Rolling Stone’s Matt Taibbi described Goldman Sachs as “a great vampire squid wrapped around the face of humanity,” a phrase that, while defamatory of a uniquely adapted cephalopod minding its own business 3,000 feet under the sea, rang true. Yesterday, the intermediate appellate court for New York state agreed: Goldman Sachs is so obviously dishonest that you cannot sue them for fraud unless you get them to specifically agree that they aren’t lying to you.

First, the facts. In essence, Goldman Sachs brought in a hedge fund (Paulson & Co.) to put together a group of horrible investments (called “Abacus”) that they expected to fail — and even bet against — and then set about finding rubes to invest in it, thereby helping Goldman and Paulson make a tidy profit off the investor’s losses. One other banker who passed on the deal described it as “like a bettor asking a football owner to bench a star quarterback to improve the odds of his wager against the team.” (He’s quoted in the dissent.)

ACA Financial Guaranty Corporation was one of the rubes Goldman Sachs found. As Reuters reported, ACA’s lawsuit against Goldman Sachs “alleged that Goldman misrepresented the role of the hedge fund Paulson & Co, which supposedly selected underlying mortgage-backed securities that doomed the [collateralized debt obligation] to fail, thereby assuring Paulson of big profits on its undisclosed Abacus short.” The scam was so blatant the Securities and Exchange Commission brought its own case against Goldman Sachs, which settled for $550 million.

Sounds simple enough; as James Surowiecki wrote about the scandal three years ago, echoing the thoughts of many financial journalists, there was ample reason to believe that ACA was both a “dupe” hoodwinked by Goldman and a “dope” that failed to perform adequate due diligence on a complicated investment. Being a “dope” is a problem, but one would assume that a duped dope would be allowed to present evidence to a jury arguing that the fraud was a bigger problem than the lack of due diligence.

Except that the New York courts won’t let ACA get to a jury.
Continue Reading Never Trust A Vampire Squid: Merger Clauses & Fraudulent Inducement

When I began law school, we started 1L with two weeks of the same class three days a week: Legal Decision Making. In theory, the class was supposed to introduce the nuts and bolts of the law, thereby giving us a running start on the substance of our other traditional 1L classes, like Contracts. It failed. Our professor misunderstood the Socratic Method to be little more than an excuse to berate students, and so the bulk of our time was wasted on verbal games of three-card monte where every answer was wrong. (It wasn’t until later that semester I witnessed, in another class, the Socratic Method used properly to stimulate critical thought.)

Our casebook was impossible to find and extraordinarily expensive because it had only been published once in the early 1960s. While the rest of the legal profession had rightly discarded the work as unworthy of even a second edition, our professor delighted in the book’s signature ability, through sloppy or malicious editing of critical passages, to turn straightforward court opinions into inscrutable parables.

Imagine Moby Dick with all references to whales omitted; that was how our textbook presented every case, concealing both the facts and the holding, leaving nothing but untethered legal analysis. Perhaps the most spectacular failure revolved around the meaning of “dicta” in court opinions. Lacking the facts or holding — and the cases being too old or too obscure, to find on LexisNexis or Westlaw — our attempts to discern the dicta from the precedent was, to paraphrase Melville, like a vast practical joke, the wit thereof we but dimly discerned. The joke, we more than suspected, was at nobody’s expense but our own.

Last week there was a dicta fight in the Delaware courts. If you don’t know the details of the Delaware Supreme Court’s per curiam reprimand of Chancellor Strine, read these Reuters or NYTimes reports for background, then be sure to read Gordon Smith’s post, which has the reprimanding language in full and which explains the intellectual background behind the fight. In short, these two highly respected jurists differ strongly over the “defaults” over Delaware LLC law: Strine thinks that, unless the parties clearly contract otherwise, then LLC managers owe fiduciary duties to LLC members; Steele thinks they don’t.  
Continue Reading The White Whale: The Purpose Of Dicta In Delaware

“Let your greatest cunning lie in covering up what looks like cunning,” said Baltasar Gracián, the 17th Century Jesuit priest who wrote about how to survive in a post-Machiavelli world. These days, when tort reformers aren’t busy trying to stack the decks against consumers and injured people, they’re busy concern trolling, claiming to be looking out for the little guy while really waging war against the lawyers who take the risks and put in the time to make things right for the folks injured and cheated by corporate greed.

