The Liberal Order

Tyler Has a Consulting Gig

Tyler Cowen argues. (And man has this ticked some people off.)

Under Lockean property rights theory, you own physical things, not the values of those things.  It is for this reason that if you set up shop next to a competitor, you are not infringing his property rights, even if his business ends up being  worth less.  So let's say I steal your painting.  Yes, you do deserve your painting back.  It is yours.  But say I steal your painting and lose it or wreck it.  That should be the end of the story.  You never owned the "value of that painting."  You simply owned the physical painting.  You are not due compensation.  If you take my money as compensation for your loss, that is simply another theft.

He might want to offer his consulting services to Linden Labs.

In what might be a first-of-its-kind lawsuit, a Pennsylvania lawyer is suing the publisher of the rapidly growing online world Second Life, alleging the company unfairly confiscated tens of thousands of dollars worth of his virtual land and other property.

Story here.

Recent Legal Issues

A blind U.C. Berkeley student is suing Target.com for having a web site inaccesible to the blind.
Good luck to video game companies.

Chrysler Group President and CEO speaks out against lawusit abuse.

Today's "litigation lottery" system of justice costs America $246 billion a year.  According to the President's Council of Economic Advisors, one-half to two-thirds of that $246 billion price tag is a "tort tax" that's approaching nearly $1,000 per every man, woman and child every year.  That's 2.23 percent of the nation's GDP, compared to less than one percent in countries like France, Japan and Canada.  In efforts to fight meritless lawsuits, LaSorda outlined four "Common Sense" suggestions that would allow business to improve competitiveness and fight non-value added costs of unwarranted or frivolous lawsuits.

"First, in tort cases we need to allow witnesses to tell the full story, so that juries can hear it," said LaSorda.  "Product liability laws in the majority of states actually compel witnesses to tell the 'partial truth,' and thus prohibit juries from hearing the 'whole truth.'"

Thirty-two states do not allow jurors to consider a plaintiff's seatbelt use in assessing damages -- even though wearing seat belts is required by law in those states.

"Second, we need to set some reasonable and fair limits on damages in product liability cases," said LaSorda.  LaSorda cited a previous legal case in which DaimlerChrysler was hit with more than $50 million in compensatory and punitive damages.  A driver of a minivan was killed by blunt force trauma to the back of the head caused by an unbelted rear passenger.  The driver of the other vehicle, a seventeen year-old who fell asleep behind the wheel, was not sued.

According to a recent study, only a minority of total costs goes toward compensating the injured plaintiff: 14 percent of the costs go to defending claims, 19 percent are spent on plaintiff attorney fees, 21 percent goes toward administering costs, and only 46 percent of the costs associated with tort liability are given to the plaintiff to compensate them for their injuries.  According to LaSorda, "We need a system that first assesses realistic economic damages, and then sets reasonable limits on other damages."

"Third, we must stop punishing responsible companies for meeting or exceeding federal safety and regulatory standards," said LaSorda.  "If there is a clear product or safety reason for making changes, we aren't going to back down because of the threat of lawsuits ... But the threat of product liability creates a huge disincentive for the self critical evaluation of the features on current and past vehicles.  A promising proposal could also become a nightmare -- if it is taken out of context in a lawsuit."

Fourth, LaSorda called on businesses to pursue legal reform and eradicate what the American Tort Reform Association has called "the judicial hellholes" in this country.  Many states including Mississippi, Texas, South Carolina, Georgia, Ohio and Michigan have recognized that legal reform is a critical element in business, and have enacted civil legal reforms to improve their systems.

Ford is noticably absent from the discussion. HT Autoblog.

Another Twist in the RIAA Lawsuit Strategy

The RIAA finds itself at odds with another music industry interest.

Nettwerk Music Group, the Canadian record label and artist-management company that is home to Avril Lavigne, Sarah McLachlan, Barenaked Ladies and Sum 41, is taking on the RIAA on behalf of Elisa Greubel, a 15-year-old Texan whose father was sued by the recording industry trade group in August 2005 for owning a computer that allegedly shared more than 600 music files.

Among the nine songs the RIAA is focusing on in the suit, according to Nettwerk, is management client Lavigne's "Sk8er Boi." The RIAA is demanding Greubel's family pay $9,000 to settle the suit, or half that amount if the family signs off on the conditions built into a standard settlement agreement (see "RIAA Sues 784 For File-Sharing, Gives Props To Supreme Court Ruling" and "Single Mother Of Five Takes On RIAA In Downloading Case").

Nettwerk Music Group CEO Terry McBride said in a statement that legal action is not the answer. "Suing music fans is not the solution, it's the problem."
- - - -
McBride said he decided to weigh in because the action involves his artists. "Litigation is not 'artist development,' " he said in the statement. "Litigation is a deterrent to creativity and passion and it is hurting the business I love. The current actions of the RIAA are not in my artists' best interests." Nettwerk has offered to pay all legal fees and any fines for the family in the event that they lose the suit and Mudd said he has reduced his fees in the case.

