Coyote Blog

I think Megan McArdle is being naive about the tort system in this country when she writes

So Junior Seau's family is suing the NFL over head injuries, which lead to chronic brain damage, and possibly his suicide.

...

This story is simply  unbelievable.  Shareholders of AIG should have been wiped out in 2008 in a bankruptcy or liquidation after it lost tens of billions of dollars making bad bets on insuring mortgage securities.  Instead, AIG management and shareholders were bailed out by taxpayers.

It is bad enough I have to endure those awful commercials with AIG employees "thanking" me for their bailout.  It's like the thief who stole my TV sending me occasional emails telling me how much he is enjoying it.

Now, AIG managers and owners are considering suing the government because the the amazing special only-good-for-a-powerful-and-connected-company deal they got was not good enough.

Directors at American International Group Inc., AIG -1.28% the recipient of one of the biggest government bailout packages during the financial crisis, are considering whether to join a lawsuit that accuses the U.S. government of too-onerous terms in the 2008-2009 rescue package.

The directors will hear arguments on Wednesday both for and against joining the $25 billion suit, a person briefed on the matter said. The suit was filed in 2011 on behalf of Starr International Co., a once very large AIG shareholder that is led by former AIG Chief Executive Maurice "Hank" Greenberg. It is pending in a federal claims court in Washington, D.C....

Starr sued the government in 2011, saying its taking of a roughly 80% AIG stake and extending tens of billions of dollars in credit with an onerous initial interest rate of roughly 15% deprived shareholders of their due process and equal protection rights.

This is especially hilarious since it coincides with those miserable commercials celebrating how AIG has successfully paid off all these supposedly too-onerous obligations.  And certainly Starr and other AIG investors were perfectly free not to take cash from the government in 2008 and line up some other private source of financing.  Oh, you mean no one else wanted to voluntarily put money into AIG in 2008?  No kidding.

Postscript:  By the way, employees of AIG, you have not paid off all the costs of your bailout and you never will.  The single largest cost is the contribution to moral hazard, the precedent that insurance companies, if sufficiently large and well-connected in Washington, can reap profits on their bets when they go the right way, and turn to the taxpayer to cover the bets when they go wrong.

JP Morgan finds itself under the government microscope for having heartlessly... cooperated with the government four years ago

The U.S. Department of Justice and New York Attorney General Eric Schneiderman teamed up last week to sue J.P. Morgan in a headline-grabbing case alleging the fraudulent sale of mortgage-backed securities.

One notable detail: J.P. Morgan didn't sell the securities. The seller was Bear Stearns—yes, the same Bear Stearns that the government persuaded Morgan to buy in 2008. And, yes, the same government that is now participating in the lawsuit against Morgan to answer for stuff Bear did before the government got Morgan to buy it....

As for the federal government's role, it's helpful to recall some recent history: In the mid-2000s, Bear Stearns became—outside of Fannie Mae and Freddie Mac—perhaps the most reckless financial firm in the housing market. Bear was the smallest of the major Wall Street investment banks. But instead of allowing market punishment for Bear and its creditors when it was headed to bankruptcy, the feds decided the country could not survive a Bear failure. So they orchestrated a sale to J.P. Morgan and provided $29 billion in taxpayer financing to make it happen.

The principal author of the Bear deal was Timothy Geithner, who was then the president of the Federal Reserve Bank of New York and is now the Secretary of the Treasury. Until this week, we didn't think the Bear intervention could look any worse.

Somewhere there was a legal department fail here - I can't ever, ever imagine buying a company with Bear's reputation that was sinking into bankruptcy without doing either via an asset sale or letting the mess wash through Chapter 7 so there could be an old bank / new bank split.  But Bank of America made exactly the same mistake at roughly the same time with Countrywide, so it must have appeared at the time that the government largess here (or the government pressure) was too much to ignore.

I have mixed feelings about Groupon.  Having been an executive at Mercata 10+ years ago, I recognize that they have gotten further than we did with the group buying model by a) waiting for there to actually be social media and b) delivering electronic goods (coupons) rather than hard goods.  As a customer, I have satisfactorily participated in several groupons and as a business we have used it a couple of times as a promotional program.  As an investor, I was short Groupon for quite a while, convinced that they had no particular barrier to entry for competitors like Amazon who could grab the market if there was enough money at stake.

So, all that aside, I was fascinated by the recent settlement of a class action lawsuit.  Prior to the lawsuit, all customers could get a full refund of their Groupon through a simple contact with Groupon customer service.  After the lawsuit, customers during the class action period can only get a partial refund and then only by going to a separate class website and hassling with forms and doing a lot of waiting.  The plaintiffs will actually get less than they would have had the lawsuit not gone forward, the difference being the millions required to pay off the tort lawyers to go away.

Having just had to pay the fees of a tort lawyer who brought a frivolous suit against our company just to make him go away, I am sympathetic.  Had the plaintiff approached me directly, I might have given her a few bucks just to settle and avoid getting lawyers involved.  But instead the lawyer got part of his fees paid in the settlement and the plaintiff got zip.  Basically just legal blackmail, with the plaintiff as unpaid pawn.

