El Blog de noticias sobre Derecho Anglo-Americano

El Gertrude Ryan Law Observatory ha creado un espacio dedicado al análisis y comentario de
temas de actualidad en el mundo jurídico de los Estados Unidos, orientado a promover y
fomentar la universalización del Derecho en todas sus áreas


miércoles, 28 de noviembre de 2007

WSJ: Demanda por perdidas en fondo de pensiones

High Court Hears 401(k) Case

By MARK H. ANDERSONNovember 27, 2007; Page A6
WASHINGTON -- Supreme Court justices hearing a case of alleged retirement fund mismanagement seemed uncomfortable with barring employees from suing over certain losses to an individual's retirement account.

The high court considered arguments in a case brought by a South Carolina man who alleged his employer, DeWolff, Boberg & Associates Inc., mismanaged his 401(k) plan. He charged that requested investment changes were never made and as a result his retirement account lost $150,000.

At issue in the case is whether federal pension law, which allows lawsuits by a group of employees, prohibits a suit over an individual account loss. Legal experts believe the outcome could be an important development in retirement law because of the shift from defined pension plans to 401(k) contribution plans. The case could also affect lawsuits over individual company stock funds, like those at issue in employee losses from accounting-fraud debacles such as Enron Corp.
MORE

Law Blog: Erisa on Stage at High Court
LaRue v. DeWolff: Argument transcript Court filing

Justice Stephen Breyer, summing up concerns expressed by several justices, asked why it mattered if "that one diamond came from a big vault or from one little safe-deposit box with the participant's label on it." He indicated he wasn't sure he saw how federal pension law allows the group lawsuit while barring the individual case. Justices expressing similar concerns included Ruth Bader Ginsburg, David Souter, Antonin Scalia and Samuel Alito.

The federal government, appearing at the arguments in favor of the plaintiff, believes the law allows employees to seek recovery of losses for individual retirement account mismanagement. The plaintiff, James LaRue, seeks to recover losses he alleges occurred because the company's plan didn't act on instructions he made in 2001 and 2002. A federal trial court and the Fourth U.S. Circuit Court of Appeals in Richmond, Va., ruled the case, in its initial stages, wasn't allowed under federal pension laws. (LaRue v. DeWolff, Boberg & Associates Inc.)
Write to Mark H. Anderson at mark.anderson@dowjones.com

WSJ: Magnate sentenciado por caso irregularidades en el caso "oil for food" de Irak

Tycoon Sent to JailIn Oil-for-Food Case

By CHAD BRAYNovember 29, 2007; Page B10
Texas oil trader Oscar S. Wyatt Jr. was sentenced to more than a year in prison after pleading guilty to a conspiracy charge and admitting he approved the payment of a $200,000 surcharge to the Iraqi government in violation of the United Nations' oil-for-food program.

At a hearing in Manhattan, U.S. District Judge Denny Chin sentenced Mr. Wyatt, the former chairman of Coastal Corp., to 12 months and one day in prison, to be followed by three years of supervised release. He also ordered Mr. Wyatt to forfeit $11 million, which Mr. Wyatt paid yesterday.
MORE

Wyatt
Wyatt Pleads Guilty to Iraq-Oil Scheme10/02/07
Politics Figure in Wyatt Trial09/04/07
Three Charged in Oil-for-Food Probe10/22/05

"My opinions in many ways probably caused me to skirt too close to the law," said Mr. Wyatt, who has been outspoken about both Bush administrations and about U.S. policy in Iraq. "For that, I was wrong, and for that, I am truly sorry."

Mr. Wyatt, 83 years old, pleaded guilty to a single count of conspiracy in October, abruptly ending his trial on conspiracy, wire-fraud and other charges on its 12th day. He had faced 18 months to 24 months under a plea agreement.

Mr. Wyatt admitted that he agreed to cause a surcharge of about $200,000 to be paid to a bank account in Jordan controlled by officials at Iraq's State Oil Marketing Organization in December 2001, a violation of the U.N. program and U.S. law.

Write to Chad Bray at chad.bray@dowjones.com

WSJ Law Blog: Sentencia en caso de "securities class action"

Jury Rules For JDSU In Rare Securities Class Action Trial

Posted by Peter Lattman

As we told you last month, a securities-fraud class-action lawsuit that goes to trial is as rare as a pygmy marmoset. There have been 19 securities class action trials since 1996. One that goes to a jury verdict are even rarer — as rare as, say, a Cambodian Forest Ox (pictured). Only four securities class-action cases have been tried to a verdict since the passage of 1995’s PSLRA.
Make that five. After a five week trial and less than two days of deliberation, a federal jury in Oakland unanimously found yesterday that JDS Uniphase and four of its former executives aren’t liable for shareholders’ losses in the company’s stock.

The gist of the lawsuit, filed in 2002: JDSU and its execs painted a rosy picture of the company’s finances so they could cash out before its stock got slammed. Said the plaintiffs’ lawyer during opening statements: “They knew in the year 2000 what was to come in the year 2001. Instead of telling the public, they cashed out, selling hundreds of millions of dollars of stock, benefiting themselves.”

JDSU was a serious highflyer in the dot-com days, run by Jozef Straus, an eccentric, quirky-hat wearing Canadian. The Connecticut Retirement Plans and Trust Funds was the lead plaintiff and Labaton Sucharow lead counsel. Jim Bennett at MoFo represented JDSU and three former executives; Heller Ehrman’s Mike Shepard represented former JDSU CEO Kevin Kalkhoven.
“Most people don’t have the courage to take these cases to trial,” said Shepard in an interview with the Law Blog. “My client had the courage to take this case to trial because he didn’t do anything wrong. The only thing the plaintiffs had on him was that he sold a lot of stock and got really rich. I tip my hat to the jury for realizing that rich guys can do the right thing.”
Believe it or not, there’s another securities class action trial going down right now in Phoenix against education provider Apollo Group. Click here for the details. (And click here for a complete list of securities class action trials from Adam Savett at Risk Metrics; click here for photos of endangered species.)

Update: The Law Blog just received this statement from lead plaintiffs’ lawyer Barbara Hart of Labaton Sucharow: “The fact that the case was prosecuted through a complex and lengthy trial reflects Treasurer Nappier’s commitment to the interest of US securities markets and our belief that these allegations needed to be prosecuted to their fullest. The jury has spoken and there is much to be learned from this experience. We are proud of the commitment and professionalism of which this case has been prosecuted on behalf of JDSU shareholders.”

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martes, 27 de noviembre de 2007

SCOTUSblog: Audiencia del caso ERISA ante el Supremo


Posted: 26 Nov 2007 04:50 PM CST
Note: The following argument recap is by Paul Secunda of the University of Mississippi School of Law and Workplace Prof Blog, where this entry is cross-posted. The SCOTUSwiki page for this case, with more links and documents, is here.

As Rick pointed out this past weekend, the highly-anticipated ERISA case of LaRue v. DeWolff, Boberg & Assoc. was argued today in front of the Supreme Court. This is a case which will help define a 401(k) pension plan holder’s right to sue plan administrators for breach of fiduciary duty. More specifically, the case may shine much needed light on the scope of relief available to employees under Sections 502(a)(2) and 502(a)(3) of ERISA.

Below are my initial thoughts on the oral argument today in the case based upon an analysis of the oral transcript. (Full disclosure: I was one of eleven law professors who signed an amicus brief supporting LaRue’s opposition to DeWolff’s motion to dismiss. I hope, however, that this fact does not cloud my analysis of the oral argument).

1. Peter Stris, a law professor at Whittier, went first. He put forward his “straightforward” argument: “The plain meaning of ‘any losses to the plan’ includes any diminution in value of defined contribution plan assets, regardless of the number of participants ultimately affected.” FWIW, that sounds right to me.

lunes, 26 de noviembre de 2007

Findlaw News: Proyecto de ley para criminalizar empleo de ilegales

US government revising plan for penalizing businesses that hire illegal immigrants

(AP) - WASHINGTON-The government says it will rewrite rules for penalizing employers of illegal immigrants to try to satisfy a federal judge in San Francisco who put the crackdown on hold.

U.S. District Judge Charles Breyer stopped the Bush administration last month from going ahead with enforcement of regulations requiring employers to fire workers if their Social Security identification numbers did not match records and the discrepancies could not be addressed in 90 days.

In issuing the temporary injunction, the judge said the Social Security database contained errors that could have cost many legal workers their jobs, and the government did not properly study the effect of the rules on business.

Late Friday, Breyer agreed to a request from the administration to put the case on hold while it reworks the regulations - a process bound to put off enforcement until the spring. The judge stayed proceedings until March 24, when the government thought it could have new rules ready on how to enforce immigration laws in the workplace.

Business, labor and civil liberties groups had sued to stop the "no match" rules, arguing the plan would trap companies and workers in a costly bureaucratic nightmare.

In its motion, the administration acknowledged that the judge had found "serious questions on the merits" raised by the case. "A stay will prevent the waste of judicial resources in litigating over a rule that is in the process of being revised," the administration's brief said. "Defendants hope and anticipate that the amended rule will fully address the Court's concerns."

