Thursday, July 31, 2008

Reactions to Ryan v. Lyondell

Posted by Jeff Lipshaw

Larry Ribstein
and Francis Pileggi have already posted on Ryan v. Lyondell Corp., just handed down in the Delaware Court of Chancery.  (HT to both!) 

The case involves a shareholder challenge to Basell's acquisition of Lyondell Corporation, a major specialty chemical manufacturer.  This is of no small interest to me, having been the general counsel of a publicly-held specialty chemical company that first sold its publicly-held subsidiary (in a deal reminiscent of McMullin v. Beran for you Delaware corporate law wonks), and then merged with another company (as the target) in a stock-for-stock deal, both of which invoked Delaware law on the fiduciary obligations of the directors in transactions involving change of control.  I'm also interested as a result of my more theoretical musings about judgment in Law's Illusion.

In a nutshell, the court denied summary judgment, claiming an insufficient record to establish no genuine issue of material fact, on two issues:  (1) whether the Lyondell directors breached their fiduciary obligations  (a) to maximize shareholder value in the sale context under Revlon, and (b) not to impose undue "lock-up" restrictions so as foreclose competing bids, under Unocal and Omnicare, and (2) whether the 102(b)(7) exculpatory provision on damages operated to bar claims against the directors.  On issue (1), the court observed that the deal went down very fast, with almost no market test, and with a full panoply of deal protection clauses favoring the buyer, even though the offer price was at a 50% premium to market.  On issue (2), the court left open the possibility that the board's [in]action constituted a lack of good faith, invoking the duty of loyalty rather than the duty of care, and hence removing the claim from the exculpatory provision of 102(b)(7).

Here are some quick reactions:

1.  It looks to me like the Lyondell board and its advisers, although acting very, very quickly, did everything they should or could have done, short of playing chicken with the buyer as they walked out the door to seek competing bids.  The opinion doesn't say Basell's CEO threatened to walk away from the deal if Lyondell shopped it, but there's just about everything but that.

2.  The court says the board's review is to be reasonable not perfect, and there are instances in which, indeed, the board may conclude an offer is what is called "pre-emptive" or "take-out."  The court concludes there is no evidence that the board members were self-serving or otherwise conflicted.  The court agrees that the price was fair.  And finally the court, at the very end, says that, well, this case is really more about our summary judgment standards than our corporate law.

3.  I'm not sure why Basell didn't give a little more.  For example, the agreement (you have to read it or the proxy statement to find this) had a "force-the-vote" provision, meaning that there had to be a shareholder vote on the Basell proposal even if there was a superior offer and the Lyondell board withdrew its recommendation.  The court is probably right in saying that is "belt-and-suspenders."  Moreover, at the end of the day, it's Basell or the insurers who are going to pay if the plaintiffs recover anything - it's hard to imagine the directors having to come out of pocket (I'm assuming this will be Side A coverage with no deductible) when there's no evidence they benefited themselves by the transaction (contra WorldCom or Adelphia). 

4.  This is a place where the strictures of Delaware law truly put even good faith managers and directors between a rock and a hard place.  The court acknowledges the testimony of one Lyondell director who said he was worried about getting sued if the board somehow let this offer go by without submitting it to the shareholders!  I recognize, in theory, that you don't know to a certainty that there wasn't another couple bucks a share out there, but I have a hard time seeing what the plaintiff is going to say between the denial of the s.j. motion and trial that isn't in the nature of the worst kind of second-guessing.

5.  I have a hard time seeing how this becomes a duty of loyalty case under Stone v. Ritter for purposes of 102(b)(7), when the court has granted summary judgment on other claims, rejecting any notion that the directors were disloyal.  This is the "somehow lack of care is so extreme that it constitutes bad faith which is disloyal" bootstrap.  Correct me if I'm wrong, but doesn't this case present precisely the Smith v. Van Gorkom factual scenario that 102(b)(7) was intended to address!

So . . . . [inhale deeply]  My question to all the corporate law professors out there is this:   You understand the facts.  You understand the risks.  You are sitting there advising the board at H-Hour.  Do you really tell Lyondell's board it is duty-bound not to take this deal under this agreement, and watch a $48 offer on a $30 stock evaporate?  What would you do?