Several sites have reposted this Craigslist ad, gasping in shock at it as evidence of massive foreclosure fraud

We are a collection agency/debt buyer. What we are looking for is a part time attorney to work for us as our corporate counsel, on our payroll, about 5 to 6 hours a week. This is a short term employment arrangement, no longer than 90 to 120 days.

Your job will be to sign pleadings, praecipe for entry of appearances, praecipe for writ of execution, and garnishment orders. Our paralegal will prepare all paperwork for your signature. This is very standard stuff for us.

If you are an attorney looking for challenging legal work, this is not for you. WE DO NOT NEED F LEE BAILEY- we are fee shopping. If you passed your boards with a D+, and you can sign your name, you possess all the credentials required for this job. If this opportunity interests you, please feel free to reply to this email with a brief description of who you are, when you got your law license, and what you will be needing from us in the way of compensation.

I would instead offer it as a lesson in the stupidity of state-enforced professional licensing arrangements.  Let me rewrite it:

We have all the legal knowlege we need.  We know exactly what the forms look like and mean.  We have written all the documents and tested them over time during our long presence in this business and we know them to meet our legal needs.   We have no need, in other words, for legal help.

However, attorneys have gotten together and created an attorneys guild, and, what's more, have convinced the government to pass laws that require membership in the guild to perform certain gate-keeping functions.  In our case, we need a member of the guild to sign some forms to make them legal, both because the guild has strong influence and because certain folks have convinced everyone that all mortgage pain in this country came from having a machine perform this signature function rather than a flesh and blood hand.  So we need a flesh and blood hand rather than a machine to sign foreclosure documents.  Unfortunately, that hand has to be attached to a brain that has passed the bar exam, and because the guild is pretty good at limiting its membership, we expect to have to pay an absurd amount of money for this trivial function that could be duplicated by a six-year-old (and used to be performed by a simple $100 machine).

Don't get us wrong -- if we were on trial for our lives or facing a nasty, complicated lawsuit or wanted to draft a custom contract to protect our interests, we would be very happy to consider the opinion of third party licensing groups as to the merit of a particular attorney.  Ironically, though, even then current licensing would be absurd, for in this case it would not greatly exceed our quality requirements (as it does for signing our foreclosure paperwork) but it would vastly undershoot our need due diligence needs.   Perhaps there is some legal function for which attending an ABA-accredited school and passing the bar exam is the perfect level of quality assurance, but we have not found it yet.

I hate excerpting Ken at Popehat in times like this, because I simply love reading all his prose and hope you will do so as well rather than settling for the excerpt only.  I love Neal Stephenson's Cryptonomicon not because it is his best story (it's not) but because it has some of his best prose.  Six pages on eating Cap'n Crunch and ten or so on getting a wisdom tooth extraction, and I was left begging for more.  Ken is my blogging equivalent.  I could read a whole book just with Ken calling out censorious lawyers for threatening bloggers to try to shut them up.

That said, he has been writing of late about a site called Funnyjunk sending a lawyer-cum- Tony-Soprano after the Oatmeal.  Today he really rips into said lawyer, named Charles Carreon:

See, a legal threat like the one Charles Carreon sent — "shut up, delete your criticism of my client, give me $20,000, or I'll file a federal lawsuit against you" — is unquestionably a form of bullying. It's a form that's endorsed by our broken legal system. Charles Carreon doesn't have to speak the subtext, any more than the local lout has to tell the corner bodega-owner that "protection money" means "pay of we'll trash your shop." The message is plain to anyone who is at all familiar with the system, whether by experience or by cultural messages. What Charles Carreon's letter conveyed was this: "It doesn't matter if you're in the right. It doesn't matter if I'm in the wrong. It doesn't matter that my client makes money off of traffic generated from its troglodytic users scraping content, and looks the other way with a smirk. It just doesn't matter. Right often doesn't prevail in our legal system. When it does, it is often ruinously expensive and unpleasant to secure. And on the way I will humiliate you, delve into private irrelevancies, harass your business associates and family, disrupt your sleep, stomp on your peace of mind, and consume huge precious swaths of your life. And, because the system is so bad at redressing frivolous lawsuits, I'll get away with it even if I lose — which I won't for years. Yield — stand and deliver — or suffer."

Our system privileges Charles Carreon to issue that threat, rather than jailing or flogging him for it. And so Carreon supports bullying like that. He's got a license to do it. He knows that his licensed threats — coming, as they do, on the [slightly odd] letterhead of a lawyer — inspire far more fear and stress than the complaints of a mere citizen, and by God he plays it to the hilt.

