GenEx: Class 5

- role for simulation (i'm the judge)
- prepare for simulation
- do simulation next class
- schedule individual meetings next week (12:30)
- presentation with cathy and jason 11/9

judge (nicole)
clerk (jason)
respondent toby (tom)
2 respondent lawyers -- keaton and ade

2 petitioners -- carin and andrew

2 petitioners lawyers -- cathy and sylvia
2 observers -- ashley and matthew

ADR class 5

IP class 5

nonobviousness -- "did we really need you to tell us how to do this?"
graham v. john deere co.

hindsight bias: if i could come up with this, obviously a PHOSITA could

test that the graham court imposed:
- are all the elements of the invention already out there somewhere?

KSR v. teleflex


TSM test

commercial arbitration class 5

recap from last class:
9th circ is anti-arb, and still used to compel arb of employment cases
CA district courts weren't doing so and SCOTUS believes the claims
are arbitrable even without a square holding
the courts have taken a significant interest in trying to provide safeguards
that govern arbitration in these types of claims
part of that has been done under an unconscionability rubric, bc
arb is subject to state law to the extent all contract provisions are.
DP protocol - a joint effort of ABA and AAA, which has various safeguards
and very important is that in the protocol, there's a specific provision
that arbitrators are supposed to apply the statute:

the general AAA code, has stuff about fairness but nothing about
adhering to the law.
the cases are still very restrictive to overturning awards that find an
absence of discrimination, even where there's very strong evidence of
discrimination. there's two reasons for this:
1. the "manifest disregard" concept, which applies only to errors of
law and not errors of fact
2. manifest disregard is something taht arbitrators deliberately refuse
to follow

some ways, the most important issue is that not all forums are as
neutral as the AAA. when the forum is more structured for the
employer's purpose, then they're worthy of special scrutiny.

later we'll get to whether collective bargaining requires union members
to arbitrate certain kinds of claims.

thombly.

some employment cases lend themselves to arbitration and others really
don't.

establishing that the person was doing a good job, the other people
didn't have higher ratings, etc.
both cases are readily presentable in arbitration.
unlike court, the employee isn't inundated with lots of procedure,
and there's often "smoking guns" in the files, so it doesn't really
hurt that discovery is more limited and arbitration allows an
employee to go forward who might not have been able to afford
court procedings.
especially in race cases, there's an important issue of
"disparate impact" -- no overt impact, but sometimes more
incidious, what looks on its face to be neutral but is instead
in practice hugely disparate on members of a particular race, or
sometimes sex or age group. that type of case is on the claimant
to show, usually by stat analysis, what the impact of the practice is
and then the burden shifts to the employer to establish a business
necessity for the practice.
but if the plaintiff can show that there's a less discriminatory means
of getting to the objective, then there's a disparate impact case.
these are not good arbitration cases, because you
1. need more discovery
2.

how many employees can bring a class action to arbitration?
they're caput.

wright:
though SCOTUS said that these claims are arbitrable under a
general clause in shirk, etc.

2009: pent clausa decision, overturns precedent against the holding
without admitting it!
so the first thing that j.Thomas writes is that the 80s cases' issue is
"does arbitration bind a later court" where here the question is different....
as long as stat claims are held to, (hear recording...)

weiskoft thinks the different isn't distinguishable.

SCOTUS hasn't been content to extend arbitrability to fed stat claims
that would otherwise be heard in federal court.
basically, the pro-arb policy has been cramed down the states' throats.
see Federal Arb stat. s. 2, which discusses teh enforcability of arbitration
in the cases that involve interestate commerce. there's only two cases that
don't fall in the commerce clause: lopez and morrison.

right of actions. the fed must bring it's own cases for arbitration.
only other way is that it's a federal question or complete diversity.
do you only enforce this when a case happens to wind up in federal court?
or does it mean that for any case involving interstate commerce,
the state courts have to adhere to the federal arbitrability principles
ennunciated by SCOTUS? -- the federal laws of arbitration and
federal case law preempts the state law that is deemed to be anti-arbitrability:

for instance, a state - even under one of its own statutes - cannot effectively
provide in the statute that claims in the statute cannot be arbitrated, for
any issue involving interstate commerce.