Via Overlawyered, Daniel Fisher at Forbes — who as far as I can tell has never once argued in favor of increasing consumers’ legal rights — is deeply concerned about the lawyers who invested approximately 20,000 hours and $500,000 of their own money, and then fought hard over the past four years, to win a $25 million settlement in an antitrust case (the case involved egg purchasers suing egg producers for conspiring to inflate the price of eggs.) He thinks their request for $7.5 million in fees — less than one-third of the settlement, and less than the $11 million the lawyers would have earned if they had billed the same way the defense lawyers did — should be delayed indefinitely, because, if we spend years picking apart the exact hours worked by every plaintiffs’ lawyer in a class action, “we consumers would have a much better way to judge whether our lawyers are overcharging us for this valuable work.” He wants this process to apply to every class action, so that plaintiffs’ lawyers will go wholly unpaid for years for their “valuable work” while corporate-funded intervenors dream up new objections.

Fisher complains, using the passive voice (“it would be unseemly … interestingly, however”) to imply but not actually state that the plaintiffs’ lawyers have done something improper:

It would be unseemly for law firms to collude on their billable rates in an antitrust case. Interestingly, however, the billable rates cluster around certain levels: $750-$950 for senior partners, $375-$450 for experienced associates, and $200-$300 for junior [associates]. While the legal industry might be as competitive and efficient as, say, the egg business, it’s difficult to see how this many firms, linked together with a web of referral agreements, can actually compete on price so their clients get the best deal possible.

Fisher wrote “$200-$300 for junior partners.” I think that was just a mistake, so I corrected it above. Starting with the basics, there’s nothing “interesting” about that clustering of fees: that’s how hourly fees are in the legal marketplace. Walk into a tall building in a downtown metropolis and ask for a top-shelf senior litigator, plus some associates, and you’ll hear those exact rates.

But more to the point, “collude on their billable rates?” “Overcharging?” What on earth is Fisher talking about?

The cases were all done on a contingent fee. Multiple clients signed up directly, each agreeing to pay one-third or more as a contingent fee, and it was those clients’ claims that was used to create the class action. No client was charged a dime in fees or expenses — all of the work and risk was born by the plaintiffs’ lawyers, who are walking away from those claims with less money in their pocket than the defendants’ lawyers.
Continue Reading Concern Trolling Over Class Action Fees (Egg Purchaser Antitrust Edition)

As regular readers know, I’ve spent the last two weeks trying a case with Francis Malofiy. [If you googled in looking for him, skip to the bottom of this post.] Last Friday, after 15 hours of deliberations, the jury returned a verdict in favor of our client on all six questions — relating to the nature of the agreement, damages, whether our client breached his obligations, whether defendants would get a set-off, and when the statute of limitations began to run — and awarded him $4.17 million in damages. The vote was 10–2, which is good enough under Pennsylvania law. The judge kindly let the attorneys talk with the jurors (assuming they wanted to talk, of course), so I went back to figure out what happened with those two holdouts.

Post-verdict discussions with jurors often reveal a handful of surprising and insightful comments that sometimes make me re-think how I tried the case. Jurors tend to take their duties very seriously, and so lawyers can usually jump right into detailed questions about the facts and what they thought about various issues. We were fortunate to have a number of invigorated and candid jurors who were happy to talk to us about the case.

In our case — in which our client alleged that he was frozen out of his ownership interest in an industrial business after spending two years building the business’ physical plant — there were a lot of issues, from the disclosure requirements for SBA Loans to the right type of saw for a particular cutting machine, but one issue loomed large: the lack of a written agreement. We had documents (including one signed by all the parties) supporting our claims, they had documents (signed by them, but not our client; we alleged they were created after the lawsuit was filed) supporting their claims, but there was no single document that purported to be the agreement among the parties. It was mostly our client’s word against the defendants’ word, with each side portraying radically different circumstances surrounding the agreement, chiefly differences over the work our client did in those two years.Continue Reading Doing Business On A Handshake

Yesterday afternoon, the defendants in my trial dumped a twenty-one page brief on me, requesting the Court preclude our business valuation expert from testifying, arguing that we had “a bogus valuation expert” whose “report is a sham” describing a “topsy-turvy world” in support of “Plaintiff’s belief that he can obtain a windfall through a whimsical and inflated valuation of this business” — and that was all just in the introduction.

It seems somebody needs to read #4 on my advice for litigators.

Naturally, within less than a day I filed a detailed response, explaining why our expert was fine, and why the appropriate valuation of a minority shareholder interest in a company where the shares aren’t regularly traded is “the shareholder’s proportionate interest in the company as a whole valued as a going concern according to accepted business practices.” As a service to any other plaintiff’s lawyers out there in a similar case, I leave you with an edited excerpt from my brief.

