Welcome to "On the 50 Yard Line" The Blog of Stuart L. Pardau, Attorney, Professor and Observer of Political Economy; It’s not just about football.

Sunday, July 31, 2011

Shareholders in Muni Bond Fund Bailing out the Issuers of Muni Bonds...Could Lawsuits Be Far Behind?

Soon after I started reading the following article  http://online.wsj.com/article/SB10001424053111903635604576476460016084304.html in yesterday's Weekend Wall Street Journal, I did a "double- take" to check the date to make sure it wasn't April 1st and to confirm this wasn't some kind of sick April's Fools day joke. Unfortunately it is no joke.
Here is an excerpt from the article:
"This week, shareholders in 32 closed-end municipal-bond funds sponsored by Nuveen Investments voted on a proposed change that would permit the funds to make loans to issuers of muni bonds 'in circumstances where a municipal issuer is in distress.' Nuveen is one of the largest managers of tax-free bond funds, with some $76 billion in such assets..the plan sheds light on a little-known occurrence: the use of a fund's assets to provide life support to borrowers that can barely make interest payments on bonds already owned by the fund. Such loans are rare but could become more common, say fund experts."

So let me see here. I invest in a technology ETF with a major institution like Fidelty.   Then let's say, heaven forbid, the tech sector crashes on reports of earnings that have fallen off a cliff, so Fidelty decides to loan some money to some of the largest firms that comprise this ETF to help get them through the rough patch. A bad idea? No, a really, really %$^&# bad idea. Setting aside the potential legal risk which I think is potentially huge (even if the fundholders voted to "approve", when things go sideways, which I would forecast a high probability that they will, the clarity of the disclosure and consents, among other items, will be questioned), it is just bad business. One of the key reasons for someone to invest in a fund is to achieve some level of diversification. You probably won't make a killing but you also won't lose 90% (or more) of your investment. I would hope that even if a few municipalities are shaky, the majority in any given fund would be sufficiently safe. What on earth are the folks at Nuveen thinking? Or is the situation really that dire in the muni bond market?

Friday, July 29, 2011

Marvel prevails over Kirby Heirs in Copyright Ownership over Spider-Man and Incredible Hulk Properties

In Marvel v. Kirby,  Southern District of New York in summary judgment rules against heirs of Jack Kirby; finds that Kirby's contributions to such characters as The Incredible Hulk & Spider-Man were works for hire under the 1909 Copyright Act.

Here is the Order:


Thursday, July 28, 2011

What One Law School Can Do To Improve Legal Education and Make Better Lawyers

A great posting from Roy Black. What Roy says makes perfect sense. All it takes is for one Law School to have the vision, focus and intestinal fortitude to execute on it. http://www.royblack.com/blog/um-law-school/

Idea/Expression Dichotomy in Copyright Law

Under U.S. law, the standard for determining copyright protection is: 1) originality; and 2) fixation to a tangible medium of expression. The standard for determining originality is a pretty low bar. Even the most minimal level of originality will do. Rest assured you will not be judged by a panel of art or other critics. (Though as the Supreme Court ruled in Feist, mere assembly of facts, such as in a phone directory, as was the case in that instance) will not meet even this very low bar of originality. The fixation requirement just goes to the recording, capture and transcription. So singing in the shower, no matter how original, if not recorded or written on a sheet of music, would not pass the test of copyright.

Many often mis-categorize ideas as being protectable by copyright. They are not. Rather, it is the expression of the idea that may conceivably be protected. Think of it this way: The "idea" of a thief who wants to rob a bank is hardly an original one. But what might be original is how that idea is expressed. The more similar that expression is to previous copyrighted works, the greater the risk one runs of being sued for copyright infringement.

See the link below for a summary of recent case involving alleged infringement of certain photographs.  Take a look at the photos and determine for yourself. Are the expressions substantially similar? By the way, despite the editorializing of the author of the article, I am not convinced the Court's ruling was improper. Granting motions to dismiss should be used sparingly and these questions of "fact" are more properly the province of a juries, which necessarily would come much later in the case.


