy created by Congress. However, the existence of a federal law, the effect of which is so egregious, does not require New York to enforce agreements which common sense and reasonable persons would conclude have so gone beyond the intentions of Congress in passing legislation to insure that federally chartered banks were on the same competitive footing as their state chartered rivals that it has become unconscionable, especially when the legislation affects the economic well being of its citizens individually and the general public."

But there's more. Citibank claims to be located in South Dakota, hence the "Citibank (South Dakota) NA" on their stationary, and South Dakota allows banks to charge any interest rate they want: even rates that would be criminal in New York. Apparently, however, Citibank is incorporated in Delaware and it's corporate address is in Missouri, so reason #1 the court ordered a hearing was that the bank failed to show that South Dakota Law applied. This won't make much of a difference in the long run, since Delaware Law is almost as biased as South Dakota, but, again, there's more.

The defendant also disputed that the credit agreement under which Citibank asserted its interest rate and claimed legal fees applied to him. The bank argued that the defendant was given a copy of the agreement with his credit card, agreed to the terms by activating the card, and was periodically informed of changes in the agreement. The bank, however, did not have any evidence that it ever provided any such agreement or updates.

The problem of banks not having evidence of ever providing an agreement is a practical issue that may be helpful for many litigants in this situation, but there's still more. Here's what I think is the biggest point. Part of the hearing the judge ordered will relate to the fact that the National Banking act says "when no rate is fixed by the laws of the State,… the bank may…charge a rate not exceeding 7 per centum or 1 per centum of the discount rate on ninety-day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve district where the bank is located, whichever is greater,…" and the court wants to know "why is not this the rate to be charged on the account and not the rate selected by the plaintiff?"

If Judge Straniere interprets the National Banking Act to mean that where state law does not set a usury rate, then the rate can only be 7% (or 1 per cent of the 90 day commercial paper discount rate), this would, in theory, mean that most credit cards, nationwide, are grossly overcharging their customers. South Dakota, Delaware and Virginia, where most banks claim to be "located," use phrases like "any reasonable rate" rather than actually setting a usury rate, and allow banks to charge whatever they want. If the judge ruled that the National Banking Act's 7% provision applied in these circumstances, that decision would undoubtedly be appealed to the Appellate Term, then to the Appellate Division, then to the N.Y. Court of Appeals, and -- if it went that far -- fought all the way to the U.S. Supreme Court. Thus far, banks have won every battle in their unending campaign to pillage as much money as possible from their poorest customers, but (particularly with the current financial crisis) this may be a turning point. Either this case will finally lead to a just interpretation of the National Banking Act, or perhaps public outcry will force legislators to finally act on this issue.