The plan is meant to expose illegal immigrants who get jobs by giving out fake Social Security numbers and penalize companies that employ them. Nothing in the brief suggested the government would ultimately back away from a "no match" plan as it looked for ways to make enforcement pass legal muster.

In September, a month after the plan was announced, the government had about 140,000 letters ready to be sent to employers, each identifying 10 or more employees with mismatches in their records. But the case stopped enforcement from proceeding. Breyer issued the injunction Oct. 10.

SCOTUSblog: Agenda semanal del Tribunal Supremo

Sunday, November 25th, 2007 6:25 pm Ben Winograd Comments (0) Print This Post

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On Monday, the Court is scheduled to hear argument in Larue v. DeWolff (06-856), asking whether ERISA provides private causes of action for plan participants alleging fiduciary breaches. In advance of the argument, the Court is expected to release remaining orders from the November 20 conference (see here for the initial round of orders released last Tuesday).
On Tuesday, the Court is scheduled to hear argument in Knight v. Commissioner of Internal Revenue (06-1286), asking whether fees paid to financial advisers are fully deductible from the income of a trust or estate, and in New Jersey v. Delaware (134 Original), asking whether, under a century-old compact between the two states, New Jersey may authorize the construction of a natural gas facility along its side of the Delaware River over Delaware’s objection.

On Wednesday, the Court is scheduled to hear argument in Rowe v. New Hampshire Motor Transport Assn. (06-457), asking whether the Federal Aviation Administration Authorization Act preempts a Maine state law meant to block the delivery of tobacco purchased over the Internet to teenagers.

(All case names link to argument previews on SCOTUSwiki.)
On Friday, the Justices are scheduled to hold a private conference, orders from which could be released as soon as the following Monday, Dec. 3. Click here for our list of petitions to watch at Friday’s conference.

The petitioner’s brief is due Thursday in Cuellar v. United States (06-1456). No respondents’ briefs are due this week. If filed, the reply brief is due Tuesday in Snyder v. Louisiana (06-10119). Supplement briefs are due Tuesday in Hall Street Assoc. v. Mattel (06-989), a case argued Nov. 7. (See here for a discussion of the new issues to be briefed.)

sábado, 24 de noviembre de 2007

The Wall Street Journal: Sobre armas y derecho constitucional

Guns and the Constitution
November 24, 2007; Page A10
In recent decades, the Supreme Court has discovered any number of new rights not in the explicit text of the Constitution. Now it has the opportunity to validate a right that resides in plain sight -- "the right of the people to keep and bear arms" in the Second Amendment.
This week, the Supreme Court agreed to hear the case of District of Columbia v. Heller. In March, the Court of Appeals for the D.C. Circuit declared unconstitutional the District's near-total ban on handgun possession. That 2-1 ruling, written by Judge Laurence Silberman, found that when the Second Amendment spoke of the "right of the people," it meant the right of "individuals," and not some "collective right" held only by state governments or the National Guard.

That stirring conclusion was enough to prompt the D.C. government to declare Judge Silberman outside "the mainstream of American jurisprudence" in its petition to the Supreme Court. We've certainly come to an interesting legal place if asserting principles that appear nowhere in the Constitution is considered normal, but it's beyond the pale to interpret the words that are in the Constitution to mean what they say.

However, it is true that, despite our vitriolic policy fights over gun control, the Supreme Court has rarely ruled on the Second Amendment. The Court last spoke in detail in 1939, in U.S. v. Miller, involving a bootlegger who claimed the right to transport an unregistered sawed-off shotgun across state lines. That opinion was sufficiently complicated that both sides now claim it as a precedent.

The dispute arises from the first four words of the Second Amendment, the full text of which reads: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." If the first two clauses were omitted, there would be no room for ambiguity. But part of the legal controversy has centered around what a "well regulated militia" means.

Judge Silberman's opinion argued, with convincing historical evidence, that the "militia" the Framers had in mind was not the National Guard of the present, but referred to all able-bodied male citizens who might be called upon to defend their country. The notion that the average American urbanite might today go to his gun locker, grab his rifle and sidearm and rush, Minuteman-like, to his nation's defense might seem quaint. But at stake is whether the "militia" of the Second Amendment is some small, discreet group of people acting under government control, or all of us.

The phrase "the right of the people" or some variation of it appears repeatedly in the Bill of Rights, and nowhere does it actually mean "the right of the government." When the Bill of Rights was written and adopted, the rights that mattered politically were of one sort -- an individual's, or a minority's, right to be free from interference from the state. Today, rights are most often thought of as an entitlement to receive something from the state, as opposed to a freedom from interference by the state. The Second Amendment is, in our view, clearly a right of the latter sort.

As a practical matter on the Court, the outcome in D.C. v. Heller might well be decided by one man: Anthony Kennedy, the most protean of Justices. However, in recent years he has also been one of the most aggressive Justices in asserting any number of other rights to justify his opinions on various social issues. It would seriously harm the Court's credibility if Justice Kennedy and the Court's liberal wing now turned around and declared the right "to keep and bear arms" a dead letter because it didn't comport with their current policy views on gun control. This potential contradiction may explain why no less a liberal legal theorist than Harvard's Laurence Tribe has come around to an "individual rights" understanding of the Second Amendment.

By the way, a victory for gun rights in Heller would not ban all gun regulation, any more than the Court's support for the First Amendment bars every restraint on free speech. The Supreme Court has allowed limits on speech inciting violence or disrupting civil order. In the same way, a judgment that the Second Amendment is an individual right could allow reasonable limits on gun use, such as to protect public safety.

Here's hoping the Justices will put aside today's gun control passions and look to the plain language of the Bill of Rights for instruction in this case, as Judge Silberman had the courage to do.

URL for this article:http://online.wsj.com/article/SB119586692113002695.html

Hyperlinks in this Article:(1) http://online.wsj.com/article/SB119586772865602737.html (2) http://online.wsj.com/article/SB119586772865602737.html

jueves, 22 de noviembre de 2007

TNR: Reseña del libro "Out of Range", de Tushnet

The Most Mysterious Right
Cass R. Sunstein, The New Republic Published: Monday, November 12, 2007
Out of Range
By Mark V. Tushnet
(Oxford University Press, 156 pp., $19.95)

In 1991, Warren E. Burger, the conservative chief justice of the Supreme Court, was interviewed on the MacNeil/Lehrer NewsHour about the meaning of the Second Amendment's "right to keep and bear arms." Burger answered that the Second Amendment "has been the subject of one of the greatest pieces of fraud-- I repeat the word 'fraud'--on the American public by special interest groups that I have ever seen in my lifetime." In a speech in 1992, Burger declared that "the Second Amendment doesn't guarantee the right to have firearms at all. " In his view, the purpose of the Second Amendment was "to ensure that the 'state armies'--'the militia'--would be maintained for the defense of the state. "

It is impossible to understand the current Second Amendment debate without lingering over Burger's words. Burger was a cautious person as well as a conservative judge, and the chief justice of the Supreme Court is unlikely to offer a controversial position on a constitutional question in an interview on national television. (Chief Justice John Roberts is not about to go on Fox News to say that the claimed right to same-sex marriage is a fraud on the American people perpetrated by special interest groups.) Should we therefore conclude that Burger had a moment of uncharacteristic recklessness? I do not think so. Burger meant to describe what he saw as a clear consensus within the culture of informed lawyers and judges--a conclusion that was so widely taken for granted that it seemed to him to be a fact, and not an opinion at all.
Flash forward to this past March, when the United States Court of Appeals for the District of Columbia Circuit enthusiastically embraced the very view that Burger had described as a "fraud." In the process, the court struck down several handgun restrictions in the District of Columbia. And so the Supreme Court is now being asked to decide whether the Second Amendment creates an individual right to own guns. There is a decent chance that the Court will say that it does. Whatever the Court says, we have seen an amazingly rapid change in constitutional understandings--even a revolution--as an apparently fraudulent interpretation pushed by "special interest groups" (read: the National Rifle Association) has become mainstream. How on earth has this happened? Was Chief Justice Burger just wrong?
To understand the problem, we must begin with the text of the Second Amendment: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed." The clause is divided into two parts. It starts with a kind of preamble, or perhaps an explanation, which is followed by a declaration of a right. Even at first glance, modern readers should be able to venture at least two interpretations of this provision. The first sees an emphatically individual right. Whatever the preamble says, the operative clause refers to "the right of the people to keep and bear Arms," and proclaims that it "shall not be infringed." The second interpretation emphasizes the unusual opening words: "A well regulated Militia, being necessary to the security of a free State." With these words, the Second Amendment seems to specify its own purpose, which is to protect the "well regulated Militia." If that is the purpose of the Second Amendment (as Burger believed), then we might speculate that it safeguards not individual rights but federalism--that it seeks to ensure that the new national government would not interfere with citizen militias at the state level. On what has become known as the collective rights view, "the right of the people to keep and bear Arms" does not mean that individual citizens can have guns. It means only that the national government must respect the right of "the people," taken as a collectivity, to maintain organized militias for the common defense.