In Pennsylvania, business damages ‘need not be proved with mathematical certainty, but only with reasonable certainty, and evidence of damages may consist of probabilities and inferences.’ Hawthorne v. Dravo Corp., Keystone Division, 352 Pa. Super. 359, 376, 508 A.2d 298, 307 (1986), appeal denied, 514 Pa. 617, 521 A.2d 932 (1987); Delahanty v. First Pennsylvania Bank N.A., 318 Pa. Super. 90, 119, 464 A.2d 1243, 1257 (1983). ‘Thus, the law does not demand that the estimation of damages be completely free of all elements of speculation[,]’ Delahanty, 318 Pa. Super. at 118, 464 A.2d at 1257, and the fact-finder ‘may use a measure of speculation in estimating damages.’ Penn Electric Supply Co. Inc. v. Billows Electric Supply Co. Inc., 364 Pa. Super. 544, 549, 528 A.2d 643, 645 (1987). Any doubt or uncertainty as to the precise amount of damages is construed against the breaching party or wrongdoer. Atacs Corp. v. Trans World Communications Inc., 155 F.3d 659, 669 (3d Cir. 1998) (citing Delahanty and applying Pennsylvania law).

Pennsylvania law plainly provides that shareholders forced or frozen out of their interests are entitled to that “fair value” of their interests. This “fair value” approach is consistent with breach of fiduciary duty precedent (i.e., Viener v. Jacobs, 2003 PA Super 324, 834 A.2d 546 (Pa. Super. Ct. 2003)) and with the dissenters’ rights provisions of the Pennsylvania Business Corporations Law (“BCL”) that plainly entitles dissenting shareholders to “payment the fair value of [their] shares.” 15 Pa.C.S. § 1571–1580. The BCL includes similar provisions for limited partnerships and for LLCs.

Across the United States, the overwhelming majority rule regarding the “fair value” of minority interests in private companies derives from this analysis by the Delaware Supreme Court: 
Continue Reading Valuation of Minority Shareholder Interests In Oppression, Fiduciary Duty, And Contract Cases

[Update: All the publishers settled, prompting credits to customers, but Apple fought it, and in July 2013 lost at trial. Now comes the inevitable appeal.]

Big waves were made yesterday with the United States Department of Justice (DOJ) filing an antitrust lawsuit against Apple and five of the six largest publishers of trade books in the United States, together comprising over half of the New York Times fiction and non-fiction bestseller lists. Here’s the complaint.

The lawsuit alleges (as best can be summarized in one sentence) that, after Amazon introduced $9.99 pricing of popular e-books, Apple conspired with the publishers so they would all simultaneously move from the “wholesale” model (where retailers set their own price after buying at a set price from distributors) to an “agency” model that gave publishers the power to dictate retail prices, after which they coordinated a price hike (with Apple’s permission) to force Amazon to raise its prices or lose access to all those books. Three of the publishers have already agreed to a tentative settlement, while Apple, Macmillian, and Penguin have vowed to fight.

Macmillian’s CEO said the company would have settled, but the DOJ’s terms were “too onerous” and “could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model.” Keep that in mind for what follows.

The lawsuit has been expected for a long time. Given prior disclosures about pre-suit settlement discussions over the case, a number of consumer antitrust class action lawsuits have already been filed on behalf of e-book purchasers. (Ed Oswald, who thinks Apple should “surrender” the federal case, has been following those cases for a while, check his archives.) If you really want to know the ins-and-outs of antitrust law applicable to the case, read this brief filed by Apple as part of their motion to dismiss the consumer cases, and this brief filed by the plaintiffs in response. I’ll get to my thoughts on the merits of the consumer cases and the DOJ case in a moment.

Few issues in recent memory have produced so much commentary — I suppose that’s what happens when a story hits writers, bibliophiles, techies, and Apple fans and foes all at once — and there’s so much out there about the role of these companies in the e-book market it’s hard for me to even suggest where to begin. Of the many issues of law, business, and the future of book publishing raised by the case, I write to develop just one of those issues: why the DOJ was right to bring it
Continue Reading In Defense Of The DOJ’s Antitrust Lawsuit Against Apple And E-Book Publishers

Over the past two weeks, one of the enduring questions of corporate governance — whether boards of directors are re-elected entirely every year of if their terms are “staggered” so that only a fraction of the directors (often 1/3 or 1/4) are up for vote every year — jumped back into public discussion. Steven Davidoff wrote about it on March 20th, with a thorough post, The Case Against Staggered Boards, that synthesized the issues well and linked to many of the core academic papers on the subject. As Davidoff asked:

According to the data provider FactSet SharkRepellent, 302 S.&P. 500 companies had staggered boards in 2002. Ten years later, the figure has fallen to 126.