for example, a state has other types of provisions which are seen
FAA s. 3/4: stay of the case
state courts have a lot of latitude, so long as they're not hostile to
arbitrability.
so to figure out if something is prempted, we have to go through the
substance procedure distinction under erie.
and then, we have the issue where the parties rights contractually
can create precedent even over the state's laws and that may conflict
with the FAA (because of choice of forum, etc)

if a state court doesn't apply FAA, what can the court do?
tehre's a provision that allows SCOTUS to give judgment
over a state's highest court in art. III s. 2.

prima paint:
weiskopf thinks the principle is right, but thinks it's interestng that the
state rule, even state rule with substance that are supposed to apply
under erie, are preempted because of FAA: so state court rules can't apply
even if it's something necessary!

how does the court explain? if the fed gov't under const analysis,
then the federal courts can make the rules over arbitration over the rules
of interstate commerce, and keep that regulatory power from the states.
this means that federal courts can make the rules as to how that power
may be exercised:
in a diversity case, the state rule doesn't apply and the claim of fraud
and inducement goes to the arbitrator. and the state court must apply
the same rule in an arbitration case.

preemption is coextensive with the FAA -- state courts deal with FAA
cases unless they involve a federal question or diversity.

1. illustrates hoe preemption works
2. SCOTUS says theres a distinction between affecting and involving commerce
3. parties had reason to contemplate interstate activity tho contract was intrastate

preemption doctrine isn't created by congress really.

what if SCOTUS wanted the s.2 construed broadly, then s.1 should construe
the employment clause narrowly as possible.
the court says that the impetus for arbitrability is the taft-hartley

for next class, we'll finish c.3:
argument is whether there should be preemption, and whether FAA
was ever intended to apply to state court. J.O'Connor was the leader
that it shouldn't apply, though Scalia and Thomas were the ones who
said it should, but now they think that it shouldn't.... very possible that
when this issue comes up again, the decision at state level will put out
preemption



mcdonald v. douglass

basic principles of preemption

severability

broad reach of preemptive effect
narrowness of employee exclusion s.1
federal preemption based on subject matter

biz org class 5

piercing the corporate veil
matters of equity and fairness.

is there a lack of corporate formatives?
have the shareholders comingled funds and assets?
under capitalization?

if a shareholder doesn't observe the separate existence of
the corp, why should creditors?
shareholders have to act in a way that respects separate identity of
(who??)

unity of interest & ownership

lack of corporate formalities;
commingling of funds and assets;
under-capitalization;
use by one corporation of the assets of another.

sea-land v. pepper source
             M                   A
              l                     l
---------------------------------------------
I        I         I         I          I             I
SL    PS      J         S-C    CC         T-N

markesee and pepper source: PS was under capitalized,
shuffled money back and forth under the different corps,
but sea-land is unable to pierce the corp veil because
didn't show fraud or injustice and didn't show that the
judgment would be unsatisfied. the court's reasoning is that
1. the petitioner will always have an unsatisfied judgment in
this type of case and 2. this is a two part test to show fraud
and unity in ownership.

what's the difference between carlton and pepper source/marcasee?
why was there an injustice in the sea-land case?

remember that the purpose of corp is to max shareholder wealth, so
shareholders get to take money out of the corp.

marcasee has been saying to sea-land that it will pay, while all the
while, he has been removing and comingling pepper source funds
for his own personal use. the court requires sea-land to establish
fraud and injustice, but it does seem that the very facts of co-mingling
are the same factors under unity and ownership: the test is not clearly
bisected.

when we do piercing doctrine, recognize that it's not neatly set up.
a strong case of unity of interest/ownership may overcome a weak
case of injustice or vice versa.

as a practical matter: if you have shareholders that are ignoring the
separate existence of the corporation, that in and of itself is unfair.
it's circular reasoning, which is problematic of students of the law
but makes the matter arguable.

see p. 200 q. 2.
why is not the owner of a corp who's escaped liability for its debts
not unjustly enriched? an unsatisfied judgment is not enough to
attack the shareholders personally. here, even though marchese acts to
establish that there's unity of interest and ownership, there still begs the
question of where fraud and injustice exists?

what is the difference between the sea-land and BMS (silicone) case?
- sea-land could have contracted for a personal guarantee
- sea-land could have done due diligence to investigate assets
- sea-land could have contracted for assets and solvency

contract creditors assume the risk when they enter the contract that the
entity with which they contract will not be able to pay back. but with respect
to tort creditors, there's not that opportunity.

carlton: the court says that it's okay that carlton was unjustly enriched
and the legis should change the minimum coverage required
BMS: contract v. tort creditors, the question of fraud is much more
important to a contract creditor because it will make it difficult for the
contractor to do due diligence.

