ProfessorBainbridge.com

Rodney Strong Alexander's Crown Cabernet Sauvignon (Alexander

A long time favorite. (The exceptional 1984 was one of the first single vineyard Cabernets I bought in quantity.) Excellent berry fruits with a touch of cedar and leather. Perhaps a tad flabby (despite the back label claim of "firm acidity") but easy to drink. Good steak wine. At $30/bottle, it's fairly priced. Grade: A--

Civility in the blogosphere

Brian Leiter's got an interesting post on why he doesn't value civility when it comes to blogging (what makes it personally interesting is that Brian has been unfailingly civil to me in personal contacts). Orin Kerr replies with a defense of civility. Personally, I prefer a civil tone (not that I always manage to achieve it; cf. Romans 3:23), but I nevertheless appreciate Brian's biting acerbity in much the same way I enjoy Mencken's acerbic wit and sarcastic tone. It takes all kinds to make a blogosphere, after all. But, of course, your mileage may vary.

Millennium Challenge Funds Slashed

In a post on improving the US' image abroad, Kreps and Arend comment on the Millennium Challenge program initiated by President Bush:

President Bush created the Millennium Challenge Account (MCA) in 2002, calling for an increase in US development assistance by 50 percent over the next three years. Although these are great plans, little concrete action has happened. Almost none of that funding has been disbursed.  And the US is missing an opportunity to have a lasting effect on the process of democratization.

Since the MCA funds are tied to political and economic reform, the US can advance its objectives of democratic governance through the incentive of development assistance.  Several countries in the horn of Africa have already indicated that they are ready to accept the transparency and accountability demanded by the MCA.  If the Administration would begin funding these countries on a fast-track basis, they would be more equipped to take measures to address the humanitarian, heath and environmental problems that confront them. This would be vital boost for those nations, but it would also promote an important American security concern by helping them to democratize and prevent their territory from serving as a breeding ground for terrorists.  And America would be seen not just the sword-wielding imperialist, but as a state seeking to take its stewardship as world leader seriously.

Given the potential for good that MCA represents, it's a great pity that the House just cut MCA funding by 11% below what Bush requested.

Voicemail Peeve

Why is it that when people leave a voicemail message they only give you their phone number one time and spit it out so fast you have no chance to jot it down? Or is my penmanship just unusually slow?

RIP

Shelby Foote has passed away. I'm deeply sorry to hear this news. I loved his Civil War trilogy. And who can forget how he stole the show in Ken Burn's Civil War documentary.

It's all about me

Today I learned that I am John Hawkin's 29th favorite blog. On the other hand, I also learned that I am not on People for the American Way's list of "Other High-Profile Federalist Society Members." Oh well. You win some, or at least come in 29th, you lose some.

Bush on Iraq

If, like me, you missed President Bush's speech on Iraq (in my case, I had the good excuse of working away at an article on the fiduciary duties of directors of corporations in the vicinity insolvency), the transcript is available here. Money quote:

Some of the violence you see in Iraq is being carried out by ruthless killers who are converging on Iraq to fight the advance of peace and freedom. Our military reports that we have killed or captured hundreds of foreign fighters in Iraq who have come from Saudi Arabia and Syria, Iran, Egypt, Sudan, Yemen, Libya and others. They are making common cause with criminal elements, Iraqi insurgents, and remnants of Saddam Hussein's regime who want to restore the old order. They fight because they know that the survival of their hateful ideology is at stake. They know that as freedom takes root in Iraq, it will inspire millions across the Middle East to claim their liberty, as well. And when the Middle East grows in democracy and prosperity and hope, the terrorists will lose their sponsors, lose their recruits, and lose their hopes for turning that region into a base for attacks on America and our allies around the world. Some wonder whether Iraq is a central front in the war on terror. Among the terrorists, there is no debate. Hear the words of Osama Bin Laden: "This Third World War is raging" in Iraq. "The whole world is watching this war." He says it will end in "victory and glory, or misery and humiliation." The terrorists know that the outcome will leave them emboldened, or defeated.

It's an ex post rationale for the War rather than a justification, but nevertheless it's the argument I find strongest (see Why Iraq?). I remain somewhat skeptical, however, that the Administration really knows what's doing when it comes to putting theory into practice.

