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Legal     1 - Duke Energy Employee Advocate

Legal - Page 11

"Boards of directors and management are now on notice that this is a new day."
- Chief White House Economic Adviser Lawrence B. Lindsey

Public Citizen Defends Free Speech

Public Citizen – Press Release - July 11, 2002

WASHINGTON, D.C. - A Web site created by Birmingham consumer Thomas Ballock to air his frustrations with a local auto dealer not only is permissible under trademark law but is speech that should be protected by the First Amendment, Public Citizen concluded in a brief filed July 1 with the United States District Court for the Northern District of Alabama.

In April 2002, the auto dealer, Crown Pontiac-Nissan of Hoover, Alabama, sought and received a preliminary injunction to prevent Ballock from posting criticism about Crown on the Internet. Ballock did not have an attorney representing him at the time. The injunction prohibited Ballock from using Crown's name in the domain name, meta tags or anywhere in the text of any Internet site. Ballock then retained the Public Citizen Litigation Group to represent him.

Public Citizen has filed a motion to dissolve that injunction on the grounds that Ballock's use of Crown's name is permissible under federal trademark law and constitutes the type of consumer commentary that has long been protected by the First Amendment. Amanda Frost, an attorney with Public Citizen, will be in Birmingham July 12 for a hearing on the case.

In its response to Ballock's motion to dissolve the injunction, Crown has retreated from the arguments on which the court's injunction relied. Crown's original complaint was that Ballock's Web site - - infringed on its trademark, an untenable argument because it relied on a section of law that requires a trademark to be registered, and Crown had never registered its name. Crown now concedes that Ballock had a right to use Crown's name in the text of the site, but maintains he could not in the meta tags and domain name. The court injunction, barring all three uses, still holds.

"Crown has realized that Ballock had a right to criticize it by name in the text, and now it's backpedaling," Frost said. "Crown is simply doing whatever it can to silence criticisms on the Internet. Ballock should be able to use Crown's name in the domain name and meta tags, too."

Crown now claims trademark infringement based on a law that protects non-registered trademarks. However, the law does not apply to the noncommercial use of a mark. Ballock's site was noncommercial; he built it to educate consumers about Crown and the hazards of mandatory arbitration clauses that many Birmingham auto dealerships require customers to sign, and he did not sell any goods or services on the site.

Furthermore, the First Amendment protects Ballock's use of Crown's name in the text, domain name and meta tags of his Web site, Public Citizen's reply argued. The domain name is similar to the title of a creative work in that it uses Crown's name to draw attention to the content of the site. The site in no way attempted to confuse users or mislead them to believe that it was Crown's official site. In fact, Ballock's Web site included many prominent disclaimers explaining that the site was not sponsored by or affiliated with Crown. Because Ballock used Crown's name merely to identify it as the subject of his criticism, his Web site is protected by the First Amendment.

Crown also erroneously claims that Ballock violated the Anti-cybersquatting Consumer Protection Act. The anti-cybersquatting law was designed to prevent private citizens from registering domain names of prominent businesses and then offering to sell them to those businesses. Ballock made no attempt to sell the domain name to Crown or to profit in any way from the Web site.

"Crown's arguments just don't hold water," Frost said. "The First Amendment protects Ballock's speech from these types of attempts to silence criticism."

Public Citizen became involved in the case because it has a history of defending free speech on the Internet. The hearing will be held 9:30 a.m., July 12, at 1729 5th Ave. North in Birmingham.

Court Cites First Amendment Rights of Critics

Employer Held Liable for Sexual Demands

New York Law Journal - by Mark Hamblett – June 30, 2002

(6/28/02) - An employer is automatically liable where a supervisor bases decisions affecting a subordinate's employment on the subordinate's submission to sexual demands, the 2nd U.S. Circuit Court of Appeals has ruled.

Reaffirming the state of the law in the 2nd Circuit in the wake of two U.S. Supreme Court cases on Title VII sexual harassment, the court said Metropolitan Life Insurance Co. should be held liable where a jury finds a company employee, fearing she would lose her job, submitted to a supervisor's quid pro quo demands.

The 2nd Circuit, in an opinion written by Senior Judge Wilfred Feinberg, overturned a magistrate judge's decision finding no liability for MetLife, and the 2nd Circuit remanded the case, Jin v. Metropolitan Life Insurance Co., 01-7013.

Min Jin filed suit claiming that her supervisor, Gregory Morabito, subjected her to crude remarks and unwanted sexual advances, all the while threatening to fire her if she did not submit. She also alleged that Morabito punished her for reporting the harassment by denying her automatic paycheck deposit privileges and withholding her paychecks if she continued to refused to attend the Thursday evening meetings where she was often molested.

Magistrate Judge Douglas F. Eaton overruled Jin's objections to proposed jury instructions. Jin had argued that the jury should be able to consider, as a "tangible employment action" the practical result of Morabito's ongoing harassment: that she was afraid to come to work and changed her schedule to avoid being alone with him.

The jury went on to find that Jin was subjected to sexual harassment and that her work environment was hostile or abusive. But the jury also found that Morabito's actions did not result in a "tangible adverse action impacting on the terms and conditions of her employment."

It also found that MetLife exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and that Jin failed to take advantage of preventative or corrective opportunities provided by the company.