By contrast, Charles Carreon doesn't like shows of force that you or I can muster. "I'm completely unfamiliar really with this style of responding to a legal threat," he sniffs. There's a whiff of Paul Christoforo of Ocean Marketing in there — the sentiment "how was I to know that I was picking on someone stronger than I am? Is that fair?" But what he means is "if the people I threaten don't have to dig into their pockets to go hire a lawyer, and spend unpleasant hours with that lawyer, and lay awake at night worrying, and rely on a lawyer who is part of my privileged culture, but can stand up for themselves . . . how can I intimidate them so easily?" Perhaps some rude Oatmeal followers did actually send true threats or abuse to Charles Carreon's office — which I condemn. That's morally wrong and not helpful to the cause of free speech; it's harmful. But I fail to see why Charles Carreon sending that threat letter is more legitimate, admirable, or proper than ten thousand Oatmeal fans sending back the message that Charles Carreon is a petulant, amoral, censorious douchebag. It doesn't take lawyers, it doesn't take law school, it doesn't take any special privilege conferred by the state — it only takes a robust right of free expression — sending it back by blogging it, tweeting it, posting it on Facebook, and posting it in comments on forums. Charles Carreon has power derived from an inadequate legal system and letters of marque from the State Bar; The Oatmeal has the power of goodwill and community respect earned by talent. There's no reason to exalt Carreon's power and condemn The Oatmeal's.

Read it all.  The Oatmeal's response is also classic.

Breaking news from California:

The Workers' Compensation Insurance Rating Bureau (WCIRB) made it official and submitted a mid-year filing for a 9.1% increase in the pure premium advisory rate that Insurance Commissioner Dave Jones approved less than six months ago. The proposed July 1 increase follows the 37% increase that Jones approved for January 1 that was hidden by the change in benchmarks for pure premium rates that was made at his request....

The Bureau insists that an increase of this magnitude is necessary to combat the continued deterioration in the claims experience, as well as an uptick in claim frequency in the 2010 accident year. Much of the increase will also go to pay for the higher loss adjustment expenses carriers are incurring fighting liens and litigating permanent disability claims. Projected ALAE costs are up to $11,403 per indemnity claim for the 2011 accident year compared to $10,698 the year before.

A 9.1% increase a half year after a 37% increase is just crazy.  This tends to confirm three issues I have written about before:

1. People are filing workers comp claims as a substitute for or a supplement to unemployment.  Our company has seen a significant increase in people "coincidentally" suffering an injury on one of the last few days, and particularly the very last day, before they are to be laid off.  Only such fraud explains an increase in claims when economic activity is way down, particularly when more dangerous professions like construction employment fell much more than office employment in the recession.  We have also seen, by the way, an increase in frivolous labor lawsuits in CA coincident with the economic decline.  A year ago I had an employee in CA tell me that she had attended a brainstorming session the night before among several of my ex-employees trying to generate ideas for ways to sue our company.  I can't wait for an improvement in the economy when the returns of working are higher than the returns of brainstorming ways to extract money from our company via the legal system.
2. California in general does a bad job of policing workers comp. fraud.  Woe to the employer that actually attempts to question an outrageously suspicious claim.  Last time I tried to do so in CA I got slapped with a lawsuit.
3. All states do a terrible job policing permanent disability claims.  I hire a lot of older workers.  I can't tell you how many people show up at my door trying to be paid under the table because they don't want to endanger their permanent disability by having a record of getting paid for doing very physical outdoor work for us.  They assure me they are 100% capable to do heavy physical labor.  Since I don't pay anyone off the books, they end up finding work elsewhere.   Many of you may not believe such people exist, but I have met a number of folks who consider getting a permanent disability, or at least something a doctor will testify is a permanent disability, the equivalent of hitting the lotto.  I have even been sued by a woman for submitting testimony to the social security administration that might have harmed her chances of getting a permanent disability ruling.  The lawsuit stated that if she was denied the disability payment after I testified that I had seen no evidence of any limitations in what she could do on the job,  that I should be liable for paying her the lifetime amount she would have gotten.  So I wimped out and withdrew my testimony and let the taxpayers pay her rather than farting around with a lawsuit.

I grew up in Houston.  Around and embedded in Houston are a number of small cities and villages with their own police forces.  You generally really, really did not want to encounter these folks.  They often hired the dregs of large police forces, preferentially taking the hard cases even the larger forces could not tolerate.  I remember the small village next to my high school hired one of the Houston Police officers who beat Joe Campos Torres to death (after Texas courts gave the two leaders of the beating probation and at $1 fine for killing the Vietnam vet).  These police forces are famous for their hostility to non-whites.

So it comes as no surprise, but never-the-less with great irritation, to see another such Houston-area independent city (in this case Bellaire) refusing to punish criminal officers who gunned down an innocent man in his own driveway for the apparent crime of driving while black

Cop runs license check on a suspicious vehicle. Although they apparently committed no traffic violation, cop insists that his decision to run a check had nothing to do with the fact that the occupants were black, and happened to be driving in an affluent, predominately white neighborhood. The cop’s partner apparently then enters the wrong license number, which returns a car that had been reported stolen. So cop follows car into driveway, which happens to be the home of the driver’s parents, where he lives. Cop approaches driver and occupant with his gun drawn. Driver’s parents come out to see what’s causing the commotion. Cop roughs up driver’s mother. Driver gets up from ground to tell cop to lay off of his mother. Cop shoots driver, a full 32 seconds after pulling into the driveway.

The driver, who was unarmed, will now carry a bullet in his liver for the rest of his life. The cop was charged with first degree aggravated assault. A jury acquitted him. Now this week, U.S. District Judge Melinda Harmon dismissed the driver’s lawsuit against both the cop that fired his gun and the cop who entered the wrong license plate number, citing qualified immunity. According to Harmon, the officer acted “reasonably,” and moreover, wrongly accusing an unarmed man of stealing a car, pointing a gun at him, then shooting him in the liver, “did not violate [his] constitutional rights.”

