This NY Sunday Times article (hat tip to Peter Lattman) reports on the efforts of the wealthy Long Island enclave of North Hills’ efforts to use the power of eminent domain — following last year’s controversial U.S. Supreme Court decision in Kelo v. New London (related posts here) — to condemn the exclusive (and private) Deepdale Golf Club and turn it into a public golf course for the village.
Inasmuch as Deepdale is one of the best golf courses on Long Island, we’re not talking about a blighted piece of property. Nevertheless, the village mayor’s reasoning for the possible eminent domain action is a truly amazing expression of governmental power:

[Village Mayor Marvin] Natiss has said that a village golf course would be a wonderful amenity for residents. Mr. Lentini once said that making Deepdale a village club would “make North Hills that much more desirable, which would make the properties that much more valuable, which will bring in that many more affluent people.”

Left unsaid is that such transparent reasoning could be used to justify the governmental taking of virtually any property.
At any rate, it appears that a part of the village’s purpose in going after the club property is that Deepdale is so exclusive that only one of North Hills’ 1,800 wealthy residents is a member and, according to Mayor Natiss, “my residents could not get in if they applied” even if they could afford the six-figure initiation fee and annual dues of about ten grand. And, just to make matters more complicated, the land on which the Deepdale course sits is actually owned by a private company that leases the land to the the club at a below-market rate. Inasmuch as at least one of the minority shareholders in the private company wants the private company to sell the land to cash in on his interest, the minority shareholder is supporting the village’s effort to acquire the club.
Let’s hope that this department is not getting any ideas from North Hills’ plans for Deepdale.

This past Tuesday evening, my old friend Randy Wilhite and I did our annual divorce-bankruptcy class for Randy’s Family Law Course at the University of Houston Law Center, and the usual good time was had by all. For those interested in the subject — which Randy and I characterize as “the train wreck of the law” — feel free to review my powerpoint presentation and contact me if you desire further information on our presentation.
This year’s presentation was particularly interesting because of the impact of Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which went into effect this past October. The Advisory Committee on Bankruptcy Rules has approved Interim Bankruptcy Rules and Official Forms for BAPCPA, the purpose of which is to implement BAPCPA’s substantive and procedural changes during the gap period between the effective date of BAPCPA and the Supreme Court’s promulgation of new BAPCPA rules. These interim rules and forms officially took effect on December 1, 2005, and here is the full text of the new rules and forms. Some of the additional proposed rules and forms remain subject to public comment until February 15, 2006 and, thus, are not yet effective, but you can review the text of those rules here.

Looks as if Bill O’Reilly is not the only prominent television pundit who is a tad wacky.
This NY Observor article (hat tip to Walter Olson) reveals that CNN personality Nancy Grace is playing fast and loose with background facts that bear on the motivation for her crime-busting agenda.
Beward of the demagogues.

Based on yesterday’s oral argument in Anna Nicole Smith’s appeal to the Supreme Court in regard to her claims against the estate of former Houston oilman J. Howard Marshall, the early speculation from the experts in such matters is that Anna Nicole is likely to win. Steve Jakubowski has a nice wrap-up of the argument here.
Despite all the hoopla of Anna Nicole barreling into the normally stuffy Supreme Court courtroom, the legal issue in the case is decidedly unsexy — Did the bankruptcy court have jurisdiction over a tort claim that Anna Nicole’s bankruptcy estate owned and asserted against against J. Howard’s son, who is the executor of J. Howard’s estate? My sense is that it’s not particularly surprising that the experts believe that Anna Nicole has a winner on that issue.
Anna Nicole’s appeal is based on what is called a ìrelated toî claim to a bankruptcy case, which simply means that it is a claim that could have some impact on the bankruptcy estate. Inasmuch as successful assertion of Anna Nicole’s claim against the younger Marshall could generate money for her estate, the claim is clearly a “related to” claim. Although a bankruptcy court has broad discretion to abstain from adjudicating such a claim, it is clear that such abstention is not mandatory, and the Anna Nicole bankruptcy court elected not to abstain from adjudicating her claim.
The younger Marshallís legal team asserts that there is a non-statutory ìprobate exceptionî to federal jurisdiction that applies in federal diversity cases and bankruptcy cases. But their legal authority for that proposition in the context of Anna Nicole’s case is pretty skimpy and distinguishable. As such, I too will be surprised if Anna Nicole doesn’t win.
In discussing my view that Anna Nicole is a winner with one of my teenage daughters, she asked: “Does that mean that she will get her television show back?” ;^)