Because MetLife had prevailed on those last two questions, which constituted an affirmative defense, Eaton entered a "no liability" judgment for the company.

On the appeal, Feinberg turned to two Supreme Court cases that addressed employer liability for the sexually harassing conduct of a supervisory employee: Burlington Industries Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. City of Boca Raton, 524 U.S. 775 (1998).

In Ellerth, he said, the Supreme Court "tackled the question of an employer's liability under the aided in the agency relation standard when a supervisor's harassment does not culminate in a tangible employment action."

Where no tangible employment action is taken, the Supreme Court said, "a defending employer may raise an affirmative defense to liability or damages" by showing the company exercised reasonable care to prevent and correct the offending behavior promptly, and that the employee, as the jury found in Jin's case, failed to take advantage of corrective opportunities.

That affirmative defense is not available, Feinberg said, where the harassment culminates in a tangible employment action.

But Feinberg said the 2nd Circuit agreed with Jin that "the district court defined tangible employment action too narrowly."

"Requiring an employee to engage in unwanted sex acts is one of the most pernicious and oppressive forms of sexual harassment that can occur in the workplace," he said. "It is hardly surprising that this type of conduct -- a classic quid pro quo for which courts have traditionally held employers liable -- fits squarely within the definition of 'tangible employment action' that the Supreme Court announced in Faragher and Ellerth."


Predating the Faragher and Ellerth decisions was the 2nd Circuit's ruling in Karibian v. Columbia University, 14 F.3d 773 (1993). There the court was confronted with a lower court's decision to grant summary judgment to an employer where a supervisor changed an employee's conditions at work and implicitly threatened to fire her if she did not submit to a sexual relationship.

The 2nd Circuit reversed, stating that an employer is strictly liable for quid pro quo sexual harassment "because the quid pro quo harasser, by definition, wields the employer's authority to alter the terms and conditions of employment."

The Karibian court, Judge Feinberg said Thursday, "then held the district court erred when it required the plaintiff to present evidence of actual, rather than threatened, economic loss."

MetLife, he said, argued that Karibian is no longer good law "because of the new employer liability framework announced in Faragher and Ellerth, which focuses on agency principles and the existence of a 'tangible employment action,' is at odds with Karibian's reliance on the 'quid pro quo' terminology to impose strict liability on the employer."

"We disagree," he said. "Despite the differences in terminology, Karibian's essential holding that an employer is liable in a submission case is sound even under the Supreme Court's new liability analysis."

Metlife, he said, "points to Ellerth for the proposition that an unfulfilled threat is not a tangible employment action."


"The key difference in this case is the claim that Jin was required to submit to sexual acts and that Morabito used that submission as a basis for granting her a job benefit (her continued employment)," Feinberg said. "This is substantially different from the type of unfulfilled threat alleged in Ellerth, where no job benefit was granted or denied based on the plaintiff's acceptance or rejection of her supervisor's advances."

In any event, he said, "[b]ecause Faragher and Ellerth support our earlier holding in Karibian that economic harm is not required to hold an employer liable in a submission case, we see no persuasive reason to abandon our prior judgment on that issue."

MetLife argued that a statement in Ellerth required a "tangible employment decision" to be an official act of the company.

"But, assuming Jin's allegations to be true," Feinberg said, "Morabito's use of his supervisory authority to require Jin's submission was, for Title VII purposes, the act of the employer."

"Thus, under Faragher and Ellerth, Karibian's rule that an employer is automatically liable when a supervisor bases decisions affecting the terms and conditions of a subordinate's employment on the submission to sexual demands remains good law," he said. "Because Jin presented evidence that Morabito, as her supervisor, explicitly threatened to terminate her if she did not submit to sexual acts and then allowed her to keep her job after she submitted, the jury should have been instructed to consider the conditioning of her continued employment on her submission as a possible tangible employment action."

The court, he said, was reaffirming "the view stated in Karibian that Title VII should not be read to 'punish the victims of sexual harassment who surrender to unwelcome sexual encounters.'"

"It would be anomalous to find an employer liable when an employee was able to stand up to a supervisor's sexual demands, and therefore provoke an action such as termination, but to find no liability when the employee was unable to refuse and was actually subjected to sexual abuse," he said.

Senior Judge James L. Oakes and Judge Fred I. Parker joined in the 2nd Circuit opinion.

Peter G. Eikenberry represented Jin. Steven E. Obus and Allen I. Fagin of Proskauer Rose represented MetLife.

The National Women's Law Center and the National Employment Lawyers Association/New York filed amicus briefs in support of Jin. The Chamber of Commerce of the United States filed an amicus brief in support of MetLife.

Corporate Crooks

CBS Market Watch – by M. France, Dan Carney – June 26, 2002

(July 1, 2002 issue) - The day of reckoning finally seems to be at hand. Emboldened by the criminal conviction of Arthur Andersen LLP for obstruction of justice on June 15, government lawyers are steaming ahead with the Enron Corp. investigation--and are probing malfeasance at an ever expanding list of companies that now includes Tyco International (TYC ), Adelphia Communications (ADELA ), Computer Associates (CA ), Qwest Communications (Q ), and Global Crossing.

