Antitrust claim treated as board game, says judge

From the late 1980s through 2001, if you did your own body work on your car and you needed automotive sandpaper, you had two choices, 3M or NicSand. Now the only choice is 3M.

Sixth Circuit Judge Boyce F. Martin, Jr. thinks that’s abrasive.

Most folks with banged-up cars let the bump shop deal with the patching and painting, and the resulting dust and stink. So, there’s not a huge do-it-yourself market for automotive sandpaper.

It doesn’t make economic sense for retailers to stock both brands. That’s why the retailers NicSand and 3M dealt with insisted on annual, exclusive-supplier agreements. The retailers were not adverse to switching suppliers. But to get in, you had to furnish a full line of products, provide all the display equipment, discount the first order and buy the retailer’s current inventory of sandpaper.

This worked extremely well for NicSand until 1997, when 3M decided to get serious about improving its one-third market share. One-by-one, over a several-year period, 3M offered the retailers six- or seven-figure incentive payments to stock 3M products on an exclusive, multi-year basis. The retailers told NicSand to come back in a few years and maybe we can talk business then.

When 3M was done, NicSand was out of the automotive sandpaper business, into bankruptcy court seeking reorganization and on the phone to its lawyers to sue 3M for antitrust violations.

The issue in the Sixth Circuit was antitrust standing. Judge Jeffery S. Sutton, writing for an en banc majority, said NicSand didn’t have it because 3M’s pricing was not predatory and there was no illegal tying (being forced to buy one product to get another product that you really want). The incentive payments were price cuts offered in exchange for getting the retailer’s business. And the multi-year contracts? This was no different than buying in bulk to get a discount. What about the exclusive nature of the contracts? This was the retailers’ condition, and 3M couldn’t be faulted for going along with that.

Judge Martin, in dissent, said the case made him long for the good old days

when monopoly was an evil targeted by Congress and guarded against by the antitrust laws of the United States. Since their enactment, it has been the purpose of the federal antitrust laws to prevent the emergence of entrenched monopoly power and “to perpetuate and preserve, for its own sake and in spite of possible cost,” the existence of competition in industry. … Today, however, the majority treats monopoly more as a board game than as an economic harm to the public.

Judge Martin continued

The majority seeks to characterize this case as one in which one company that had long prospered in a particular niche market became lazy and fell victim to a more vigorous competitor that simply played the game of business more effectively. While NicSand may have once been the dominant competitor, that former status can neither legalize 3M’s anticompetitive business practices nor make 3M immune from antitrust suit. Yes, NicSand was 3M’s competitor, and yes, it obviously fell prey to 3M’s tactics. However, 3M now holds a monopoly over the market, products have been eliminated and prices have correspondingly risen by seventy percent. The question here is whether the tactics 3M employed to attain that status were legal and whether NicSand is an adequate representative of the market’s interests in this suit. Contrary to the majority’s contentions, at this stage of the case [dismissal on a Rule 12(b)(6) motion with no discovery], it is impossible to conclude that NicSand has failed to meet its burden. The dangers of monopoly are well-recognized in our law … and I believe the majority has improperly turned a blind eye to them in this case.

The case is NicSand v. 3M.

Bill to keep cars from judiciary motors along

Compensation for Michigan Supreme Court justices and Court of Appeals judges would not include the use of state-owned or state-leased vehicles under legislation that has cleared the Michigan House General Government Committee.

The committee has reported out (see pages 8 and 9 in the linked document) a pair of bills, HB 5005 (amends the Revised Judicature Act) and HB 5006 (same thing but amends the Management and Budget Act), that address the matter.

The legislation has a bit of the “Department of Redundancy Department” feel to it because, if enacted, it will accomplish by law what has already been put into practice by the MSC justices and COA judges themselves. The bills also include all the state’s trial-court judges, who never had state-owned vehicles to begin with.

Responding to media reports last April about the costs associated with issuing judicial branch employees state cars, all of the justices and COA judges turned theirs in, amid some grousing and speculation that using their private vehicles for court business may be a false economy once they’re reimbursed for mileage.

MSC recusal standards: constitutional amendment being drafted

A state constitutional amendment that would require Michigan Supreme Court justices to recuse themselves “in any proceeding in which the judge’s impartiality might reasonably be questioned” is in the works at the request of Rep. Mark Meadows, (D-East Lansing).

This would include situations where campaign contributions to a justice from a party’s lawyer or the lawyer’s law firm exceed a specified amount over a given time period.