July 31, 2008 in Law & Business | Permalink | Comments (5) | TrackBack (4)

Solicitation Letters to Prospective Transfer Students

[posted by Bill Henderson]

A reporter for the ABA Journal has contacted me for a story on uptick in transfer students.  She has dug up a lot of information on this topic.  Although she has heard a lot of rumors that some law schools directly solicit rising 1Ls from other law schools, at this point they are all rumors from lots of law school administrators.

If any reader has any concrete evidence of direct solicitation of transfer students, the reporter, Leslie Gordon, would love to hear from you.  (It would be great if you would cc me, as I would love to see the evidence as well.)  Thanks. 

July 31, 2008 in Teaching & Curriculum | Permalink | Comments (0) | TrackBack (0)

Same Standard

The Supreme Court of New Jersey held that the Appellate Division had erred in granting judgment nov to the defendant in a claim of religious-based hostile work environment brought by a Jewish police officer. The trial jury had found the hostile work environment but awarded no damages; both sides had appealed to the Appellate Division. The court here concluded that the standard of proof for such a claim was the same as for a claim of race or gender hostile work environment. The plaintiff had presented "sufficient evidence...[he had] suffered severe or pervasive harassment." (Mike Frisch)

July 31, 2008 in Law & Society | Permalink | Comments (0) | TrackBack (0)

Blurred Out on Google Maps; Using GPS Safely; and Zillow is a Ouija Board

Posted by Alan Childress

Three technological ideas to ponder:

1. The interesting IT Security post Blurred Out: 51 Things You Aren't Allowed to See on Google Maps has all the usual suspects (the White House's rooftop security devices, bomber bases, nuclear plants), some that make sense once explained (Stony Brook University, the Boring house in Pennsylvania,the city of North Oaks MN), and some odd ones (downtown Sydney, William Hurt's house, Playland Amusement Park in Rye NY). Commenters list plenty other examples and explanations.  [HatTip to EE, which also links a lyric-search and CD-cover website.]

2.  I am a big fan of GPS units and the security and confidence they bring.  They are so cheap now, and easy to use.  Even "basic" units one can buy at Wal-Mart or Amazon do all you may need (e.g., some are cheaper because they exclude Canada and Alaska, though they incorrectly and insultingly call it "continental US only" as if Alaska is an island).  Most units have a Go Home button or setting, and that is convenient from anywhere to get back on track. But consider setting the home address to a neighbor's house (or the police station) just in case your car is stolen or a valet professional gets inappropriatelyB000fcsxbq2 curious (recall a great scene in Entourage).  I feel confident that you can find your way home from the next street over if that's how you set its default.

3.  Let's all quit pretending that Zillow has any basis in reality.  Any search of the web reveals error rates that would be unacceptable if it were to be taken seriously.  In my case it does not even have the correct house at my address, not even close, but it dutifully values my house (without any information about bedrooms and baths even if it were the right house) anyway at947173_ice_fishing_2 some fixed number.  I think the monkey-dart picking stocks experiment could also double for a more accurate valuation system on the web.  Meanwhile, I have set my GPS "home" as this house down the street.  If my car or GPS is ever stolen, and the thief has initiative and follow-through, I expect to see that house devalued more on Zillow.

July 31, 2008 in Blogging | Permalink | Comments (1) | TrackBack (0)

No Jurisdiction in Federal Court For Malpractice Claim Based on Underlying Trademark Representation

The Fifth Circuit addressed the removal and jurisdictional issue yesterday, and held for the malpractice plaintiff against his defendants, the Duane Morris law firm and its attorney Richard Redano.  This is in an opinion [here in pdf] authored by Judge Jerry Smith.  The "case within the case" dealt with trademark rights to "Testmasters." The Fifth Ciruit's holding is nicely summarized by the Fifth Circuit Civil News, per Robert McKnight, in an email this morning:

After Redano represented Singh in unsuccessful trademark litigation, Singh sued Redano in Texas state court for legal malpractice. Redano removed on the ground that Singh would have to prove causation by establishing that he should have prevailed in the trademark dispute, and so resolution of trademark issues was necessary to the malpractice claim. The district court agreed, denied Singh's motion to remand, and then dismissed his claim [based on a pending summary judgment motion on the merits].
      Holding: Vacated and dismissed for lack of subject matter jurisdiction. "[M]erely because the alleged malpractice occurred in a prior federal trademark suit .... does not confer subject matter jurisdiction under § 1331 or § 1338(a)." The test in a situation such as this is whether "(1) resolving a federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities." Redano could not establish items (3) or (4).