As more scandals come to light, the White House is growing increasingly enthusiastic about throwing corporate crooks in jail. Although the Bush Administration is skeptical of new business regulation, it has no qualms about vigorously enforcing existing rules--and is, in fact, on a campaign to convince the public that energetic prosecution is a better way of coping with America's white-collar crime wave than cumbersome legislation. "Cops who maybe were asleep at the switch when a lot of the abuses were taking place are now aggressively patrolling," says Chief White House Economic Adviser Lawrence B. Lindsey. "Boards of directors and management are now on notice that this is a new day."

So does this mean that the rogue's gallery of irresponsible execs who have populated the business pages over the past several months will finally go to jail? Will the little guy finally be avenged? Don't count on it. While there will certainly be more prosecutions--and some of them will bear fruit--criminal enforcement is a risky game. The laws regulating companies are ambiguous, juries have a hard time grasping abstract financial concepts, and well-counseled executives have plenty of tricks for distancing themselves from responsibility.

The Andersen case underscores the difficulties ahead for the government. The feds almost lost Andersen--even though they had an inside whistle-blower, a simple story line, and a hometown jury packed with people who had seen the devastation Enron caused close-up. "After Arthur Andersen, nobody is going to talk about slam-dunk cases anymore," says Columbia University Law School securities law professor John C. Coffee.

What's more, many of the abuses that have enraged the public are entirely legal. Companies can file misleading accounting statements that are in complete compliance with generally accepted accounting principles (GAAP). They can boost their income, for example, simply by assuming that their pension plan investments will earn a higher rate of return in the future. Executives are also allowed to enjoy outrageous incomes and baronial perks without breaking any laws at all--so long as the board approves. And because so many of the laws governing corporate conduct are weak, there's no way criminal or civil prosecution can ever be a complete substitute for regulatory reform--no matter how aggressive the White House promises to be. "Enforcement works for the tiny percentage of people who engage in truly egregious behavior," says Henry T.C. Hu, a corporate and securities law professor at the University of Texas. "But for the far more numerous instances of lesser behavior, it is hard to reach them through enforcement."

Of course, the fact that criminal law applies only to extreme cases is probably little comfort to those under scrutiny. In the wake of the Andersen victory, government lawyers are turning their attention to the biggest target of all: Enron. Using their verdict against the energy giant's auditor as leverage, they're hoping to win the cooperation of insiders and build a case against top executives Kenneth L. Lay, Jeffrey K. Skilling, and Andrew S. Fastow. Enron and the individual officers all deny they've broken any laws.

Many of the scandals that have emerged since Enron are also on the government's radar screen. Criminal charges have already been leveled against former Tyco CEO L. Dennis Kozlowski for tax fraud and former ImClone Systems Inc. CEO Samuel D. Waksal for insider trading. Both claim they are innocent. Meanwhile, several other companies and their executives, including Global Crossing and Adelphia, are under investigation.

Sensing the public's anger, law enforcers across the country are taking a new interest in corporate crime. While most federal securities fraud suits have historically been filed by U.S. Attorneys in Manhattan and Brooklyn, cases are currently pending in an unprecedented 17 offices, ranging from San Francisco to Miami to Alexandria, Va. State and local prosecutors, such as New York State Attorney General Eliot Spitzer and New York City District Attorney Robert Morgenthau, are also getting in on the act. "In the aftermath of Enron, it is becoming easier to interest criminal prosecutors in complex securities cases," says Stephen M. Cutler, director of the Securities & Exchange Commission's Enforcement Div., which lacks the ability to file its own criminal prosecutions. "Their reluctance in the past came from a fear that these cases wouldn't play wellin front of juries."

As it turns out, that fear is not entirely unfounded. Indeed, the current flurry of activity may not necessarily yield a string of convictions. In a country with a long-established tradition of criminal rights, prosecutors always face high hurdles. They must, for starters, prove their cases beyond a reasonable doubt. In business cases, they also have to educate jurors about sophisticated financial concepts. That's no small job. Andersen should have been a prosecutor's dream: a clear-cut case of obstruction of justice where no one disputed that reams of documents had been destroyed. But the prosecution nearly unraveled under the skilled counteroffensive of the defense. And just getting jurors to understand the basics can be a chore. According to one news report, an Andersen juror initially believed that the case involved the National Aeronautics & Space Administration.

Imagine how much harder it would be to teach jurors about special-purpose entities or complex derivatives, as the prosecutors in any potential case against Enron would probably have to do. That's why government lawyers will try to steer clear of arcane minutiae, stick to clear themes, and try to pose their arguments as simple human morality tales. "What you really need to win any of these cases is an insider who can recount the conversations people were having and explain what people were thinking," says New York litigator Richard A. Martin, a former Assistant U.S. Attorney.

Finding such a whistle-blower is tough. Enough evidence has to be marshaled to persuade an insider to cooperate and then turn on his or her associates. And that's not the biggest challenge. To win a criminal case, prosecutors have to prove that an exec willfully broke the law--that he or she knew, for example, that the 10-K was fraudulent. If the executive has any legitimate reason for believing that the document was accurate, no matter how implausible, criminal charges will fail. In contrast, the plaintiffs in a civil lawsuit would have to prove only that the exec was reckless about the legitimacy of the 10-K--that he or she should have been aware it was misleading.