Outside this universe of large companies, the staggered board has also fallen out of favor, though not as rapidly. Of 900 other companies outside the S.&P. 500, staggered board adoption rates have declined by about 25 percent since 2002.

It is here where our puzzle arises.

Compare this with the market for initial public offerings. According to FactSet SharkRepellent, 86.4 percent of the companies going public this year have had a staggered board. This figure is up from a still high 64.5 percent in 2011. Staggered board provisions have been adopted by prominent companies like Tesla, LinkedIn and Dunkin’ Brands.

What explains this divergence?

If this were a class, I’d raise my hand. Why do IPOs overwhelming have staggered boards while public companies overwhelmingly have annual-election boards? Because company founders and managers like to preserve as much power as they can when their companies go public.

Ever the professor, Davidson admits that’s one possibility, but also says it may be well-intentioned management trying to maximize shareholder value, or just the fault of lawyers giving every client the strictest option they can:
Continue Reading Martin Lipton Is Wrong About Harvard’s Shareholder Rights Project

[UPDATE: Just a few days after I wrote this post based on the Chrome issue, Google released their biggest change in a decade, the “Search Plus Your World” feature that directly integrates results from Google properties like Google+ and Picasa into standard Google search results. That change — a mixing of search with Google verticals, or church and state, so to speak — raises the antitrust stakes considerably. Twitter has already raised alarms.

The antitrust analysis for “Search Plus Your World” is the same as for the Chrome SEO penalty, because it would also be alleged to be ‘exclusionary conduct.’ Did Google make that change as part of, in the Supreme Court’s words, “the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident?” Interestingly, we can already see Google’s planned response in their description of why Facebook and Twitter — the obvious competitors for this same market — won’t do as well in the new Google search framework:

“Facebook and Twitter and other services, basically, their terms of service don’t allow us to crawl them deeply and store things. Google+ is the only [network] that provides such a persistent service,” [Amit] Singhal told me. “Of course, going forward, if others were willing to change, we’d look at designing things to see how it would work.”

That could indeed protect Google from antitrust liability. They’re saying, in effect, “you don’t show up as highly in our results because our agnostic search crawler can’t access as much from you as it does from Google+.” It’s similar to how, as SEOMoz pointed out, Google+ pages rank so well not because of any specific Google tampering, but because of exceptional optimization to rank for searches of names. That might convince a judge that the new move was intended to improve user results, not to exclude Twitter and Facebook.

It’s an aggressive move, one without considerable risk given the Senate’s concerns outlined below.]

It’s no secret that Google’s biggest fear of late has been the potential for antitrust liability arising from its near-total dominance of the online search market, particularly mobile search. Google has so far prevailed, including in the myTriggers claim that many believe was secretly funded by Microsoft (how else would some little nothing company have the funds to pay for Microsoft’s own chief antitrust lawyer to represent them?), but their biggest challenge is yet to come. Back in September, the United States Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights held somewhat hostile hearings on the issue, and just last month the Chairman and Ranking Member of the Subcommittee sent a bipartisan letter to Federal Trade Commission requesting an investigation. More on that in a moment.

Aaron Wall of SEOBook gets the credit for spotting hundreds of posts ending “this post is sponsored by Google,” many of which included direct, followed links to the download page for Google’s Chrome browser. As any business with a web presence knows, there’s almost no greater sin in Google’s eyes than paying people to write phony drivel accompanied by followed links, so Danny Sullivan of Search Engine Land wondered aloud what the consequences would be:

Paid links drew much attention last year, after Google penalized JC Penney, as well as Forbes and Overstock for using them. Google even banned BeatThatQuote, one of its own companies last year, over the issue. In 2009, Google penalized Google Japan for its own search results for the same issue, not removing it but reducing its ability to rank for 11 months.

Potentially, all this means that Google will have to ban the Google Chrome download page over paid links. That would suck for Google, since it’s busy running ads for Google Chrome, which will in turn prompt people to search for it.