The California-based TestMasters site says, "Our company offers services under the name TestMasters everywhere except Texas. In Texas our company offers services under the name ScorePerfect."  The URL of testmasters.com takes you to this Texas-based company.  I am likely confused. [Alan Childress]

July 31, 2008 in The Practice | Permalink | Comments (1) | TrackBack (0)

Sharing Disciplinary Responsibility

The Wisconsin Supreme Court decided a reciprocal discipline case involving the interplay of disciplinary orders against an attorney also admitted in Minnesota. The court held that reciprocal and original matters should not be joined, that a sanction imposed by Minnesota was a fresh order of discipline that merited a reciprocal sanction and that the attorney's constitutional challenge was baseless:

As for Attorney Crandall's constitutional arguments that this court lacks authority or jurisdiction to "punish" him for misconduct that occurred in Minnesota, they are based on an improper understanding of this court's constitutional obligation to regulate the practice of law in Wisconsin and of the nature of professional discipline. The Wisconsin Constitution vests the judicial authority of the state in a unified court system, Wis. Const. art VII, § 2, and gives this court superintending and administrative authority over all courts in the state.

As we have noted in prior cases, because attorneys are an important part of the administration of justice in the courts of this state and because the constitutional grants of authority obligate this court to ensure that courts function efficiently and effectively to provide for the due administration of justice, this court has the inherent and exclusive authority and power to regulate and discipline members of the bar in this state.(citations omitted) Thus, our imposition of discipline for professional misconduct that allegedly occurred in another state does not accord extraterritorial effect to Wisconsin's Rules of Professional Conduct for Attorneys. See SCR ch. 20. Rather, imposing reciprocal discipline is a means (1) to ensure that attorneys who have been granted the privilege to practice law in this state comport themselves in this state in a manner that promotes the efficient administration of the law, and (2) to protect the citizens of this state who require the assistance of a competent and trustworthy attorney.

Moreover, the imposition of professional discipline related to the practice of law in this state is of a different nature than punishing an individual in Wisconsin for a criminal act wholly committed in another state. The imposition of discipline does not have as its purpose to punish the respondent attorney, but rather to protect the public, the courts and the legal profession in Wisconsin from incompetent and unfit attorneys.

(Mike Frisch)

July 31, 2008 | Permalink | Comments (0) | TrackBack (0)

Pay You Back With Interest

The District of Columbia Bar's Legal Ethics Committee recently issued an opinion on charging interest on advanced expenses. The committee summarized its conclusion as follows:

A lawyer who uses the firm’s line of credit to advance to a client the costs of the representation will incur interest charges from the bank in doing so. The lawyer may pass these costs along to the client, so long as the client has been fully informed in advance of these charges, the client has agreed to pay them, the costs are reasonable, and the           lawyer maintains a separate accounting of the interest charges incurred for that client. Finally, the costs of the line of credit must be directly attributable to the representation of that client; in other words, the lawyer may not pass on to individual clients the costs of maintaining a line of credit used to fund the firm’s general overhead expenses.

(Mike Frisch)

July 31, 2008 in Clients | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 30, 2008

Tenth Time Is A Revocation

The Michigan Attorney Discipline Board rejected a proposed 120 day suspension consecutive to a three-year suspension presently being served by a disciplined attorney. The case involved mishandling a matter and providing false information to the client. The attorney also failed to participate in the disciplinary process. The board concluded that revocation was the correct sanction, noting that the attorney had an "abysmal" record of prior discipline that included nine earlier sanction orders. (Mike Frisch)

July 30, 2008 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Settlement Does Not Preclude Malpractice Claim

The New Jersey Appellate Division reversed an order granting summary judgment to the defendant in a legal malpractice case. Plaintiff and his uncle had agreed to pursue a joint business venture with plaintiff as a full-time employee. The lawyer handled the purchase transaction, creating two business entities and attending the settlement. Thereafter, a dispute arose between plaintiff and his uncle. He claimed malpractice in the failure of the lawyer to properly document the agreement with his uncle.