Suppose that we are "textualists," in the sense that we believe that the Constitution must be construed in accordance with the natural meaning of its words. Honest textualists will have to agree that the Second Amendment is ambiguous, and that it could plausibly be interpreted in different ways. Stare at the words all you like, and you will hardly be able to be certain about which interpretation to choose. The legal scholar William Van Alstyne got it exactly right: "no provision in the Constitution causes one to stumble quite so much on a first reading, or second, or third reading."

Many textualists are also originalists, in the sense that they believe that the meaning of the text is settled by the original understanding of those who ratified it. Originalists would want to ascertain what the meaning of the Second Amendment was in the latter part of the eighteenth century. Was it understood to create individual rights or not? If it was understood to create individual rights, what are the permissible limits on those rights? Originalists would find the central interpretive issue easy if, at the time of ratification, everyone understood the Second Amendment to create an individual right to have guns. The issue would be equally easy if the words "well regulated militia" were understood as a qualification of the right, and if the Second Amendment were universally understood, in its context, to be an effort not to protect private gun owners but to immunize state militias from federal abolition. Originalists would also be interested in seeing if some other interpretation not immediately obvious to modern readers turned out to be the dominant one at the time.

Of course, many people are not originalists. Constitutional law depends not only on the original understanding, but also on social practices and judicial interpretations extending over time. And if we are not originalists, we would want to know something about the American tradition of restrictions on gun use and ownership over the last, say, 150 years. We would also be interested in inquiring into whether courts have accepted one or another view, and if so, whether any particular interpretation has become an established part of existing law.

In his brisk, even-handed, and illuminating discussion, Mark Tushnet concludes that "there's no definitive answer to what the Second Amendment means. " Those who find an easy answer are "blowing smoke." As a matter of the original understanding, Tushnet thinks that "the pro-gun-rights position is a bit stronger than the alternative." But if the original understanding is put to one side, and we consider "all the other components that go into good legal arguments," it turns out that the "pro-gun-control position is significantly stronger than the alternative." Taking the relevant materials as a whole, Tushnet thinks that "the gun-control story is slightly, but only slightly, better than the gun-rights one." Tushnet's punch line is that the real division is less legal than cultural: it involves not the founding era or the constitutional text, but the sharp and emphatically contemporary divide over the role and the meaning of firearms. To understand Tushnet's argument, we need to go into some details.

Tushnet contends that the individual rights view actually comes in three distinct varieties, each having different implications for the scope of the right. On the most modest view, each of us has a right to have guns--but only for reasons connected with the maintenance of an organized militia, which can operate as a check on the national government. Our individual right is meant to enable us to band together in order to resist the national government if it gets out of hand. A somewhat more ambitious view insists that each of us has a right to have guns, not only to protect ourselves against government oppression but also to use if the government fails to protect us against criminals who threaten our persons or our property. On this view, restrictions on gun ownership are constitutionally questionable insofar as they disable people from responding to either public or private dangers. A third view is the purest one of all: it sees the right to keep and bear arms as a fully individual right, one that we can exercise as we choose (including for self-defense and for hunting) unless the government has a "compelling" interest (as, for example, in the prevention of murder and the protection of endangered species).
Insisting on the ambiguity of the text, Tushnet shows that things get even more mysterious when we investigate the history. What exactly is meant by the words "keep and bear arms"? Do these words mean the same thing as "own" or "have" arms? Tushnet says that in its historical context, "keep and bear" is a technical phrase, one that "referred to weapons in connection with military uses, even when the terms used separately might refer to hunting or other activities." You do not "bear" arms if you carry a rifle to shoot rabbits (or bears). This point seems to suggest that whatever interpretation is correct, it should emphasize the military uses of guns (as opposed to, say, hunting or even purely private self-defense).

And what exactly is the "militia"? Modern readers might well be puzzled by this question. A constitutional amendment proposed in the Virginia Ratifying Convention offers a clue. It said that "the people have the right to keep and bear arms; that a well regulated militia composed of the body of the people trained to arms is the proper, natural, and safe defense of a free state." This phrasing suggests that the "militia" is the "body of the people," or more specifically, its able-bodied males who might be or have been trained and enlisted on the state's behalf. With this point, Tushnet thinks that we should be converging on the view that on the original understanding, individuals do have some kind of right to have guns, at least insofar as gun ownership enables people to band together to defend themselves. On this view, the national government would not be permitted to disarm its citizens.

This reading has the advantage of fitting plausibly with the civic republican tradition that greatly influenced the founders. Republicans believed that a professional or "standing" army could endanger liberty because of its separateness from the people. From the standpoint of civic republicanism, an armed and engaged citizenry was the best way of protecting the national defense. In this sense, the right to keep and bear arms might even be seen as a sibling to the right to free speech and the right to petition the government for redress of grievances. Like the latter rights, the former was an important way of promoting self-government, and of reducing the risk that national officials would act on the basis of interests adverse to those of the citizenry itself. On this view, "We the People" would be sovereign insofar as we could speak out, petition the national government, and defend ourselves. And for committed republicans, participation in the militia is not merely a right, it is a civic duty as well. (There are implications for the idea of national service.)

To be sure, the text of the original Constitution raises some immediate issues here. Congress has the power to "provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions." Congress also has the power to "provide for organizing, arming, and disciplining the Militia," while the states retain power over "the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress." Do these provisions undermine the claim that the Second Amendment protects individual rights? Tushnet does not think so. Of course the Constitution recognizes the existence of state militias, and also Congress's powers over them, but the Second Amendment can nonetheless be understood as an effort to allow "the people" to arm themselves.
Apparently supporting the pro-gun reading, William Blackstone, a large influence on the Framers, explicitly referred to the right to bear arms as "a public allowance, under due restrictions, of the natural right of resistance and self-preservation, when the sanctions of society and laws are found insufficient to restrain the violence of oppression." Joseph Story, a Supreme Court justice from 1811 until his death in 1845 and an immensely influential early commentator on the constitution, wrote that the right "to keep and bear arms has justly been considered, as the palladium of the liberties of a republic; since it offers a strong moral check against the usurpation and arbitrary power of rulers." Revealingly, some state constitutional provisions seemed to create individual rights. Pennsylvania stated plainly, for example, that "the right of the citizens to bear arms, in defense of themselves and the State, shall not be questioned." And a "minority report" in Pennsylvania, objecting to ratification, referred broadly to the people's "right to bear arms for the defense of themselves and their own State, or the United States, or for the purpose of killing game."

But it is misleading to take quotations out of context, and the original sources do not provide unambiguous support for the pro-gun position in its modern form. Blackstone's discussion goes on to link the right to bear arms with the ban on standing armies: "Wherever standing armies are kept up, and the right of the people to keep and bear arms is, under any colour or pretext whatsoever, prohibited, liberty, if not already annihilated, is on the brink of destruction." Taken as a whole, Story's own discussion emphasized less an individual right to have guns than the uses of the militia. North Carolina's Constitution seemed to suggest a collective right rather than an individual one, or at least the connection between the right and the fear of standing armies: "the people have a right to bear arms, for the defence of the State; and as standing armies, in time of peace, are dangerous to liberty, they ought not to be kept up." Even Pennsylvania's seemingly unambiguous provision might be understood as part and parcel of an objection to a standing army. The minority report in Pennsylvania did refer to a right to hunt, but hardly any other sources spoke in terms of a right to have or use guns for nonmilitary purposes.
Summarizing the early history, the Tennessee Supreme Court wrote in 1840 that the real object of the right to keep and bear arms "is the defense of the public" and thus it refers to "military use." It follows that a hunter "might carry his rifle every day for forty years, and yet it would never be said of him that he had borne arms; much less could it be said that a private citizen bears arms because he has a dirk or a pistol concealed under his clothes, or a spear in a cane."
Still, Tushnet concludes that if the admittedly complex and divergent sources are put together, they provide "substantial support for some individual- rights interpretation." He adds that the most convincing such interpretation "connects the individual right to the operation of the citizen-militia: We each have the right to keep and bear arms so that we can participate in the militia-- the body of the people--and thereby keep governments from becoming tyrants."
In constitutional law, the Court's own precedents play a significant role. It is both striking and noteworthy that, well over two centuries since the founding, the Court has never held that the Second Amendment protects an individual right to have guns. The leading decision, from 1939, is United States v. Miller. The case involved the National Firearms Act of 1934, which banned possession of a sawed-off shotgun. A unanimous Supreme Court rejected the trial court's conclusion that the statute violated the Second Amendment. Sounding like Chief Justice Burger, the Court said that the Second Amendment's "obvious purpose" was "to assure the continuation and render possible the effectiveness of" the militia, and that its "declaration and guarantee . . . must be interpreted and applied with that end in view." The Court emphasized "the absence of any evidence tending to show that possession or use of a [sawed- off shotgun] at this time has some reasonable relationship to the preservation or efficiency of a well regulated militia." Without such evidence, the Court was unwilling to say that the Second Amendment protected the right to have such a weapon, which, the Court added, was not "part of the ordinary military equipment" whose use would contribute to the common defense.