Matt Cutts, head of Google’s webspam team —and increasingly their public face, like in the videos Google prepared as part of a public relations campaign after the Senate’s Antitrust Subcommittee hearing— responded on Google Plus that the campaign violated Google’s quality guidelines, and so “the webspam team has taken manual action to demote for at least 60 days,” after which the Chrome team can submit a reconsideration request. Problem identified, action taken.

So where’s the antitrust problem?Continue Reading Google’s New Antitrust Liability With Search Plus Your World And The Chrome SEO Penalty

The Sandusky child molestation scandal at Penn State continues to be the biggest legal news in Pennsylvania. One lawsuit against Penn State and the Second Mile has already been filed, presumably because the victim was either nearing, or had already passed, the statute of limitations. A civil lawsuit can be filed at any point after a criminal act, though in that case the civil litigation is usually put on hold until the criminal case is finished.

I’ve already discussed most of the issues in the cases that could be filed by sexual abuse survivors in my previous post, linked above, but a new issue has started to bubble up: what happens to former football coach Joe Paterno, president Graham B. Spanier, athletic director Tim Curley, and university vice president Gary Schultz. Paterno and Spanier avoided criminal prosecution but were swiftly fired by the Board of Trustees for their roles in the scandal. (Technically, Spanier was given an ultimatum: resign or be fired, an effective termination that may have been given to Paterno as well. Spanier chose to resign.) Curley and Schultz were indicted for perjury and failing to report child abuse, after which Curley voluntarily went on administrative leave and Schultz retired.

Plenty has been written about the criminal prosecution about Curley and Schultz. As this Reuters analysis points out, prosecution on the failure-to-report-abuse claim might be tricky, but perjury is perjury, and it’s Curley’s and Schultz’s word against Mike McQueary’s over what exactly McQueary told them.

Outside of the criminal aspect, there’s an important civil litigation aspect just starting to gain traction, and that’s whether Paterno, Spanier, Curley or Schultz might have their own claims against Penn State. Consider this article about the PSU Trustees and Pennsylvania’s Sunshine Law:

[Q]uestions arose about whether the board had complied with the state’s Sunshine Act, because there was no evidence of required public votes on the matters. So the executive committee – nine of the 32 board members – decided to hold a brief telephone conference call Friday morning to resolve questions and formally approve those three major decisions.

The changes in status for Spanier, Paterno, and Erickson were the result of the questionable handling of child-sexual-abuse allegations against former assistant football coach Jerry Sandusky, whose arrest came five days before the departures of Paterno and Spanier.

“Due to the extraordinary circumstances” during the week of Nov. 6, Penn State spokesman Bill Mahon said after the executive committee’s five-minute phone call, “the board of trustees needed to act swiftly and decisively regarding personnel. While the board believes immediate action was necessary [three weeks ago], it is holding this special, preannounced public meeting of the executive committee to reaffirm and ratify the board’s prior personnel decisions.”

He added that the trustees “wanted to dot all the I’s and cross all the T’s.”

He said the firing, the resignation, and the naming of the new president were effective the week of Nov. 6. The full board will meet in January to “reaffirm” the action taken by the executive committee Friday, he added.

Even apart from the Sunshine Act, there are issues here worth exploring: what legal rights, if any, might Paterno and Spanier have against Penn State? I’ve seen news stories indicating that, at least for Spanier, they are “working out” a “multi-million dollar” severance package. Let’s look a little more deeply into that. 
Continue Reading Do Paterno And Spanier Have Golden Parachutes At Penn State?

Big news in the sporting and antitrust litigation worlds — which overlap considerably — on Friday when the U.S. Court of Appeals for the Eighth Circuit (which hears all appeals in federal cases filed in the states between North Dakota, Minnesota, Arkansas, and Nebraska), reversed a preliminary injunction imposed by the U.S. District Court for the District of Minnesota prohibiting the NFL owners from imposing a “lockout” on players.

The order is posted here; when I reference Opinion and Bye Dissent below, I’m referring to that PDF. Two judges, Colloton and Benton (both appointed by George W. Bush — hold that thought) voted in favor of dissolving the injunction while the third judge, Bye (Clinton), provided a lengthy dissent.

As with all sports law news, start with Michael McCann. Here’s his Sports Illustrated column on the ruling. It’s a good summary; I’m going to get more technical and legally opinionated than he can get in an SI column. (Short version of our conclusions: we both agree that a request for en banc review is unlikely, but I’m more sanguine on the players’ odds in a petition to the U.S. Supreme Court.) ESPN has a Q&A as well. Howard Bashman has a round-up of stories here.