next question is whether the company has failed to do corporate formalities.
because if it has, then the contractor creditor has no way to know what
the stability of the business is.

a tort creditor will argue under-capitalization - whether the company is
adequately funded. not something that a contract creditor will want to
emphasize because the capitalization is something the creditor could have
investigated.

analysis #1. once the plaintiff has pierced veil to expose liability of marchese,
it put a levy on stock he owned. what would be gained by reverse piercing
other corporate veils.

reverse piercing: must show same analysis as piercing but the starting point
and ultimate conclusion is different. if sea land reaches marchese, it gets a
judgment of his funds and shares of his other corporate holdings. but you don't
want to be a shareholder in his other companies -- bond and note holders stand
before share holders and equity holders in getting repaid, so you would still not
be holding anything if the companies aren't profitable. if you want to reach the
assets of the companies, you would have to reverse pierce after piercing.

so -- after marchese becomes personally liable from the piercing, the reverse
piercing would hold marchese wholly liable to sea-land via all its subsidiaries such
that other creditors stand in line behind it/don't have priority over it. must show
whether there's unity of interest & ownership between marchese and his other
companies and that it would failing to pierce sanction fraud or promote injustice.
reverse piercing then will allow sea-land to reach the other assets of the companies.

what about tie-net, where marchese only owns 50%? why shouldn't tie-net be
reverse pierced for sea-land? even with respect to tie-net, there's comingling and
lack of corporate formalities and under capitalization. but there can't be a unity of
interest and ownership as a factual matter, because only 50% is owned, but as a
legal matter, this is instead up to the court that all four factors apply to tie-net.

roman catholic arch diocese of SF. dude sues everybody.
this case clarifies PCV and who is laible under the theory.
if a parent corp has 2+ subs, then piercing the sub will allow you to reach the
parent but not to reach the assests of the other subs. that must be done through
reverse piercing.

even if the plaintiff could pierce the monestary's veil, he could arguably
reach the vatican and pope's assets but couldn't reach the other churches
such as the archbishop and archbishop of SF. to do so, plaintiff would
have to show enterprise liability or reverse pierce. enterprise liability
could potentially work but reverse piercing wouldn't.

piercing maybe reaches parent assets. but plaintiff doesn't then get to reach
assets of other companies under parent org. only other recourse is
reverse or enterprise liability. it simply was inconvenient for the plaintiff
to go after the switzerland monastery. the point is that piercing only
destroys vertical boundaries, not horizontal boundaries, which are destroyed
through enterprise liability or maybe reverse piercing. under enterprise,
all the subs could be liable if they engaged in a common enterprise. if the
plaintiff is able to show that there's no separate identity between the
companies, then there's enterprise liability.

why isn't piercing effective here?
- sovereign immunities
- the churches don't all sell dogs

In re silicone.
BMS owns 100% of the subsidiary MEC.
the question is how can tort creditor plaintiffs reach the assets
of the parent company BMS who is the sole shareholder of
MEC?

good arguments that PCV should be allowed:
- BMS negotiated the purchase of 2 corps in MEC's name.
- MEC went for long periods of time without board meetings.
   in fact, 2 of the 3 MEC directors were BMS officers.
- BMS made MEC's financial decisions.

BMS' help for MEC cause BMS problems:
- affiliated corps distrib. MEC implants without a charging fee.
   (lack of corp formality)
- BMS helped MEC conduct market studies and product tests.
- BMS house counsel and PR staff worked for MEC
- BMS bought insurance for MEC

BMS went too far and so there's lack of separation and lack of formality.
the plaintiffs could have established that MEC was BMS alter ego.

this case is also different from sea-land because the court says that
plaintiffs in this kind of case do not need ot show fraud -- these are
tort victims who want to pierce the corp veil to reach the parent company
and the court says taht fraud is not required because htey are tort creditors.
what tort creditors care about is capitalization. the fact MEC manufactured
breast implants and was under cap'd when implants can malfunction, that in
and of itself is unjust -- not fair to deal in a risky business and not be
adequately capitalized.

BMS was doing everything it could to ensure MEC could be financially
healthy and successful. courts and commentators don't follow this case because
many feel that BMS didn't do anything wrong here -- didn't commit fraud and
the fact that BMS didn't get dividends from MEC and worked for free established
that it was not acting unjustly.

however, these creditors decided to get implants. though they were harmed, they
dealt with parties who made decisions of what to implants to get/give.