At a minimum, this passage seems to suggest that Congress has complete power over weapons that are not or have not been ordinarily used by the military. It also seems to reject the strongest versions of the individual rights interpretation: consider the Court's suggestion that the "declaration and guarantee" must be construed with close reference to the goal of assuring the continuation of the militia. In any case, the lower federal courts have overwhelmingly endorsed the collective rights view; numerous cases reject the conclusion that the Second Amendment protects an individual right. A representative statement, from a court of appeals in 1971, insists that the Second Amendment protects the "right of the state to maintain a militia" and does not create an "individual right to possess a firearm." It was not until the twenty-first century that (only two) lower federal courts, packed with Reagan and Bush appointees, adopted the pro-gun interpretation--with one such decision in 2001 and another in 2007.

Even if the Second Amendment does confer an individual right, and therefore imposes limits on national gun-control legislation, a further question remains. Does the Second Amendment apply to the states? By its plain terms, the original Bill of Rights applies only to the national government. To be sure, most (but not all) of the listed rights are now understood to have been "incorporated" in the Fourteenth Amendment and made applicable to the states through that route. But is the Second Amendment incorporated as well? When the Fourteenth Amendment was ratified, there was disagreement over that question, and general agreement that states had considerable power to regulate firearms. In 1886, the Court unanimously ruled against incorporation, and no lower federal court has rejected that ruling.

In interpreting the Constitution, judges pay attention to social practices, and not only to judicial precedents. If federal and state governments have long regulated gun use, creating a tradition of such regulation, many judges would be reluctant to invoke the original understanding in order to upset that tradition. Tushnet finds that, since the Civil War, gun regulation has been common--and it has rarely been challenged on constitutional grounds. He concludes that the last century and a half shows a simple pattern: "A substantial body of laws regulating weapons possession and a small number of opinions addressing Second Amendment objections to such laws, with no opinions from appellate courts invalidating any modern regulations, and an apparent lack of interest by the Supreme Court in taking fundamental Second Amendment questions."
Whatever the view of the founding generations, Tushnet remarks, ours has been "a tradition in which the Second Amendment imposes at most extremely weak, perhaps indiscernible, limitations on the government's power to regulate the use and possession of weapons of any sort." He adds that technology has obviously changed since 1791. The national government now has nuclear weapons, airplanes, bombs, and tanks. Citizens armed with pistols and rifles cannot protect themselves against the nation's military force. So perhaps new technology "has made the Second Amendment obsolete were it taken to protect only the right to keep and bear guns and rifles, and ridiculous were it taken to protect the right to keep and bear bazookas."
In Tushnet's view, there is an evident conflict between the original understanding and the legal arguments based on judicial precedents and social practices. He urges that in the face of such conflicts, the original understanding tends to yield. In the context of free speech, for example, we have gone far beyond the original understanding, protecting commercial advertising and even political dissent in ways that would have astonished the founding generation. Tushnet thinks that if we reject originalism, we will probably conclude, on the basis of social practices and judicial decisions, that the Second Amendment does not protect an individual right.
Tushnet also investigates policy issues. Does gun legislation do any good? He explores "safe storage" laws, which require people to keep their guns locked up at home; "must issue" laws, which actually encourage gun ownership by requiring law enforcement officers to issue licenses to carry concealed weapons; and stricter enforcement of existing gun-control policies. Tushnet emphasizes that econometric studies, trying to measure the effects of these policies, often fail to produce clear results. Social scientists disagree on the effects of safe storage laws. At the very least, no clear evidence suggests that such laws have a significant impact on reducing gun-related violence. The economist John Lott found that "must issue" laws decrease gun-related deaths; he concluded that if criminals know that law-abiding citizens might be carrying guns, they are less likely to engage in violent crime. But Lott's studies have been subject to vigorous objections, and a committee of the National Academy of Sciences, finding the evidence inconclusive, was unwilling to accept Lott's argument. Greater enforcement of existing laws does seem to have produced significant decreases in murder rates, but even here the evidence has been disputed, and it is expensive to enforce existing laws.

Tushnet concludes that the dispute over the Second Amendment, and gun- control laws as a whole, must be understood in terms of "the culture wars." Zell Miller put it well in 2001, suggesting that debates about gun policy are "about values ... about who you are and who you aren't." Drawing on work by Dan Kahan, Tushnet says that we might try to "shift our conversation away from polarizing debates about what the Constitution means and what sorts of gun policies actually reduce violence, and toward a respectful acknowledgment of the disparate visions of the good society that pervade American society." With such a shift, we might fight less about guns and embrace a policy of putting lots of new police officers on the streets--a policy that actually works to reduce crime. And if we do need to reach a consensus on the gun question, we could imagine some reasonable alternatives. Perhaps most people could accept an individual right to own guns, while also accepting sensible restrictions on what guns individuals may use and how exactly they might use them.

Tushnet has provided a balanced, intelligent, and exceedingly useful guide to the Second Amendment. Unfortunately, he neglects a significant matter. How did the individual rights position, so marginal and even laughable among judges and lawyers for so long, come to be treated as a respectable view--and even to be described as the standard model by 2007? It is certainly relevant that the National Rifle Association, and other like-minded groups and individuals, have sponsored and funded an endless stream of supportive papers and research. The Second Amendment revolution has been influenced by an intensely committed social movement with political and legal arms. But it is also true that for many decades lawyers and law professors paid hardly any attention to the Second Amendment. Sanford Levinson, a well-known liberal legal scholar, produced the key paper in 1989, called "The Embarrassing Second Amendment," which took the pro-gun position seriously. Levinson started a kind of academic avalanche, in which other scholars, with varying political positions, helped move the individual rights position from the margin to the mainstream.

Many of the historical treatments have been thin, result-oriented, and even embarrassing, at least from law professors, and they do not come to terms with the immense difficulties in capturing the original meaning of the Second Amendment. Tushnet's discussion is neither embarrassing nor result-oriented, but it, too, is thin. For many constitutional problems, the founding-era discussions seem familiar, or at least familiar enough. Modern readers can easily find their way into the debates over the power to make war, the composition of the Senate, and the right to a jury trial. But to explore the original understanding of the Second Amendment is to enter an altogether different nation, whose central preoccupations were not at all like our own. In the founding era, many people were fearful of a standing army, and that fear was closely entangled with their support for the right to keep and bear arms. Indeed, it was the anti-Federalists-- skeptics about the proposed Constitution-- who were most insistent on the importance of the right to bear arms as a way of protecting state militias and thus checking the national government.

Some of those who wrote and endorsed the Constitution were highly ambivalent about those militias, and favored instead a national force, even a standing army. Charles Pinckney of South Carolina went so far as to say that he had little "faith in the militia." The Constitution itself represented a compromise between national and state control, and the document's advocates argued that the anti-Federalists were needlessly worried. In an important passage in The Federalist Papers, Madison argued that the fear of a standing army was baseless, on the ground that any such army would be badly outnumbered by "a militia amounting to near half a million of citizens with arms in their hands, officered by men chosen from among themselves, fighting for their common liberties, and united and conducted by governments possessing their affections and confidence." This passage is difficult to understand today. It is extremely hard to think our way back into a world in which standing armies seem a major threat to liberty and in which state militias are an indispensable safeguard.

Of course we have a National Guard, and states continue to authorize militias. About half of the states even maintain militias. But contemporary state militias are marginal institutions. (Do you know anyone who is in one? Do you know if your state has one?) No one thinks of them as important safeguards against the United States Army. In his impressive and illuminating book A Well- Regulated Militia: The Founding Fathers and the Origins of Gun Control in America, the historian Saul Cornell urges that if we really want to be faithful to the original understanding, we would have to recreate "the world of the minuteman," a "nightmare" in which states would require all Americans "to receive firearms training" and "to purchase their own military-style assault weapons."

To appreciate the centrality of state militias to the Second Amendment, consider an early draft of the amendment written by Madison: "A well regulated militia, composed of the body of the people, being the best security of a free state, the right of the people to keep and bear arms shall not be infringed; but no person religiously scrupulous shall be compelled to bear arms." And to see just how radically the nation has changed, pause over this question: if contemporary Americans were writing a new constitution, would any sane person suggest this language? Sure, we could imagine a proposed "right to keep and bear arms," but what are the rest of the words doing? Madison's draft is unmistakably focused on the military; without that focus, it would be senseless to follow the "right to keep and bear arms" with an exemption for those with religious scruples. If the ratified Second Amendment is substantively identical to Madison's draft, its core function might be (as suggested by Jack Rakove) merely to affirm "the essential proposition--or commonplace--that liberty fared better when republican polities relied upon a militia of citizen-soldiers for their defense, rather than risk the dire consequences of sustaining a permanent military establishment." Thus in the debate in the House of Representatives over what became the Second Amendment, Elbridge Gerry asked, "What, sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty."

Saul Cornell concludes that the "original understanding of the Second Amendment was neither an individual right of self-defense nor a collective right of the states, but rather a civic right that guaranteed that citizens would be able to keep and bear those arms needed to meet their obligation to participate in a well-regulated militia." And indeed, the very distinction between an "individual right" and a "collective right" seems foreign to the goals of those who ratified the Second Amendment. One of their central purposes was to declare a civic right that would also be part of a civic responsibility, founded in republican goals and connecting the role of citizen with the role of soldier. The anti-Federalists lost the key arguments, but they did think that the Second Amendment ensured that states could resist the national government, and this checking function did play a role in the founding debates.