The Problem with Unnamed Sources

Reporters Judith Miller and Matthew Cooper are likely to go to jail for refusing to name sources in connection with the interminable investigation of the Plame kerfuffle.

Ms. Miller has said she will go to jail rather than testify. "Journalists simply cannot do their jobs without being able to commit to sources that they won't be identified," she said in a statement yesterday. "Such protection is critical to the free flow of information in a democracy." (Link)

How very noble of her. But there's a problem with unnamed sources:

A newspaper investigation of a former columnist for The Sacramento Bee could not verify 43 sources she used in a sampling of 12 years of her work.

Diana Griego Erwin resigned May 11 as she came under scrutiny about the existence of people she quoted. (Link)

Why should we trust the Millers and Coopers of the world when they claim they really do have unnamed sources and that those sources are credible?

Update: Slate's got another example, this time from a NY Time story on a lawsuit between Peter Jackson and New Line Cinema, arising out of how the latter handled sales of some Lord of the Rings products, which quotes a cheap shot by a unnamed individual identified only as a New Line lawyer. As Slate put it:

... shouldn't there be a Times policy against giving a partisan source, in this case a defense attorney, the cover of anonymity to call the plaintiff in a case against his client piggish? As a matter of fact, there is such a published policy limiting what anonymous sources can say in Times articles. In "Confidential News Sources," on the paper's corporate Web site, the policy reads in part:

We do not grant anonymity to people who use it as cover for a personal or partisan attack. If pejorative opinions are worth reporting and cannot be specifically attributed, they may be paraphrased or described after thorough discussion between writer and editor. The vivid language of direct quotation confers an unfair advantage on a speaker or writer who hides behind the newspaper, and turns of phrase are valueless to a reader who cannot assess the source.

Why did the Times violate its own policy in attacking Peter Jackson?

The Business Right versus the Religious Right on the Supremes?

The WSJ has a very interesting article today on a possible fissure within the conservative community on Supreme Court nominees. It notes, for example, that the business community and social conservatives are sharply divided in their assessment of some current justices, perhaps most notably Stephen Breyer:

Pro-business legal scholars and practitioners say the former law professor and aide to liberal Sen. Edward M. Kennedy has the best understanding of corporate issues of any current member of the court. ... James Dobson, president of the Colorado-based conservative- advocacy group Focus on the Family, once said Justice Breyer ought to be impeached because he was too sympathetic to gay rights.

The article goes on to note that Scalia and Thomas periodically give the business commuinity fits, while they are usually the darlings of the social conservatives.

What's perhaps most interesting about the article, however, is the suggestion that there is a fundamental divide between business and social conservatives on issues as basic as federalism:

What business wants from the high court sometimes undercuts basic conservative principles. One example has to do with federal authority and states rights. Corporations increasingly have sought protection from unfavorable state laws and court rulings by arguing that federal law "pre-empts," or sets aside, that of the states. This argument could be used to rein in ambitious state attorneys general, such as New York's Eliot Spitzer, who has tried to apply more stringent standards for corporations than those sought by the Securities and Exchange Commission or the Environmental Protection Agency.

Religious conservatives, by contrast, tend to embrace the more traditional conservative position favoring states rights. So they encourage states and municipalities to stretch or go beyond high court precedent on abortion, prayer in public or religious displays. Tony Perkins, president of the Family Research Council and a former Louisiana legislator, says he is well aware that businesses wants national rules that pre-empt the sometimes-conflicting patchwork of state and local regulation. But "that is inconsistent with the predominant judicial philosophy that the president has nominated," he says.

I think the article has overstated the divide on this issue. Pro-business conservatives can be very pro-federalism when it comes to issues like corporate governance, where they tend to favor state regulation. (See my article The Creeping Federalization of Corporate Law.) Where business tends to want national rules is on issues like tort reform and environmental regulation. Social conservatives may have different priorities, as illustrated by Family Research Council President Tony Perkins' complaint that Bush was devoting too much attention to Social Security and tort reform rather than defense of marriage, but they are unlikely to oppose business efforts at national reform in this area. As Grover Norquist once observed:

The reason the modern Republican Party holds together, and for 20 years has grown and gotten stronger -- even though some people from outside have thought they saw fissures -- is it is a low-maintenance coalition. Nobody in the coalition wants anything at anyone else's expense on their primary vote-motivating issues.