NYS requires showing of fraud in tort and contract creditor cases.

so long as you observe corp formalities, you get to enjoy the benefits of being
inc'd.

see p. 208 for factors that are regular for parent subsidiary relationship that
encourages PCV.
the sub operates with grossly inadequate capital -- that looks bad
parent uses sub property as its own
parent doesn't observe basic corp formalities

sub is a separate entity and the parent shouldn't be paying the expenses,
using the subs property, comingling, maintaining the sub's records and meetings,
etc.

see p. 210 q. 4: if you had been BMS counsel, what advice would have given
if asked to avoid MEC deaths liability? bear in mind the imporance for BMS to
exercise control over MEC in a practical matter.

pettifogging -- looking at just minute details

run MEC in a way that established and observes its separateness and identity.
see the notes above. n.b -- clients will push back on that, but it's up to the att
to not back down

proRo: problem

You are a public defender who is vehemently opposed to capital punishment.  The court has appointed you to represent Ted Kaczynski, who has been charged with mailing package bombs to university professors over a period of nearly 20 years.  The bombs killed three people and injured many others.  K's alleged motive was that by killing his victims, he was fighting the spread of technological culture.  The prosecutor is seeking the death penalty.

 

K had once been a professor of mathematics at MIT.  In the early 1970s he became a recluse, moving to a cabin in Montana.  He was captured after a nationwide manhunt that lasted for several years.  And he was captured only because his brother turned him in after recognizing his writing style in the manifesto that K sent to the newspapers.  The FBI searched his cabin and turned up substantial physical evidence linking him to the bombings.

 

You have interviewed K a number of times; he is highly intelligent, well educated (with a Ph.D. from a leading institution), and very articulate.  He also seems troubled.  He is deeply committed to his belief that human society is being destroyed by the spread of technology.  You are not a psychiatrist, but you suspect that medical experts might conclude that he suffers from schizophrenia.

 

After adequate research, you explain to K that there are only two viable defense options. 

(1) There are arguably some flaws in the procedure through which the FBI got authorization to search his cabin.  You might be able to win on a suppression motion.  But the chance that the judge would suppress evidence in a case like this is extremely small.

(2) A more promising strategy would be to assert a defense based on mental disability.  But K dreads being labeled mentally ill, so you propose a very limited mental disability defense -- arguing that K had sufficient mental capacity to be responsible for his crimes, but that he was sufficiently impaired that he shouldn't be convicted of 1st degree murder.  So he would not be killed by the state.

 

You consult with a psychiatrist before presenting these options to K, but the psychiatrist said he would need to interview K for several days and administer several tests -- all of which would require K's consent and cooperation -- in order to form an opinion.

 

So you recommend to K that he submit to the psych exam.  But K reacts angrily: he favors the suppression angle, and thinks that the merits of suppression are strong.  K also says that if the evidence from the search was not suppressed, he wants to defend his bombings as justified (not excused) to prevent the technological threat.  He wants to try to persuade the jury that he was trying to save humanity.  He is bitterly opposed to psychiatry in principle as part of the same technological evils that he perceived himself to be fighting against.

 

If you could prove that K was suffering from paranoid schizophrenia when he committed his crimes, you could probably get him a life sentence; barring the unlikely suppression, that appears to be the only way you could save his life.  But K steadfastly refuses to submit to the exam.

 

Because the government is looking for the death penalty, the upcoming jury trial will have two phases.  In phase 1, the jury will determine whether K is innocent or guilty and, if guilty, whether he committed first or second degree murder.  Psychiatric evidence showing that he suffers from schizophrenia could be used in the first phase to show that K was guilty only of second degree murder.  If K is found guilty of first degree murder, psychiatric testimony could be used in the second phase to try to show "mitigating circumstances" warranting a life rather than a death sentence.

 

Here are your options:

 

1.  Allow K to try to persuade a jury that his bombings were justified to protect society from greater disasters.  This is what K wants to do, but it has virtually no chance of succeeding and will probably lead to a death sentence.

 

2.  Over K's objection, ask the judge to order a psychiatric exam.  Here, you would need to try to persuade the judge that K may be a schizophrenic, and that you, rather than he, should be making decisions about what defenses to raise.  This strategy is also unlikely to work.  The judge may refuse to order the test over K's objections.  Also, K might fire you and withdraw your request.

 

3.  A compromise.  Try to persuade K that he should submit to a psych. exam, but explain the purpose of the exam this way:

A.  Tell him that if evaluation shows he is mentally unimpaired, the results can be used to show that his views are not the crazed ramblings of a crazy man.