We should be able to agree that, at a minimum, the national government could not abolish state militias or ban their members from carrying weapons. But such militias no longer serve anything like their old role. As some of the founders hoped and others feared, national defense is undertaken by a professional military, which is the equivalent of a standing army. And if the national government is really determined to oppress us, we won't be much helped by pistols and rifles.

A most puzzling question, then, is how to "map" the original understanding, however it is specified, onto contemporary disputes. Consider the portion of the law of the District of Columbia that requires citizens to keep lawfully owned shotguns bound by a trigger lock.
Suppose that a citizen objects that a trigger lock will interfere with his efforts at self-defense. What does that objection have to do with the Second Amendment as originally understood? The individual right to have guns, at least as conceived and pressed in the last decades, is best taken as a contemporary creation and a reflection of current fears, not as a reading of the civic-centered founding debates. Modern gun owners, invoking the Second Amendment on the basis of a principle that they favor, are not altogether different from older people who have tried (unsuccessfully) to invoke the Equal Protection Clause in order to strike down mandatory retirement laws. Indeed, the contemporary effort to use the Second Amendment to strike down gun-control laws is similar in many ways to the effort by civil rights lawyers to strike down laws mandating racial segregation, although those lawyers did not insist that their position was compelled by the original understanding of the relevant constitutional provision.

Invoking some historical sources, including the minority report from Pennsylvania, some gun advocates insist that a general right to self-defense against the national government and against criminals, and even a right to hunt, falls within the original understanding. Suppose they are right. What follows? If we discovered that according to the original understanding the Equal Protection Clause permitted racial segregation, would it follow that the Court would have to allow racial segregation? If we discovered that according to the original understanding the Privileges and Immunities Clause forbids minimum- wage laws, would it follow that the Court should strike them down? Justice Scalia likes to consult history, but he has described himself as a "faint- hearted" originalist, in the sense that he will not use the original understanding as an all-purpose weapon against long-established law.

As Tushnet suggests, gun-control advocates might well invoke settled practices, and apparently entrenched law, to uphold the laws that they favor. It is both true and important that well over two centuries after the founding, the Supreme Court has yet to recognize an individual right to bear arms. On the other hand, the Court's decisions are not without ambiguity, and in recognizing such a right, the Court could distinguish its precedents, rather than overrule them.

Some people are drawn to judicial "minimalism," and want to decide cases as narrowly as possible. (Chief Justice Roberts and Justices Alito, Breyer, and Ginsburg have shown minimalist tendencies.) Could we imagine Second Amendment minimalism? Even if it is agreed that the Second Amendment should be construed to protect individual rights, it does not follow that all, most, or many restrictions on gun ownership must be struck down. People have an individual right to free speech, but that right is not absolute. Courts allow governments to regulate obscenity, libel, bribery, criminal conspiracy, false commercial advertising, child pornography, and criminal solicitation. Even the minority report in the Pennsylvania ratification convention, much emphasized by advocates for gun rights, says that the right to bear arms can be overcome in the face of "real danger of public injury."

It would not be difficult for judges to conclude that a "real danger of public injury" exists when those with criminal records seek to buy handguns, or when people get sawed-off shotguns, or when they do not agree to keep their guns in secure places at home. Judges who embrace minimalism would prefer to resolve Second Amendment cases in the following way: "We need not answer the disputed question of whether the Second Amendment confers individual rights at all. Nor need we specify the precise nature of any individual rights that might be conferred by that amendment. Even if the Second Amendment does confer individual rights, it is not violated by the restriction at hand. That restriction preserves the right to possess guns; it merely imposes a reasonable condition on the enjoyment of that right."

An approach of this kind, now followed by many state courts under state constitutions that protect gun rights, would leave open the possibility that courts would invalidate the most draconian or severe restrictions on gun ownership, while also allowing the democratic process considerable room to maneuver. To be sure, some gun-control laws, including the law in the District of Columbia, are quite severe, and make a minimalist approach hard to implement. But even when confronting such laws, courts can rule in a way that leaves open many of the hardest questions.

Many people would like to reject a minimalist approach on the ground that Chief Justice Burger was essentially correct--that the legal materials, including the original understanding and the broader tradition, do not recognize an individual right at all. But whatever the founding generation may have thought, the Second Amendment has become a shorthand, or a rallying cry, for a deeply felt commitment on the part of tens of millions of Americans. There would be not merely prudence, but also a kind of charity and respect, in judicial decisions that uphold reasonable restrictions without rejecting that commitment, and without purporting to untangle the deepest mysteries about the meaning of the Constitution's most mysterious provision.

The Wall Street Journal: El Supremo se enfrenta a la NRA

Justices to Weigh Handgun Ban
Supreme Court Decision On a D.C. OrdinanceIs Likely Amid Election Run

By JESS BRAVINNovember 21, 2007; Page A4
WASHINGTON -- The Supreme Court touched a constitutional third rail ahead of next year's election, agreeing to decide whether the Second Amendment gives individuals a right to own handguns.

The court is expected to hear arguments in the spring and to issue an opinion by July, just as the campaign for the November presidential election heats up.
• The Case: The Supreme Court agreed to decide whether the Second Amendment gives individuals a right to own handguns.
• The Question: Courts have viewed the provision as reflecting a state's power to field a militia -- not an individual's right to arm himself for personal reasons. President Bush came to office declaring that wrong.
• The Campaign: The timing, ahead of next year's presidential election, could force candidates to take a stand on the issue.
"This issue lights the grass roots on fire," said the National Rifle Association's Wayne LaPierre. The case "will force each presidential candidate to say" what he or she thinks the amendment means.

The high court has never invalidated a firearms regulation on Second Amendment grounds. Since the justices' last word on the issue in 1939, lower courts have seen the provision as reflecting a state's power to field a militia -- not as an individual's right to arm himself for personal reasons.

That doctrine has outraged gun-rights proponents, who found a friendly ear in the Bush administration. Under Attorney General John Ashcroft, in 2004 the Justice Department reversed course and formally concluded that the Constitution protects gun ownership much as it does freedom of speech. But it wasn't until March of this year that a federal appeals court agreed, striking down a 1976 District of Columbia ordinance that effectively bans handguns and requires that rifles and shotguns be kept unloaded and disassembled or under trigger lock.
Republican presidential candidates have endorsed the view that the Second Amendment provides an individual right. Even Rudolph Giuliani, who as mayor of New York backed broad gun controls, now says the District of Columbia law is unconstitutional.

The campaigns of Democratic candidates Sens. Hillary Rodham Clinton, Barack Obama and former Sen. John Edwards didn't respond to requests for comment. The issue poses tougher problems for Democrats, who are trying to reach beyond their urban base to rural and suburban voters in the South and the Rocky Mountain states.

The current justices have had little occasion to detail their views. In 1997, a 5-4 court struck down parts of the federal Brady gun-control act, but not on Second Amendment grounds; instead, the court found that Congress exceeded its authority to direct state officials to enforce the law.

The four dissenting justices -- John Paul Stevens, David Souter, Ruth Bader Ginsburg and Stephen Breyer -- remain on the court today. Justice Clarence Thomas, who joined the majority, hinted in his concurring opinion that he might be receptive to the individual-rights argument.
Justice Antonin Scalia, meanwhile, has indicated he might see the Second Amendment as a bar on federal regulation of firearms -- but not that by states. In "A Matter of Interpretation," a 1997 book laying out his approach to constitutional law, Justice Scalia wrote that he considers the amendment "a guarantee that the federal government will not interfere with the individual's right to bear arms for self-defense." That might portend poorly for the law enacted by the District of Columbia, which isn't within any state and technically is an arm of the federal government.

Justice Scalia added, however, that "properly understood, it is no limitation upon arms control by the states." That suggests he might see the Second Amendment running up against another doctrine many conservatives embrace: states' rights.

The Second Amendment, in its entirety, reads: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed." Legal debate has focused on whether the first clause qualifies the second, protecting gun possession only as part of service in a state militia or its modern-day descendant, the National Guard.

The 58-page appeals-court opinion striking down the district's law, written by U.S. Circuit Judge Laurence Silberman, was a shot across the bow of prevailing jurisprudence. Plumbing history as well the amendment's placement within the Bill of Rights, Judge Silberman, one of the bench's most influential conservatives, wrote that the individual right to gun ownership predated the U.S. and was enshrined in the Constitution, "premised on the private use of arms for activities such as hunting and self-defense, the latter being understood as resistance to either private lawlessness or the depredations of a tyrannical government (or a threat from abroad)."

Advocates on both sides acknowledge the paucity of definitive authority on the matter, sending lawyers and scholars to history tomes and archaic grammars to parse the amendment's meaning. So few are the precedents that Judge Silberman even turned to the Supreme Court's most notorious opinion, Dred Scott v. Sandford, to support his ruling. While that 1857 pro-slavery case was "erroneous in holding that African-Americans are not citizens," Judge Silberman noted that elsewhere it asserted, "albeit in passing, that the Second Amendment contains a personal right."