Both cops are back on the force. The guy with the bullet in his liver? Tough luck. He’ll be paying his own medical bills.

A small victory against the relentless march of the state regulators and licensors

Eyebrow threading to remove facial hair, a practice which has ancient roots in Eastern countries such as India and Iran, is gaining popularity around the country.

And threaders can now operate freely in the state without a cosmetology license after an October court settlement determined that the Arizona Board of Cosmetology would no longer regulate the trade.

The consent judgment resulted from a lawsuit filed in Maricopa County Superior Court by five threaders, including Gutierrez.

The threaders argued that the Board of Cosmetology was merely trying to help more traditional hair removal outfits remove a source of low-cost competition.  The threaders were represented by the IJ, who do great work for economic liberty

As GM was failing, I argued for the normal laws of bankruptcy to be allowed to work.  After all, valuable brands and manufacturing facilities were not just going to go *poof* -- someone would purchase them and employ them, and hopefully those someone's would to a better job than the previous owners and managers.

A big part of the "logic" for bailout and Presidential intervention in the auto companies was that auto purchases would halt if consumers were unsure whether their warranties would be honored and service would be available.

From an AP story, November 13, 2008

Advocates for the nation's automakers are warning that the collapse of the Big Three - or even just General Motors - could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.

Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation's largest automakers, which are struggling to survive the steepest economic slide in decades....

Automakers say bankruptcy protection is not an option because people would be reluctant to make long-term car and truck purchases from companies that might not last the life of their vehicles.

Well, it turns out that this was partially bogus.  The written warranties are still honored, but GM argues it left liability for any defects or design problems in the old shell company

General Motors Co (GM.N) is seeking to dismiss a lawsuit over a suspension problem on more than 400,000 Chevrolet Impalas from the 2007 and 2008 model years, saying it should not be responsible for repairs because the flaw predated its bankruptcy.

The lawsuit, filed on June 29 by Donna Trusky of Blakely, Pennsylvania, contended that her Impala suffered from faulty rear spindle rods, causing her rear tires to wear out after just 6,000 miles. [ID:nN1E7650CT]

Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.

But in a recent filing with the U.S. District Court in Detroit, GM noted that the cars were made by its predecessor General Motors Corp, now called Motors Liquidation Co or "Old GM," before its 2009 bankruptcy and federal bailout.

The current company, called "New GM," said it did not assume responsibility under the reorganization to fix the Impala problem, but only to make repairs "subject to conditions and limitations" in express written warranties. In essence, the automaker said, Trusky sued the wrong entity.

"New GM's warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis," wrote Benjamin Jeffers, a lawyer for GM. "New GM did not assume responsibility for Old GM's design choices, conduct, or alleged breaches of liability under the warranty."

Of course, this happens all the time in bankruptcy  (and it is my experience, but I am not a legal expert) that GM may or may not succeed in this argument.  It is not always possible to leave liabilities behind in an old corporate shell, or else companies would reorganize every year.

But the point is that the special treatment of GM was supposed to be to protect consumers, and that turns out to be BS.  The warranties were likely always going to be protected in any bankruptcy, as such consumer benefits nearly always are in chapter 11 (the fact that you still hold any frequent flyer miles is proof of this, as nearly every airline in the country has been through chapter 11 in the last couple of decades and none of them disavowed their frequent flyer miles, despite the fact that holders are the most unsecured of unsecured creditors).

Our rulers are pretty good at finding tricky ways to expand their power

...several environmental groups that have received millions in EPA grants regularly file suit against that same agency. A dozen green groups were responsible for more than 3,000 suits against the EPA and other government agencies over the past decade, according to a study by the Wyoming-based Budd-Falen Law Offices.

The EPA even tacitly encourages such suits, going so far as to pay for and promote a "Citizen's Guide" that, among other things, explains how to sue the agency under "citizen suit" provisions in environmental laws. The guide's author — the Environmental Law Institute — has received $9.9 million in EPA grants over the past decade.

And, to top it off, critics say the EPA often ends up paying the groups' legal fees under the Equal Access to Justice Act.

"The EPA isn't harmed by these suits," said Jeffrey Holmstead, who was an EPA official during the Bush administration. "Often the suits involve things the EPA wants to do anyway. By inviting a lawsuit and then signing a consent decree, the agency gets legal cover from political heat."

 

What do corn farmers and Hollywood studios have in common?  They both have an uncanny ability to force self-serving legislation through Congress.  This week's bit of sucking up to Hollywood is the PROTECT IP act, currently under consideration in Congress:

An ideologically diverse group of 90 law professors has signed a letter opposing the PROTECT IP Act, the Hollywood-backed copyright enforcement/Internet blacklist legislation now working its way through Congress. The letter argues that its domain-blocking provisions amount to Internet censorship that is barred by the First Amendment.

Jointly authored by Mark Lemley, David Levine, and David Post, the letter is signed not only by prominent liberals like Larry Lessig and Yochai Benkler, but also by libertarians like Post and Glenn "Instapundit"Reynolds.