Big companies have lots of lawyers, and these lawyers specialize in creating exactly the type of paper trail that will exonerate top execs. Aggressive actions are routinely fortified with sanitizing formalities: file memos that justify iffy decisions, board approvals, and blessings from outside lawyers and accountants. Even if they helped nurture a corrupt corporate culture, CEOs and CFOs can often plausibly claim that they knew nothing about wrongdoing three or four levels down the hierarchy. All of these factors help to create the type of reasonable doubt that kills criminal prosecutions. In the Enron case, Lay, Skilling, and Fastow are all likely to argue that the company's disclosures were approved by Andersen. "They're going to say, `Look, I'm not an accountant. I told them what I wanted to do, and they said it was O.K.,"' says Houston criminal and civil defense attorney David Berg.

The difficulty of proving what's going on inside an executive's head makes it hard to prosecute cases where the law is unclear. The more ambiguity there is, the easier it is for execs to plead ignorance. As a result, government lawyers may have a tough time pinning blame on corporations and individuals in cases focusing on new types of derivatives, complex tax dodges, and exotic partnerships and joint ventures. That's a broad category that could include many recent accounting controversies, including the off-balance-sheet partnerships used by companies such as Enron and PNC Financial Services Group Inc.

Still, despite the obstacles, public anger is on the rise, so prosecutors are likely to keep the heat on. Jail is the best way ever invented to grab executives' attention. A busy CEO can buy insurance to cover legal damages. But there's no way to hire someone to serve jail time. And prison can't be counted as a business expense. Had government lawyers been more aggressive about bringing criminal cases a decade ago, says Joel Seligman, a securities expert at Washington University School of Law, many of the recent abuses might never have occurred. "Fraud is not a steady-state phenomenon," says Seligman. "It's binge and purge. What has become absolutely clear is that the late '90s were a binge period--in part, because the sensitivity to prosecution was reduced." That sensitivity is increasing. What's not clear, though, is how effective the coming purge will be.

Mike McNamee and Amy Borrus also contributed to this article.

Padding the Books Can Have a Cost

New York Times – by Kenneth N. Gilpin – June 22, 2002

(6/21/02) - Sending a loud message to corporate executives, three former executives and a current employee at the Rite Aid Corporation were indicted today in what the Securities and Exchange Commission and the United States attorney's office described as a far-reaching securities and accounting fraud.

The charges, which were filed separately by the S.E.C. and the United States attorney's office for the Middle District Pennsylvania, culminate a two-and-a-half-year investigation that began after revelations of accounting irregularities at Rite Aid sent the stock price of the nation's third-largest drugstore chain into a tailspin.

"This is not an overnight event," said Wayne M. Carlin, regional director of the S.E.C.'s Northeast Regional Office. "These have been coordinated investigations by the F.B.I., the S.E.C. and the U.S. attorney's office in Harrisburg, Pa."

Martin L. Grass, Rite Aid's former chairman and chief executive; Franklin Brown, the former chief counsel and vice chairman, and Franklyn Bergonzi, the former chief financial officer, were among those charged. So, too, was Eric S. Sorkin, who until this morning had been the company's executive vice president for pharmacy services.

Karen Rugen, a Rite Aid spokeswoman, said that after the indictments were filed, Mr. Sorkin was suspended until further notice.

Mr. Grass and Mr. Brown face the most serious charges. They include conspiracy to defraud, making false statements to the S.E.C., tampering with witnesses and obstructing various investigations.

Mr. Bergonzi is charged with conspiracy to defraud and making false statements to the S.E.C. Mr. Sorkin is charged with conspiracy to obstruct justice and making false statements to a grand jury.

Mr. Grass resigned from the Camp Hill, Pa.-based company in October 1999. Mr. Bergonzi stepped down as chief financial officer in June 1999 and left the company the following October. Mr. Brown retired from Rite Aid on March 1, 2000.

"It is not a common event for the chief executive, the chief financial officer and the vice chairman of a public company to be indicted in an accounting fraud," Mr. Carlin said. " But when you do what these characters did, that is the consequence they face."

In its complaint, the S.E.C. alleges that Rite Aid overstated its income in every quarter from May 1997 to May 1999 by huge amounts.

When the wrongdoing was ultimately discovered, Rite Aid was forced to restate its pre-tax income by $2.3 billion and net income by $1.6 billion. It was the largest restatement of corporate earnings in American history.

In November 2000, Rite Aid agreed to pay $45 million in cash plus about $150 million in stock to its shareholders to settle a class-action lawsuit accusing the company of releasing misleading information that artificially inflated its stock price. A federal judge approved the deal last year.

At the beginning of 1999, Rite Aid's stock was trading for more than $50 a share. Today, the company's shares closed at $2.69, up 11 cents.

Securities lawyers said importance of the charges extends well beyond the misdeeds that the government contends took place at Rite Aid.

"Criminalizing earnings management plus general deception in a case not involving insider trading will scare the daylights out of officers at Adelphia Communications, Tyco International and, of course, at Enron," said John Coffee, a professor of securities law at Columbia University's School of Law.

"This could be a straw in the wind," Mr. Coffee said. "U.S. attorneys see their constituents want greater use of criminal sanctions in white-collar cases, particularly those involving securities fraud and financial manipulation."

KPMG, Rite Aid's accounting firm during the period the earnings were said to have been manipulated, was not charged. The company's new management switched auditors in 2000 to Deloitte & Touche.

"The three men indicted for fraud are former executives who have not had any relationship with this company for at least the past two years," Ms. Rugen, the Rite Aid spokeswoman, said.