The present suit was filed after the plaintiff and his uncle had settled. Consistent with another recent decision that we reported, the court held that the trial court erred in holding that the settlement barred the malpractice claim. The court notes the uncle also has sued the attorney for malpractice and that the case had survived summary judgment. Here, the court concludes that the fact that only uncle paid for the representation does not matter in evaluating the viability of the malpractice claim. (Mike Frisch)

July 30, 2008 in Clients | Permalink | Comments (0) | TrackBack (0)

Recusal Not Required

A litigant in a hotly-contested defamation suit sought the recusal of a Wisconsin Supreme Court justice on a variety of grounds that included political support of the justice by opposing counsel and the judge's appearance at a fund raiser in support of lesbian, gay, bisexual and transgender rights. The petition was filed after the court had rendered an adverse judgment in the underlying case. The supreme court today denied the recusal motion in the attached opinion. The court determined that the justice had not sought the endorsement of counsel and did not engage in any impropriety in attending the rally:

In addition to there being no requirement that a judicial candidate disclose all contributions to his or her campaign, the record before us does not support Donohoo's assertion that Justice Butler violated his campaign promise regarding contributions. According to the materials Donohoo has submitted, Justice Butler said he would refuse contributions from parties with pending cases before the court, but would accept and disclose donations from attorneys with pending cases. From the record before us, it appears this is precisely what happened. Justice Butler accepted and disclosed a $300 contribution from Attorney Pines. As the Judicial Commission noted, Bock and Irvings were not parties to a pending action. In addition, nowhere does Donohoo assert that Justice Butler knew that Bock or Irvings were board members of Fair Wisconsin. The code of judicial conduct does not require judicial candidates to attempt to research every possible organization with which contributors may have an affiliation. Such a requirement would be unduly burdensome to candidates for judicial office and we decline to impose it.

As to Donohoo's claim that Justice Butler acted improperly in attending the fund raiser, the Judicial Commission noted that "[j]udges and candidates for judicial office can announce their views on political and legal issues as long as they are not pledges or promises to decide cases in a certain way."

The court also was troubled by the timing of the motion. (Mike Frisch)

July 30, 2008 in Judicial Ethics and the Courts | Permalink | Comments (0) | TrackBack (0)

Both Sides Now

An attorney with a record of prior discipline was suspended for 18 months by the Wisconsin Supreme Court. The case involved a husband and wife who were each represented by counsel in a divorce case that was scheduled for trial. Husband suggested to wife that they would be better off with a single lawyer. Respondent agreed to be that lawyer. The other attorneys withdrew and Respondent did not promptly enter an appearance. His attempt to postpone the trial failed as he was not yet counsel of record in the case.

At trial, he purported to represent only the husband. He failed to secure financial information pertinent to wife's rights and otherwise favored husband:

...the referee found that the "credible evidence establishes that Attorney Gamiño did not advise N.B. before the final hearing that he would not be representing her in the divorce action." Attorney Gamiño thus violated SCR 20:1.9(a),[4] which provides that a lawyer who has formerly represented a client in a matter shall not represent another person in the same or a substantially similar matter in which the person's interests are materially adverse to the interests of the former client unless the former client consents in writing after consultation. The referee observed:

N.B. had no real information regarding her husband's pension accounts. She was disabled under Social Security and likely could not work. She had been a past victim of domestic abuse by E.B.. The marital settlement agreement did not give her the $98,000 that she was to get from her husband's known pension accounts. Under the guise of maintenance, she was to get $500 per month toward her share (the $98,000) of the property division. However, those payments were not guaranteed in the event of E.B.'s death. This approach meant that the alleged maintenance was a tax deductible expense for E.B. and N.B. would be obligated to pay taxes on what in fact were payments to her over time of her share of the marital estate. Attorney Gamiño knew or should have known all of this information. It was as expert witness Hickey said. The conflict was not waivable by Attorney Gamiño regarding the adverse position of these parties. Under Attorney Gamiño's duty of loyalty to N.B., he was obligated to disabuse N.B. as to the patently unfair divorce agreement that was being offered to the court. N.B. could potentially waive the conflict had she been informed of her rights, but there was no such advice given to N.B. by Attorney Gamiño and no written waiver ever was prepared or signed. Attorney Gamiño had critical knowledge as to N.B. that created an insurmountable conflict and made it impossible for him to continue to represent E.B., an adverse party to N.B., his former client, in the divorce.