"The Act would allow courts to order any Internet service to stop recognizing [a] site even on a temporary restraining order... issued the same day the complaint is filed," they write. Such a restraining order, which they describe as "the equivalent of an Internet death penalty," raises serious constitutional questions.

The Supreme Court has held that it's unconstitutional to suppress speech without an "adversary proceeding." That is, a speaker must, at a minimum, be given the opportunity to tell his side of the story to a judge before his speech can be suppressed.

Yet under PIPA, a judge decides whether to block a domain after hearing only from the government. Overseas domain owners (and the speakers who might make use of their websites) aren't offered the opportunity to either participate in the legal process or appeal the decision after the fact. (Affected domain owners may file a separate lawsuit after the fact.) This, the professors say, "falls far short of what the Constitution requires before speech can be eliminated from public circulation."

 

SB7 has some good observations about risk:

I was listening to the WSJ radio podcast while getting some dinner ready, and one of their reporters said, in the context of discussing Fukushima, that some of the engineers at the plant "knew there was a risk" in the plant's older design and could conceivably face charges for not doing something about said risk.

This kind of talk really grinds my gears.  In any engineering situation there is always some risk.  You can have less risk, or more risk, but risk is not something you either have or do not have.

I will go one step further.  This ex post facto witch hunt aimed at folks who discussed risks  (an pogrom that occurs in nearly every product liability lawsuit with fishing expeditions through company memos) is the WORST possible thing for consumers concerned about the safety of their products and environment.  Engineers have to feel free to express safety concerns within organizations no matter how hypothetical these suppositions may be.

Some concerns will turn out to be unfounded.  Some suggested risks will be deemed too small to economically overcome.  And some will turn out to be substantial and require action.  And sometimes well-intentioned people will make what is, in retrospect, the wrong trade-offs with risks.   These witch hunts only tend to suppress this very valuable and necessary internal dialog within organizations.  Nothing is going to turn the brains of engineers off faster than an incentive system that punishes them retroactively for well-intentioned discussions about risk.

Yeah, I know, this is volume one hundred and something in a series, but it is such a crystal clear example of government licensing working primarily to protect incumbent competitors in an industry I have to share it.

Suppose you’re the owner of a taxicab company in a largish metropolitan area. One day you notice some taxis tooling around town—and they’re not yours. They belong to an upstart competitor. His cars are newer, his drivers are nicer, and his fares are lower. Pretty soon your profits start shrinking. What are you going to do about it?

You have a couple of choices. Option A: Invest a lot of money in new vehicles, customer-service training for your drivers, GPS systems to map faster routes and so on. A lot of expense. A lot of effort.

So you go for Option B: Invest a little money in a few politicians, who adopt a medallion law: Only licensed operators with city-issued taxi medallions may operate cabs. The oldest cab companies get first dibs on the medallions, at the lowest rates. Only a few medallions are left over for the new guy, and he can’t afford them anyway. Bingo—your competition problem is solved. The customers might not like it, but what are they going to do—walk?

Apparently this is exactly what is happening in DC

Now it’s the District of Columbia’s turn. Four members of the D.C. City Council have introduced a bill that would create a medallion system for the nation’s capital. Medallion prices would start at $250 for the most established taxi companies and, for the newer entrants, run as high as $10,000. At least initially. As time wore on, it’s likely that the price of a medallion would go up for everyone. That’s what has happened in places such as New York, where a government permission slip to drive a cab costs about $600,000. In Boston, which initially capped medallions at 1,525 in the 1930s—and more than a half-century later had added only 250 more—a medallion will cost you $400,000.

At present the District has more than 10,000 licensed taxi drivers; the proposed legislation would establish only 4,000 medallions. Needless to say, such artificially imposed scarcity also drives up prices. A study by Natwar Gandhi, the District’s chief financial officer, found that fares in cities with medallion systems are 25 percent higher than in cities with open taxi markets.

By the way, for extra points, here is a lawsuit right out of Atlas Shrugged

That story has played out in many cities across the United States, with sometimes amusing variations. A decade or so ago, Minneapolis (population 300,000-plus) allowed a grand total of 343 taxis to operate until Luis Paucar, an immigrant, filed suit. The city council decided to allow another 45 cabs. Then the existing cab companies sued, using the creative legal theory that they had a constitutional right not to face competition. (They lost.)

I thought this was ironic....

Germany--Standing in Aisle 1 of a local Aldi supermarket, between the €2.59 ($3.62) bottles of sparkling wine and the packaged bread, German master baker Wolfgang Schäfer is in enemy territory.

The third-generation baker lobs 15 cents into the massive, beige-colored automat before him, presses a button and cocks his ear to the machine for any clues to what's transpiring inside. Almost instantly, a warm wheat roll plunks into the bin below.

"Not even two seconds," says the 55-year-old Mr. Schäfer, who had switched out of a white shirt embroidered with his family bakery's insignia into a less conspicuous checkered button-down for the stealth fact-finding mission. "Whatever goes on in there, it's certainly not baking."