"The new management team that came to Rite Aid in December 1999 has changed the way the company does business, including strengthening our financial controls," she said. "We are a very different company and a much stronger company than we were two years ago."

Separately, Rite Aid announced today that it had entered into a cease-and-desist order with the S.E.C. that completed an investigation into the company's financial reporting and accounting practices under its former management.

Rite Aid, which will pay no fine under the settlement, said the accounting issues were addressed in the restatements of the company's financial statements in 2000.

Johnny Parker Instills Fear in Corporations

Forbes – by Michael Freedman – June 22, 2002

How a small-town South Carolina lawyer named
Johnny Parker instills fear in corporations everywhere.

(June 10, 2002 issue) - Folks in Hampton County, S.C. (pop. 21,000) say trial lawyer Johnny E. Parker is about the nicest guy you would want to know. The son of a music teacher and a motel owner in Hampton, he knows just about everyone. He and his wife, Peggy, volunteer a lot and recently donated 10 acres to the town of Hampton to build a nature trail. "Johnny's a fine person," says Don C. DeLoach, mayor of Varnville, a Hampton County town of 2,000 people.

That reputation helps Parker attract clients--and he's got lots of them. Parker, 55, has deftly exploited a state law that has turned him and his small, poor county into a litigation machine. The law permits personal injury plaintiffs who are South Carolina residents to file a suit in any county in which an out-of-state company owns property and conducts business--regardless of where an accident took place. Example: Last August a woman rolled her GMC Safari van and suffered head injuries. She brought on Parker and filed a suit against Michigan-based General Motors and Ohio-based Cooper Tire & Rubber in Hampton County, 90 miles from where she lived and 350 miles from the Tennessee town where the accident took place. The legal nexus: Products made by GM and Cooper Tire are sold in Hampton.

Most states don't allow this kind of forum shopping; plaintiffs must file cases in the county where an incident occurred or where the defendant has his or its principal place of business. But Hampton is not unique; a handful of other counties across the country have turned into lawsuit factories that export their justice across the country (see chart). The victims are faceless, faraway corporations.

Last year 610 civil suits were filed in Hampton, more than twice the number filed in similarly sized South Carolina counties. Much of this is due to Parker, a well-regarded lawyer who gets lots of referrals. Of the 100 jury cases currently on the Hampton County roster, 71 were filed by his firm. At least 31 involve distant defendants like Pharmacia subsidiary Monsanto, Ford Motor and Sears, Roebuck.

One frequent defendant: Richmond, Va.-based CSX, a rail company whose tracks run through Hampton. The trains sometimes make stops there to load or unload freight--a transaction of business, as the law has been interpreted. As a result, in the last ten years Parker's firm has filed four dozen personal injury cases against CSX and since 1995 CSX has paid $18.8 million in verdicts and settlements. There are now 17 cases pending against CSX in Hampton (out of 48 statewide), but only 2 involve incidents that occurred there.

It's just plain folks in Hampton County. State Circuit Court Judge Rodney A. Peeples smokes in the courtroom and calls lawyers by their first names. After hearing arguments in May over a $13 million dispute, Peeples handed out fresh-picked strawberries to the lawyers and then joined them across the street for a seafood lunch. Afterward the judge shook Parker's hand and blew a kiss to defense lawyer Celeste Tiller Jones.

In Parker plaintiffs are getting a lawyer with close ties to the legal establishment. His firm, Peters, Murdaugh, Parker, Eltzroth & Detrick, was founded in 1910 by Randolph Murdaugh, who represented railroads and other businesses in his private practice while serving as state prosecutor. Today, a portrait of Murdaugh's son, "Buster," who also had dual practices, hangs on the wall behind the judge's bench in the Hampton County Courthouse.

Parker, a soft-spoken man with close-cropped hair, started working at the firm in 1971 and now runs it, overseeing ten lawyers in three towns--that's nearly half the lawyers in the whole county--including two members of the Murdaugh family. After the state legislature elected Perry M. Buckner to a state judgeship in 2000, Parker's firm bought Buckner's firm, building and all, for an undisclosed amount. In January Parker hired Gerald C. Smoak Sr., who had served for ten years (until last year) as a state judge and had presided over several of Parker's cases.

Does any of this give Parker an edge in the courtroom? Perish the thought. As Parker says, defense lawyers can always request a change in venue or ask that the judge recuse himself. "We don't live in a world where people don't have relationships," he says.

But Parker's strong roots to the community, plus jurors' propensity there for giving out handsome awards, make outsider defendants skittish about going to trial. Parker was one of the plaintiff lawyers involved in a mid-1990s medical malpractice case in Judge Smoak's courtroom, in which a jury awarded $14 million--13 times the national average--for an incident 70 miles away on Hilton Head Island. James D. Rhodes, a CSX claims investigator, recalls one 1999 case in which a Hampton jury awarded $1 million to a CSX employee who injured his back in Charleston. Rhodes says that's probably three times the amount the plaintiff would have received in a different county. "I would say it's an uphill battle for most defense lawyers there," says James E. Lady, a Charleston lawyer who has represented CSX and other companies there.