Exactly.

In fact, many social conservatives affirmatively support much of the business agenda. Pat Robertson, for example, has noted his "strong support for tax reform and tort reform." The Illin ois Family Institute opines that: "The need for tort reform in Illinois is not just a serious issue, but is fast becoming a crisis."

Hence, it should be possible to find nominees who will be acceptable to both sides of the conservative community. Indeed, the Journal article flags two likely choices:

Two lower- court judges have drawn interest in corporate circles because they represented companies on regulatory matters before going on the federal bench: John Roberts of the Washington, D.C., Circuit Court of Appeals and Michael McConnell of the 10th Circuit Court of Appeals in Denver.

There are some who worry that Roberts might turn out to be another Souter, making him a questionable compromise choice. In contrast, McConnell's nomination to the 10th Circuit was supported by many social conservatives, such as the Traditional Values Coalition, while the leftist American Constitution Society's blog villified him as "a leader of the anti-choice forces."

In sum, this is just one more reason to think McConnell would make an ideal compromise choice, precluding any risk of fissure within the movement.

Payments to Class Action Named Plaintiffs

As a followup to yesterday's post on the possible indictment of famed plaintiff securities class action law firm Milberg Weiss, Jonathan Wilson has more on why kickbacks by class action lawyers to the named plaintiff in such suits are "dastardly":

The practices that Lazar is alleged to have engaged in are certainly dastardly.  The principle of class action litigation is that the interests of many are adequately represented by a few named plaintiffs, allowing for a more efficient outcome than if each individual plaintiff were left to pursue his own remedies. 

That principle is utterly undone if, as alleged, the named plaintiff has a covert arrangment with class counsel for additional compensation that is not shared with other class members.

The practice is especially dastardly because the mechanics of litigation (with the protection of the attorney/client relationship) cloak the transactions between the named plaintiff and class counsel.  There is no third party to regulate those transactions and no mechanism to police wrongdoing.

While judges have a responsibility to avoid collusive arrangements with class counsel and collusive settlements, in practice many judges lack the inclination and the legal tools to supervise these arrangements.

While defendants may sometimes suspect inappropriate behavior, they too lack a mechanism to prevent it and may even lack the standing to complain about it.

WSJ on 10 Commandments Cases

The WSJ($) editorial board has an interesting take on yesterday's 10 commandments cases:

And now for the dueling Ten Commandments decisions, in which the Justices cast themselves as religious interior decorators -- and finicky ones at that. In van Orden v. Perry, the Court allowed a six-foot granite monument to the Ten Commandments on the grounds of the Texas capitol. But in McCreary County v. ACLU of Kentucky, it decided that a display of framed copies of the Ten Commandments inside two Kentucky courthouses was going too far.

What gives? Only Stephen Brayer would seem to know the secret logic behind this split decision, since he was the swing Justice in the two cases. Reading through the majority opinions, it seems that the difference boils down to such "context" dependent issues as the fact that the granite monument was old -- it had been there since 1961 -- while the Kentucky commandments were of newer vintage and therefore possibly a product of the dreaded religious right.

As Justice Scalia wrote in a particularly blistering dissent in McCreary: "What distinguishes the rule of law from the dictatorship of a shifting Supreme Court majority is the absolutely indispensable requirement that judicial opinions be grounded in consistently applied principle." By refusing to offer such a principle here, the Supremes have guaranteed even more church-state appeals. We'd add that this is a subject where a plain-language reading of the First Amendment -- which prohibits Congress only from establishing a state religion or "prohibiting the free exercise thereof" -- would be immensely clarifying.

Burke and Foreign Policy

Henry Farrell raises some good questions about what a Burkean foreign policy would look like with respect to development aid. I must confess that development is not an area to which I've given a lot of thought (excepting a long ago articl e on sovereign debt, which is only tangentially relevant, if at all), but I did once play around with the question of what a Burkean policy of prudence would look like with respect to Iraq. I think I'm still more or less where I was back then.

