Kelo ripples hit the Cowboys stadium project

cowboys stadiummain.jpgAs noted in this earlier post, the U.S. Supreme Court’s recent decision in Kelo v. City of New London inevitably will have ripples, including the use of government’s eminent domain power to increase the value of privately-owned professional sports franchises at the expense of private property owners.
Thus, it is not surprising that Arlington landowners have filed the first lawsuit over the City of Arlington’s use of its eminent domain power to seize the landowners’ land for the benefit of Jerry Jones and his Dallas Cowboys stadium project. The landowners contend that the stadium project — although tacitly owned by the City — is beneficially owned and certainly controlled by Mr. Jones through a long-term ground lease, and that using the government’s eminent domain power to take private property from one person and give it to another is unconstitutional. Sounds like Kelo II, doesn’t it?

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A personal experience with Judge Roberts

John_roberts2.jpgAlthough I do not agree with the writer’s conclusion, this post tells a personal story about Supreme Court nominee John G. Roberts, Jr. that reflects why he is one of my favorites for a spot on the Supreme Court and certainly will not result in this type of embarrassment. Hat tip to Craig Newmark for the link to the post on Judge Roberts.

The ubiquitous Mr. Lipton

lipton.jpgWhen the Walt Disney Co. board needed advice regarding Comcast’s adverse takeover offer for Disney, who did the board call?
When Richard Grasso was negotiating with the New York Stock Exchange Board regarding his compensation package, who did he call?
And when the Morgan Stanley board was considering recently departed CEO Phillip Purcell and his cohort Stephen Crawford’s controversial exit pay packages, who did the Morgan board call?
Martin Lipton, that’s who. This NY Times article profiles the longtime New York merger and acquisitions specialist, who is famous in corporate legal circles for having refined the use of the poison pill anti-takeover strategy. The article is an interesting read on one of the legal profession’s real heavyweights.
As an aside, Mr. Lipton’s place in Texas legal history was cemented back in 1985 when his testimony on behalf of his client Texaco was one of the main reasons that jurors awarded $11 billion to Pennzoil during Pennzoil’s famous lawsuit against Texaco over Pennzoil’s failed bid for Getty Oil. After filing a historic chapter 11 case to avoid paying the resulting judgment, Texaco settled the Pennzoil judgment for $3 billion in 1987, insuring Houston plaintiff’s lawyer Joe Jamail’s place among Texas’ richest lawyers.

Reviewing BP’s responsibilities

BPlogo2.gifAs if the fatal blast at its Texas City plant earlier this year (for which it has already admitted liability) and the listing of its huge Thunder Horse drilling platform was not enough, British Petroleum executives wake up today to a front page Wall Street Journal ($) article that reports that the OSHA investigation into the blast has discovered that it was only the latest in a series of major “incidents” at the Texas City plant over the past 16 months, including a September 2004 accident in which two BP employees were scalded to death while removing a valve from a hot-water line and a big March 2004 fire that did not result in any deaths.
Behind the motto “Beyond Petroleum,” BP has been one of the corporate leaders in promoting an image of social responsibility, a topic on which Professor Ribstein has written and commented extensively. For example, BP CEO John Browne has been a mainstream media darling for advocating reduction of global warming by lowering carbon-dioxide emissions at BP facilities. Now, against a backdrop of cost cuts and old equipment at its Texas City refinery, plaintiffs’ attorneys in the wrongful death and personal injury lawsuits resulting from the Texas City blast are planning on portraying BP’s social responsibility agenda as merely a public relations ruse to cover-up its business practice of exposing refinery workers to grave danger. BP announced a $700 million charge against earnings earlier this week to cover its projected liability related to the lawsuits.
Isn’t it interesting how even seemingly innocuous corporate policies have a way of backfiring when they stray too far afield from the basic corporate purpose of maximizing shareholder value?

Not looking good for Merck

vioxx10.jpgIn the ongoing wrongful death civil trial against Merck involving its pain reliever drug Vioxx, the mainstream media tends to focus on seemingly important expert testimony such as that described in this article.
Being more a student of the courtroom, however, I tend to focus in such trials on jury dynamics, such as those described in this Fortune Magazine article:

Speaking in state court in Angleton, Texas, without notes and in gloriously plain English, and accompanying nearly every point with imaginative, easily understood (if often hokey) slides and overhead projections, (plaintiff’s lawyer Mark) Lanier, a part-time Baptist preacher, took on Merck and its former CEO Ray Gilmartin with merciless, spellbinding savagery . . .
But in contrast to Lanier . . . (Merck defense lawyer David Kiernan) seemed to read much of his presentation and illustrated it only with stodgy, corporate headshots of Merck officials or hard-to-read excerpts from documents whose meaning was shrouded in medical jargon . . .
The trial offers jurors a stark choice between accepting Lanier’s invitation to believe simple, alluring and emotionally cathartic stories versus Merck’s appeals to colorless, heavy-going, soporific Reason.

