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Blog: Jack "Out of the Box"

Welcome to Jack "Out of the Box." This is a spin-off of the Firm's InfoLaw Newsletter, much like "CSI: Miami" is a spin-off from "CSI." Except without all the corpses. I plan to update the blog at least weekly. Really. It's not like when I used to promise my mom to clean my room once a week. I'm more mature now. And of course, the InfoLaw Newsletter will continue every two weeks. The blog will feature shorter pieces, and ideally, reader feedback. Should be fun. Oh yeah, and informative.

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  • Threat/Warning? It's in the Eye of the Plaintiff

    Apr 23, 2015
    I found this post on Techdirt kind of interesting.  Here’s the situation.  A client of a lawyer/psychotherapist named Jose Arcaya posted a negative review of Arcaya on Yelp.  Here’s a sample of what it said:  

    I hired Arcaya to help with a case. I asked him at the outset if he had handled these matters before and he said yes. The ensuing performance suggests otherwise. When I mentioned his truly pitiful performance he implied that it was my fault. When i reminded him that he was the lawyer and hired to do a professional job he made fun of my medical issues. Absolute scum.

    Arcaya sued the reviewer – Zolton Boka – for libel.  And while the decision to sue over a negative review could be the subject of a post itself, that’s not what caught my eye.  There is another defendant in the suit named Scott Greenfield. Greenfield is an attorney who apparently got introduced to Boka.  Greenfield called Arcaya to talk about the situation, and mentioned to Arcaya the “Streisand Effect.”   That is the phenomenon, named after Barbara Streisand, describing the situation where someone demands the removal of online information only to find that the removal demand exponentially increases the attention on the offending information.   

    Arcaya considered Greenfield’s advice to be a threat.  I suppose along the lines of “advising” someone that their signature or their brains can be on a contract.   


    But I think there is a difference between how the Corleone family does business and what Greenfield did here. And Arcaya’s overreaction here seems like evidence that the negative review concerning his lawyer skills was spot on.

    Go comment!
  • This One Belongs To ... Who, Exactly?

    Apr 22, 2015
    I am a torn man as I sit here at my keyboard today.  On the one hand, I love the Cincinnati Reds.  I mean, in ways that may not even be healthy.  I know I shouldn’t lose sleep when Jumbo Diaz blows a two run eighth inning lead. But I do.  If I did not know that the Reds chose Chad Mottola over Derek Jeter I would probably have more room in my brain for useful information.  But I am cursed with that knowledge.   

    On the other hand, I love journalism and I respect reporters, especially beat writers like C. Trent Rosecrans, who has to write honestly about the very people he’s forced to live with for 8 months a year.  That can’t be easy.

    And so, given my competing impulses, what to make of Bryan Price’s performance Monday night?  I like Price.  He did a phenomenal job as the Reds pitching coach, and he seems like an even tempered, smart guy.  And I hate to see the national press piling on.  And I suggest you listen to what he said.  Despite many people calling it a “rant” it’s actually pretty measured and he doesn’t shout.  It’s the 77 f-bombs that have caught everyone’s attention.   

    But I don’t like what he did. And I’m not thrilled with his apology.  Because I don’t agree with the content of his message to C. Trent.  And while I understand his frustration, I still think he’s off base.  

    It seems to me that Price had two basic beefs – first, that Rosecrans published information about Devon Mesoraco’s absence from the team, and second, that Rosecrans tweeted that backup catcher Tucker Barnhart was on his way to St. Louis.  The tweet went out before the Reds told Kyle Skipworth – the player Barnhart was replacing – that he was headed back to the minors.  

    In the story about Mesoraco, Rosecrans quoted an unnamed source, presumably someone in the clubhouse, who confirmed that Mesoraco was not in the dugout for the Sunday night game against the Cardinals. That was contrary to Price’s pregame comments that Mesoraco could pinch hit.   Price has a right to be upset about the unnamed source, but he shouldn’t be upset with the reporter.  If he wants to control information, the way to do it is to make sure his team speaks with one voice, and deal with the leaker.  But the reporter has a job to do, and that does not include self-censorship for the good of the Reds.   