Story here.

How Low Can the Bar Go?

Further proof that the tort lobby serves the interests of its members and not the interests of those they profess to protect.

Who Owns Statistics?

Major League Baseball is claiming ownership rights to the use of its player statistics and seeking compensation from sports fantasy leagues.

Major League Baseball has claimed that intellectual property law makes it illegal for fantasy league operators to "commercially exploit the identities and statistical profiles" of big league players.

It seems to me that the purpose of intellectual property law is to protect the creative output of individuals or group of individuals, not simply the outcome or effect of their actions. I probably can justify a right to own and control my lectures, but I certainly don't own information regarding students' GPAs.

MLB generates interest in their sport by disseminating stats on teams and players. In fact, MLB more than any other professional sports league has leveraged its use of player stats to generate interest in their profession. Depending on the elasticity of demand for player stats, which I would think is quite large, they're likely to hurt themselves with this action.

 

RIAA Wins First Appeal

Judge Frank Easterbrook issues the first appeal of the RIAA's lawsuits against file sharers.

From the opinion:

Authorized previews share the feature of evanescence: if a listener decides not to buy (or stops paying the rental fee), no copy remains behind. With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrighted material without compensation to authors cannot be deemed “fair use.” Copyright law lets authors make their own decisions about how best to promote their works; copiers such as Gonzalez cannot ask courts (and juries) to second-guess the market and call wholesale copying “fair use” if they think that authors err in understanding their own economic interests or that Congress erred in granting authors the rights in the copyright statute.

There certainly are plenty of sources of legal downloads now.

Tea for Two, and Two for HOV

Hmmm. I wonder if she pays double fare for a taxi or bus or train for the same reason?

A pregnant woman ticketed for driving in the carpool lane will have her day in court next month to argue that her unborn child counts as a second person in the car.

Kahn v. State Oil

Judge Richard Posner's opinion in Kahn v. State Oil (discussed below) was a well crafted legal maneuver. State Oil won the case against Kahn at the federal district level, with the district court judge ruling that price fixing is not--or at least should not be--a per se violation of antitrust law. Kahn appealed the case to Posner's circuit court, arguing that the district court erred in overturning established precedent in the form of Supreme Court rulings since 1968. This caused Posner to issue his brilliantly crafted opinion.

Although State Oil's defense was based on sound economic reasoning, sufficient for the district court judge to side in their favor, Kahn argued that the Supreme Court precedence still holds establishing a per se violation of federal antitrust laws for any price fixing scheme. Posner reluctantly had to agree with Kahn and overturn the ruling of the district court. (Posner was certainly aware of the controversy surrounding Robert Bork's opinion in Rothery v. Atlas Van Lines, which essentially overturned  a precedent previously established by the Supreme Court.)

The gist of Posner's opinion is, "Boy, State Oil has certainly made a sound economic case that its pricing policy is efficient, reasonable, and actually protects competition, but my hands are tied by Albrecht v. Herald. Man would I love to overturn Albrecht for (insert all the reasons espoused by Posner), and if the Supreme Court would listen I bet, golly gee whiz, that they would agree with me and overturn it.  This would establish a rule of reason from now on in price fixing cases. But again, at this time I can't. Although all these reasons I stated above are rational, reasonable, and pro-competitive, I simply cannot overturn a U.S. Supreme Court decision and must therefore rule in favor of Kahn. But one more time, if the Supreme Court were ever to read this opinion, I am certain that they would listen to reason and overturn Albrecht. At that time, I could then rule in favor of State Oil." (Nod, nod; wink, wink.)

State Oil appealed, the Supreme Court overturned Albrecht, and Posner was able to issue his rebuke of Kahn's arguments on remand, directing the district court to dismiss the suit against State Oil.

The Relevance of a Well Written Judicial Opinion

Jane Galt trashes Harriet Miers for her “dreadful writing skills,” noting that “on the Supreme Court, Justices don't just vote "yes" or "no"; they write opinions. And what is said in those opinions often forms the precedent for other cases. Incompetent opinions will leave a legacy that lingers far beyond the next associate justice, and whatever high-profile case you think she can swing for you.”

The Supreme Court of Michigan

Patrick J. Wright praises Michigan's Supreme Court.

For the past six years, the Michigan Supreme Court has been a leader in attempting to restore a proper balance between the judiciary, the legislature and the people. The bloc that constitutes the court's frequent majority--Justices Clifford Taylor, Stephen Markman, Corrigan, Young and, often, Elizabeth Weaver--has consistently refused to substitute its policy preferences for those of the legislature. Importantly, the court's other justices, Michael Cavanagh and Marilyn Kelly, have joined the majority in key cases. But the court's "judicial restraint" has not implied passivity. All of the justices have been willing to rule out-of-bounds legislation that encroaches on individual rights protected by the state constitution.