Professor Ribstein — who was prescient in predicting the outcome of the corporate case of the decade — can rest easy.
In a ruling issued yesterday afternoon, the Delaware Supreme Court upheld the Delaware Chancellory Court’s decision dismissing the civil lawsuit brought by certain Disney shareholders against the board of Walt Disney Co. for approving the rather generous $140 million severance package paid to former Disney executive Michael Ovitz after Ovitz was effectively fired by his longtime friend and former Disney CEO Michael Eisner for essentially doing nothing during Ovitz’s year as president Disney. A copy of the decision is here, and here are initial comments from corporate law scholars Professor Ribstein, Professor Bainbridge and Professor Smith.
Steven Schulman, the former Milberg Weiss partner who has bigger problems now than the loss in the Disney-Ovitz case, pursued the case on behalf of certain Disney shareholders and contended that the Disney board’s decision-making process amounted to a series of sham “jam sessions” in which the board abrogated its responsibilities to Disney shareholders by rubberstamping the Eisner-supported severance deal for Ovitz. However, the Delaware Supreme Court upheld the Chancellory Court’s decision that was critical of the Disney board, but concluded that Eisner and the other Disney directors acted in good faith in approving Ovitz’s termination without cause and thus, were immunized from liability to shareholders regardless of whether approving the generous severance may have been a bad decision.

When you put a dozen of so strangers in a jury room together, weird things happen.
That’s certainly been the case recently in Chicago, where the current big news is that the defense team for former Illinois Governor George Ryan is seeking a new trial based on jury misconduct after the jury convicted Ryan on all 18 counts of a federal corruption indictment in a six-month trial earlier this year (previous post here). Although jury misconduct motions are always longshots, based on news reports, this one has a better than typical chance if only a few of the allegations of juror misconduct turn out to be true.
In the Ryan case, the allegation is that one of the jurors looked up a definition of “good faith deliberations” in attempting to persuade a holdout juror that she was not deliberating in good faith. Inasmuch as the holdout was ultimately dismissed from the panel for unrelated reasons, the trial judge denied Ryan’s first juror misconduct motion. However, Ryan’s defense team is now demanding a new hearing into allegations that there was so much pressure put on the holdout — and so many other jurors either lied in their jury questionnaire forms or did not follow the court’s instructions — that the jury deliberations were utterly skewed and a new trial is required.
Such conduct is a growing issue in high-profile trials as information about such trials is readily available to jurors who routinely work or engage in recreation on their computers each day. This is particularly important in a case such as Lay-Skilling, where pre-trial motions indicated widespread bias (see also here) against the defendants among prospective jurors. During the trial, several media outlets — including the hometown newspaper, the Houston Chronicle — covered the trial by innovatively blending traditional media reports and columns with blogging and podcasts. Although a valuable resource for the general public, such coverage could easily affect jurors who disregard the court’s instruction not to read ongoing media reports about the trial. For example, before and during the Lay-Skilling trial, the Chronicle’s Enron webpage prominently promoted the newspaper’s business columnist’s columns and blog that regularly ridiculed the defendants and called for their conviction, and also promoted regular blog posts from a former Enron Task Force prosecutor. It is certainly the media’s perogative to cover a trial in that manner, but the potential effect of such coverage on the jury pool would seem to mitigate strongly in favor of a more liberal rule in favor of changing the venue of such trials than has traditionally been applied.

Although the conflict flies below the radar screen outside legal circles, the Fifth Circuit Court of Appeals and the U.S. Supreme Court have been engaged in a caustic war or words (see articles here and here) over the past several years in regard to death penalty cases emanating from Texas courts. Based on the recent decision in Jackson v. Dretke, 05-70031 (5th Cir., May 30, 2006), it looks as if the Fifth Circuit judges are now getting testy with each other over such cases.
Jackson involves what type of mitigation of punishment evidence is a defendant entitled to propound to the jury during the sentencing phase of a capital murder case. Jackson admitted murdering his wife and two children, but his defense attorney sought to have the jury hear from Jackson’s family and friends who did not want him to be executed. The trial judge denied the defense request and the Texas Court of Criminal Appeals upheld the decision. Jackson’s habeus corpus proceeding in federal court followed, seeking what in death penalty appeal jargon is called a “certificate of appealability” (“COA”) from the state courts’ rejection of Jackson’s request to have the jury hear the testimony of Jackson’s family and friends.