    His beef with the Twitter leak is also misplaced.  There is tremendous pressure on the media not only to get it right, but to get it out quickly.  Back in the day, the Barnhart sighting wouldn’t have been much of an issue, because it wouldn’t have run until the next morning’s paper came out. And by then, Skipworth would have known his fate.  But social media creates this scenario.  And it can be heartbreaking.  We had a family friend die in a car accident, and the young man’s brother got a text – “sorry about your brother” – before he’s heard about the accident.  

    The news media tries hard to hold a story on a death until the next of kin are notified, but the fact that a backup catcher is headed back to the minors is not in the same league.  And the media shouldn’t hold off reporting what they observe first hand to make sure the Reds have delivered the news to their player.     There was a time when beat writers were in the team’s pocket – the teams picked up their expenses for crying out loud.  And most writers toed the company line.  The reserve clause was great.  Guys who the owners didn’t like got labeled “trouble makers.”  Thankfully those days are long gone and the game is as popular as it’s ever been.  And sports writers who put out honest, compelling stories are part of the reason for that success.   

    At some point, I hope Price comes to regret the substance of his comments as much as the profanity.
    Go comment!
  • No Comment A "No No"

    Apr 16, 2015
    Here’s a great piece from my friend Nick Vehr at Vehr Communications. It’s 8 tips for Media Spokespersons.  It’s all good stuff.  And the overlap I see between Nick’s world and mine arises pretty frequently.  Trials draw a lot of media attention.  Whether it’s a high profile criminal case involving a bombing at the Boston Marathon or a copyright infringement suit over the rights to “Blurred Lines” – the media is interested.   

    And I run into clients and other lawyers who still think “no comment” is the appropriate response to media inquiries.  I’ve never thought that was a great idea, and in talking to PR folks over the years I’m even more convinced.  That’s not to say clients should spill their guts in response to every question, but they shouldn’t make themselves look like they’re hiding something or otherwise miss the chance to advance their own message.   

    To use a cliché, one size does not fit all.  Picking the right message and the right spokesperson seems like a no brainer.  
    Go comment!
  • Bad Idea From Washington D.C.

    Apr 15, 2015
    If you read that headline and assumed this blog would be bashing Congress or President Obama, I apologize for disappointing you. But the bad idea to which I am referring comes courtesy of Muriel Bowser, Mayor of Washington D.C.  She wants to exempt police body camera footage from the Washington D.C. Freedom of Information Act.   According to the piece in Washington City Paper, the provision is tucked away in a bill called the “Fiscal Year 2016 Budget Support Act of 2015.”  

    I assume Mayor Bowser was playing hide the ball here, so to save my readers some time, here it is:  

    This subtitle exempts Metropolitan Police Department body camera video footage from Freedom of Information Act regulations. The purpose of this subtitle is to address privacy issues concerning officers and the residents filmed on body cameras. This subtitle would be applicable from the date that body cameras were first used on October 1, 2014.  

    Here we go again.   Do politicians go to a class called “Solutions in Search of Problems?”  Because so many of them seem to excel in the field.  I suppose in an infinitesimal number of cases, privacy may be an issue.  But how that justifies making all footage off limits confuses me.  

    Does anyone doubt that what cops do and how they do it are matters of great public interest?  Has anyone not heard about Ferguson or  North Charleston? Body camera footage is and should be publicly available.  And Mayor Bowser should know better.  
    Go comment!
  • Real Victims of Fake Online Reviews

    Apr 14, 2015

    Last June, I wrote a blog about a case in Virginia where the court allowed  the subject of a Yelp! review to force Yelp! to reveal the identity of the person who wrote the anonymous review.  The subject of the reviews presented evidence that the reviews were bogus.  But in my blog, I wondered if Yelp! itself had a claim:

    So we’ll see. But I am more interested in how Yelp (and other online review sites) deal with the “rock and a hard place” position these cases put them in.
    On the one hand, Yelp needs to protect the anonymity of its users. Legitimate reviewers should feel free to post their opinions without sacrificing their privacy.
    But on the other hand, bogus reviews, and the perception that any review might be bogus, could potentially kill the Yelp business model.
    So Yelp itself has an interest in rooting out the fiction from the fact. In short, Yelp may not be completely devastated no matter what happens in the Virginia Supreme Court. 