That's why settling is usually the best solution. A few years ago a train employee in Lawrenceville, Ga. filed a personal injury suit against CSX and SMI Steel asserting that a wooden beam fell out of a rail car and hit him in the head. CSX settled quickly for $400,000. SMI did likewise. "Our attorneys said, 'Look, you're either going to settle this, or you're going to get a judgment against you that's a whole lot bigger,'" recalls Avery Hilton, president of SMI Steel-South Carolina.

SMI has since joined forces with CSX, Duke Power, Alcoa, Chevron Phillips and others to lobby for a change in the law that would end forum shopping. But their most recent attempt at legislation, in May, was thwarted after last-minute lobbying by Parker and Smoak.

This might be just an amusing tale of small-town justice, except the losers are the residents of Hampton County. This is the tenth poorest of South Carolina's 46 counties, with a median household income of $26,300 (the U.S. average: $39,000). Unemployment in Hampton is 7.8%, compared with 6% statewide. The specter of litigation has scared off employers. Two years ago Wal-Mart drew up plans to build a store in Hampton. A lawyer in Columbia warned Wal-Mart that siting a store there would put the entire South Carolina operation at risk for Parker's lawsuits. Wal-Mart never built.

Residents aren't happy about the economy, but they don't seem ready to blame Parker, who disputes the notion that companies avoid Hampton because of him and his lawsuits. "That is a propaganda tool," he says. He claims if anyone can find such a company he will promise not to sue it if it moves to Hampton--and represent the company free of charge.

And who can say Parker and his family don't give back to the community? Later this year the county will hold a referendum on a penny sales tax. Of the proceeds, $2 million would be used to renovate the lovely, but deteriorating, 124-year-old county courthouse. Parker's wife, a county council member, has volunteered to help oversee the $3 million project. The Parkers have agreed to chip in the extra $1 million required for the restoration.

Of course, that seems only fair. Parker is getting the most use out of it.

Bush Sued Over 9/11 Attacks

The Examiner, San Francisco – by David Kiefer – June 21, 2002

(6/11/02) - Stanley Hilton now figures his case is stronger because of a coalition of attorneys, victims' families and bipartisan legislators who gathered in Washington on Monday to condemn the government's lack of action in preventing the Sept. 11 attacks.

Hilton is the San Francisco attorney who filed a $7 billion lawsuit in U.S. District Court on June 3 against President Bush and other government officials for "allowing" the terrorist attacks to occur.

Among Hilton's allegations: Bush conspired to create the Sept. 11 attacks for his own political gain and has been using Osama bin Laden as a scapegoat.

Hilton said he has information that bin Laden died several years ago of kidney failure.

"I hope it will expose the fact that there are numbers of people in the government, including Bush and his top assistants, who wanted this to happen," Hilton said.

His class-action suit named 10 defendants, including Vice President Dick Cheney, National Security Advisor Condoleezza Rice, Secretary of Defense Donald Rumsfeld, and Transportation Secretary Norman Mineta. Hilton said he represents the families of 14 victims and that 400 plaintiffs are involved nationwide.

White House spokesman Ken Macias and Department of Justice public affairs officer Charles Miller each said their departments were unaware of the lawsuit.

Hilton, Sen. Bob Dole's former aide, has been publicly critical of conservatives in books he has written about Dole and the Clinton sex scandal. Hilton, who said he has sources within the FBI, CIA, the National Security Agency and Naval intelligence, demands Bush's impeachment and believes the truth will come out in trial.

Hilton claims the Bush administration ignored intelligence information, refused to round up suspected terrorists beforehand, and during the hijackings refused to disable pilot controls and switch to a ground-based remote system.

He claims the government benefited from installing a puppet Afghan government friendly to U.S. oil interests.

Hilton also says Bush used bin Laden's antagonist image to create a public frenzy, which allowed the Bush administration to tighten its political grip.

Arthur Andersen Bites the Dust

Employee Advocate – – June 17, 2002

The Chicago Tribune article below reports the conviction of Arthur Andersen for obstruction of justice. Andersen will cease auditing public companies as of August 31, 2002.

So much for the company being “too big to fail.” Enron executives, no doubt, thought that it was too big to fail.

When the Andersen scandal first broke, the executives smugly tried to explain it away. They seemed to feel that they were too important to be bothered with such matters. Bold statements were made that they would be exonerated. Cavalier statements were made that any business lost due to the sandal would be trivial. It is satisfying to witness arrogant jerks choke on their own words.

Employee intervention in corporate affairs can be a good thing, but the Andersen employees missed the boat. They did not intervene in the corporate misdeeds upfront, and demand that the company clean up its act. They were silent. They waited until the company was caught red-handed.

Then, it was too late then to do anything. Standing around on street corners with “I am Arthur Andersen” tee shirts on, was not going to change the course of federal justice. The employee’s point was that most of them were innocent of any wrongdoing. We do not contest that point. But still, it changes nothing. Employees will always pay the price for the blunders of their executives.

Other executives have proclaimed that they welcomed a vigorous investigation of the charges against them. All the while, these same executives were trying to quell the matter under-the-table. Executives have claimed to be exonerated from any wrongdoing, even as the investigations were just beginning. These executives are surely convinced that they are just too big to fail.

Arthur Andersen Convicted

Chicago Tribune – by E. Torriero, R. Manor – June 17, 2002

(6/16/02) - HOUSTON — In an inglorious end of its 89-year history as the country's preeminent accounting firm, Arthur Andersen yesterday was convicted of obstruction of justice for interfering with a federal investigation of Enron.

