The Daily Parker

Politics, Weather, Photography, and the Dog

Busy news day

A large number of articles bubbled up in my inbox (and RSS feeds) this morning. Some were just open tabs from the weekend. From the Post:

In other news:

And now, to work, perchance to write...

Agents of what, exactly?

Most members of the Writers Guild of America (WGA) last week fired their agents because of the intrusion of finance into their business. Large agencies, some owned by finance companies and no longer partnerships, no longer appear to represent the writers they claim to represent, as the agents have interests on both sides of many deals.

The Association of Talent Agents (ATA) has responded to all these principals firing their agents with questionable logic:

For those of you who haven’t been following, the WGA (for which, until recently, my husband worked as a magazine editor) wants the talent agencies to sign a new code of conduct to ensure the agents do their jobs — getting their clients the best deals possible — and that’s it. No using clients as part of an overall package deal or working with affiliated production companies; too often, the WGA contends, these practices result in writers getting shafted.

The ATA says the agencies will not be signing any such code because the WGA is not the boss of them and writers actually benefit from packaging, which has been going on for years.

So the WGA instructed its members to fire their agents, which almost all of them have, and announced it is suing the four major talent agencies.

In response, the ATA accused the WGA of trying to throw Hollywood into “predetermined chaos” and instructed its members to keep a list of any writers trying to get work without using an agent because, according to ATA reps, this is illegal.

So just to recap: Writers are unhappy with how major talent agencies have been repping them. When confronted with this, the agents refused to make any changes, so the writers fired them. Now the agencies are saying the writers cannot do this because, according to them, writers are legally bound to be represented by people who they believe are shafting them.

Even by Hollywood standards, this is Absolutely Insane.

It's going to be interesting as lawyers and accountants start representing writers.

Note: I'm still going through photos from this weekend, so I'll have the official Park 29 and Park 30 postings up today or tomorrow.

Sears sues Eddie Lampert

While waiting for the Mueller Report to download (spare a moment to pity the Justice Department's servers), an alert came in from Crain's:

The bankrupt estate of Sears Holdings Corp. sued Eddie Lampert and his hedge fund ESL Investments Inc., claiming they wrongly transferred $2 billion of company assets beyond the reach of creditors in the years leading up to the retailer’s bankruptcy.

“Had defendants not taken these improper and illegal actions, Sears would have had billions of dollars more to pay its third-party creditors today and would not have endured the amount of disruption, expense, and job losses resulting from its recent bankruptcy,” lawyers for the estate said in a court filing.

The complaint, filed as part of the retailer’s ongoing bankruptcy case, asks that the transactions be ruled fraudulent transfers and says creditors should be compensated.

Lawyers for the estate also allege that ESL stripped Sears of the real estate under 266 of the retailer’s most profitable stores, undervaluing the land by at least $649 million. “Moreover, the culpable insiders arranged for Sears to lease the properties back under blatantly unfair terms,” according to the complaint.

No kidding.

It's interesting to me how people who claim that the government has no right to interfere in private affairs seem to make that claim to avoid scrutiny of shady behavior. And Lampert seems to be one of the shadiest.

Changes to US copyright law

On March 4th, the U.S. Supreme Court decided two cases that change how copyright infringement cases work in the U.S. In Fourth Estate Public Benefit Corporation v. Wall-Street.com, the Court held that a copyright owner must wait for the Copyright Office to accept or reject a registration application before the owner can sue for infringement:

Justice Ruth Bader Ginsburg (who had not attended the oral argument because she was home recovering from surgery) delivered the court’s opinion. She analogized the registration requirement to an administrative exhaustion requirement that an owner must satisfy before suing to enforce ownership rights.

The court concluded that the only satisfactory reading of the text of Section 411(a) is that the Copyright Office must have registered the copyright in order for registration to have been made. Fourth Estate had argued that the phrase should be read to refer to the copyright owner’s submission of a completed application.

Note that this does not mean creators need to register every creation. Copyright accrues to the author of a work at the moment of its creation. The registration requirement only applies to lawsuits for infringement. Neither creators nor the Copyright Office want to register every single creation in the United States; that's insane. But if you infringe on a copyright, the creator may register the work and then sue you, even if the work wasn't registered when you infringed on it.

Law firm K&L Gates still recommends registration: "An initial cease and desist letter to an infringer containing proof of copyright registration demonstrates that the claim may be filed in court, providing leverage to the copyright owner. Companies and other creators should consider routine copyright application filing to protect their valuable assets without loss of time and damages waiting for registration to occur after the infringement is discovered."