    Well, I don’t know if the folks at Amazon read my blog or not, but Amazon recently filed a lawsuit against the operators of sites that allegedly offer Amazon sellers the ability to purchase fake 4 and 5 star customer reviews of their products. 

    Amazon brought the suit in a California state court against Jay Gentile, who apparently operates a site called buyamazonreviews.com.  The suit also names “John Does” who operate similar sites.  And here is how the lawsuit describes its Amazon’s objective:

    “While small in number, these reviews threaten to undermine the trust that customers, and the vast majority of sellers and manufacturers, place in Amazon, thereby tarnishing Amazon’s brand.” Amazon strictly prohibits any attempt to manipulate customer reviews and actively polices its website to remove false, misleading, and inauthentic reviews.”

    I think Amazon is doing the right thing.  The reviews have absolutely no value if they’re not authentic, and if customers don’t perceive them as authentic. Amazon and other review sites absolutely have the right to protect the value of their service.

    Go comment!
  • "A+" for New Crowdfunding Rules

    Apr 10, 2015

    Back in October, I asked my partner and securities lawyer, Dick Schmalzl, to write about the current status of equity crowdfunding in “SEC Takes Baby Steps Towards Equity Crowdfunding.”  Here’s Dick’s update on two new developments of particular interest to Tri-State businesses and investors.

    March was a busy month on the equity crowdfunding front. Kentucky adopted the “Kentucky Intrastate Crowdfunding Exemption,” and the SEC finalized its new “Regulation A+” rules.

    Moving at warp speed (as measured in government time), a crowdfunding bill was introduced in the Kentucky legislature on January 6, 2015, unanimously adopted by both houses in March, and signed into law by Governor Beshear on March 19.  Beginning July 1, 2015, Kentucky’s new securities law exemption will allow startups and other small businesses to raise up to $2 million a year by selling their securities to the public over the Internet.  

    Similar to intrastate crowdfunding exemptions enacted by a dozen or so other states, quite a few conditions have to be met.  Most notably:  the business must be formed in and doing business in Kentucky; all investors must be Kentucky residents; the maximum investment from any single non-accredited purchaser is $10,000; the securities must be sold through a Kentucky-registered intermediary; all subscription proceeds have to be escrowed with a Kentucky-located financial institution until the targeted offering amount is reached; an offering disclosure document is required; and quarterly reports must thereafter be made available to purchasers and filed with the Kentucky Securities Division.  By no means simple, but all in all, kudos to the Commonwealth!   

     

    In stark contrast, federal crowdfunding laws have moved at a snail’s pace, but at long last the SEC has taken a huge leap forward. While garnering much less attention than the SEC’s still pending, October 2013 proposed rules for equity crowdfunding, the SEC also proposed in December 2013 to amend existing Regulation A pursuant to Title IV of the Jobs Act.  The primary impetus for amending Regulation A was to make it easier for medium sized companies—too small to conduct an IPO but more seasoned than a typical start up—to raise capital in meaningful amounts.  On March 25, the SEC adopted final rules that accomplish these objectives, and then some.

    Cleverly nicknamed “Regulation A+” because they are so much better than plain old Regulation A, the new rules will become effective in mid-to-late June.  Although Regulation A has been around for over 20 years, it is seldom used despite having some very attractive features.  Regulation A allows a company to publicly offer its securities, so there is no prohibition on general solicitation and general advertising. Sales are not limited to wealthy accredited investors, but can be made to anyone, which is the ultimate crowdfunding objective.  And, the securities purchased under Regulation A are freely tradable.  Nonetheless, these advantages have been outweighed by two major problems.  Under old Regulation A, a company’s stock sales were limited to a maximum of $5 million (only $1.5 million of which could be sold by existing stockholders), and the offering documents needed to be reviewed by the SEC and by state securities regulators in each state where the offering would take place.  That’s a lot of time, uncertainty, paperwork, filing fees, and professional fees, all to raise a relatively small amount of capital.