What exactly does happen inside the automats has become a matter of dispute between Aldi Süd, a discount supermarket chain, and most of Germany's 15,000 traditional bakeries, since the company began installing the machines in hundreds of its German stores this year. The automats are emblazoned with the word Backofen, or "baking oven," and pictures of bowls of whole grain and bouquets of wheat. Aldi markets the rolls and bread the machines dispense as "fresh out of the oven--direct into the bag."

But to thousands of German bakers, Aldi's freshness claim is half-baked. Worse, they charge, it misleads customers who might equate the German discounter's baked goods with the bread they and their employees knead, shape and bake through the wee hours of every morning.

The German Bakers' Confederation, steward of the country's centuries-old bread-making tradition, is taking Aldi Süd--one of the two companies that make up the Aldi empire--to court on claims of deceptive advertising. Aldi Süd says it rejects the claims in the lawsuit.

...in the context of this (see part IV)

This is a legend of success and plunder
And a man, Tom Smith, who squelched world
hunger.
Now, Smith, an inventor, had specialized
In toys. -So, people were surprised
When they found that he instead
Of making toys, was BAKING BREAD!

The way to make bread he'd conceived
Cost less than people could believe.
And not just make it! This device
Could, in addition, wrap and slice!
The price per loaf, one loaf or many:
The miniscule sum of under a penny....

If you never have read the whole poem, do so.  In concludes thus:

Price too high? Or price too low?
Now, which charge did they make?
Well, they weren't loath to charging both
With Public Good at stake!
In fact, they went one better They
charged "monopoly!"

No muss, no fuss, oh woe is us,
Egad, they charged all three!
"Five years in jail," the judge then said.
"You're lucky i's not worse.
Robber Barons must be taught
Society Comes First!"

Now, bread is baked by government.
And as might be expected,
Everything is well controlled;
The public well protected.
True, loaves cost a dollar each.
But our leaders do their best.
The selling price is half a cent.
(Taxes pay the rest!)

Most everyone knows that Al Capone was finally nailed for tax evasion, rather than murder, robber, extortion and all the more heinous crimes for which he was mostly likely guilty.  For years, an unfortunately relatively small group of us here in Phoenix have tried to see Sheriff Joe Arpaio brought to justice, or at least removed from office, .   Lacking the success so far, Arpaio may finally go down for fraud in his management of County funds.

In something that should be a surprise to no one, even his supporters, the supremely arrogant Arpaio did not like state law and the county supervisors rules on where he could spend different parts of his budget.  So it appears he created a shadow payroll system that has only just been discovered that has been paying different people different amounts for different purposes than what shows up in the official County payroll systems, and has been doing so for over a decade.

Deputy County Manager Sandi Wilson and her staff in the Office of Management and Budget for months have worked to figure out how extensive financial problems are, and she expressed shock at the hidden system.

"They've developed a system that basically tracks where they are working versus where they are being paid, and they did not update the official database, which led to the potential problems," Wilson said. "I think they deliberately hid this info from us."

The employee-tracking database was in a secure criminal-justice computer system accessible only to the Sheriff's Office. Control of access to that system, known as ICJIS, has been the subject of a long-running and expensive legal battle during the past two years.

County administrators say they were puzzled by the sheriff's willingness to sue over what they viewed as minor issues related to control of the ICJIS system. The fight by the sheriff to block county access to the system has cost more than $1.6 million.

County officials believe Sheriff's Chief Deputy David Hendershott sought to limit access to the system to hide the shadow payroll records it contained. Those records showed that potentially hundreds of employees who did no work in the jails were being paid with detention funds.

"That's a reasonable conclusion to draw, but we don't know for sure," Irvine said. "From Maricopa County's perspective, the ICJIS dispute and lawsuit has made no sense."

County officials sent information on the payroll system to the U.S. Attorney's Office for review. That office is conducting a separate abuse-of-power probe of Sheriff Arpaio, his employees and others.

The article fails to mention it, but I believe that the county computer facility mentioned above was the same one that Arpaio sent armed deputies storming in to take over about a year ago.  At the time, no one really bought his explanation that it was about protecting sensitive criminal information from prying eyes.  I hypothesized it was to take control of an email server that had incriminating information about Arpaio, but now it turns out it may have been to protect his shadow payroll system.

When I grew up in Houston, we told Aggie jokes, like others might tell blond jokes or fill-in-disfavored-ethnic-group jokes.  Anyway, way back in the 70's a joke went around something like this:

Did you hear about the Aggie who was caught in the New York blackout?  He was stranded on an escalator for three hours.

I remember this only after seeing this story via overlawyered:

Kim Kreis, et al. v. American Multi-Cinema Inc.; AMC Entertainment Inc., No. CGC-10-501102 (San Francisco Super. Ct. filed June 25, 2010).

Trip and fall lawsuit. The plaintiffs injured themselves on a stationary escalator at the defendants' movie theatre, as there was no sign posted warning them that it was not moving.

Is there any unwelcome outcome nowadays, however trivial, that can't spawn a lawsuit?

The blaming of private companies for government procurement errors is one I deal with frequently at my privatization blog.  This seems to be a particularly egregious example:

Maricopa County officials can't sue the Sheriff's Office for buying a $465,000 bus without their approval, so now they want to sue the bus company.

Precisely why Motor Coach Industries would be sued over the internal squabble remains unclear.