Former HealthSouth Corp. CEO Richard M. Scrushy Acquited

In a stunning blow to the government's crusade against business malfeasance, the jury has rendered a not guilty verdict in the first major trial under the 2002 Sarbanes-Oxley Act. Tom Kirkendall has the details and excellent analysis. Money quote:

...  the Scrushy case will stand for the dubious nature of the government's policy of criminalizing merely questionable business practices. As much as the government protests that true business crimes are deterred by such vigorous prosecution of questionable business conduct, the fact of the matter is that any reasonable interpretation of justice is strained in squaring the result in the Scrushy case with the results in the Martha Stewart case, the sad case of Jamie Olis, the case of Dan Bayly, the case of William Fuhs, the DOJ's handling of the Global Crossing case, and many others. As Professor Ribstein has noted:

So white collar prosecutions become a sort of lottery. If the prosecution can come up with something colorful, it wins, or maybe loses if it’s too colorful (Sardinia). These are not the elements of a rational criminal justice system.

Larry Ribstein also weighs in.

Milberg, Weiss Faces Possible Indictment

Famed securities class action plaintiffs' law firm Milberg, Weiss reportedly has been named in the indictment of Seymour Lazar. Mr. Lazar is a retired entertainment lawyer who has served as a plainitff in dozens of class actions over the years.

The indictment said Lazar and his family members collected at least $2.4 million in "secret and illegal kickback payments" from the law firm through Selzer and others.

During this period, Milberg Weiss earned at least $44 million in legal fees from cases in which Lazar or a family member was a plaintiff, according to the indictment.

It also accuses the law firm of filing "false and misleading" court documents and sworn statements signed by Lazar, and of hiding the payments to Lazar from the courts.

Although Milberg, Weiss has not yet been indicted, the WSJ($) reports that both senior partners at the firm and the firm itself may face indictment in the near future. (Blawgger Tom Kirkendall has more details and provides some context.)

I tend to agree with Larry Ribstein that what's sauce for the goose is sauce for the gander. Like Larry, I've been skeptical of the government's power to destroy firms by indicting them. (Although less so; I still think reasonable people could believe that it was Arthur Andersen's time to go.)

Yet, at the same time, it strikes me that there are sound policy reasons to prohibit lawyers from making kickbacks to the named plaintiffs in class actions. Since a named plaintiff is essential to bringing a class action, paying kickbacks to someone willing to serve as the requisite plaintiff may tend to make it easier for lawyers to bring nuisance claims. Because a named plaintiff who has received a kickback is even less likely to monitor the activities of the lawyer (who is the real party in interest in a lot of these suits) than is a typical class action plaintiff, it increases the probability of a settlement that benefits the lawyer but not the class (such as the notorious practice of coupon settlements).

One gathers that this practice is fairly widespread. Certainly, the testimony back when the PSLRA was adopted suggested it was common in the securities class action field. If the probability of detection and punishment is low, the economics of deterrence tells us we need a high nominal sanction to deter. As a result, we may well need criminal sanctions. Hence, I believe that an indictment of any individual lawyers who engaged in this practice would be perfectly appropriate.

Update: Jonathan Wilson has more on why kickbacks by class action lawyers to the named plaintiff in such suits are "dastardly":

The practices that Lazar is alleged to have engaged in are certainly dastardly.  The principle of class action litigation is that the interests of many are adequately represented by a few named plaintiffs, allowing for a more efficient outcome than if each individual plaintiff were left to pursue his own remedies. 

That principle is utterly undone if, as alleged, the named plaintiff has a covert arrangment with class counsel for additional compensation that is not shared with other class members.

The practice is especially dastardly because the mechanics of litigation (with the protection of the attorney/client relationship) cloak the transactions between the named plaintiff and class counsel.  There is no third party to regulate those transactions and no mechanism to police wrongdoing.

While judges have a responsibility to avoid collusive arrangements with class counsel and collusive settlements, in practice many judges lack the inclination and the legal tools to supervise these arrangements.

While defendants may sometimes suspect inappropriate behavior, they too lack a mechanism to prevent it and may even lack the standing to complain about it.

O'Connor

My friend and colleague Eugene Volokh ably dissects Justice O'Connor's views on religion in the public square as expressed in the 10 Commandment cases. If you go read the passage he quotes, you might ponder this additional question: What the heck does any of what she says have to do with interpreting the Constitution? It's a display of purely personal opinion being incorporated into the law.