    Skipping the gritty details (of which there are many), “Regulation A+” now allows two types of offerings which keep the good parts of old Regulation A and largely fix the bad parts.  A “Tier 1” offering pretty much mirrors the old Regulation A except that a company now can raise up to $20 million in a 12 month period,  including up to $6 million of stock sales by existing stockholders.  To ease the state securities law burdens, the North American Securities Administrators Association has created a new coordinated review program.  It’s untested but every little bit helps. 

    Where “Regulation A+” really begins to sizzle is with its brand new “Tier 2” offering.  A company can raise up to $50 million in a 12 month period, with up to $15 million sold by stockholders.  “Regulation A+” then gets even better by preempting Tier 2 offerings from state securities law registration requirements, thereby eliminating those expenses and potential delays.  The tradeoff for a Tier 2 offering is that the company must provide audited financial statements with its required disclosure document, and must file ongoing annual, semiannual, and current event reports with the SEC.  The good news is that the offering document is less detailed than an IPO-type prospectus and the ongoing periodic reports are substantially scaled down from the 10-Ks, 10-Qs and 8-Ks that public companies must file.

    In essence, a Tier 2 offering is “IPO-lite,” providing the company with many of the same benefits as an IPO, but without becoming an SEC reporting company or subject to Sarbanes-Oxley requirements.  Given that even the smallest IPOs today are generally far north of $100 million, many well established, privately held companies should find a Tier 2 offering to be very enticing.  If the company later decides it wants to become a full blown public company, it can file a simple Form 8-A with the SEC and seek listing on the NYSE or Nasdaq.

    In addition, Tier 2 offerings could become a very effective crowdfunding capital raising tool for newer and much smaller companies.  Unlike the pending SEC crowdfunding rules that would limit a company’s stock sales to $1 million a year and impose numerous other restrictions similar to those in the Kentucky Intrastate Crowdfunding Exemption, Tier 2 offerings have no minimum offering size and fewer hoops to jump through.  

    Investors benefit from “Regulation A+” too.  Ordinary people will have more opportunities to invest in high growth startups and other attractive privately held companies that were off limits in the past.  And because securities sold under “Regulation A+”, whether in a Tier 1 offering or a Tier 2 offering, are freely transferable, investors will have liquidity.  Angel investors, venture capitalists, private equity firms, and even owners of family held businesses may find that Regulation A offerings provide a new exit alternative in lieu of the traditional IPO or sell the company options. 

    Implementing “Regulation A+” in practice may reveal some obstacles that could prevent its potential benefits from being fully realized. But for now, “Regulation A+” should energize capital raising for private companies and crowdfunding advocates alike.  Well done, SEC!  
    Go comment!
  • Why Access Matters

    Apr 09, 2015

    I saw this piece on the Huffington Post yesterday.  Pretty interesting reading.  It’s a hypothetical news report of the Walter Scott shooting that we’d likely be reading were it not for the footage that captured the incident.  Mr. Scott is the South Carolina man who was shot eight times in the back by a North Charleston, South Carolina police officer last Saturday. 

    And the thing is, it’s not entirely fiction.   Here’s a description of how the piece was written:

    This article relies entirely on local news reports, which sourced their version of events to information from police, the attorney for the officer, "witnesses" and police statements. Many of those claims turned out to be lies. Slager has been charged with murder. Whenever possible, this article pulls verbatim from local news reports.

    This incident illustrates why the public must have access to things like body camera and dash cam video recorded by police.  It seems like common sense.  But apparently, not everyone sees it that way.  I’m working on a case right now in the Ohio Supreme Court where the Ohio Highway Patrol is refusing to turn over dash cam video of a high speed chase on I-71.  The Patrol is taking the now common approach of many law enforcement units – calling the dash cam “confidential investigatory material” and stonewalling.  Here’s hoping the Ohio Supreme Court puts an end to this foolishness.

    Of course, dash cam video is not so confidential that it stops the Patrol from maintaining its own YouTube channel, and highlighting the dash cam video it wants the public to see. But hey, where’s it say cops have to be consistent?