The Supreme Court last considered the issue nearly 70 years ago, when two men challenged their convictions for violating a federal law banning interstate transport of short-barreled shotguns. The court upheld the convictions, observing that since the weapons had no "reasonable relationship to the preservation or efficiency of a well-regulated militia, we cannot say that the Second Amendment guarantees the right to keep and bear such an instrument." A sawed-off shotgun isn't "part of the ordinary military equipment" that would find a place in "the common defense," Justice James Clark McReynolds wrote then.

At his 2005 confirmation hearings, Chief Justice John Roberts declined to specify his own view of the Second Amendment but said that Justice McReynolds had "side-stepped" the individual-rights question. "People try to read the tea leaves," he said. "But that's still very much an open issue."
(District of Columbia v. Heller)
--Christopher Cooper contributed to this article.
Write to Jess Bravin at jess.bravin@wsj.com

martes, 20 de noviembre de 2007

The Wall Street Journal: Victoria judicial para Pfizer

Pfizer Legal Win Might BlockSome Lawsuits Over Celebrex

By NATHAN KOPPEL and HEATHER WON TESORIERONovember 20, 2007; Page A13
Pfizer Inc. scored a victory yesterday through a federal ruling that might wipe out some lawsuits alleging that the drug maker's painkiller Celebrex caused heart attacks and strokes.

U.S. District Judge Charles R. Breyer of San Francisco ruled that plaintiffs in the litigation haven't presented scientifically reliable evidence that Celebrex caused heart attacks or strokes when taken at a daily dosage of 200 milligrams. That is the most common dosage, according to Pfizer.

Celebrex is the last drug in the COX-2 inhibitor class that is sold in the U.S. Merck & Co.'s Vioxx and Pfizer's other COX-2 painkiller, Bextra, were withdrawn from the market amid safety concerns.

There are more than 3,000 Celebrex plaintiffs, according to the ruling, but it isn't clear how many the ruling will affect. Paul Sizemore, a plaintiffs' attorney with Girardi & Keese in Los Angeles, estimates that about 900 Celebrex cases involve plaintiffs who were prescribed the 200-milligram dose. However, he says, many of the plaintiffs took the drug twice a day.

"When does a 200-milligram case become a 400-milligram case?" he says. "We are going to have to review medical records and contact the clients to see what the actual usage was."

New York plaintiffs' lawyer Paul Pennock of Weitz & Luxenberg, which also handles Celebrex cases, estimates about two-thirds of the Celebrex cases will be unaffected by the ruling. But those involving 200-milligram dosages will be eliminated, he says.

"We are pleased with the decision of the federal court, which recognizes the lack of any credible evidence linking Celebrex, at its most common dosage form, with heart attacks or strokes," Pfizer General Counsel Allen Waxman said.

Write to Nathan Koppel at nathan.koppel@wsj.com and Heather Won Tesoriero at heather.tesoriero@wsj.com

The Wall Street Journal: Stock-Option Basckdating Scandal

Firms Settle Backdating Suits
Some Private CasesEnd in Agreements;More Deals Ahead?

By ASHBY JONESNovember 19, 2007; Page A15
Settlements have been reached in recent months on some private lawsuits arising from the stock-options backdating scandal, with several rendering relatively modest payouts compared with some class-action suits.

Several so-called derivative suits, the most common type of suit in the wake of the backdating revelations, have been settled under multipart arrangements in which executives pay back money to the company and companies make some changes to corporate governance and pay the fees of the plaintiffs' lawyers.

In September, executives and board members at Barnes & Noble Inc. agreed to a repricing of options worth $3 million and to a repayment of $2 million to the company, while the company consented to some 15 "therapeutics," or changes in governance, including an audit-committee review of stock-option internal controls at least once a year. The company agreed to pay plaintiffs' lawyers a $2.75 million fee. Recent settlements involving Sepracor Inc. and Family Dollar Stores Inc. involved similar three-tiered approaches.

Lawyers on both sides predict the settlements so far will pave the way for more. "The cases are likely going to start to fall," said Lee Rudy of Schiffrin, Barroway, Topaz & Kessler LLP, a plaintiffs' firm handling several dozen backdating cases.

Stock options allow recipients to buy stock at a preset exercise price, generally set at the market price on the day the options were granted. Backdating involves pretending that an option was granted on an earlier date when the market price was lower. The practice can lead to accounting irregularities and tax problems for the companies and executives involved.

The backdating scandal has led to more than 80 financial restatements, dozens of executive dismissals, and civil and criminal government investigations. In August, Gregory Reyes, the former head of Brocade Communications Systems Inc., was found guilty on criminal charges related to backdating. Recently, however, the Securities and Exchange Commission has ended several investigations without filing formal charges.

So far, plaintiffs' efforts involving backdating have met with mixed results. In typical securities-fraud class-action lawsuits, shareholders allege company executives misled investors; shareholders as a group sue after bad news triggers a drop in the share price. But because word of options backdating typically didn't lead to significant drops in share prices, only about 30 class-action lawsuits have been filed.

At least two suits have been dismissed partly for failure to properly allege that fraud led to a stock drop, including one this month involving Apple Inc. Still, a handful of class-action suits have been settled; one, involving Mercury Interactive Corp., settled for $117.5 million.

Mostly, plaintiffs' lawyers have filed "derivative suits," somewhat awkward creations in which shareholders sue a company (and others) on behalf of the company itself, alleging not personal but corporate losses. To date, more than 160 derivative cases have been filed, many brought by two firms, Schiffrin Barroway and Coughlin Stoia Geller Rudman & Robbins LLP.

More than a dozen derivative cases have been dismissed by courts. In those that have settled, the amounts paid out, both to the company and to the plaintiffs' lawyers, are relatively small. "In many cases, plaintiffs' lawyers are really just aiming to secure corporate therapeutics and, beyond that, just make a living," says Kevin LaCroix, a lawyer who focuses on issues of directors' and officers' liability and has had a limited role in some backdating cases.

In the Sepracor settlement, more than 2.2 million unexercised options were repriced and 500,000 were canceled. And in a settlement reached earlier this year between plaintiffs and Family Dollar, three executives and a director agreed to give up 210,000 options.
Write to Ashby Jones at ashby.jones@wsj.com

The New York Times: Opiniones secretas del Departamento de Justicia

Op-Ed Contributor
Release Justice’s Secrets

By NICHOLAS deB. KATZENBACH and FREDERICK A. O. SCHWARZ Jr.

MICHAEL MUKASEY has been confirmed as attorney general. But the profound moral, legal and constitutional issues raised at his Senate Judiciary Committee hearings are unresolved. Mr. Mukasey should open the door to their resolution by releasing the Justice Department’s long-secret legal opinions that have warped our fight against terrorism.

When the Justice Department, usually acting through its Office of Legal Counsel, issues legal opinions binding on the executive branch, there is never justification for keeping them secret.
Opinions that narrowly define what constitutes torture; or open the door to sending prisoners for questioning to Egypt and Syria, which regularly use torture; or rule the president has some “inherent power” to ignore laws are all of concern to Congress and the public whether one agrees or disagrees with the legal analysis.

Yet all these opinions have been kept secret, along with many other, related post-9/11 opinions that purport to decide what America’s law is.

Secrecy always increases the risk of foolish mistakes. If the withheld opinions are sound, why fear letting them see the light of day? Is there ever a justification in a government of law for keeping what one believes to be the law secret?

Some may say releasing the opinions will lead to more embarrassment. To this, there are two answers. First, what is most important is that we get it right and remain true to our country’s values. Second, the best way to restore our reputation is to confront our mistakes openly and then resolve not to repeat them.

Some also say that releasing opinions on, for example, torture, may give terrorists a window into what techniques we do and do not use. Again, this has it backwards. The world should know we reject the tactics of the enemy.

These issues must be faced openly by the new attorney general, by Congress, by presidential candidates and by the American public.

Mr. Mukasey can do a great deal to help restore both our Constitution and America’s reputation, and thus strengthen us at home and abroad. A good start would be to release the secret opinions of the Office of Legal Counsel.

Nicholas deB. Katzenbach was the United States attorney general from 1965 to 1966. Frederick A. O. Schwarz Jr. is the senior counsel at the Brennan Center for Justice at New York University.

miércoles, 7 de noviembre de 2007

The Wall Street Journal: Yahoo en el banquillo por colaboración con gobierno chino

Yahoo's Lashing Highlights RisksOf China Market

By COREY BOLES in Washington, and DON CLARK and PUI-WING TAM in San FranciscoNovember 7, 2007; Page A1
An unusually dramatic congressional hearing on Yahoo Inc.'s role in the imprisonment of at least two dissidents in China exposed the company to withering criticism and underscored the risks for Western companies seeking to expand there.

"While technologically and financially you are giants, morally you are pygmies," Rep. Tom Lantos (D., Calif.), who called the hearing on Capitol Hill, told Yahoo's co-founder and Chief Executive Jerry Yang and General Counsel Michael Callahan. "This testimony has been an appallingly disappointing performance."

Gao Qin Sheng, center, mother of Chinese journalist Shi Tao, who was sentenced by China to 10 years in prison with the help of information provided by Yahoo, bursts into tears after committee chairman Rep. Tom Lantos requested Yahoo CEO Jerry Yang, left, publicly apologize to Mr. Shi's family. Chinese dissident Harry Wu, right, looks on during the hearing.