Andersen promptly announced that it would cease as of Aug. 31 auditing public companies — the core of its worldwide business. Despite a planned appeal, the firm acknowledged that the conviction "effectively ends" its accounting practice.

In a scandal that rocked Wall Street and cost investors billions of dollars, Enron collapsed last fall after admitting it hugely overstated profits. Andersen had approved Enron's figures. As regulators moved in to investigate, the accounting firm destroyed thousands of Enron-related records.

"Arthur Andersen was a lapdog, not a watchdog," prosecutor Andrew Weissmann said, referring to Andersen's botched audits of Enron and the cozy relationship between Andersen auditors and Enron executives.

In a surprise to defense attorneys, jurors said their decision to convict centered not on the shredding of trunks full of paperwork but largely on the changing of a few words by in-house Andersen attorney Nancy Temple on Andersen internal memos.

Jurors viewed those changes as obstructionist and an attempt to paint Andersen's Enron mistakes in a deceitful light. Temple also removed her name from another Enron-related memo.

Two Andersen partners showed no reaction when the guilty verdict was read by U.S. District Court Judge Melinda Harmon. Lead defense attorney Rusty Hardin, who argued Andersen's cause with passion and sometimes theatrics, bowed his head and pursed his lips. The jury had deliberated for 10 days before reaching a verdict.

"I feel for the many people of Arthur Andersen today," Hardin said later.

The firm will be sentenced in October and faces the prospect of a $500,000 fine. The greater penalties are the permanent damage inflicted on the firm's once-stellar reputation and the loss of its ability to audit publicly traded companies. Andersen, in fact, has been dissolving as the scandal has played out, with 18,000 employees and hundreds of clients abandoning the firm.

While no one will go to jail, Andersen plans an appeal that could take more than a year and run its course long after the firm disappears.

"We still don't think we committed a crime," said C.E. Andrews, Andersen's global managing partner. "This case has been about salvaging our good name, and we will continue to pursue that."

Andersen admitted that its audits of Enron were faulty, but the firm was not on trial for its auditing work. Andersen does face a welter of lawsuits stemming from the Enron collapse and continued federal scrutiny.

"We are not finished with Arthur Andersen," said Leslie Caldwell, the San Francisco-based federal prosecutor heading the government's Enron task force.

Jurors saw attorney Temple's actions in altering a memo as the trigger point for conviction.

In mid-October, Temple crossed out the word "misleading" in a memo from David Duncan, Andersen's lead Enron auditor and the government's star witness, referring to Enron's massive misstatement of earnings. In a final draft, she changed "misleading" to "aggressive and unique."

Defense attorneys saw the jurors' indictment of Temple as a wild-card search for a thread to find the firm guilty.

"I found it just mind-boggling," said Andersen attorney Charles Rothfeld, who was in the courtroom where jurors met with the media. "I take the jury's remarks as a complete vindication of Andersen's position."

But prosecutors maintain that they knew all along that Temple's changes were an act of evasion.

Wednesday, after a week of deliberations, jurors told judge Harmon they were deadlocked. The judge gave them the "Allen" charge, a formal instruction for jurors to try again for a verdict.

Jurors asked the judge Thursday if they could convict Andersen even though they could not agree on who directed the shredding of documents at Enron.

Harmon responded Friday by saying that they could, although she acknowledged the question never had been raised before.

Andersen, meanwhile, asked for a mistrial late Friday. Harmon denied the request, and jurors took less than 15 minutes yesterday to reach a verdict.

Prosecutors predict the verdict will make witnesses more willing to come forward to talk about alleged wrongdoings involving Enron.

"It sends a strong message: We are going to get to the bottom of the Enron debacle," prosecutor Sam Buell said.

Citizens File Plutonium Lawsuit

Carolina Channel – June 15, 2002

Action Seeks Compensation For Plutonium Storage

(5/29/02) - COLUMBIA, S.C. -- Some business leaders from Allendale and Barnwell counties have joined Gov. Jim Hodges in taking legal action over the federal government's plan to ship plutonium to the Savannah River Site.

Marguerite Willis, a lawyer for the group, said that papers filed in U.S. District Court in Columbia do not seek to stop plutonium shipments to SRS from Colorado.

She said that the group wants to make sure South Carolina citizens are compensated for storing the plutonium.

David Cannon, one of the businessmen, said that storing plutonium has been costly in Colorado and people in South Carolina shouldn't have to pay those expenses.

Lawyers said that the federal law they are suing under allows people in a class action lawsuit to collect up to $10,000 each.

The Energy Department wants the plutonium shipped to South Carolina to be reprocessed into fuel for commercial nuclear reactors.

Hodges has said that he worries the project might collapse and the material would be stuck in the state indefinitely.

Hodges said in a release that his aims are slightly different than those of the Allendale and Barnwell group.

He said that while his lawsuit seeks to prevent the material from entering the state without an agreement on when it will leave, the class-action suit focuses on what happens if the federal government stores plutonium in South Carolina.

"This new suit doesn't interfere with my goal; it's just another sign of the growing opposition to plutonium-dumping in South Carolina," Hodges said.