H’mm. On one hand, an interesting story told through a lively presentation given without notes using colorful images. On the other hand, a bland recitation of prepared remarks given with boring images of hard-to-read text in documents.
Translated: This is not looking good for Merck.

City Hall, San Diego style

San Diego logo.gifA couple of former City of Houston aides have had a rough spot lately, but frankly our corruption is blase’ compared to what’s going on at City Hall in San Diego recently.
First, the San Diego mayor resigned a couple of weeks ago amidst a pension fund scandal. Then, after about 60 hours on the job, the mayor’s interim successor — along with another member of the San Diego City Council — was convicted of conspiracy, extortion, and fraud in connection with a scheme to receive money for changing a city law to benefit strip club owners. With a new interim mayor and another mayor to be elected in a special election, that makes four mayors by my count in the space of just a few months. All of which prompted economist and San Diego resident James Hamilton to observe:

Forgive me if this sounds paranoid, but isn’t this the same crowd to whom the Supreme Court gave the power to kick me out of my home in order to hand it to some developer? Not that any City Council members would ever let how much money they got from that developer influence their decision on something like that.

Judge Roberts in action

John_G._roberts.jpgOrin Kerr over at the Volokh Conspiracy refers us to this recent D.C. Circuit decision in which U.S. Supreme Court nominee John G. Roberts, Jr. wrote a lively dissent and, in so doing, provides a glimpse of why he was one of my favorites for nomination to the Supreme Court.
The decision involves a search and seizure case. The defendant was driving a car with the license plate light out. After police stopped him, it turned out that he did not have a driver’s license on him, that his license had been suspended, and that the car had stolen tags. During the stop, the police could find not find anything that indicated that the car was properly registered. Thus, the police arrested the defendant and then they searched the car’s trunk, where they found a gun. Wallah! The defendant was charged with a gun possession crime and we now have a search and seizure case.

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Epstein on judicial activism

supreme_large_seal.gifRichard A. Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago, and the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution. In this Wall Street Journal ($) op-ed on the nomination of John G. Roberts to the U.S. Supreme Court, Professor Epstein makes a good point regarding the simplistic and often misleading criticism of “judicial activism”:

From the get-go, I would insist that we view with suspicion the oft-hurled epithet of “judicial activism.” Judicial review, which allows the Court to strike down federal and state legislation, is an indisputable part of the Constitution. The structural and substantive prohibitions the Constitution contains are large. One can be a “strict constructionist” and still believe that major legislative initiatives, executive orders, and administrative rules are unconstitutional. By the same token, the government should be accorded a wider degree of discretion in running its own affairs — the military, courts, schools, etc. — a view that is largely permissive of government affirmative action programs that parallel those which comparable private institutions adopt on a voluntary basis. In these cases, the private benchmark offers a useful measuring rod for state discretion.

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The least surprising lawsuit of the year

morgan9.gifAfter this, you just knew this was coming.
The Lerach Coughlin Stoia Geller Rudman & Robbins LLP lawsuit against Morgan Stanley’s board of directors, former executives and lawyers alleges that directors breached their fiduciary duty and abused their control of Morgan Stanley by mismanaging the firm for several years, but particularly by handing out large severance payments to former Morgan CEO Philip Purcell and his former right hand man, Stephen Crawford. The lawsuit also asserts claims against the firm’s departing general counsel and outside law firm Kirkland & Ellis for legal malpractice and professional negligence in their handling of the Ron Perelman fraud case in Florida that recently resulted in a $1.57 billion judgment against Morgan.
Interestingly, the lawsuit even took a swipe at new Morgan CEO John Mack, who the lawsuit claims approved the payoffs to Messrs. Purcell and Crawford “to secure his return to power.” Mr. Mack has publicly stated that he did not know about the awards before he was hired, but that he is not going to “second-guess” Morgan board decisions that were made prior to his taking over as CEO. Mr. Mack did waive his own pay guarantee when the awards to Messrs. Purcell and Crawford became public.

New Fifth Circuit decision on family limited partnerships

family LP.jpgFollowing on its decision last year on the popular estate planning tool of family limited partnerships, the Fifth Circuit recently issued this decision in the case of deceased Texas millionaire Albert Strangi and, in so doing, provided a guide for what not to do in utilizing a family LP. Here is a NY Times article on the decision.
Family LP’s allow parents to transfer assets to their children at a lower tax rate than is assessed on estates and gifts. Under the typical family LP, the parents retain a few shares of ownership while their children hold most of the shares. Moreover, family LP’s are often set up in an effort to shield assets from the parent’s creditors, so decisions on the vehicle are closely followed by lawyers who specialize in either estate planning or creditors rights.

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