Tuesday, July 26, 2011

New York Attorney General Motion To Dismiss re Jacoby & Meyers Lawsuit

I have previously tweeted on the subject of Alternative Litigation Financing ("ALF"). ALF is the term used to describe the growing trend of third party funding of litigation (from support of traditional personal injury claims to complex intellectual property litigation) http://twitter.com/#!/slpardau/status/81461904354193408.

In what is another fascinating development relating to this trend, in May of this year, the law firm of Jacoby & Meyers firm filed suit in New York challenging Rule 5.4 of the New York Rules of Professional Conduct which prohibits fee sharing agreements with non-lawyers. The suit is based on a variety of theories including the First Amendment and dormant Commerce Clause. The post here is of the New York Attorney General's recent Motion to Dismiss in the case. http://www.nylj.com/nylawyer/adgifs/decisions/072611judgesmemo.pdf.

There are a lot of interesting developments, including the deregulation of the legal services market in the United Kingdom, which beginning this Fall. It seems plausible that ,much like the deregulation of the financial services markets in the U.K.,  these developments will influence what takes place in the United States.

Friday, July 22, 2011

Government Accounting Office Report: Questions/Concerns Still Remain About Federal Reserve's Loans to "Too Big To Fail Institutions"

Almost three years later, the Fed has still not been forthcoming on details of its loans to "Too Big To Fail"  institutions. Greater transparency and accountability is required.  http://www.cnbc.com/id/43855944

Thursday, July 21, 2011

Senator Grassley's Letter to the ABA

The issue of legal education now seems very much on the radar screen of Congress, especially the massive amount of Federal Dollars that goes towards financial aid and scholarships, large portions of which may be misspent or not properly accounted.  http://grassley.senate.gov/about/upload/2011-07-11-Grassley-to-ABA.pdf

Wednesday, July 20, 2011

Interview with New Register of Copyright Office

Good (and short) interview with new Register of Copyrights, Maria Pallante, who replaces Marybeth Peters who was in that role since 1994.  Maria's comment about "fair use" is particularly on point; I agree (from personal experience) that one does not "sleep well" if required to address/enforce this issue. http://arstechnica.com/tech-policy/news/2011/07/new-register-of-copyrights-unfortunately-i-start-with-enforcement.ars?utm_source=rss&utm_medium=rss&utm_campaign=rss

To Go To Law School, or Not To Go...

I often get asked by students and others I know: Should I or shouldn't do it? The "it" is Law School. My usual response, which is often perceived as a "dodge", but is really the truth, is that "it depends". 

Will you, for example, be starting at Harvard or Yale? Then, I think the answer to the aforementioned question for most would be: "Almost certainly, yes."  My answer would probably not differ a whole lot, even for that next category of Law Schools, say through and including the "Top 20-25" Ranked in U.S. News, for example.  All those "top" schools carry a certain cache either nationally or regionally, each have their share of Superstar Professors, and if you graduate in the top half (or even somewhere below that), in all likelihood you are more or less assured a well-paying and/or interesting job opportunity somewhere.

The challenge is those Second, Third and certainly Fourth/Fifth tier schools. If one has a crystal ball and knows that you will take an immediate shine to the study of Law and are shoe-in for Law Review and will graduate at the very top of your class, then I would say "go for it". But the brutal reality is quite different and none of us have that crystal ball. While I always try to emphasize the positive and highlight the great training law school can provide (warts and all, and there are some large ones, that deserve a real popping), does it really justify the opportunity cost of three years, $150,000 in debt, and your fair share of petty slights and pride swallowing moments?  It depends, but for most, almost certainly not.

Check out this one post http://thecareerist.typepad.com/thecareerist/2011/07/nyls.html which  highlights some of these concerns with respect to New York Law School (confused at times, with the far more prestigious, NYU). The post elaborates on the recent NYT article which was quite critical of the outgoing Dean, who himself has been a proponent on the need for significant changes of law school pedagogy (read: focus on the more practical real world stuff, and lessen the burden on law firms and non-profits to shoulder the burden of training new lawyers.)  This story is far from over; to paraphrase the line from one of Churchill's famous speeches, it is "not the end nor is it even the beginning of the end, but perhaps it is the end of the beginning." When the "end" does arrive, I imagine a very different Law School environment and curricula than the one we have today.

