Shortly after the Australian courts held that an action for libel could be instituted anywhere where the site could be read (and possibly cause damage (as noted here December 13), the Fourth Circuit reached the opposite conclusion three days later in a case entitled Young v. New Haven Advocate (No. 01-2340).

Young was a warden of a Virginia correctional facility holding Connecticut inmates which became the subject of articles in two Connecticuit newspapers (the Advocate and the Hartford Courant) concerning conditions in those facilities. Young alleged he had been defamed by the articles and claimed that he could bring suit in Virginia because the articles in question appeared on the newspapers' web sites. He would have won three days earlier in Sydney. The Fourth Circuit (Richmond, VA) reached the opposite conclusion.

The Fourth Circuit's analysis focused on the facts that the articles apppeared in Connecticut newspapers written in Connecticut (the reporters in issue did all their work via telephone in the Nutmeg State), with virtually no circulation in Virginia (slip opinion p. 5). Insofar as the writings in question were aimed at Connecticut audiences discussing Connecticut issues (specifically, Connetcicut's use of out-of-state prisons), the Court held that the incidental appearance of the articles in Virginia on newspaper web sites aimed at Connecticut readers did not giver courts sitting in Virginia the power to hear the libel claim of a Virginia resident.

Young established a bright-line test favoring the place of posting as the place where a Internet libel case may be brought--but it may be too simplistic. Many metropolitan areas (New York, Philadelphia) cover two or more states; many sites (such as Dow Jones') target worldwide audiences. The Fourth Circuit stressed the fact that the articles in issue were on sites aimed at Connecticut audiences (see slip opinion at pages 10-12). Will libel plaintiffs seek to demonstrate Internet defendant's desire to reach every possible reader, no matter where they are? Young--while a win for web publishers--gives them an opening to do so in every case.

Edward R. Wiest
12/31/2002 10:35:10 AM - [Link]

Supreme Court Gives Securities Arbitrators Six Years

On December 10, the Supreme Court resolved an ongoing problem in securities arbitration practice by holding that NASD arbitrators, not courts, have the authority to determine when customer claims are too stale to be considered in its decision in Howsam v. Dean Witter Reynolds, Inc. (No. 01-0800).

NASD Dispute Resolution Code of Arbitration Procedure §10304 provides in pertinent part that no dispute "shall be eligible for submission to arbitration . . . where six (6) years have elapsed from the occurrence or event giving rise to the . . . dispute." When customers asserted claims against brokers after uncovering losses attributable to trades outside the six-year period, a broker would often run to court seeking an order enjoing aritration on the basis that it had never agreed to arbitrate "ineligible" claims and only courts could determine which claims were "eligible" for arbitration under NASD rules. The transparent purpose was to move the claim to a judicial forum where delays were likely to be longer, discovery expenses (particularly the cost of deposition discovery) was higher and judges perceived as more likely to find a claim was time-barred.

Justice Breyer's opinion for seven justices (Justice O'Connor recused herself) in Howsam (HTML version) put an end to this gambit. He construed the six-year eligibility rule to be one so closely tied to an underlying customer-broker dispute (when did the last churned trade take place? when should the customer have discovered that his losses were due to misconduct?) so as to place it within the province of arbitrators, rather than judges (slip opinion at pp 5-6).

Justice Breyer's approach makes sense from the perspective of both an arbitrator and an advocate. The date upon which an allegedly wrongful trade took place is rarely in dispute. The issue of whether a claim is too stale turns on determining the date upon which the investor realized--or should have realized--something was wrong. This question (in technical terms, that of when the claim was "discovered" so as to begin the running of applicable statutes of limitations) will be decided on the basis of the credibility of the investor's testimony as to his knowledge and experience in securities trading generally and the specific transactions in issue. Arbitrators can and must consider such issues in every case. Incantation of the possible misuse of the work "eligible" in the six-year rule does not change the fact that the purpose of the rule was to create a time limit for bringing claims. Determining whether a claim was asserted within a time limit is ordinarily the province of arbitrators. (Justice Breyer so observed at page 5 of his opinion.) Applying this doctrine to NASD Dispute Resolution proceedings, no matter how delayed, makes perfect sense.

Note to Court watchers: Justice Thomas published a seperate opinion (HTML format) observing that New York courts had resolved the issue in 1997 and the parties had agred to be bound by New York law. On this basis, Justice Thomas concluded (by implication) that principles of federalism made the majority's textual analysis unnecessary. It's amazing how you can find a basis for deferring to another jurisdiction in almost every case!

Edward R. Wiest
12/20/2002 9:48:35 AM - [Link]

Mirror Image

This blog is now being mirrored on Blogger at http://barristerblog.blogger.com/

Edward R. Wiest
12/19/2002 11:46:36 PM - [Link]

Light at the End of the Holland and Lincoln Tunnels

A committee of the New Jersey Supreme Court has recommended the Garden State change its bar rules to permit the admission by waiver of experienced attorneys and abolish the rule requiring active members of the New Jersey bar to maintain a real office (with a real desk, real meeting room, and real person answering the telephone) in New Jersey. The December 11 press release announcing the committee's recommendations has links to all relevant documents. It is of interest that the president of the New Jersey State Bar Association (always a strong supporter of the status quo)was quoted as stating in response to these recommendations that "Increasing [the number of lawyers authorized to practice in New Jersey] by admitting more lawyers does not improve the quality of services to which the public has access."