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The ubiquitous Richard Posner reviews in this New Republic Online article (free registration req’d) two new books about the law clerks of the United States Supreme Court — Courtiers of the Marble Palace: The Rise And Influence of the Supreme Court Law Clerk (Stanford 2006) and Sorcerers’ Apprentices: 100 Years of Law Clerks at the United States Supreme Court (NYU Press 2006) — which provide a glimpse of how the modern Supreme Court operates. It’s an entertaining and informative review, reflected by the following blurb:

Except for Justice John Paul Stevens, who writes his own first drafts of opinions, law clerks write the first drafts of their justices’ opinions. (According to Courtiers, Stevens’s clerks rewrite his drafts extensively, thus producing an inversion of the normal relation of clerk-author to justice-editor. In another inversion, Justice Harry Blackmun, a genuine eccentric, left the opinion-writing to his clerks after his first years on the Court and concentrated on cite-checking their drafts. He was by all accounts an awesome cite-checker.) Some justices rewrite the clerks’ opinion drafts extensively, others little. Sorcerers’ Apprentices estimates that 30 percent of the opinions published by the Supreme Court are almost entirely the work of the law clerks; and as they are the primary drafters of most of the other opinions as well, probably more than half the written output of the Court is clerk-authored.

Judge Posner is particularly interested in whether the elaborate Supreme Court law clerk system has actually resulted in improvement in the quality of the Court’s decisions:

[O]ne can apply quality-related criteria, such as clarity, brevity, guidance provided to the lower courts, and candor in explaining the true grounds of decision, to the opinions in the two eras.
When one does this, one is not likely to find a dramatic, or perhaps any, overall difference in quality. Today’s opinions are longer–a dubious virtue. There are more separate opinions, most of which are ephemeral. Today’s opinions are more polished, more “scholarly,” and more carefully cite-checked, but these are modest virtues. Neither judges nor their clerks are scholars. The scholarly apparatus of judicial opinions belongs to the rhetoric rather than the substance of judicial decision-making.

Read the entire review.

As predicted here almost two years ago, New York-based Weil, Gotshal & Manges settled during the latter stages of an ongoing trial the malpractice claims levied against the firm by the owners of a small New Jersey based retail clothing outlet, according to this Law.com ($) article. The colorful case — which was prompted by Weil Gotshal suing their former clients for $2.7 million in fees — was the subject of this earlier NY Sunday Times article.
Settlement terms were not disclosed as Weil Gotshal released a statement saying that it “settled despite its confidence in the trial outcome to avoid the cost of what would have been an inevitably long appeals process.”

William F. Buckley, Jr. tells a good anecdote about the perils of cross-examination in this NRO Online op-ed. In commenting about a New York criminal case involving a potential enhanced sentence because of the defendant’s alleged use of the “N-word” in beating up the victim, Buckley passes along his own experience as a defendant in a case involving his use of an allegedly derogatory word:

Some years ago I was a defendant in a lawsuit brought by a creepy fascistic outfit (they are now out of business), and the question before the jury was whether I and the magazine I edited were racist. The attorney had one weapon to use in making his point, namely that we had published an editorial about Adam Clayton Powell Jr. when he made a terminally wrong move in his defense against federal prosecutors. The editorial we published was titled, “The Jig Is Up for Adam Clayton Powell Jr.?”
On the witness stand I argued that the word “jig” could be used other than as animadversion. The feverish lawyer grabbed a book from his table and slammed it down on the arm of my chair. “Have you ever heard of a dictionary?” he asked scornfully, as if he had put the smoking gun in my lap. I examined the American Heritage College Dictionary and said yes, I was familiar with it.
“In fact,” I was able to say, opening the book, “I wrote the introduction to this edition.”
That was the high moment of my forensic life. And, of course, the dictionary establishes that the word ìjigî can be used harmlessly.