The amendment is being patterned after Rule 2.11(A)(4) of the American Bar Association’s (ABA) Model Code of Judicial Conduct, according to a spokesperson from Meadows’ office.

Meadows, a member of the House Judiciary Committee, asked the Legislative Service Bureau to prepare the amendment earlier this month, after the committee took testimony from Rich Robinson of the Michigan Campaign Finance Network (MCFN).

The MCFN has been making its case for the MSC to develop recusal standards when justices, litigants and money are intertwined. This is a suggestion the court is not likely to act on any time soon. See, Michigan Lawyer: Campaign cash and recusal: a lost cause in the MSC?

Public financing of MSC election campaigns has also been a long-standing priority for the MCFN. See, Michigan Lawyer: Justices, money, elections and recusal In his testimony, Robinson told the committee that public financing of MSC election campaigns would eliminate “much of the cause for concern about recusal.”

Campaign cash and recusal: a lost cause in the MSC?

In an earlier post, Michigan Lawyer: Justices, money, elections and recusal, we took a look at two Michigan Campaign Finance Network proposals.

One recommended “voluntary full public funding” of Michigan Supreme Court elections.

The other urged the MSC to “develop standards for recusal for cases involving individuals and interest groups who have substantial financial ties, whether personal or political, to any justices.”

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Recusal: a heated debate in the MSC Over in the Hall of Justice, the topic of recusal has generated ferocious debate among the justices. The arguments have focused, for the most part, on the court’s practice of letting justices who are the subject of a recusal motion decide the motion themselves and whether the justices are required to provide reasons for a decision to either remain on the case or to back off. Historically, the justices have remained silent about their reasons. But since 2003, Justice Elizabeth A. Weaver has become insistent that reasons be provided. See, e.g. “If it ain’t broke… MSC declares procedures for handling recusal motions don’t need fixing” and “Is it time for MSC to reform how it handles recusal motions? Experts weigh in on impact of high court’s recent ruling”. The latest salvos are in two of the high court’s orders, Jordan v. Dep’t of Labor & Economic Growth, and Fieger v. Cox.

The issue of recusal standards addressing justices and political financial matters is a subset of the larger issue of the high court’s recusal procedures in general. See the sidebar on the right.

The Legislature will need to hash out any public funding proposal. Recusal standards based on campaign contributions are within the court’s domain, but with the court’s current makeup, this is not likely to happen anytime soon.

Here’s why.

In Adair v. State of Mich., the plaintiffs asked Chief Justice Clifford W. Taylor and Justice Stephen J. Markman to recuse themselves because both justices’ wives worked for the office of the Attorney General, who was defending the case.

The motion produced a memorable response, in which every justice weighed in on the topic of recusal. And, Justices Taylor and Markman, previously staunch defenders of the court’s “no reasons” tradition, broke that tradition when they filed an 18-page statement explaining why they were denying the motion.

They responded to every argument the plaintiffs made, and then gratuitously addressed a topic the plaintiffs hadn’t mentioned — campaign contributions.

They started with some undisputable givens: every “justice in Michigan in modern times” has received campaign contributions; under the state constitution, justices must compete in elections; it takes bushel baskets of money to run a campaign and the money has to come from somewhere. Then they said this:

Of considerable relevance to the subject of campaign contributions as a basis for recusal is the Legislature’s establishment of limits on individual and political action committee contributions to Michigan judicial candidates. MCL 169.252 and 169.269. Such limits must be understood as clearly reflecting the Legislature’s, and the people’s, understanding that contributions in these amounts will not supply a basis for disqualification. That is, lawful contributions made within these limits, lawfully reported and lawfully disclosed, cannot fairly constitute a basis for judicial disqualification. Otherwise, these statutes, just as MCR 2.003 and Canon 3(C), would be little more than cleverly devised snares to be exploited by those wishing to undermine individual judges. A judge who plays by the rules should not be required to recuse himself or herself on the basis of such conduct. Thus, we assume, as have all the justices before us, that the Legislature decided that lawful campaign contributions would not give rise to a basis for judicial recusal.

Those words were written Jan. 31, 2006.

In statements released the same day, both Justices Robert Young and Maura Corrigan indicated support for the joint statement of Justices Taylor and Markman.

Justice Young: “I support their joint statement and fully concur in the legal analysis of the ethical questions presented in it.”

Justice Corrigan: “I agree with their legal analysis of the ethical issues raised.”

There’s no reason to think that any of them see things differently now.