This post from about a year ago addressed the National Collegiate Athletic Association’s longstanding and dubious regulation of intercollegiate athletics, and now a class action antitrust lawsuit is asserting a pretty hefty damage claim against the NCAA that directly challenges the organization’s regulatory system.
This ESPN.com article reports on the antitrust suit that was filed last week in Los Angeles on the theory that the NCAA has illegally conspired to prohibit member institutions from offering athletic scholarships that cover the ìfull costî of attending a college. The NCAA dictates a standard scholarship package in the form of a ìgrant-in-aid,î which covers tuition, room and board, books and a few other related expenses. However, it does not cover expenses such as phone bills and travel expenses, which many student-athletes from families with low incomes have a difficult time financing. As the ESPN.com article notes:

[A]thletes are the only students subject to aid restrictions imposed by an agreement among universities. Talented students in music, chemistry or any other area can be bid upon by individual colleges, without limits on the total value of their scholarship packages.

Continue reading →

Bruce Carton over at the Securities Litigation Watch blog is excerpting portions of Joseph C. Goulden’s new book called The Money Lawyers (Truman Talley 1995), and the first excerpt is a portion of the chapter in the book about controversial class action plaintiffs’ lawyer, William Lerach. Goulden notes that Lerach disarmed him about Lerach’s legendary reputation for combative behavior in their first meeting:

Stories of the [Lerach] temper are legion. An unfriendly adversary told me he once heard Lerach tell corporate executives during negotiations, “I don’t give a f**k if I put your company into bankruptcy. I’m going to take away your beach house and your condo in Aspen by the time I’m finished with you.” When he talks about high tech executives, he tosses around vitriol such as “scumbags” and “crime in the suites.” He can be combative when dealing with other lawyers. One remembers hearing Lerach storm, “Your professional life is at an end. I am going to destroy you.”
But he chose to open our talk with a grin. “So,” he said, “some of those guys are saying nasty things about me, eh?”

David Boies — who champions himself as an advocate of honest corporate governance and disclosure — was the Tyco board’s outside counsel in connection with investigating corporate fraud. Consequently, during the trial of former Tyco executives Dennis Kozlowski and Mark Swartz last year, Boies was one of the prosecution’s main witnesses in contending that the Tyco executives had failed to disclose their compensation adequately to the Tyco board.
Meanwhile, however, Boies resigned last year as special chapter 11 counsel at the request of his client, Adelphia Communications, for failing to disclose to the Adelphia Bankruptcy Court and creditors that members of the Boies family indirectly own a substantial interest in a document management services company that did between $5 and $10 million of business with Adelphia. Apparently, other clients of Mr. Boies’ firm also have paid substantial sums to the document management company without knowing of the company’s affiliation with the Boies law firm.
Now, after a hearing earlier this week, this Wall Street Journal ($) article reports that the Bankruptcy Judge in the Adelphia case has ordered an ethics investigation into whether Boies and his firm should have disclosed the firm’s partners’ ties to the company that Adelphia used for document management.
In the meantime, final Bankruptcy Court approval of the Boies firm’s almost $30 million fee (most of which has already been paid) for doing legal work for Adelphia hangs in the balance. If any significant portion of that fee is disallowed, then that could prove to be one expensive non-disclosure for the champion of good corporate governance and disclosure.