Thus, the referee concluded that the OLR established by clear, satisfactory and convincing evidence that Attorney Gamiño violated [conflicts rules].

In imposing sanction, the court considered the fact that this conduct occurred in the same time frame as the earlier sanction, which involved an improper sexual relationship with a client and the mother of a juvenile client. The court's order includes a CLE requirement, but I think it will take more than CLE to educate him if he did not see the non-waivable conflict here. (Mike Frisch)

July 30, 2008 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Sokol on Obama as Teacher

Posted by Jeff Lipshaw

Danny Sokol (Florida, left), over at Antitrust and Competition Policy Blog (A Member of the Law Professor Blogs Network), provides additional detail (he was also quoted in the New York Times story) on his Sokol_small experience with Barack Obama while Danny was a student at the University of Chicago Law School.  His account confirms other stories I've heard about Obama's genuineness.  When I was helping out (somewhat) back in the early primary season, some of the people who were working up in New Hampshire told me about the Senator coming out of a building and throwing snowballs at the volunteers, leaving them in something of a quandary - "do we throw snowballs back?  are the Secret Service agents going to object if we do?"

It's also interesting to see peers and acquaintances go from being private figures to public figures in full view, particularly when, as Danny points out, part of your appeal and, indeed, charisma, is your individual attention to people.  I've experienced the "looking beyond me to the next person" sense in talking to a number of politicians, and in fairness, the number of people who make demands on a mayor's or governor's or senator's or candidate's time simply forecloses the possibility of that now public person being everybody's friend. 

July 30, 2008 in Hot Topics, Law & Society, Lawyers & Popular Culture, Teaching & Curriculum | Permalink | Comments (0) | TrackBack (0)

Pitting Client Against Client

A criminal defendant ("petitioner") who was represented jointly along with her spouse in connection with drug charges established that counsel labored under a conflict of interest. Thus, the South Carolina Supreme Court concluded that the trial court improperly denied post-conviction relief:

At the PCR hearing, both plea counsel and Petitioner testified   that counsel spent more time preparing Husband’s case despite the fact that   Petitioner was pleading guilty to a majority of the charged offenses and faced   a more severe sentence. 

In terms of the conflict of interest, plea counsel acknowledged   that she discussed this issue with Husband, but could not recall specifically   talking to Petitioner about such a conflict.  Plea counsel also admitted that   she argued for leniency in Husband’s case and requested the plea judge   reconsider his sentence.  In contrast, plea counsel did not make these   arguments on behalf of Petitioner.  Moreover, Petitioner’s and Husband’s   interests were adverse to one another given Petitioner pleaded guilty to the   majority of the drug charges whereas Husband pleaded guilty to a single charge   of PWID marijuana within proximity of a school.  Significantly, plea counsel   stated at the plea proceeding that Husband was originally “charged with   everything,” but she “was able to get the solicitor who had the case at the   time to dismiss all of his cases.”  A review of the plea proceeding also   reveals that plea counsel argued for leniency on behalf of Husband by comparing   his more limited involvement in the crimes to that of Petitioner.  We believe   plea counsel’s approach essentially pitted Husband against Petitioner, which   was clearly detrimental to Petitioner’s interests.

Under the circumstances, the court held that the petitioner need not demonstrate prejudice in order to establish entitlement to relief. (Mike Frisch)

July 30, 2008 in Ethics | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 29, 2008

Class of 2007: A More Extreme Bi-Modal Distribution

[By Bill Henderson, cross-posted to ELS Blog]

NALP just published its 2007 edition of Jobs & JD's. One topic of interest to students, lawyers, law firms, and legal educators is the change in salary distribution from 2006 to 2007.  The now famous 2006 bi-modal distribution was vivid evidence that the U.S. legal profession is undergoing significant structural change.  As shown in the graph below (from this NALP webpage entitled "Another Picture Worth a 1,000 Words"), the underlying stressors are even more pronounced for the class of 2007. 