So calm down: don't send every blog post or Instagram photo you create to the Copyright Office. They don't want them. If you want to sue for infringement, then register the work. But how often does that happen?

The other case, Rimini Street, Inc. v. Oracle USA, Inc., clarified what "full costs" mean in an infringement suit, and won't apply to most creators the way Fourth Estate will.

Trips to Europe will need EU registration starting in 2021

When I first heard this morning that visa-free travel to Europe would end for US citizens in 2021, I was dismayed. I remember how time-consuming it was to get a visa before the visa-waiver program started in the late 1980s. And I figured that the US would retaliate, requiring visas from Europeans, which would essentially destroy tourism between the two regions.

The reality isn't really anything like that. In fact, it merely brings the EU in line with what the US has required of visa-free travelers for years.

Starting in 2021, Americans will simply need to register with the EU equivalent of our Electronic System for Travel Authorization, or ESTA:

Currently, US citizens can travel to Europe for up to 90 days without any sort of travel authorization. ETIAS will change that.

Visa-free travelers, including US citizens, will need to request ETIAS authorization before visiting the Schengen Area. They can complete an application and pay a service fee of 7 euros (about $8) online. The authorization is valid for three years.

"Completing the online application should not take more than 10 minutes with automatic approval being given in over 95% of cases," the European Commission said in a statement.

The United States won't be the only country affected by the changes. From 2021, citizens from 60 countries will be required to apply for the ETIAS before entering the Schengen Area. Brazil, Canada, New Zealand, Singapore, Israel and Mauritius are among those countries.

So this should not affect taking a last-minute trip on the Eurostar, or crossing from Northern Ireland into the Republic. And it's fair; we've required ESTA registration from all overseas visitors for many years. I'm annoyed particularly at NPR for getting the details totally wrong in their newscast this morning.

Gosh, who do you root for?

The Times is reporting that Michael Cohen has sued the Trump Organization for $1.9m in unpaid legal fees:

The lawsuit, filed in New York Supreme Court in Manhattan, said that the Trump Organization had agreed to pay Mr. Cohen attorney’s fees or related costs connected to his work with the Trump Organization but had failed to live up to that promise.

Mr. Cohen is also seeking reimbursment for an additional $1.9 million he was ordered to pay in fines, forfeitures and restitution after he pleaded guilty to breaking campaign finance laws, tax evasion and lying to Congress, the lawsuit said.

The complaint said that around July 2017, Mr. Cohen and the Trump Organization entered an agreement under which the company would pay for Mr. Cohen’s legal fees and costs connected to investigations being conducted by Congress and Robert S. Mueller III, the special counsel who is investigating Russian interference in the 2016 election.

This should be interesting. I wonder if Trump will plead that the contract was unlawful because it served a corrupt purpose?

What about RICO?

Author Garrett M. Graff, writing for the Times, suggests that Rudy Giuliani's approach to prosecuting cases under the Racketeering-Influenced and Corrupt Organizations Act (RICO) could provide the model for dismantling the Trump Organization:

Fighting the Mafia posed a uniquely hard challenge for investigators. Mafia families were involved in numerous distinct crimes and schemes, over yearslong periods, all for the clear benefit of its leadership, but those very leaders were tough to prosecute because they were rarely involved in the day-to-day crime. They spoke in their own code, rarely directly ordering a lieutenant to do something illegal, but instead offering oblique instructions or expressing general wishes that their lieutenants simply knew how to translate into action.

Those explosive — and arresting — hearings led to the 1970 passage of the Racketeer Influenced and Corrupt Organizations Act, better known as RICO, a law designed to allow prosecutors to go after enterprises that engaged in extended, organized criminality. RICO laid out certain “predicate” crimes — those that prosecutors could use to stitch together evidence of a corrupt organization and then go after everyone involved in the organization as part of an organized conspiracy. While the headline-grabbing RICO “predicates” were violent crimes like murder, kidnapping, arson and robbery, the statute also focused on crimes like fraud, obstruction of justice, money laundering and even aiding or abetting illegal immigration.