Mr. Yang apologized to the mother of journalist Shi Tao, who was jailed after Yahoo China, then a unit of the company, handed information about him to Chinese authorities in 2004. She was at the hearing, sitting directly behind Messrs. Callahan and Yang. Addressing the families of the dissidents, Mr. Yang said: "I want to say we are committed to doing what we can to secure their freedom. And I want to personally apologize for what they are going through."

The hearing was called by Rep. Lantos, chairman of the House Foreign Affairs Committee, to hear testimony about the circumstances under which Yahoo cooperated with the Chinese authorities, and to hear from Mr. Callahan about apparent inconsistencies in his testimony.
The highly publicized hearing highlighted a risk that comes with the rewards of moving into the huge Chinese market: Yahoo, Google Inc. and other U.S. Internet companies face a potentially high cost in negative publicity with their gains.

The debate over China is just one of the pressures facing Mr. Yang, who succeeded Terry Semel as CEO in June. Mr. Semel had also been dogged by questions about Yahoo's actions in China. Like executives at Google and other Internet companies, Mr. Semel expressed his anger at China's repressive policies while arguing that the company had to follow the laws of countries where it does business.

It's unknown what the consequences would have been for Yahoo if it failed to comply with the Chinese demands. The company said that if its employees violated Chinese law, they could face prosecution in the country. The licenses required for a foreign business to operate in China are entirely at the government regulator's discretion.
Ahead of the Olympic Games next summer in Beijing, China is facing increased scrutiny on a host of problems -- from human rights to the environment -- that could well broaden to affect Western companies doing business there.

Some analysts pointed to the hearing as a reason that Yahoo's shares dropped 5% on a day when the stock market was generally up. The decline came despite the potential benefit to the company from the hugely successful stock listing in Hong Kong yesterday of Chinese Internet company Alibaba.com Ltd. Yahoo owns 39% of its parent company, Alibaba Group, a stake it bought in 2005. (Please see related article.)

PREPARED TESTIMONY

Click on the name to read the full prepared testimony.
Yahoo CEO Jerry Yang:"Like many who came to America with the hope of a better life and opportunity, my mother brought me here from Taiwan as a child. [hellip] [I had] a keen appreciation at an early age of the freedoms and opportunities offered in America. I believed then, as I believe now, that this country is a beacon of freedom to the rest of the world. [hellip] We continue to believe in engagement in markets like China. Why? Today, despite broad limitations on sensitive political subjects, Chinese citizens know more than ever before about local public health issues, environmental causes, politics, corruption, consumer choice, job opportunities, and even some foreign affairs."

Yahoo General Counsel Callahan:"I recognize that some may disagree, but our view is that engagement in China is the better course, and that is why Yahoo opened local operations in China. A byproduct of opening local operations, however, is that local operations are subject to local law. I cannot ask our local employees to resist lawful demands and put their own freedom at risk, even if, in my personal view, the local laws are overbroad."

Rep. Tom Lantos:"If you think our witnesses today are uncomfortable sitting in this climate-controlled room and accounting for their company's spineless and irresponsible actions, imagine how life is for Shi Tao, spending ten long years in a Chinese dungeon for exchanging information publicly -- exactly what Yahoo claims to support in places like China."

Alibaba.com shares opened at HK$30 (US$3.86) yesterday, more than double its initial public offering price of HK$13.50, and reached an intraday high of HK$39.95.

Scott Kessler, an analyst at Standard & Poor's, said he thought the decline in Yahoo's shares was more the result of investors selling on the news of Alibaba's successful stock-market debut after a run-up in prior days. With the hearing past, he thinks investors may now believe that Yahoo has weathered the China issue. "There's a reputational hit from this that the company can now absorb," Mr. Kessler said.

The Alibaba deal put Alibaba itself on the front lines in dealing with Chinese government officials, not Yahoo. Mr. Yang noted that his company doesn't control the day-to-day operations of Alibaba or Yahoo China.

Still, Mr. Yang's grilling highlights the bind that Internet companies face when they venture overseas, privacy experts say. In China, privacy takes a back seat to laws governing criticism of the government, and while Yahoo and rivals like Google tried to comply with China's local laws, that ultimately backfired on them domestically.

"They're caught in a vise," said Denny O'Brien, international outreach coordinator for the Electronic Frontier Foundation, a nonprofit civil-liberties group in San Francisco.

For the past year, says Mr. O'Brien, Yahoo and other Internet companies have been working with the EFF and other nonprofits on a code of Internet privacy principles, trying to resolve some of the issues that had unfolded in China. The effort has been proceeding slowly and isn't yet complete.

While the U.S. government had been silent on the topic for some time, Mr. Yang's testimony today signals the reinvolvement of U.S. officials into global Internet privacy issues, Mr. O'Brien said.

Yahoo first entered the Chinese market in 1999, when it was aggressively expanding overseas in other countries such as Japan. But local Chinese portals stole a march on the U.S. company and it had middling success in the giant market.

In 2004, Yahoo acquired 3721 Network Software Co., which makes software for Chinese-language Internet searches. In 2005, it paid about $1 billion and transferred its ownership in Yahoo China as part of the deal to obtain its stake in Alibaba Group, which owns Alibaba.com and other properties. Mr. Yang is one of four members of Alibaba Group's board of directors.

Yahoo, based in Sunnyvale, Calif., ran into trouble in China the same year as the Alibaba deal, for its role in helping Chinese officials identify Mr. Shi. He allegedly used his Yahoo email account to relay the contents of a secret government order to an overseas Web site. Mr. Shi is now serving a 10-year prison sentence.

Also at the hearing was the wife of jailed Internet writer Wang Xiaoning. According to a committee spokeswoman, Mr. Wang was arrested in 2002 for using a Yahoo account to advocate open elections in China. The company is alleged by lawmakers and human-rights groups to have cooperated with Beijing over his arrest as well.

In the case of Mr. Shi, Mr. Callahan had initially told Congress that Yahoo didn't know the reasons for a Chinese government order seeking information from the company. Then in October 2006, when Mr. Callahan discovered the extent to which company officials did learn of the political aspect to the government order, he failed to let Congress know his earlier testimony was incorrect.

Lawmakers expressed incredulity that Mr. Callahan hadn't been aware of the details of Beijing's request. That order referred explicitly to "state secrets" violations, which several members of the panel pointed out was code in China for political investigations.

"Yahoo claims that this is just one big misunderstanding," said Rep. Lantos. "Let me be clear -- this was no misunderstanding. This was inexcusably negligent behavior at best, and deliberately deceptive behavior at worst."

Mr. Callahan apologized to the committee for not returning to inform lawmakers of his earlier error. Earlier, in meetings with committee staffers, he also apologized for misinforming the panel, according to several people at those meetings.

Yahoo has denied that Mr. Callahan apologized in private for misinforming the committee, and at Tuesday's hearing, Mr. Callahan also said he didn't believe he had been untruthful when testifying in 2006.

His remarks didn't mollify lawmakers. Committee members of both parties took turns at the hearing lambasting the executives for what happened.

Rep. Brad Sherman (D., Calif.) said he believed Rep. Lantos had shown significant self-control in not pursuing a perjury investigation into Mr. Callahan's February 2006 testimony.
"How could a dozen lawyers prepare another lawyer to testify before Congress, without anyone thinking to look at the document that had caused the hearing to be called? This is astonishing," said Rep. Chris Smith (R., N.J.).

Mr. Lantos asked why no one at Yahoo had been disciplined for what happened. Mr. Yang said that while the company had lessons to learn from the incident, he didn't believe there was any need to discipline any one employee. "At the end of the day, I feel that everybody was doing the best they can given a difficult situation," Mr. Yang said.

Messrs. Yang and Callahan were pressured by lawmakers to endorse a bill, authored by Rep. Smith, which would criminalize cooperation by U.S. technology companies with foreign governments that could use information to crack down on democracy activists. The Yahoo executives refused to specifically do so, but said they would look at the legislation further. That bill was unanimously approved by the committee two weeks ago and now faces a debate on the floor of the House.

The lawmakers urged Yahoo to help with the humanitarian needs of families of jailed dissidents in China. Rep. Smith said one way the company could do this would be to settle a court case brought against it by relatives of the imprisoned dissidents as soon as possible. Mr. Callahan said that the company was open to that. After the hearing, the Yahoo executives met with Mr. Shi's mother, Mr. Wang's wife and their translator. It isn't known what was said in that meeting.

Write to Corey Boles at corey.boles@dowjones.com, Don Clark at don.clark@wsj.com and Pui-Wing Tam at pui-wing.tam@wsj.com

The Wall Street Journal: Discriminación laboral por edad

Supreme Court FrustratedBy FedEx Age Complaint

By MARK H. ANDERSONNovember 6, 2007 11:28 p.m.
WASHINGTON -- The Supreme Court Tuesday expressed frustration with the Equal Employment Opportunity Commission's handling of an age discrimination claim against FedEx Corp., which is arguing a claim should be dismissed on technical grounds.