The county has maintained in this months-long bus battle that Sheriff Arpaio's office bought the vehicle with Jail Enhancement funds, when it should have used a typical county procurement process.

From the bus company's point of view, though, the Sheriff's Office was a customer with cash. For the county to demand a full refund, without so much as a deduction for the depreciation, seems like a raw deal for MCI.

Cari Gerchick, spokeswoman for the county, says text of the lawsuit won't be released until after the Board of Supervisors votes on it at Monday's meeting. She could not provide the legal justification for the expected lawsuit, beyond saying that MCI "should have known" the MCSO had not followed the county's procurement process.

Get that?  The company should have known that our County's chief law enforcement officer was not following the law.  This is obviously an absurd contention, but further the company had two geographic disadvantages:  1.  Not being from AZ, they don't know just how unethical our sheriff really is; and 2.  Being from Chicago, even if they had recognized unethical behavior, they would have assumed it was perfectly legal

This is pretty scary.  From the Massachusetts state treasurer, the state health care system (essentially the model for the current version of Obamacare) is going bankrupt, and only huge cash infusions from the Federal government are hiding the full disaster.

"If President Obama and the Democrats repeat the mistake of the health insurance reform here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years," Cahill said in a press conference in his office.

Echoing criticism leveled by congressional Republicans in recent weeks, Cahill said, "It is time for the president, the Democratic leadership, to go back to the drawing board and come up with a new plan that does not threaten to bankrupt this country."

[T]he state's health insurance law"¦Cahill said, "has nearly bankrupted the state."

Cahill said the law is being sustained only with the help of federal aid, which he suggested that the Obama administration is funneling to Massachusetts to help the president make the case for a similar plan in Congress.

"The real problem is the sucking sound of money that has been going in to pay for this health care reform," Cahill said. "And I would argue that we're being propped up so that the federal government and the Obama administration can drive it through" Congress.

The Democrats have no good ideas for controlling Medicare costs after a government takeover.  If they did, they would have already implemented these ideas on Medicare or in Massachusetts.  Their only plan is price controls and rationing.  Here is an example of price controls hitting a wall in Medicare:

Walgreens drugstores across the state won't take any new Medicaid patients, saying that filling their prescriptions is a money-losing proposition "” the latest development in an ongoing dispute over Medicaid reimbursement....

In a news release, Walgreens said its decision to not take new Medicaid patients stemmed from a "continued reduction in reimbursement" under the state's Medicaid program, which reimburses it at less than the break-even point for 95 percent of brand-name medications dispensed to Medicaid patents....

Washington was reimbursing pharmacies 86 percent of a drug's average wholesale price until July, when it began paying them just 84 percent. While pharmacies weren't happy about the reimbursement reduction, the Department of Social and Health Services said that move was expected to save the state about $10 million.

Then in September came another blow. The average wholesale price is calculated by a private company, which was accused in a Massachusetts lawsuit of fraudulently inflating its figures. The company did not admit wrongdoing but agreed in a court settlement to ratchet its figures down by about 4 percent.

So the Government is reimbursing retailers at 80% of wholesale costs.  Even forgetting their overhead,  Walgreens was asked to sell dollar bills to the government for 80 cents.

What both stories have in common are government health plans that are subsidized from the outside:  The Feds are pouring money into Massachusetts and money is sucked out of the private medical side to subsidize Medicare.  But what happens when there is only one system, when there is nothing outside of it to subsidize it?  What are they counting on to save them?

I will say that I have a certain fondness for the idea of tossing everyone in Congress in jail on a giant RICO prosecution.  So Thomas and Apraio's crazy RICO suit naming most everyone of any importance in the county government and judicial system as conspirators has a certain appeal.  Unfortunately, unlike my dream RICO suit, the basis for the suit is that Arpaio and Thomas were consistently prevented from excercising unchecked power

In essence, the lawsuit alleges that any county official who at any point attempted to stop Thomas and Arpaio from doing anything -- whether it's prosecuting Don Stapley, "investigating" the $341 million court tower project, or repeatedly suing Thomas' own clients -- is part of a criminal enterprise. That includes judges who ruled against them, attorneys who opposed them in court (like Ed Novak and Tom Irvine) and county employees who attempted to stop the insanity.

I guess its lucky they didn't send the SWAT team in for her, as she might be dead now:

[Victoria] Aguayo has filed a lawsuit in Maricopa County Superior Court, after she was arrested, indicted, and nearly prosecuted for her "role" in the infamous "Desert Divas" prostitution ring.

One problem: Aguayo was not a "desert diva" and the evidence suggesting she was is laughable at best.

On one of the "Desert Divas'" many Web sites, the agency advertised an "escort" named "Tia." "Tia" is described on the site as being "thin, white, and blonde" and has a tattoo on her stomach that is clearly visible in the topless photo of the "diva" Aguayo's lawyer was kind enough to send New Times.

Phoenix Police Detective Christie Hein identified Aguayo as "Tia" based on the photo on the Web site when she arrested her on August 28, 2008, the lawsuit claims.

We've seen pictures of both "Tia" and Aguayo and we gotta say if Aguayo can be identified as "thin, white, and blonde," so can Aretha Franklin.