Stephen Bainbridge and Larry Ribstein are two of the blawgosphere’s most insightful thinkers on corporate governance issues, and their their blawgs have contributed more to the understanding and appreciation of those and many related business law issues over the past couple of years than virtually any other resources on the Web of which I am aware. These two academics continued their generous contributions over the past week with a couple of timely pieces in regard to director liability and the business judgment rule that should be required reading for any director of a public company or any advisor of a director.
First, Professor Bainbridge used the oral argument in the Delaware Supreme Court in the Disney-Ovitz case to provide this timely refresher (blog post here) on the business judgment rule and its importance to good corporate governance. He plainly states the rule as it relates to directors:

Continue reading →

This Wall Street Journal ($) article reports that Harvey Miller — the New York attorney who built Weil, Gotshal & Manges‘ bankruptcy and corporate reorganization practice into a national dynamo before leaving the firm in 2002 to join Greenhill & Co. — is being accused of overbilling his client Loral Space & Communications Ltd. of as much as $3.6 million in the company’s recently concluded corporate reorganization case.
To add intrigue to the matter, Miller’s chief accuser is the creditors’ committee counsel in the Loral case, Akin, Gump, which incurred the wrath of Miller’s opinion last year in the Vermont bankruptcy case of FiberMark Inc., in which Miller concluded that the firm should forfeit a “significant portion” of its fees in that case because Akin, Gump gave allegedly biased advice to the FiberMark creditors’ committee. Akin, Gump is reportedly prepared to waive $1.5 million of its total remaining unpaid fee of $4.0 million in that case.
The challenge to Miller’s fee-charging is particularly interesting in that Miller was at the forefront of the movement to attract top-notch legal talent to the U.S. bankruptcy and reorganization legal field over the past 30 years. One of the ways that was accomplished was through the incorporation into the U.S. Bankruptcy Code of provisions that provide for attorneys to be compensated at the market rate for providing professional services to debtors in bankruptcy cases. For many years while at Weil, Miller’s hourly billing rate was among the highest of any attorney practicing bankruptcy law in the United States, and Weil’s fees for representing corporate debtors in a number of reorganization cases have been among the highest ever approved and paid. Those high fees are the genesis of the nickname for Weil, Gotshal & Manges among some envious members of the bankruptcy bar — “We’ll, Getcha & Mangle Ya.”
Update: The prescient Peter Lattman provides even more interesting background.

I swear, you can’t make this stuff up:

Richard B. Roper, United States Attorney for the Northern District of Texas, announced that . . . Mauricio Aguirre-Orcutt [had been sentenced to 57 months in prison] following his guilty plea in October to a one-count Information charging him with mail fraud. . . . Orcutt admitted that he ran an elaborate scheme, full of lies and deception, to defraud [Pen World International Magazine publisher] Glen Bowen out of thousands of dollars worth of expensive fountain pens. . .
Orcutt, while corresponding with Bowen, falsely represented that he had been a special assistant and advisor to former Presidents Ronald Reagan and George H.W. Bush and had been a State Department official who helped finalize the North American Free Trade Agreement. He also represented that he was an advisor to President George W. Bush and that heíd met with President Bush earlier in the day.
To bolster the misimpression, Orcutt falsely represented to Bowen that he was meeting with United Nations Secretary General Kofi Annan in New York on September 15, 2004 and was going to ìmarketî Pen World to the Secretary. Orcutt suggested giving Secretary Annan of Pen World a Delta 20th Anniversary fountain pen. Bowen acquired the Delta Pen and mailed it to Orcutt so that Orcutt could make the presentation to Secretary Annan as a gift from Pen World. Later, Orcutt advised Bowen that he had met with Secretary Annan and had given him the Delta Pen, which the Secretary used to sign a United Nations Resolution. A few days later, Orcutt sent Bowen an altered digital photograph of Secretary Annan that purportedly shows the Secretary signing some document with the Delta Pen. Orcutt, however, never met with Secretary Annan and kept the Delta Pen for himself.

Read the entire DOJ press release, which also relates Orcutt’s con of Bowen over a pen for President Bush.
My sense is that Mr. Bowen will be receiving quite a few emails of this nature over the next several months.