At oral arguments on the appeal, the justices repeatedly criticized the EEOC for making it confusing for employees to levy an age discrimination complaint against a company. In addition to criticism of the EEOC, the high court also appeared reluctant to support FedEx's arguments for a hard-line approach that results in dismissal of an employment complaint due to a mistake.
"My main concern in this case, however the decision comes out, is to do something that will require the EEOC to get its act in order because this is nonsense," Justice Antonin Scalia told the federal government's attorney.

At issue in the appeal is whether Patricia Kennedy, a female courier for Federal Express, lost the chance to sue over age discrimination because she filled out an intake questionnaire, thinking that was sufficient, and failed to file a formal charge with the EEOC before bringing her lawsuit under the Age Discrimination in Employment Act.

Individuals bringing discrimination claims under federal law must first go to the EEOC before heading to court. Ms. Kennedy's suit alleges FedEx used courier delivery rates to weed out older employees.

The lawsuit, filed in 2002, was initially dismissed by a U.S. District Court because the formal complaint was filed after she joined the lawsuit against the shipping company. The 2nd U.S. Circuit Court of Appeals in New York revived her case, ruling the intake questionnaire was sufficient to support the discrimination claim in court.

Several justices expressed sympathy for that outcome as they resisted the FedEx's attorney's plea for strict age discrimination claims rules.

"I just don't understand your leap from government incompetence to saying the plaintiff loses," Chief Justice John Roberts Jr. said to FedEx's legal counsel, Connie Lensing.

Ms. Lensing argued the age discrimination law requires the company get preliminary notice that a discrimination charge has been levied against it, giving companies time to settle the matter. In the Kennedy case, Ms. Lensing said that notice wasn't given because the appropriate forms weren't filled out on time.

The justices spent much of their questioning trying to understand how this mistake was made. Several of them, in addition to Justice Scalia, said they thought the EEOC's procedures were confusing. "I thought that this statute, as all the statutes the EEOC administers, are designed for claims that are put forth initially largely by unrepresented people," Justice Ruth Bader Ginsburg said.

Toby Heytens, an assistant in the U.S. Solicitor General's Office, acknowledged the EEOC's procedures had been cumbersome but said improvements have been made. "The agency has taken a number of concrete steps.. to deal with what in reality is a very serious problem," Mr. Heytens said.

The case is Federal Express Corp. v. Holowecki, 06-1322. A decision is expected by early 2008.
Court Turns Down Former Illinois Governor's Plea

Former Illinois Gov. George Ryan lost his final bid Tuesday to delay his prison term when Supreme Court Justice John Paul Stevens turned down his request to remain free on bail. Mr. Ryan is due to report to the federal correctional center at Oxford, Wis., on Wednesday to start serving his 6 1/2-year racketeering and fraud sentence.

Mr. Ryan and co-defendant Larry Warner, who also was turned down, have remained free on bond since their April 2006 convictions. The two men asked Justice Stevens to grant them bail at least until the nation's high court decides whether to hear their appeal.

The Seventh U.S. Circuit Court of Appeals affirmed the convictions in a 2-1 split decision. Messrs. Ryan and Warner then asked the appeals court to reconsider and were turned down by a 6-3 vote. Judge Michael S. Kanne, who sat on the three-judge panel, dissented and said the trial had been "riddled with errors."

Mr. Ryan was convicted of steering big-money state contracts to Mr. Warner and other friends, using state money and state workers to run his campaigns and killing an investigation of bribes paid in exchange for truck driver's licenses. Mr. Ryan's claim that he didn't receive a fair trial is primarily based on chaotic jury deliberations. Two jurors were dismissed after it was found they had omitted mention of their police records on a questionnaire.

lunes, 5 de noviembre de 2007

The Wall Street Journal: Estados favorecen sus propios bonos del erario público

Court May Rule on States' Bonds

By JESS BRAVIN and SHEFALI ANANDNovember 5, 2007; Page A4
The Supreme Court will today hear arguments in a case that could upend how states finance capital projects and also reshuffle the $2.5 trillion municipal-bond market.
For decades, many state governments helped keep capital within their borders by offering residents a deal: buy the state's own bonds and pay no state income tax on the interest. Interest from other states' bonds was usually taxable. Last year, a state court in Kentucky struck down the practice, ruling that the Constitution doesn't allow states to favor their own bonds that way.

• The Setting: The Supreme Court today will hear arguments on whether the Constitution allows states to favor their own bonds by making them tax-free while taxing the interest on other states' bonds. The case could upend how states finance capital projects and also reshuffle the $2.5 trillion municipal-bond market.
• The Background: Last year, a state court in Kentucky struck down the practice, ruling that the Constitution doesn't allow states to favor their own bonds that way.
• Status Quo May Stay: The circumstances of the appeal suggest the Supreme Court may be inclined to overrule the Kentucky decision, preserving the tax advantages. If not, Congress could step in to authorize the tax deductions.

If the Kentucky decision stands at the Supreme Court, some states likely would find it costlier to raise capital. That is especially true of high-tax states, such as California, Minnesota and New York, which can currently raise money relatively cheaply. The tax advantage enables these states to offer lower yields to in-state investors, which makes state borrowing less expensive.
Some small states could lose local investors who buy only their state bonds, and would therefore be forced to look for other sources of funding. In that case, "almost certainly, the costs are going to be higher," says Richard Cordray, the state treasurer in Ohio.

Such a decision would also make mutual funds focusing on single-state bonds irrelevant; many would likely be merged with national funds. These funds hold $155 billion in assets out of $365 billion in all municipal-bond mutual funds as of 2006, according to fund-trade group Investment Company Institute.

The circumstances of the appeal suggest the Supreme Court may be inclined to overrule the Kentucky decision, preserving the tax advantages. The Supreme Court rarely takes appeals from midlevel state courts, which are binding on at most a single state. Moreover, since states are practically unanimous in approving the practice, Congress could step in to authorize the tax deductions even if the Supreme Court finds the states have no inherent power to authorize them.

The market seems to expect the status quo to prevail. New York bonds are commanding a premium over some others, notes Dan Loughran, a portfolio manager of municipal-bond funds at OppenheimerFunds Inc. "The market is telling you that the Supreme Court is going to overrule the ruling in Kentucky," he says.

The legal dispute stems from the Constitution's Commerce Clause, which authorizes Congress to regulate commerce among the states. Even when Congress hasn't legislated in a particular area, courts have generally interpreted the provision to bar state governments from engaging in economic protectionism.

The Supreme Court hasn't been clear about its scope. In April, a 6-3 court upheld an ordinance requiring trash haulers in two upstate New York counties to use a dump owned by the local authorities. Two years ago, though, a 5-4 court struck down state laws restricting residents from ordering wine from other states.

The municipal-bond case is likely to turn on how the justices view state bond sales. If they consider capital financing a fundamental part of the state's sovereign authority, they are likely to leave the practice intact. If they see Kentucky as obstructing trade to give its own products an advantage, it could fall.

"These are the kind of trade barriers and trade retaliation that we don't want states to be entangled in," said Eric Brunstad, a partner with Bingham McCutcheon in Hartford, Conn., who will argue at the court today against the Kentucky policy.

Scott Attaway, a Washington lawyer with Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC, counters that municipal finance is different from the private enterprise the Commerce Clause was intended to foster.

"There aren't any private entities that are issuing municipal bonds. This goes to a core state function, which is raising money to spend for the public good," says Mr. Attaway, who isn't involved in today's case.

Interest payments on a majority of municipal bonds are free from federal income tax. State-specific deductions began in 1919, when New York imposed an income tax and exempted interest paid by its own municipal bonds. Other states followed, with Kentucky adopting a similar provision in 1936. Today, more than 40 states exempt all or some in-state bonds from their income taxes.

In 1994, an Ohio state court upheld the practice, which remained unchallenged until last year's contrary decision by the Kentucky Court of Appeals in Frankfort. The Kentucky Supreme Court declined to review the decision, leading the state Department of Revenue to petition the U.S. Supreme Court.

Several groups representing state officials, including the National Association of State Treasurers and the Multistate Tax Commission, have sided with Kentucky in asking the justices to reverse the lower court decision.

Dwight Denison, a professor of public and nonprofit finance at the University of Kentucky, says even low-tax states, which might benefit from the Kentucky decision, are worried about the implications for their tax systems. Many want to retain tight control.

If the Supreme Court decides in-state exemption is unconstitutional, states would have a choice to exempt all bonds, or tax all bonds, including its own. Market observers say many states would choose to make all bonds tax-exempt.

A change in the status quo would primarily hurt so-called specialty states such as California and New York, which see strong demand for their bonds because of high taxes and large concentrations of wealthy people. They can issue large numbers of bonds with interest rates lower than that of Texas and Florida, which have no state income tax and thus lower in-state demand.

If the court affirms the lower-court ruling, "yields on California bonds would rise, and Texas bonds would fall, meeting in the middle," Mr. Loughran of OppenheimerFunds says. That means individuals and investors holding California bonds would find their bonds' prices have declined, while holders of Texas bonds would see a rise in value.

For now, advisers suggest investors hold tight. Investors wanting to buy municipal bonds right now, should do a comparative analysis of the advantages of buying national bonds versus state specific bonds, says Ram Kolluri, a fee-only planner in Princeton, N.J.

Write to Jess Bravin at jess.bravin@wsj.com and Shefali Anand at shefali.anand@wsj.com