Aguayo is -- to put it politely -- more of a "plus-sized" woman, she's black, and is missing the tattoo that is so clearly visible in the photo of "Tia" on the "Desert Diva" Web site.

Simple, um, mistake, right?

After being arrested, Aguayo spent nearly two months in jail before she was granted a supervised release pending an upcoming trial.

While she was in the clink, Aguayo lost custody of her daughter, Jasmine, and has since been unable to get her back.

I hope JD is wrong:

Further complicating this picture is that Sheriff Joe Arpaio, despite erratic and confrontational conduct that has repeatedly put him at the wrong end of lawsuits and press coverage, is immensely popular with Maricopa County voters. In fact, recent polling suggests that the governor's office is his for the asking. He's a favorite for the Republican nod and an apparent shoe-in in the general election.

I was under the impression that the Repub's cut Arpaio loose in the last election, but I don't really follow the politics stuff much.  JD has an update on the latest Arpaio shenanigans, as does Radley Balko:

• The Maricopa County Sheriff's Office announced on Tuesday that Stoddard would surrender to jail ahead of his midnight deadline to aplogize. But when Stoddard showed up, the jail refused to book him, citing a "clerical error." Stoddard insisted on spending the night in jail anyway.
• Maricopa County Sheriff Joe Arpaio announced he has filed a federal lawsuit against the county and its judges, alleging a "widespread conspiracy" against Arpaio and his officers. Arpaio remarkably and apparently with no self-awareness whatsoever called the county a "good ole boys network," and commented that he had "never seen these kinds of things occur in the justice system." Arpaio also called Donahoe's contempt finding against Stoddard a "vendetta," and said, "For political reasons, [Stoddard's] been thrown to the wolves."
• Yesterday, the day after Stoddard spent a night in jail, 19 sheriff's deputies scheduled to work security at the courthouse called in sick, throwing the day's court proceedings into disarray. The building also had to be evacuated after a phone-in bomb threat.
• As crowds returned after the bomb threat was cleared, the law enforcement unions commenced with a conveniently-timed rally in front of the courthouse, calling Stoddard a "victim" and demanding that he be released from jail.

Wow, it sure is a real coincidence when a bomb threat against the public defenders (it was a public defender the deputy originally stole the document from) at the exact same moment the sheriff's were trying to disrupt the courthouse over a dispute involving the public defenders office.

Those who don't live here would be appalled and disgusted by how such a large segment of the local population absolutely revere this man.  He's like the right-wing Obama, living off a manufactured image.

This may see obvious to those of you in the rest of the country, but there are real problems with treating a man uniquely allowed to use force against the citizenry like a rock star.  And that is how certain segments of the local population treat Sheriff Joe Arpaio.   As one abuse of power after another is revealed, his supporters respond  "Isn't he so colorful, just like an old-time western sheriff."

For the rest of us his schtick gets old.  The county has spent millions defending lawsuit after lawsuit against him.  The INS has stripped him of his power to track down illegal immigrants, but he still ventures out on sweeps to arrest folks for driving while Mexican, arresting more people of Mexican decent than I though even existed in certain neighborhoods.  He has arrested reporters who criticized him, and arrested people who applauded a speaker who criticized him.  He even launched a mini-coup attempt against the County which employs him, invading the County offices and taking over a computer system that contained emails he had been unable to subpoena.  In the latter case, the County had to seek a restraining order against its own Sheriff!

Unfortunately, Arpaio's indifference to due process and individual rights obviously has percolated to the entire staff.  Here is the most recent craziness -- during  a trial, a Sheriff's deputy starts going through the defendant's attorney's papers, and takes some of them  (all of which were attorney-client privileged).

The explanation was that the documents had not been screened for contraband and weapons, so the deputy had to take (what looks like a couple of sheets of paper) away to study them to make sure there was no gun  stapled to them or something.  This so lame I am not sure how they can even say it with a straight face, but true to form the Sheriff's office is rallying around its own.  More in the AZ Republic.

Why is it the organizations (ie police departments) whom we entrust with uniquely scary power to use force on us citizens tend to have the least well developed internal checks and accountability processes?

Update: Random example of police not getting prosecuted for abuse of power, from today's news.  Folks like Miller and Radley Balko can fill their blogs with these type cases every day and not get them all.

...requiring dash cameras in every police vehicle would be a great idea.  Via Radley Balko, of course, video in his post here.

I do think Ms. Harmon has her lawsuit a bit misdirected.  I don't think Tasers per se are the problem.  If this guy didn't have a Taser, it would just be a nightstick or physical force.  The issue is that many police act as if they are dictators of the local area within their line of sight.

from the AZ Republic:

A Yale University student is suing US Airways for $1 million because of the loss of a video game system he claims was taken from his luggage.

Ohio resident Jesse Maiman, 21, claims his Xbox 360 console was taken from his bag during a December flight from New Haven, Conn. to Cincinnati.

He is suing for $1,700 for the video game system and for the maximum damages allowable by law, or $1 million.

You can read the article all day and you will not find any extenuating circumstances to justify this arbitrarily absurd number.   Even $1,700 for the game system itself is absurd.  One hour of legal time on this would be worth more than the machine.