Blawgletter®

A Column About Nothing . . . But

2009-07-13T11:36:44-05:00

Georgetown Law Professor Randy E. Barnett today pens an item for the WSJ. His subject? The now-underway Senate Judiciary hearings to confirm, or reject, the tapping of Second Circuit Judge Sonia Sotomayor for the U.S. Supreme Court.

The title of the piece -- "The Seinfeld Hearings" -- signals its gravitas.

Blawgletter fancies that the choice might've made Senator Al Franken, when he wrote for Saturday Night Live, wince -- or even during his time at Harvard Lampoon.

Why would a Serious Legal Scholar like REB choose funny to deal with a matter that seems to call for dignity?

Don't get Blawgletter wrong. We like to chuckle as much as the next chucklehead. Nor do we mind making sport of people who affect Excessive Gravity or display Pedantic Certitude.

No. But we do wonder if the lightness of the good pedagogue's treatment tells us how much weight we should give his Probing Analysis.

We must answer yes. R. E. Barnett opts to educate us by constructing a Straw Woman and then ripping her to shreds.

He starts by giving us a history lesson:

In the 1930s, academics developed a philosophy they called "legal realism" to undercut judicial resistance to "progressive" statutes such as laws restricting the hours a baker or a woman could work. Legal realism elevated just results over the rule of law. It saw analysis of "the law" as an after-the-fact rationalization that allowed reactionary judges to conceal their empathy for the oppressed. Because legal realists believed judges inevitably made law when they ruled, they thought judges should decide cases with progressive ends in mind.

Pardon us, but we don't recall legal realism as a New Deal creation, much less one that aimed to furnish cover for "reactionary judges" to practice their love on the little people. Au contraire. Didn't Oliver Wendell Holmes give it a big push with The Common Law in 1909 or so? And didn't it mainly work to expose the biases of reactionary judges against poor folks?

But that doesn't bother us so much. Prof. Barnett goes on to say Senators oughtn't bother asking Judge Sotomayor about "stare decisis" or "judicial activism". He prefers something totally different, he says:

Instead of asking nominees how they would decide particular cases, ask them to explain what they think the various clauses of the Constitution mean. Does the Second Amendment protect an individual right to arms?

Aha! Don't Her Honor how she would've decided District of Columbia v. Heller -- which held that the second amendment does protect an individual right to arms. Instead inquire whether the second amendment protects an individual right to arms! And rather than probe her thoughts on the Heller decision applies to state governments, demand an answer to whether the second amendment does. Totally different!

Annals of Arbitration: Fifth Circuit Proves Blawgletter Wrong (Sorta)

2009-07-12T19:22:57-05:00

Blawgletter wrote in April about a Fifth Circuit decision that, to our surprise, made a big deal about its -- the court's -- greater openness to the same argument by one side (the defense side) than by the other side. The issue concerned whether a party waived a right to arbitrate a dispute.

The panel in the April case found that the plaintiff, by asking for a ruling on a legal issue before demanding arbitration, (a) did a "substantial invocation of the judicial process" and ergo (b) committed a waiver thingy. Their Honors asked their readers to accept that the "legal standard for waiver is the same regardless of which party is the party alleged to have waived arbitration. Differences between the two sides arise from the voluntariness and timing of their actions, not the legal standard."

We didn't believe it, in part because we thought it glossed over the fact that the court saw "prejudice" to defendants often but to plaintiffs seldom. We fussed:

[B]y making the prejudice question pivot on whether the arbitration-opposing party would lose a "legal" right or advantage by having to go to arbitration, the analysis again tends to favor defendants. Courts seem to view plaintiffs' rights as boiling down to the right to ultimate affirmative relief, but they also think that defendants would "lose" rights simply by virtue of foregoing the benefit of a court's pre-trial rulings that went their way. Because plaintiffs still may have a shot at winning in arbitration, their losses (from having to arbitrate after defendants engaged in merely tactical invocation of the judicial process) appear to weigh less. But they don't.