Principal-agent law tends to evoke some rather odd outcomes in many Texas lawsuits, even those that involve application of the holder-in-due course principle.
In First Natíl Acceptance Co. v. Bishop, 187 S.W.3d 710 (2006) (Tex.App.-Corpus Christi Feb. 9, 2006), Bishop sold her home to the Gonzalezes through a warranty deed with a vendor’s lien in return for a note from the Gonzalezes secured by a mortgage on the property. Bishop then sold the Gonzalez note and mortgage to ANI, which in turn assigned the note and mortgage to FNAC, which was ANI’s principal lender. In buying the Gonzalez note from Bishop, ANI did not disclose to Bishop its relationship with FNAC.
Alas, the risk of insolvency foiled Bishop’s plan to monetize the Gonzalez note. After Bishop transferred the note and mortgage to ANI and ANI had assigned the note and mortgage to FNAC, ANI apparently went bust while owing big bucks to FNAC and before paying funds to Bishop for the note and mortgage (key tip to noteholders — don’t give up possession of the note until you are paid for it). So, Bishop canceled the deal with ANI and demanded the return of the note and mortgage. Of course, FNAC contended that it was a holder-in-due course of the Gonzalez note and mortgage, and refused to return them to Bishop. Meanwhile, FNAC posted the home for foreclosure, which I’m sure surprised the Gonzalezes, who were continuing to pay the note without knowledge of all these behind-the-scenes machinations.

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One of the enduring law firm-client relationships of the past generation in Texas has been that between the family of Dallas billionaire Ross Perot and the Dallas-based firm of Hughes & Luce, LLP. The firm long represented Perot personally and his various companies, including EDS while Perot was building the company into a computer-services giant before selling it to General Motors in the mid-1980’s for $2.4 billion. The firm has continued to represent the Perot family over the years, including Ross Perot, Jr., who has become a wealthy real estate developer in the Dallas area.
Well, based on this Ft. Worth Star-Telegram article, it’s safe to say that the Perot family’s relationship with Hughes & Luce is at an end. Ross Perot Jr. is suing the firm in Tarrant County (Ft. Worth) District Court for malpractice in connection with the firm’s allegedly botched handling of Perot’s attempted acquisition of a mothballed $20,000 Air Force trainer jet for a planned aviation museum. Perot Jr. alleges in the lawsuit that the firm’s handling of the failed purchase cost him millions in legal fees and exposed him to federal criminal charges.
How’s that for a divorce petition?

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Don’t expect U.S. District Judge Vanessa Gilmore to be sending any holiday greeting cards to the Fifth Circuit Court of Appeals any time soon.
In this unusually candid recusal order, Judge Gilmore accuses the appellate court of making an untrue statement in ordering that the the death-penalty case of a truck driver charged in the smuggling deaths of 19 illegal immigrants be reassigned to U.S. District Judge Lee Rosenthal because Judge Gilmore is “too busy” to handle the case. The Chronicle’s Harvey Rice has a story on the dust-up here.
Earlier posts here, here and here report on the rather strained relationship between Judge Gilmore and the Fifth Circuit over this case. It all started when Judge Gilmore threatened to hold the prosecutors in contempt of court for failing to divulge internal Justice Department deliberations regarding the government’s decision to seek the death penalty against one of the defendants. The prosecution filed a writ of mandamus (that’s like suing the judge) with the Fifth Circuit Court of Appeals requesting the appellate court to order Judge Gilmore, in effect, to cease ordering the prosecution to turnover evidence of communications that are clearly privileged. The Fifth Circuit agreed with the prosecution, and issued this opinion that, among other things, is a rather sharp rebuke of Judge Gilmore’s treatment of the prosecution in the case.
By the way, Judge Gilmore is currently presiding over the first re-trial of two of the defendants from the original trial of the Enron Broadband case. That first trial ended in a mix of acquittals and a deadlocked jury on certain counts. Interestingly, Judge Gilmore appeared to favor the prosecution in that first trial by declaring a mistrial without giving the jury much time to deliberate after giving them an Allen charge.

Following on this earlier post, this Harvey Rice/Chronicle story reports that U.S. District Judge Lynn Hughes ordered the Justice Department to pay $390,000 in attorney’s fees and expenses to an Oklahoma attorney as a Hyde Act sanction for a bad-faith prosecution.
In so doing, Judge Hughes observed during a hearing yesterday that the government’s charges amounted “to a garbled press release about working men who can’t get insurance” and “a jumble of claims and stray facts.”
By the way, for Judge Hughes’ opinion of the work of the Enron Task Force, see here.