On a seven-justice court, four votes are needed to make things happen.

And that’s why the MCFN’s suggestion that the court develop recusal standards addressing the issue of political money will remain just that, a suggestion, as far as the Michigan Supreme Court is concerned.

Attorneys barred from this bar: tavern owners say ‘No Lawyers’

So, you want a back-yard swimming pool to come home to after a hot, busy day of running a tavern but your neighbor, an attorney, spoils your fun with a lawsuit.

One year and $10,000 later, you’ve got your pool. Now you want revenge.

You decide you’ll use your business to let the whole world know just how you feel about meddlesome members of the legal profession.

The result is Butch and Jody Morrison’s Crescent “No Lawyers” Bar & Grill in Boise, Idaho.

“They can’t be serious,” I thought, but an on-line search gave me some doubts. “No lawyers, no kids, no kiddin’,” popped up on one result. “If you practice law … keep your mouth shut,” another warned.

Okay, I had to know more. I called the Crescent and said, “Hi! I’m an attorney and I write for a legal newspaper in Michigan. I have a few questions. Is someone there who could me help out?”

As I sat on hold, I began to think that maybe I hadn’t said the right thing.

Pollsters say lawyers and reporters are among the most despised people on the planet. Two strikes against me. I took little comfort while scanning the Crescent’s Lawyer Jokes page and ran across this one:

A group of headhunters sets up a small stand near a well-traveled road. The bill of fare is as follows:
Sauteed Tourist $10
Braised Reporter $12
Fried Diplomat $15
Barbecued Lawyer $110
A customer, noticing the great price differential, asked why lawyers cost so much.
The headhunter replied, “If you had ever tried to clean one of those devils, you would understand.”

I checked the Crescent’s bill of fare, entitled “Legal Brief.” Appetizers included a “So-Su-Me Platter” and “Prosecution Prawns.” Other choices: “Witness Stand Soups & Salads,” “Jailhouse Sandwiches,” “Law Firm Specials” and “Courthouse Burgers.” There were only a couple of suspicious items. “Lawyer Limbs” are the Crescent’s version of chicken wings with hot sauce. And there are “Lawyer Fries,” but you’ll need to look at the menu yourself for the lowdown on that one.

A bit more browsing on the website started to produce other evidence (an on-line store and a light-hearted history of the Crescent) that this whole “No Lawyers” thing might just be a big tongue-in-cheek joke. That’s when the phone line clicked back to life.

The person on the other end apologized for the wait, explained I had called during the lunch hour rush and someone could be available later. A faux pas on my part, I insisted. I forgot about the two-hour time difference between Michigan and Idaho.

But I had to ask the pay-off question.

“So what happens if you actually find out someone is an attorney?”

“We charge ’em a lawyers fee,” she deadpanned.

New trend: fewer business suits

This has nothing to do with casual Fridays or clothing shortages at your favorite tailor or department store.

This has everything to do with the declining involvement of U.S. businesses in litigation, both as defendants and plaintiffs, as reported in a survey released yesterday by the Houston-based, mega-international law firm of Fulbright & Jaworski.

For the first time since the firm began tracking such matters, major U.S. corporations have reported “a distinct drop in the number of lawsuits filed against them.”

In the firm’s “Fourth Annual Litigation Trends Survey Findings,” 17% of in-house counsel at 250 major U.S. corporations say they haven’t had to defend a new suit in the last year, compared with 11% in the 2005-06 reporting period.

They’ve also been a little less eager to sue. Sixty-five percent of the survey respondents reported filing at least one new suit, down from 70% in the prior reporting period and down more sharply still from 2004, when 88% said their company filed at least one new suit.

But there’s plenty of unfinished business. One-third of the companies say they have more than 25 suits in process at any one time, and 18% have over 100.

Governmental action against corporations continues to be a significant source of litigation. Almost half reported some type of regulatory proceedings brought against them in the last 12 months.

The survey notes a dip in securities and bankruptcy disputes and an up-tick in product liability and patent cases.

The survey also includes information about average settlements, use of outside counsel and attorney billing (including alternative fee structures) and company attitudes toward their outside lawyers, to name a few.

Download a copy here.

Justices, money, elections and recusal

A pair of recent reports from the Michigan Campaign Finance Network touch on the touchy subjects of how election campaigns for the Michigan Supreme Court are financed, and standards for recusal when litigants and justices have “substantial financial ties,” whether personal or political.