Monday, July 18, 2011

An Excellent Metric for Historic Comparisons of Government Spending

I highly recommend checking out the CATO INSTITUTE's recent posting on Federal government spending. http://www.cato-at-liberty.org/cbo-report-reveals-spending-disaster/

In particular, take a look at the data contained on the link to the spreadsheet right beneath the bar chart. I think the data on the spreadsheet is quite illuminating, beyond the "Obama is leading us to disaster" narrative spun by Cato. The President's policies may very well have that affect, but the story is deeper. There is no question that the spread between government revenues (about 14.8% of GDP) vs. what the Federal Government actually spends (about 24% of GDP) is unsustainable and even terrifying. That said, it is not the first time in history.

The data on the spreadsheet goes back to the 1930s, when the government, during the height of the Great Depression was running massive budget deficits; interestingly, the percentage of federal government spending to GDP hovered around 10%, less than half what it is today. Government spending as a percentage of GDP only really spiked up with America's entry into World War II, when at its peak, government spending was over 43% of GDP.

Also, during the peak of the Reagan arms build-up in the 1980s, the spread between federal government spending and outlays was large as well, though still only about half what it is today.

Here are a few take-aways:

1) As a percentage of GDP, federal government revenues are at record lows due in large measure to the still poor economy (a high number of folks are out of work, hence lower tax revenues); and

2) We have had, in modern times (beginning in the 1930s), similarly large budget deficits, though these seem larger and more persistent;  and

3) In each of the past cases, however, the high budget deficits were relatively short-term and the situation was corrected through a combination of reductions in spending and economic recovery; and

4) We had a budget surplus as recently as 10 years ago, which was preceded by a period of several years (in the late 1990s) whereby federal government spending as a percentage of GDP was declining; and

5) In the past,  high budget deficits were adopted to support "great causes", the defeat of Nazism and Imperial Japan and WWII and the defeat of the Soviet Union and its empire. What are our "great causes" today? (It is meant to be more of a rhetorical question; perhaps answered in a future post.)

Sunday, July 17, 2011

Tick, Tock, Tick, Tock

With both parties, still stuck in gridlock and no meaningful budget deal in sight, it is important to be reminded of some basic facts.  The U.S. Debt Clock http://www.usdebtclock.org/ is perhaps the clearest site out there with information on the perilous state of our national finances. Why? Because the numbers don't lie.  We often hear about how the national debt is now almost 100% of GDP. While strictly speaking that is true, it is also a misleading statement since it does not reflect the total liabilities associated with federal government "entitlements" (Medicare, Prescription Drugs and Social Security), the personal debts of Americans, and also omits the debts of state and local government. It is not a pretty picture. Here is how it out pencils out:

A. Unfunded Federal Obligations

1. Unfunded Medicare liability obligations: $80 trillion dollars
2. Unfunded Prescription drug obligations: $20 trillion dollars
3. Unfunded Social Security Obligations: $15 trillion dollars

Subtotal: $115 trillion

B. State and Local Government Debt

1. $3 trillion dollars

C. Private Debt

1. $16 trillion dollars

TOTAL Unfunded Federal Obligations, State and Local Government Debt and  Private Debt = $134 trillion dollars

As the debt clock reports, just on the current national debt of $14 trillion, the obligation translates to a burden to each American taxpayer of $130,000. But again, as staggering as that figure is, it is about one-tenth of "real debt" obligation of each American taxpayer, which comes to a surreal amount of over $1 million dollars per taxpayer.

Bold and courageous steps need to be taken, but based on the lack of leadership of both parties, it seems the proverbial "can is being kicked down the road" until at least 2012. That is unfortunate since real opportunities for reform and change exist.

Friday, July 15, 2011

Google Alleged to Have Collected WIFI data

. Google is alleged to have been obtaining WIFI data from private residential areas while collecting data for its Google Maps (and taking photos of your abode to make available on the internet). The big Plaintiff's shop, San Francisco-based, Lieff Cabraser is bringing the suit.

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