It’s probably best to start with the court did not do: the court did not rule on any of the antitrust allegations made by the players. The antitrust case filed by the players can continue to go forward. The court didn’t even rule on whether the players were entitled to an injunction under antitrust law; rather, the court held that labor law precluded the current players from obtaining an injunction and restricted the type of injunction the prospective players could get.

That said, it seems unlikely that either the players or the teams (not to mention their coaches, most of whom live in a precarious existence in which they change teams every two years, and so sided with the players in the case in an amicus brief) have the stomach for years of antitrust litigation during a lockout. More likely, the players and the teams intend to use these preliminary rulings on injunctions and antitrust/labor law to inform their bargaining positions. As the New York Times reports:

According to one person briefed on negotiations, the timing of the court’s opinion — issued in the morning — was “awful” and “not helpful” to the talks, unsettling them just as the sides hoped to finish discussions on the revenue split, the heart of the dispute.

The decision emboldened the hawks among both parties, the person said, inspiring some owners to want more concessions from players, and some on the players’ side to want to press their case, with the prospect that the court could allow antitrust damages.

It seems more than a little strange that both sides could feel emboldened by the order, particularly because, on the most basic level, the players lost one of their most valuable bargaining chips, i.e., the District Court order enjoining the lockout. So let’s dig a little bit deeper into what the opinion actually held and what it holds for the future, both for the NFL and for everyday employees.

There’s a lot to unpack here. We’re going to do it with a lot of laterals, like The Play.

The Players’ Antitrust Trick Play

The most obvious question is: why are we talking about antitrust at all? For purposes of antitrust law, the players are all one big union, which makes the teams all one big employer, and so the teams — at least with regard to their dealings with players — are likely a “single entity” under antitrust law. The teams thus can’t, as a legal matter, set up a “contract, combination in the form of a trust or otherwise, or, conspiracy, in restraint of trade” as prohibited by § 1 of the Sherman Act. A “single entity,” as they say, can’t agree or conspire with itself.

The players tried to get around that by busting up their own union. Right before the players–teams agreement ran out, the players ended the NFLPA’s status as their collective bargaining representative. The NFLPA then amended its bylaws to prohibit collective bargaining with the teams and filed requests with the Department of Labor and the Internal Revenue Service to be reclassified as no longer being a union.

At that point, the teams cease to be a “single entity” and turn into 32 separate entities, and that likely subjects them to antitrust scrutiny. As the Supreme Court held last year in American Needle v. National Football League, a separate case:

The NFL teams do not possess either the unitary decision-making quality or the single aggregation of economic power characteristic of independent action.   Each of the teams is a substantial, independently owned, and inde­pendently managed business.

Thus, as the players have argued, the teams can be liable for engaging in anticompetitive practices that violate § 1 of the Sherman Act, including limiting compensation for just-drafted rookie players, capping salaries for current players, and imposing restrictions on free agents like the “franchise player” and “transition player” designations.

At least that’s the players’ theory. Will it work? Maybe not: despite the American Needle case, which came to the Supreme Court on a very narrow issue — that is, if it was legally possible for the teams to be sued under antitrust laws — the Supreme Court and other federal appellate courts have been notoriously hostile to antitrust claims over the past few years. Consider AT&T v. Twombly (I discussed it briefly here; Twombly kicked off the line of cases later generally referred to as Ashcroft v. Iqbal), which dismissed — before even allowing discovery, much less trial — a fairly compelling antitrust case against the telecommunications companies. Truth is, the Supreme Court just plain doesn’t like consumers and employees.

The players at this point have three options:

  1. Giving up on the injunction, and just moving forward with the antitrust case;
  2. Appealing the Eighth Circuit’s injunction opinion either to the full Eighth Circuit sitting en banc (the current opinion was just a three-judge panel); or,
  3. Appealing to the Supreme Court (which they can do even after an en banc appeal, though it takes longer, and if the Supreme Court accepts the case, though certiorari isn’t assured).

I don’t see why they wouldn’t do #2 or #3. My hunch is that they’ll skip straight to #3: the Eighth Circuit is the most Republican Circuit in the nation, with 9 of its 11 active judges appointed by Republican Presidents (7 by George W. Bush), and so they’re arguably the most hostile Circuit towards unions, employees and consumers. With the Supreme Court, the players at least have a chance.

So let’s figure out what happened in the opinion.

Continue Reading NFL Lockout Injunction Reversal: Using Labor Law Against Employees