The Supreme Court on Work Harassment

The Recorder – by Alexei Oreskovic – June 14, 2002

Work Harassment Is 'Continuing Violation,' U.S. Supreme Court Says

(6/13/02) - Five months after appearing in front of the U.S. Supreme Court for the first time, plaintiffs' attorney Pamela Price was in high spirits Tuesday.

"We're ecstatic," said Price from her office in Oakland, Calif.

On Monday, the high court handed Price a partial victory in its decision in National Railroad Passenger Corp. v. Morgan, ruling that on-the-job harassment is part of a pattern of behavior. As a result, a jury can look at incidents that occurred outside of a statutory time period.

At the same time, the high court found the opposite is true for acts of discrimination and retaliation.

"The opinion is the very first time that the U.S. Supreme Court has taken on this issue," said Brian Ashe, an employment law partner at Chicago-based Seyfarth Shaw. "In this aspect of employment law -- which has been developing through the '90s -- it's a pretty important ruling."

Employment attorney Thomas Klein, a solo practitioner in Oakland, agrees. "This is going to come up all the time."

At issue in National is the so-called continuing violations doctrine, which allows a jury to look at all the evidence surrounding a prolonged case of harassment or discrimination, instead of evidence relating to a specific event.

Black employee Abner Morgan sued his employer for discrimination, retaliation and a hostile work environment. Many of the alleged incidents occurred outside of the 300-day window prescribed under Equal Employment Opportunity Commission rules.

In Monday's ruling the Court struck down the concept of continuing violations in discrimination and retaliation claims. As discrete acts, they are easily identifiable, single occurrences.

But the Court saw it differently for hostile environment claims. "Their very nature involves repeated conduct," wrote Justice Clarence Thomas, for the majority. "It occurs over a series of days or perhaps years and, in direct contrast to discrete acts, a single act of harassment may not be actionable on its own."

According to employment attorneys, this will make it much more difficult for businesses to defend themselves against hostile workplace suits.

"The employee will be able to write a book on the history of their bad time that the employer won't be able to refute," said Seyfarth Shaw's Ashe. "It's going to make discovery wide ranging and difficult."

Attorneys representing the National Railroad Passenger Corp. could not be reached for comment.

Meanwhile, said Price, the Court's decision to do away with continuing violations for discrimination and retaliation will make things hard on working people.

"Most people don't want to go out and file a charge with the EEOC," said Price, "because it puts you in opposition to your employer."

Asked For $3.2 Million, Awarded $8 Million

Employee Advocate – – May 25, 2002

According to the National Law Journal a lady asked for $3.2 million in a medical lawsuit. A Miami jury awarded her $8 million!

It seems that she tested positive in an early detection mammogram test. The doctors did not bother to tell her the results of the test. Now, the breast cancer has spread into her liver and bones.

The public is thoroughly disgusted with the managed health care system, and is letting them know it.

DOJ to Sue Florida Over Election

Associated Press – by Jesse J. Holland – May 23, 2002

DOJ Will File Voting Rights Suits From 2000 Presidential Election

The government will file three lawsuits against Florida counties alleging voting rights violations resulting from the bitterly disputed 2000 presidential election, a Justice Department official said Tuesday.

Two other lawsuits also will be filed, in Missouri and Tennessee, by the department's civil rights division, Assistant Attorney General Ralph Boyd told the Senate Judiciary Committee.

The lawsuits will allege different treatment of minority voters, improper purging of voter rolls, "motor voter" registration violations and failure to provide access to disabled voters, Boyd said.

Other charges, he said, include failing to allow voters with limited proficiency in English to have assistance at the polls and failing to provide bilingual assistance.

Florida's voting system endured intense scrutiny after the 2000 election, including a recount and protests that went all the way to the U.S. Supreme Court before George W. Bush was declared the winner of the state -- and the presidency.

Several groups, as well as dozens of black members of Congress, have alleged that black voters were kept from voting in Florida and other states on Election Day and ballots of others were systematically discarded.

Some Hispanic voters in Florida also alleged that they were required to produce two kinds of identification when only one was required and that they were confused by their ballots.

Boyd refused to name the cities or counties that will be sued, but he said the lawsuits would be filed within the next two months. "It will be well in advance of the primaries for the November 2002 elections," he said.

The lawsuits in Florida cover particular counties, while the ones in Tennessee and Missouri deal with cities, he said.

"My hope, my aspiration and my expectation is that in each of those we'll reach an enforceable agreement prior to the filing of the lawsuit," Boyd said. Even so, he indicated the suits still would be filed.

He said the counties and cities are cooperating in the Justice Department's investigation and have acknowledged "certain deficiencies we have identified."

Boyd said the lawsuits are the result of more than 11,000 complaints from voters after the election. He said the complaints were whittled down to 14 active investigations and the five potential lawsuits.

"What we need to make sure is that we take steps quickly enough to ensure that the problems that occurred in the last election don't occur in the next election," said Sen. John Edwards of North Carolina, a possible candidate for the Democratic presidential nomination in 2004.

Boyd agreed on the importance of moving promptly but said it was more important to proceed carefully and "get it right without regard to the political implications for anyone."

"We're going to follow the investigative trail, the evidence wherever it goes without regard to politics and without regard to whose, if anyone's, ox is being gored," he said.

Congress attempted to push through a bill revamping national elections after the 2000 elections, but the Republican-controlled House and the Democratic-controlled Senate deadlocked in February on what changes they would like to make.

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