But last week the court held that a defendant waived its right to arbitrate by waiting to demand arbitration until after the trial judge pretty much said he would rule against the defendant on the merits. Wowser. Petroleum Pipe Americas Corp. v. Jindal Saw Ltd., No. 08-20461 (5th Cir. July 9, 2009).

Let's not dwell on the differences. Things like the entirely different panels; the panel's failure to mention the two-months earlier decision; the procedural issue that the previous decision turned on versus the merits question that decided the new one. We like progress in any form it takes.

Our feed thinks about it now and believes it later.

Delaware Supremes Back Class Fix for Short Form Merger Mess

2009-07-11T15:32:32-05:00

You don't see a lot of mergers these days -- unless you mean mergers with the infinite, acquisitions by oblivion, pacts with ferryman Charon. Deal lawyers all over find themselves brushing up on things like the Uniform Commercial Code chapters that concern the calling of notes, foreclosures upon collateral, and the undoing of fraudulent transfers.

So -- to grasp the context of a new decision by the Supreme Court of Delaware -- you'll need to go back with Blawgletter to that happy place a couple years ago when M&A work kept our transactional sisteren and brethren busy, busy, busy.

In 2007, Robert Kanner, the 90-percent owner of Pubco Corporation, decided to buy out the company's minority shareholders through a "short form" merger. Delaware law gave Kanner the right to cash them out simply by telling them, after the fact, that he'd merged Pubco into another corporation, that they'd get $X a share for their Pubco stock, and that they could, if they wanted, demand an "appraisal" should they think Kanner ought to have paid more than $X. The appraisal would judicially fix the price at $X, below it, or above it.

One other thing: Kanner also had to give his now-former co-owners all information "material" to their decision whether to seek the appraisal remedy. But Kanner made a mere pretense of disclosing that stuff, deigning not even to say how he came up with $X. Plus he sent an out-of-date version of the Delaware appraisal statute. Kanner plainly liked secrets.

The Delaware Chancery Court took a different view. It held that Kanner broke his duty to disclose material facts. And it ordered a "quasi-appraisal remedy", which gave the minority shareholders a second shot at opting for appraisal even if they hadn't chosen that route in the first place. But it required them, after receiving the material info Kanner left out, to (a) give notice that they now wanted an appraisal (to "opt in") and (b) put some of the money they got in the short form merger into "escrow" in case the appraisal valued their shares at less than $X apiece.

The Supremes of Delaware affirmed the liability part of the Chancery order but reversed on the remedy side. The Court agreed with the idea of a quasi-appraisal approach but concluded that the minority should not have to opt in or put money in escrow. Berger v. Pubco Corp., No. 509, 2008 (Del. July 9, 2009).

Fees for Defending Arbitration Award?

2009-07-09T19:13:05-05:00

Say you win an arbitration. The state law you based your claim on calls for the winner to get his or her attorneys' fees. The loser goes to federal court to vacate the award but loses that gambit, too. Can you recover your fees for fighting the effort to overturn the arbitration outcome?

Yes, the First Circuit held today under Massachusetts law. The court ruled that the district court abused its discretion to award fees failing to exercise it. Janney Montgomery Scott LLC v. Tobin, No. 08-1863 (1st Cir. July 9, 2009).

Bali Hai will find you.

Quote of the Day: Harvard Law Record

2009-07-08T18:24:16-05:00

Dear Ms./Mr. My Firm is Too Good For You:

Thank you very much for your recent letter explaining that, despite the fact I am a wonderful person and will likely win the Nobel Prize for Law someday, you were not able to offer me a callback interview and/or a position as a Summer Associate. I regret to inform you that I am unable to accept your refusal to offer me a position as a Summer Associate/callback interview.

This year I have received an unusually large number of rejection letters, making it impossible for me to accept them all. Despite your outstanding experience in rejecting applicants, your refusal does not meet my needs at this time.

Therefore, I shall initiate employment with your firm in May of 2006. Best of luck in rejecting future candidates.

Harvard Law Record, Oct. 13, 2005.