1267_bimodalcurveincolorv2

The sample is based on 23,337 law school graduates from the class of 2007 who reported salary information.  Note, however, that 197 ABA-Accredited law schools graduated 43,518 students in 2007.  Although we know the types of jobs taken by 40,416 grads, only 57.7% of this group provided salary information.  If I had to wager on the direction of underreporting, I would predict it was under-inclusive of graduates with lower salaries and those who did not pass the bar.  Why?  Aside from the human psychology that it is easier to share flattering rather than embarrassing information, the roughly 7,500 jobs under the second mode are fairly close to figures I have seen from ALM and NALP data, which are provided by large law firms rather than individual students. See, e.g., charts in this NLJ article.

This bias, however, is not necessarily good news.  In the above graph, 32.5% of the law graduates took jobs with starting salaries in the $100K+ range; but the true percentage for the class of 2007 is probably lower.   Some facts and then one normative observation.  The facts first:

More after the jump ...

Continue reading

July 29, 2008 in Associates, Clients, In-House, Law Firms, The Practice | Permalink | Comments (7) | TrackBack (0)

Sanction For Crimes Unrelated To Practice

The Pennsylvania Supreme Court has adopted  a recommendation of a three-year suspension of an attorney retroactive to December 2005. The attorney had been involved in a series of drug-related crimes during a period of unemployment after graduating from law school in 1999 and completing clerkships in 2001. She has been in a recovery program since 2004. Although the attorney had not reported criminal convictions as required by Pennsylvania bar rules, she had been otherwise cooperative with the disciplinary process. The report of the disciplinary board is appended to the court's order. (Mike Frisch)

July 29, 2008 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

New Edition Out of Handbook on Privilege

5190435_big The ABA announces publication of a new fourth edition of Vincent Walkowiak's book, The Attorney-Client Privilege in Civil Litigation.  Here is the webpage

The book is an edited collection of input from various lawyers.  It is in one volume and geared to practitioners, and also considers work product privilege. 

[Alan Childress]

July 29, 2008 in Privilege | Permalink | Comments (0) | TrackBack (0)

Burke and McCouch on Ethics of Tax Shelter Attorney for Jenkins & Gilchrist

Posted by Alan Childress

Karen Burke and Grayson McCouch (both at U. of San Diego) recently posted to SSRN an article on the tax lawyer Paul Daugerdas, whose shelter opinions led to the Jenkens & Gilchrist firm's collapse, Cobra Strikes Back: Anatomy of a Tax Shelter.  Here is a post on it at TaxProf.  Our readers might be interested in the legal profession aspects of the article.  The abstract is below the fold.

Continue reading

July 29, 2008 in Abstracts Highlights - Academic Articles on the Legal Profession | Permalink | Comments (0) | TrackBack (0)

Billing Misconduct Alleged

The Illinois ARDC has filed a complaint alleging that the attorney, while a general litigation associate as Kirkland and Ellis, falsely billed a client for legal services. The complaint alleges, in part:

In March 2006, and from June 2006 through July 2007, Respondent prepared timekeeping records and the firm sent invoices for his purported services to Ernst & Young in the In re: American Italian Pasta Company Securities Litigation matter. On the timekeeping records Respondent provided to the firm, Respondent indicated he expended 736.2 hours providing legal services to Ernst & Young in the In re: American Italian Pasta Company Securities Litigation matter. At Respondent’s hourly rate, these hours resulted in billings of $221,766.

Of the 736.2 hours recorded by Respondent in March 2006, and from June 2006, through July 2007, on his timekeeping records and on the invoices to Ernst & Young, as set forth in the table below, approximately 344.3 hours totaling $106,361 were false.

I could not tell from from the complaint how this matter came to the attention of disciplinary authorities. That is always interesting to me. (Mike Frisch)

July 29, 2008 in Bar Discipline & Process | Permalink | Comments (0) | TrackBack (0)

Litigation For the Yacht Club Set

In an opinion issued today, the New York Appellate Division for the First Judicial Department resolved an issue regarding the appropriate Challenger of Record for the coming America's Cup race. The court found in favor of the Golden Gate Yacht Club ("GGYC") and against a Swiss entry("SNG"). The legal issue turned on the phrase "having for its annual regatta" in the Deed of Gift for the race. The full governing language:

"Any organized Yacht Club of a foreign country, incorporated, patented, or licensed by the legislature, admiralty, or other executive department, having for its annual regatta an ocean water course on the sea, or on an arm of the sea, or one which combines both, shall always be entitled to the right of sailing a match of this Cup, with a yacht or vessel propelled by sails only and constructed in the country to which the Challenging Club belongs, against any one yacht or vessel constructed in the country of the Club holding the Cup."

