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March 31, 2004

Amazon, Borders Face Market-Division Claims

According to this story at CNet News, last week a federal district judge in San Francisco said that a private antitrust claim against Amazon and Borders, for allegedly divvying up portions of the on-line book market between them, could proceed to trial. (The judge dismissed a companion price-fixing claim as "ludicrous on its face.") The claim related to a teaming agreement that Amazon and Borders signed in 2001. The CNet story reports that:

[Judge] Patel said one section of the contract, which is similar to one Amazon inked for the online store of Toys "R" Us, is "troubling." A restriction prohibiting Borders from competing with Amazon means that "Borders could not even provide overstock books to another online marketer, even if there were no mention online that these books came from Borders," Patel said.

This story illustrates a basic principle of contract drafting: Any clause that even resembles a division of the market among competitors should be closely scrutinized. For even if Amazon and Borders emerge victorious, they still have to go through the hassle and expense of a full-blown antitrust trial. Presumably they have already gone through the hassle and expense of document production and depositions. And they must contend not only with the antitrust laws, but also with California's notorious unfair competition law. All this for a contract clause that undoubtedly seemed like a good idea at the time.

March 31, 2004 in Contracts, Marketing | Permalink | Comments (0) | TrackBack

March 10, 2004

When the Feds Call: Lessons Learned
from the Martha Stewart Case

Well, Martha Stewart has been convicted, as someone said, of covering up a crime that the feds couldn't prove had been committed. More specifically, she was convicted (generally speaking) of making false statements to federal investigators. What kind of practical lessons does this offer for day-to-day life in the business world?

Think Carefully Before Agreeing
to be Interviewed by Government Agents

Several commentators have said that any more, you'd have to be nuts to voluntarily talk to any government agent about anything -- and that this will discourage people from cooperating with government investigations. See, for example, this nice round-up in Professor Bainbridge's blog.

Tape-Record Your Own FBI Interview?

Boston attorney Harvey Silverglate (see this bio) writes, in a letter to the WSJ ($), that:

[S]ome federal agencies, including the FBI, have a policy or practice of intentionally not tape recording even crucial interviews. Instead, agents often conduct interviews in pairs, with one agent doing the questioning and the other taking notes.

This later often pits the uncorroborated word of the interviewee against the report submitted by the agent, when any question arises as to what the person said or, equally crucially, what the agent's question was that the person was seeking to answer. Without a verbatim record of the interview, the agent's report as to what the interviewee said is usually considered authoritative, despite any errors or spin.

The lesson is that it's easy to be convicted not for what you say, but for what an agent claims you said.

(Emphasis and paragraphing added.) Lesson: If you do voluntarily agree to be interviewed by any kind of federal- or state government agent, consider doing the following --

1. preferably, tape-recording the interview. To reduce the chances of inadvertent privacy violations, ideally the recording should include your oral disclosure to the interviewer that you are recording the interview, as well as the interviewer's oral acknowledgement of that fact; or

2. as a distant second choice, having a friend sit in on the interview and take notes. But remember, your friend's notes may be incomplete or mistaken in places. And, the friend may well have to testify both (i) as to his-or-her recollection of the interview, and (ii) as to the authenticity of his-or-her notes. So your friend may end up having to hire his-or-her own lawyer, which I'm sure s/he'll be delighted to do.

Don't Lie, Either Explicitly or by Omission

Obviously the best way to stay out of trouble in this area is simply, don't lie. You'll still have some practical problems even if you try as hard as you can to tell the truth. First, you may not remember everything right then and there, and your omission of a material fact might later be regarded as a lie. Second, you might remember things incorrectly; it happens. Third, as noted above, unless you're recording the interview yourself, your interviewer may claim -- through misunderstanding or otherwise -- that you said something other than what you actually said.

March 10, 2004 in Criminal Penalties | Permalink | Comments (0) | TrackBack

March 08, 2004

Martha Stewart Juror Says Her Changing
a Phone Message Brought Her Down

This AP story reports some post-trial comments by jurors in the Martha Stewart case. It seems that one of the key pieces of evidence was testimony that Stewart had tried to change a phone message from her stockbroker:

Other jurors said Stewart's assistant Ann Armstrong, who reluctantly testified that Stewart tried to alter a phone record of a message from her stockbroker, was the key witness leading them to the domestic diva's conviction.

Armstrong testified that Stewart sat down at Armstrong's desk to change a message from her broker, Peter Bacanovic, that informed her that he thought the ImClone stock price would start falling.

"She ultimately gave the testimony that was going to bring Martha down. That was a very important piece," said juror Chappell Hartridge, one of six jurors who spoke to "Dateline NBC" in interviews that aired Sunday night.

"We all believed her 100 percent," juror Adam Sachs said of Armstrong.

This is another example of a brutal fact of legal life: In a trial, evidence can often be confusing, difficult to understand, or even contradictory. If you are accused of wrong-doing, it may not be entirely clear whether what you did was wrong. (This can be especially true in intellectual-property cases, by the way.) On the other hand, evidence-tampering is very easy to understand. If jurors conclude that you tampered with evidence, they may well seize on that as "proxy evidence" that your actions must indeed have been wrong, otherwise why would you have tried to cover your tracks?

It bears repeating: If you've been sued, or if you think you're going to be sued, or if you hear that government authorities are investigating your actions, DON'T destroy or tamper with potential evidence. The chances are you'll only be hurting yourself.

March 8, 2004 in Criminal Penalties, Litigation, Record-keeping | Permalink | Comments (0) | TrackBack

March 07, 2004

Martha Stewart - Targeted to Send a Message?

Today's New York Times has this article (registration required) about possible reasons that Martha Stewart might have been prosecuted more vigorously than had she not been a celebrity. The article quotes a former prosecutor about something I'd heard before, namely that prosecutors especially like to go after high-profile people pour encourager les autres (see here for an explanation of this French phrase and its provenance):

Prosecuting someone famous can help to change behavior, though, and appeals to prosecutors seeking favorable media attention, said Roland Riopelle, a former federal prosecutor who practices at Secarz & Riopelle in New York.

"The government is in many cases quicker to pull the trigger on a public figure than a private citizen, and I think Martha Stewart was a victim of that," Mr. Riopelle said. "The truth is, quite honestly, it's all the more exciting and it creates all the more press."

As a result, he concluded, "They're more likely to charge a prominent person for a piddly crime than they are an ordinary Joe."

March 7, 2004 in Criminal Penalties | Permalink | Comments (3) | TrackBack

March 05, 2004

Bowling for Dollars: Junk FAXer Settles for $1M+

According to an article at law.com:

A bowling business that sent out as many as 352,000 unsolicited faxes will settle a class action for up to $1 million cash and $1.5 million in coupons. However, it's not clear how much of the money will be paid out.

The settlement came under criticism from a lawyer with his own fax case against the bowling company, AMF Bowling Centers, who said the company was getting off too easily.

Excellent - maybe the word will spread and these pests will quit wasting our FAX paper.

For more information about junk faxes, see www.junkfaxes.org (apparently hosted by a consumer) or www.tcpa.com (apparently a law firm site).

March 5, 2004 in Marketing | Permalink | Comments (0) | TrackBack