In “A Case for Political Reform in Michigan,” the MCFN argues that the state “should provide voluntary full public funding for Michigan Supreme Court campaigns so voters have the opportunity to support candidates who demonstrably have no financial connection to interest groups that subsequently become litigants before the Court.”

The MCFN’s 2006 Citizen’s Guide to Michigan Campaign Finance (caution: this is a big file; if you have a wimpy computer and/or internet connection, you’ll need to be patient) details MSC candidate campaign spending in the last election. Check out Appendix M, which names, to borrow Justice Robert Young’s phrase, some of “the usual suspects” who contributed to Justices Maura Corrigan and Michael Cavanagh’s 2006 campaigns.

The Guide also bemoans Michigan’s “weak campaign finance law,” which allows special interest groups to run so-called “issue ads.”

Issue advertising advocates particular positions or recommends courses of action that stop short of actually telling viewers to vote for or against a particular candidate. Such advertising does not fall within campaign expense reporting requirements.

We’re not talking about trivial sums. From 2000, the first year for which the Guide provides issue advertising figures, through 2006, total spending on all MSC races was almost $23.2 million. Of that figure, issue advertising accounted for $10.5 million.

The problem with issue advertising, according to the MCFN’s “Case for Political Reform,” is that “with more than one-third of the spending coming from anonymous sources, there is no way to evaluate the nature or the scale of the financial connection between the justices and the judged.”

The MCFN recommends that all “issue advertising” that mentions a candidate by name within 60 days of an election should be considered campaign expenditures subject to reporting requirements.

And, this report continues, “[a]s long as huge sums of private interests’ money are involved in the judicial selection process, the Court should be attentive to the fact that political money compromises the appearance, if not the reality, of its judicial impartiality.”

The MCFN urges the MSC to “develop standards for recusal for cases involving individuals and interest groups who have substantial financial ties, whether personal or political, to any justices.”

Easier said than done.

We’ll have more about this in a future post.

Shaperio Bankruptcy Symposium: all about Chapter 13

There’s still time to register for the 3rd Annual Walter Shaperio Bankruptcy Symposium at the Westin Hotel in Southfield this Wednesday, Oct. 17.

Professor Scott Norberg, from the Florida International University College of Law, is all set to tell bankruptcy practitioners about “The Good, the Bad and the Ugly: What does Chapter 13 accomplish for debtors and creditors?”

Things get underway at 6 p.m. Chief Judge Steven Rhodes of the Bankruptcy Court for the Eastern District of Michigan would love to see you there.

Here’s a registration form with all the details.

For more information, call Leslie Berg at (313) 226-7950 or David Lerner at (248) 901-4010.

It’s not legit: jury duty calls are scam

You’re fairly certain that you haven’t received a jury duty summons, but the person on the phone, who claims to be a court official, says that you have, you didn’t show up and now the judge is angry enough to issue an arrest warrant.

This can all be cleared up, the caller continues, if you’ll just provide your date of birth, your Social Security number and some credit card information.

Hang up! Call the cops and the court the caller claimed to represent, warns State Court Administrator Carl Gromek, pictured on the left.

It’s a scam.

The only way Michigan state courts contact prospective jurors is by mail, Gromek said. “Be aware: prospective jurors can call courts, but courts don’t initiate those calls. And courts never call prospective jurors to get their financial information.”

The Niles Daily Star reports that this scam is currently being run in Berrien County, in the southwest part of the state.

Gromek has these pointers to avoid have your pocket electronically picked:

• Courts do not contact citizens by phone regarding jury duty. Be suspicious if a person calls claiming to be a court official or staff person.
• Be skeptical if you are told, “In order to avoid prosecution for missing jury duty, you must provide your social security number now so we can verify your information.”
• Be suspicious if the person pressures you for immediate action or refuses to send written information for you to review.
• Never give out your bank, credit card, or social security information over the phone to someone who calls you.
• If you are uncomfortable, hang up, even if the caller threatens prosecution.
• Report suspicious calls to local police.

We’re pretty sure it won’t be boring

Dictionary publishers looking to illustrate the word “outspoken” could do no better than by printing the photograph on the right.

That’s not-so-instantly-recognizable attorney Geoff Fieger, the hands-down favorite for the title of “Michigan’s Most Controversial Attorney Ever,” behind the yellow tape. The image is part of “Fieger: Inside Out,” a collection of work being displayed by artist Holly Flory at The Print Gallery & Everything Art in Southfield through Nov. 1.

The gallery is located near 12 Mile Rd. and Northwestern Highway. Call 248-356-5454 for more information.