The court's majority gives us a grammar lesson:

This appeal turns on the meaning of the words "having for its annual regatta" as used in the Deed of Gift. In making its determination, the motion court found that the phrase is "plainly understood to mean that it is an on-going activity; the activity has taken place and is continuing." The court further found that the phrase "implies that the organization has had one or more regattas in the past, and will continue to have them in the future." Accordingly, the court reasoned that CNEV was not a qualified Challenger of Record because it had not held an annual regatta as of the date of its challenge. The Deed of Gift, a trust instrument, "is to be construed as written and the settlor's intention determined solely from the unambiguous language of the instrument itself" (Mercury Bay Boating Club, 76 NY2d at 267). As SNG would have it, the annual regatta requirement can be satisfied where the yacht club "intends to hold an annual regatta and does so prior to the date of its proposed match." GGYC disputes SNG's construction, arguing that " [h]aving' as commonly used in the law does not mean not having now.' It means possess.' And, in this context, it means, possess' an annual regatta." GGYC's argument is untenable because, as a matter of standard English usage, the noun "regatta" cannot be the proper object of the verb "possess."

The record includes an excerpt from An English Grammar For the Use of High School Academy, and College Classes, by W. M. Baskervill and J. W. Sewell [1896]. According to this treatise, participles, such as "having," "express action in a general way, without limiting the action to any time, or asserting it of any subject." Participles "cannot be divided into tenses (present, past, etc.), because they have no tense of their own, but derive their tense from the verb on which they depend." An example given in the treatise is "fulfilling," which depends on the past-tense verb, "walked," in the following: "He walked conscientiously through the services of the day, fulfilling every section the minutest, etc." A further example is "dancing," which depends on a present-tense verb in the following verse:

"Now the bright morning star, day's harbinger,

Comes dancing from the East."

In accordance with the foregoing, "having for its annual regatta" can only be interpreted through strained English usage. If explicable at all, the phrase is subject to conflicting interpretations. We therefore hold that the Deed of Gift's annual regatta requirement is ambiguous. GGYC argued below that the participle, "having," in the Deed, derives its tense from the words "shall always be entitled." "Shall," however, is a word used to form the future tense (Lutz and Stevenson, The Writer's Digest Grammar Desk Reference § 1C, at 16-17). Accordingly, GGYC's argument only confirms the ambiguity of the annual regatta requirement.

A court may resort to extrinsic evidence to construe an ambiguous provision of a trust instrument (see Mercury Bay Boating Club, 76 NY2d at 267). In this instance, the Cup's recent history is a source of relevant extrinsic evidence. SNG challenged for the 31st America's Cup by letter to the Royal New Zealand Yacht Squadron (RNZYS), the then trustee, on August 18, 2000. SNG, a Swiss yacht club, is situated on Lake Geneva and, as of the date of its challenge, had never held a regatta on an ocean water course, as required by the Deed...

A dissent would find against the Swiss yacht club:

I am also in agreement with the motion court that GGYC's Notice of Challenge is in compliance with, and therefore valid under, the provisions of the Deed. In Mercury Bay, the Court of Appeals noted that the Deed "broadly defines the vessels eligible to compete in the match" (76 NY2d at 266), and "permits the competitors to both construct and race the fastest vessels possible so long as they fall within the broad criteria of the deed... [which document makes it] clear that the design and construction of the yachts as well as the races, are part of the competition contemplated" (id. at 269).