The sheer number and breadth of the investigations into Mr. Trump’s orbit these days indicates how vulnerable the president’s family business would be to just this type of prosecution. In December, I counted 17, and since then, investigators have started an inquiry into undocumented workers at Mr. Trump’s New Jersey golf course, another crime that could be a RICO predicate; Mr. Cohen’s public testimony itself, where he certainly laid out enough evidence and bread crumbs for prosecutors to verify his allegations, mentioned enough criminal activity to build a racketeering case. Moreover, RICO allows prosecutors to wrap 10 years of racketeering activity into a single set of charges, which is to say, almost precisely the length of time — a decade — that Michael Cohen would have unparalleled insight into Mr. Trump’s operations. Similarly, many Mafia cases end up being built on wiretaps — just like, for instance, the perhaps 100 recordings Mr. Cohen says he made of people during his tenure working for Mr. Trump, recordings that federal investigators are surely poring over as part of the 290,000 documents and files they seized in their April raid last year.

Indicting the whole Trump Organization as a “corrupt enterprise” could also help prosecutors address the thorny question of whether the president can be indicted in office; they could lay out a whole pattern of criminal activity, indict numerous players — including perhaps Trump family members — and leave the president himself as a named, unindicted co-conspirator.

Of course, the President could try to pardon everyone but himself, even if that leaves himself open to state charges in New York and elsewhere. But for the time being, the Southern District of New York and other bodies seem to be laying out the larger RICO case just fine. Can't wait to see it.

An end to civil forfeiture?

The US Supreme Court ruled today that the 8th Amendment rule against "excessive fines" applies to the states as well as to the Federal Government:

The decision is a victory for an Indiana man whose luxury SUV was seized after he pleaded guilty to selling heroin. It is also a blow to state and local governments, for whom fines and forfeitures have become an important source of funds.

In an opinion by Justice Ruth Bader Ginsburg, the court seemed to regard the basic question before it as an easy one. The justices explained that the “historical and logical case for concluding that” the ban on excessive fines applies to the states through the 14th Amendment – which bars states from depriving anyone “of life, liberty, or property, without due process of law” – is “overwhelming.”

States and municipalities have relied on civil forfeiture laws for revenue over the past three decades or so, with ridiculous and horrifying results. Today's decision will go a long way to curbing those abuses.

Sears lives to die another day

On Thursday, a court accepted Eddie Lampert's $5.2 bn bid to keep Sears running and himself as its head:

Lampert’s purchase, made through his hedge fund, ESL Investments, is intended to keep 425 Sears and Kmart stores open, preserving some 45,000 jobs. It was the only bid submitted in an auction that would have kept the once-mighty department store giant in business and avoid liquidation.

Lampert’s plan was opposed by a committee of unsecured creditors skeptical that Hoffman Estates-based Sears will be any more successful after exiting bankruptcy. The committee pushed for a liquidation, arguing that shutting down the company and selling its assets could recover more of what Sears owes.

Still unresolved is a dispute between Sears and ESL over which is responsible for paying $166 million for inventory received after Sears filed for Chapter 11 bankruptcy on Oct. 15. Although Drain did not have jurisdiction to decide the issue, he gave an advisory opinion in favor of Sears’ claim that ESL is responsible for those liabilities.

The judge’s decision saves Sears from liquidation, but still unanswered is whether Lampert can reinvigorate a retail chain that many consumers have fond memories of, but no current relationship with. Lampert has said he wants to invest in smaller stores and those that are profitable, with a focus on popular categories like appliances and repair services.

I'm not a bankruptcy attorney, so I don't know whether this is a good ruling. I, personally, would have preferred that Sears stay open and Lampert stay far away from it. But at least it's not dead yet.

Bankruptcy laws in the US

Whether the US bankruptcy code intended to create a new indentured class of university graduates, its prohibition on discharging student-loan debt has done so.

But the code really helps badly-run businesses, and not just at the criminal scale of Sears. The private-equity fund that owned a grocery store chain in Indiana has done very well under the code, while destroying the future of the chain's retirees:

The anger arises because although the sell-off allowed Sun Capital and its investors to recover their money and then some, the company entered bankruptcy leaving unpaid more than $80 million in debts to workers’ severance and pensions.

For Sun Capital, this process of buying companies, seeking profits and leaving pensions unpaid is a familiar one. Over the past 10 years, it has taken five companies into bankruptcy while leaving behind debts of about $280 million owed to employee pensions.

The unpaid pension debts mean that some retirees will get smaller checks. Much of the tab will be picked up by the government’s pension insurer, a federal agency facing its own budget shortfalls.

“They did everyone dirty,” said Kilby Baker, 70, a retired warehouse worker whose pension check was cut by about 25 percent after Marsh Supermarkets withdrew from the pension. “We all gave up wage increases so we could have a better pension. Then they just took it away from us.”

Truly, the law is a ass. It's also working as its Republican authors intended.