    Go comment!
  • News Gets Worse for Rolling Stone

    Apr 07, 2015

    Apparently, the Virginia chapter of Phi Kappa Psi has announced its plans to sue Rolling Stone Magazine over its ill-fated article “A Rape on Campus.”  And what may likely turn out to be Phi Kappa Psi’s exhibit A in the libel suit, is the report from the dean of the Columbia School of Journalism, published in Rolling Stone itself.  

    In any libel suit, a plaintiff has to prove several elements.  Among other things, the plaintiff has to prove the publication is false.  No matter how derogatory the publication, if it’s true, there’s no libel case.  This is why Tony LaRussa has never sued me for all of the mean things I’ve said about him over the years. In the Rolling Stone case, however, it seems pretty clear that there was plenty of falsity to go around. 

    The plaintiff also has to prove “fault” on the part of the publisher.  And this element varies based on the identity of the plaintiff.  A “private figure”  plaintiff needs to show only that the publisher was negligent.  And in the case of a libel suit against a major publication like Rolling Stone, the issue is whether the publication adhered to reasonable professional standards in its reporting and editing.  If the fraternity is considered a private figure, the Columbia report seals the deal on this point.   The report not only concludes Rolling Stone fell short, it provides example after example to illustrate its point. 

    On the other hand, if the fraternity is consider a public figure, it will need to prove that Rolling Stone published the piece with “actual malice.”  The U.S. Supreme Court adopted that term in the historic case of New York Times v. Sullivan.  And I’m not sure why they used those words.  Typically malice describes a  person’s attitude to another person.  It’s synonymous with “spite” and “hate.”  But “actual malice” is actually about one’s attitude toward the truth.  Did the publisher know the report was false or entertain serious doubts about its accuracy?  That is a tougher standard, because it is almost subjective.  And people can get it wrong, but not doubt the truth.

    But even if the standard turns out to be actual malice (and I think a fraternity at a large University is probably a public figure) the Columbia report is still the plaintiff’s best friend.  It lays out any number of red flags that should have put the reporter and editors on alert about the reliability of “Jackie” – the subject of the story.  Courts would likely view these red flags as circumstantial evidence of actual malice.  And that will make life tough for Rolling Stone.  

    But a libel plaintiff also has to prove the publication is “of and concerning” the plaintiff.  And frequently that’s easy.  If Tony LaRussa ever does sue me, there will be no doubt I was writing about him when I used terms like “pompous buffoon” and “spawn of Satan.”  But on other occasions, this element isn’t quite as easy to establish.  For example, courts don’t recognize “collateral damage” in libel suits.  So, for example, a plaintiff’s parents, who may be horrified about what someone says about their son or daughter, can’t bring a libel suit.  And if the libel is about an organization, typically, individual members can’t bring a suit on the theory that they have been tainted by the libel of the organization.

    And this may be where a lot of the fighting takes place in Phi Kappa’s suit.  I’m not sure that the fraternity can sue for erroneous statements about its members.  So even if there is no “Drew” (the alleged ringleader of the rape), the false description of him and the events isn’t “of and concerning” the fraternity.  To the extent the article was critical of the fraternity’s reaction to the events, those passages are probably fair game for the lawsuit.  But even though “Jackie’s” story may be false, it’s possible that the reporting on how the fraternity reacted is entirely true.  So, this case may not be such a slam dunk.

    The Columbia report makes for interesting reading.  And if you thought to yourself “how did this happen” before you read the report, you may find yourself asking that question again after you finish it.  I do think the report’s very first paragraph is instructive. It says:

    Last July 8, Sabrina Rubin Erdely, a writer for Rolling Stone, telephoned Emily Renda, a rape survivor working on sexual assault issues as a staff member at the University of Virginia. Erdely said she was searching for a single, emblematic college rape case that would show "what it's like to be on campus now … where not only is rape so prevalent but also that there's this pervasive culture of sexual harassment/rape culture," according to Erdely's notes of the conversation.