Here, GGYC's notice and certificate contain all the information required by the Deed, although SNG takes issue with GGYC's description of the challenging vessel in the certificate as a "keel yacht" while specifying dimensions suggestive of a multi-hulled vessel, such as a catamaran, thereby creating an ambiguity and rendering the challenge invalid. It is clear, however, that even if the certificate contained a possible ambiguity, SNG was not at any time actually confused or misled by the Certificate, as the record indicates that SNG fully understood that GGYC was going to race a catamaran. The general counsel of SNG's representative racing team, in an affidavit submitted in support of SNG's motion for summary judgment, averred that the dimensions delineated in the certificate "can only be for a multi-hulled vessel - presumably a catamaran," while not referring to any confusing or inconsistent language on that point. Moreover, SNG's protestations of confusion are belied by its own reply brief in which SNG acknowledges that GGYC has proposed to compete with a "catamaran goliath."

(Mike Frisch)

July 29, 2008 in Law & Society | Permalink | Comments (1) | TrackBack (1)

"An Unfortunate Truth"

In another entry in the long-running war in the West Virginia Supreme Court of Appeals, the Acting Chief Justice yesterday issued a concurring opinion defending his decision not to recuse himself in a matter and lamenting the state's judicial election process:

The opinions of the judge of a highest court of a state are no   place for intemperate denunciation of the judge's colleagues,   violent invective, attributings of bad motives to the majority of   the court, and insinuations of incompetence, negligence,   prejudice, or obtuseness of fellow members of the court.

Roscoe Pound, Cacoethes Dissentiendi: The Heated Judicial Dissent, 39 A.B.A. J. 794, 795   (1953). 

There is an important difference between a thoughtful, well-reasoned separate   opinion or order and one which is grounded in the political manipulation of legal doctrine;   and in the case of ensuring a stable, predictable and fair judicial system, that difference   matters.  Judges who use their opinions and orders simply as sensationalistic bombast by   which to convey partisan agendas or who pander to emotion rather than legal reason do a   disservice to the rule of law and to the institution they serve.

  It is a testament to the strength of our justice system that judges may disagree   and do so openly in separate opinions.  A well-reasoned and legally sound separate opinion   carries with it the opportunity for pointing out differences with the opinions of the other   members of the court without undermining public confidence in the judiciary.  Hon. Ruth   Bader Ginsburg, Speaking in a Judicial Voice, 67 N.Y.U.L. Rev. 1185, 1196 (1992).  By   furthering positive progress in the development of law, a well-honed opinion serves as an   invaluable instructional tool to judges, lawyers, legal scholars, law students and even to a   judge's colleagues.  “[T]he effective judge . . . strives to persuade, and not to pontificate.   [He] speaks in 'a moderate and restrained' voice, engaging in a dialogue with, not a diatribe   against . . . [his] own colleagues.” Id. at 1186 (internal quotations omitted).  A separate   opinion should never “generate more heat than light,” but rather should “'stand on its own   footing,' . . . spell[ing] out differences without jeopardizing collegiality or public respect for   and confidence in the judiciary.” Id. at 1194, 1196 (internal quotations omitted).  

If the touchstone of a judicial system's fairness is actual justice, which I believe it is, its legitimacy is measured in actualities, not in the manipulation of appearances   or the vagaries of sensationalism.  Actual justice derives from actual impartiality in decision-making and is conveyed in well-written legal opinions which are founded in the rule of law   -- not in orders, opinions or public pronouncements by judicial officers reflecting   partisanship, contempt for other members of this Court, or their staff, bias toward or against   the parties, or a pre-judging of the issues.  

  It is an unfortunate truth that judicial officers in West Virginia must stand for   office in political elections.  Notwithstanding this political selection method, the public's confidence in our system of justice is necessarily undermined and the stability and   predictability of the rule of law is compromised when politics cross the threshold of our   Court.  The most important factors therefore affecting the public's perception of actual   justice in this Court necessarily are the actual decisions of this Court, and its members, over time, the professional demeanor of this Court's members, and the quality of the written opinions and orders which we produce in specific cases. 

By baiting emotions, I believe the Dissenting opinion adopts a distinctly “political voice” rather than a “judicial voice.” With due respect to my dissenting colleagues,   this case does not present a close call on the basis of the rule of law.  Because the Majority   decision possesses such a deep strength of legal authority, I do not believe that the Dissenting opinion in any way weakens the authority or substance of the Court's decision.

(Mike Frisch)
 
       

July 29, 2008 in Judicial Ethics and the Courts | Permalink | Comments (0) | TrackBack (0)