I endured the two day New Jersey bar examination in 1985 to facilitate my work for a firm which then maintained both New York and New Jersey offices. In fact, I ceased to retain any knowledge of substantive New Jersey law as soon as the exam was completed and don't recall ever having signed a New Jersey pleading before my practice moved to Massachusetts in 1986. Nevertheless, I have continued to pay New Jersey bar fees to forestall the need to appear for two days of re-examination or seek temporary admission should I reappear in the state someday. The proposed New Jersey amendments would bring the state into line with ABA recommendations looking to facilitate attorney mobility and multijurisdictional practice. Hopefully, the New Jersey authorities will adopt revised rules which will spare others the need for the two-day trip to New Brunswick I made some years ago.

Edward R. Wiest
12/18/2002 11:24:16 AM - [Link]

Massachusetts Makes $2MM Fee Demand in Microsoft Case

Massachusetts AG Tom Reilly has requested a $2 million fee award in the Microsoft case, even before prosecuting its appeal. The AP report on the fee application notes that the states are using the rates of private attorneys as the lodestar for the fee application.

My guess is the Commonwealth will make a profit on the case (even after taking into account indirect costs of benefits, overhead, the maintainance of One Ashburton Place, etc.). As a Massachusetts taxpayer, I'm pleased some good came out of what proved to be a futile effort. As a Microsoft customer, I hope this payment doesn't increase the allegedl overpricing from which the state attorney generals claimed we needed protection.

Edward R. Wiest
12/18/2002 9:51:27 AM - [Link]

Internet Libel Down Under

You may have read of the decision of the High Court of Australia holding that Australian courts had jurisdiction to hear the defamation claim of an Australian resident against Dow Jones (as publisher of Barron's) and decide the claim under Australian law based solely on the availability of the allegedly libelous statement in Barron's online edition.

The opinion is available free via FindLaw--if you can spare 300 KB of bandwidth. Since I hadn't read any British Commonwealth case for business or pleasure since the 1980's, I forgot how long a case where every judge publishes his views could run (this case contains 200+ hyperlinked footnotes).
I can understand the US press's contention (as set forth in Wednesday's editorial in Dow Jones' The Wall Street Journal (subscriber site) that an internet publisher should only be bound by the law of the place of publication (be it the location of the printing press or the bank of servers).

On the other hand, if you read the opinion, the plaintiff (cannily) limited his claim to the loss of reputation in his home [Australia] state of Victoria. It's true that permitting the victim of alleged libel to sue in his home state under his own state's law can cause a good deal of mischief (see New York Times Co. v. Sullivan, 376 U.S. 254 (1964)(protecting New York newspaper from Alabama jury by Federalizing US libel law). Nonetheless, it appears that limiting Internet libel claims to the home jurisdiction of an alleged victim draws a sufficiently bright line so as to permit the publisher some means of predicting its exposure. Furthermore, as the Australian court observed (search for the text at footnote 52 (citing American cases), most likely libel defendants either have huge resources via-a-vis plaintiffs (e.g., Dow Jones) or have no assets in the jurisdiction (bloggers like me). As a lawyer, I wouldn't take a case such as that of the Australian plaintiff without a substantial retainer. That may be the most effective control on vexatious Internet libel litigation.

Edward R. Wiest
12/13/2002 10:56:46 AM - [Link]

Practical Problems of Work/Family Life

Please forgive the writer's absence of the past few days. I've been with at least one of my kids as they cope with the GI/upper repiratory bug that has been floating North of Boston.

FYI--the Boston Bar Association's 1999 task force report Facing the Grail: Confronting the Cost of Work-Family Imbalancespoke to the concerns of lawyers in large and medium size firms. As a member of the steering committee of the BBA's Solo and Small Firm section I've suggested somebody should discuss similar issues facing solos (like me). Someday, maybe I'll find time to work on the project. . .

Edward R. Wiest
12/13/2002 9:52:47 AM - [Link]

Thoughts on a Merry-Go Round That Never Stops

Wednesday?s Wall Street Journal (subscription site) reported on the fee applications of professionals (both lawyers and accountants) working for Enron and its official creditors' representatives in ongoing Chapter 11 proceedings. The top reported hourly rate is $725 per hour; the magnitude of the fee application is illustrated by the fact that the retired bankruptcy judge chairing the committee reviewing bills for judicial approval is being paid $300 per hour for his services. There were nine recorded instances where attorneys claimed to have worked in excess of 20 hours in a 24-hour period.

I've worked on extraordinary matters (e.g., the threat of a nine-figure default by commodities speculators) which may have justified the use of resources on the scale documented in Enron. Mega-fee applications in mega-bankruptcies, however demonstrate how rapidly professional fees can mount when client and attorney decide--either expressly or through inaction--a limitless sky is the limit. Most clients (mine among them) don't have the luxury of going that route. It's better from their perspective and mine (as I hope to be paid in full on my bills) that a budget tied to realistic expectations on results be in mind from the outset of an engagement and reconsidered as the case goes forward,

Edward R. Wiest
12/11/2002 3:30:00 PM - [Link]

Sad News from Hill & Barlow

Today's Globe reports that the firm of Hill & Barlow will cease operations over the next 90 days.

There are all too many large firm lawyers who conduct proceedings with the seeming intent of making life as difficult as possible for a small firm adversary. That never happened in my dealings with H&B attorneys, who never confused zealous advocacy with the abandonment of professional courtesy, even in the most difficult situations. It's sad to see a firm with such a culture pass into history after 100+ years. I trust that my friends from that office will carry that ethic with them wherever they next hang their shingles

Edward R. Wiest
12/09/2002 1:28:49 PM - [Link]