    Erdely’s question reflects a dangerous “everybody knows” attitude.  That is, everybody knows “rape is prevalent on college campuses.”  And everybody knows “there’s this pervasive culture of sexual harassment/rape culture” there.  Because if these are accepted truths, then the reporter is less likely to be skeptical of any given anecdote that validates what everybody knows.  Call me old school, but I like skeptical reporters. 

    So if I heard a reporter make a comment like Erdely, I’d challenge her on it.  What information did she personally have that rape is prevalent on college campuses, or that there’s a pervasive culture of sexual harassment?  I’m not suggesting that’s not the case, but I think the fewer assumptions the reporter brings to an assignment, the better.  I think Erdely and her editors were a little too willing to accept the truth of what everybody knows.   And now everybody knows they’re in trouble.


    Go comment!
  • The Ditzy Defense

    Mar 31, 2015

    Potentially good news for dimwits everywhere.  There may exist a “ditzy defense” in the world of libel.  And based on what happens in a Los Angeles Superior court, we’ll soon know for sure.  

    The case arises from the movie “American Hustle” and specifically a line delivered by Jennifer Lawrence.  In the scene that’s the subject of the suit, Lawrence and her husband, played by Christian Bale, are arguing about a new microwave oven that Bale received as a gift.  Lawrence claims that the microwave takes nutrition out of food. Bales says that’s “BS.”  Lawrence responds, “it’s not BS. I read it in an article. Look, by Paul Brodeur.”

    This is where it gets interesting.  Paul Brodeur is a real life scientist. And around the time in which the movie was set – the late seventies – Brodeur regularly gave interviews on the then new-fangled device.  In one interview, he was asked if there was any danger in eating food cooked by a microwave. He answered “none that is known.”  So in Brodeur’ s view the reference to him in the movie inaccurately and unfairly portrays him as a fear monger. 

    The interesting thing about the case is the nature of the film itself. It’s not fiction, since it’s at least loosely based on real events.  But it doesn’t pretend that it’s completely accurate either.   As the film’s opening title says “Some of this actually happened.” 

    So, can a plaintiff base a libel suit on statement by a character in a movie that is, by its own admission, not necessarily an accurate depiction of history?  On the one hand, why not?  If the statement is presented as a fact, about a real person, why should it matter that it was presented in a fictionalized presentation?  If someone writes a screenplay and includes a reference to “Cincinnati lawyer Jack Greiner, who defrauded his clients out of millions of dollars” (not true by the way) but presents it as a historical fact, why shouldn’t I be able to sue for that? 

    On the other hand, and at the heart of the “ditzy” defense, is the argument that it matters which character says it.  Jennifer Lawrence’s character in “American Hustle” was not entirely stable, or reliable.  So having her make the statement about Brodeur makes it questionable whether that particular item was reported as a historical fact.  In other words, her character is so “ditzy” that the audience can’t really take anything she says as factual.  And so nothing she says could form a viable libel claim. 

    We’ll see what happens.  I’m not really sure which way the court will go.  But I imagine in retrospect, the film makers are wishing they had just made up a name of a scientist.  Kind of ditzy not to do that in my view.   

    Go comment!
  • Better Late Than Never?

    Mar 26, 2015

    Here’s a piece by former Channel 9 reporter Karl Idsvoog:

      

    Karl justifiably calls out Kent State for violating Ohio’s Public Records Act in an effort to hide from the public details about KSU’s contract with a branding firm called 160over90.  Given that Karl currently teaches at Kent State, it’s safe to say he is as gutsy as ever, and his integrity remains intact.

    Too bad the same can’t be said for Kent State or 160over90.  Shame on both.  Kent State, you are a public entity subject to Ohio’s Public Records Act. You may not always like that, but I don’t like that I have to drive 45 miles per hour on Columbia Parkway.  We both just have to deal with it.

    And 160over90 (that’s your company name and you’re telling other people how to do branding? Really?) if you want to enter contracts with public universities,  you’d better deal with the fact that the contract is a public record. If you don’t like it, stick to the private sector.  But don’t think you can take public funds behind closed doors.  Karl is watching.

    Oh yea, Kent finally did cough up the unredacted records.  Great.  But why not obey the law in the first place?

    Go comment!
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