B.  Tell him (falsely) that if the evaluation shows that he is mentally impaired, you will not use the results during the "guilt" phase of the trial, but only to argue against the death penalty during the penalty phase.  K might agree to this plan because he is convinced that he will be acquitted and that there will never be a penalty phase.

 

If K allows the exam and it shows that he is mentally impaired, you actually intend to use the findings to persuade the judge to let you make the strategic decisions in the case.  Then you'll present the psychiatric evidence during the first phase of the trial.  That seems to be the only way that has a chance at saving his life.

 

In thinking about this problem, consider Rules 1.2, 1.4, and 1.14.

proRo class 5

see rule 1.2(a)

client decides if he wants to
requests to opposing counsel, and if request needs to be made to court,
client is rarely consulted in that kind of situation.
but in many situations, where it's less important than deciding to file
or continue, and instead the rule and comment give very little
guidance about which decisions are exclusively reserved for clients.

what issues are specifically off-limits for attorneys alone.
in civil cases, the client must decide whether or not to settle.
the client can delegate that authority, such as what amount to settle for,
but failing to transmit an offer of settlement to your client
(moors v. lowry for ex, where att was liable for $1M to client)
has repercussions.

criminal cases - the client must decide whether to plead, whether to
testify and whether to waive trial.

why doesn't the rule give more guidance?

this is a context sensitive matter that depends on many factors, such
as the type of lawyer you are...

ex. p 73 "i don't bargain"
why can't the lawyer find someone else for the client?
with an immediate decision that must be made, you can't bring in
new counsel in such a short period of time and prepare them in a way
such that they could really provide an adequate replacement.
events can transpire which can change a situation, and as things change
the lawyer must change as well, otherwise he's not representing the
client adequately.

you will begin to recognize as we move through materials that the
rules overlay. from one situation to another, there will be multiple
rules that weave together.

rule 1. 4 - duty of communication.
you must inform and consult client, keep the client informed about
his case, and comply with requests for information, and to consult
the client about any limitation on the lawyer's conduct and limits
imposed by the other rules.

notice that though there are explicit rules of honesty to the court,
to other parties (4.1), there's no explicit duty to not lie to your client...
probably most people assume that people will be honest with their
clients because of fiduciary duty

rule 8.4 (c) -- all misconduct on part of a lawyer should draw you back to this

see comment 2 to rule 1.4.
if these rules require prompt consultation with the client?

jones v. barnes.
issue: is it a 5th or 6th amendment violation for the lawyer to not raise every
issue on appeal that the client wants to raise?
the court says no.
is it a professional violation?
the court says no, the professional responsibility of the attorney even is such
that he should use his skills to protect the client.

why should a case be protected if there's a number of non-frivolous mistakes
made in a case? why don't we require all attornies to provide clear reasons of
why they do and don't make certain decisions?
one answer is because of the work and paper involved.

the dissent's argument: the lawyer is the client's representative voice,
and is responsible for assisting the client and preserving the autonomy and
dignity of the client.

what's the difference between civil and criminal applications in this case?

as an ethical matter, all that jones decides is that the decisions a lawyer makes
for the client is not a constitutional violation. but it doesnt' tell us anything about
the possibility of ethics violation.

rule 1.16 - withdrawal
rule 1.16(a) deals with situations where the lawyer is required to withdraw:
- att is phys/mental impaired
- att is fired (and cli has pretty much unlimited right)
rule 1.16(b) deals with permissive withdrawal, which is very broad.
rule 1.16(c) deals with what you must do after withdrawal, such as return
documents, refund fees,
rule doesn't give specific timelines for when things must be done but instead
just makes it a "reasonable" time

rule 4.2 - no contact rule
see p. 90-92
if cli A contacts other lawyer about possibility of changing lawyers, that's OK.
if an att doesnt' know whether a cli is represented, the att may make contact,
     but the att has to end all conversation as soon as s/he knows the cli is represented:
     actual knowledge
the rule applies to atts making contact with cli, not to 3d parties making contact
     to cli (so long as 3d party isn't agent of the att)
the rule only prohibits communication in regards to the matter itself,
     so att can talk to another cli about other matters

neisig v. team I
former employees are fair game so long as you're trying to compel him to
disclose something that's covered by rule 1.6.

next class:
hammad, the problem on 4.3 and interviewing suspects without counsel