The BLT: The Blog of Legal Times

The Morning Wrap

Long Fight: Business groups are looking for rays of hope in the federal courts in challenges to the regulations adopted following the financial crisis, The Washington Post reports. A federal appeals court in Washington recently ruled against a Securities and Exchange Commission rule that would have made it easier for major shareholders to put board candidates on a ballot.

Locked Up: A former Luzerne County, Pa., judge who was a central figure in a courthouse scandal is heading off to federal prison for nearly 30 years. The Legal Intelligencer reports former Judge Mark Ciavarella Jr. was sentenced to 28 years on charges that included racketeering, money laundering and tax fraud. In a statement read in court, Ciavarella said the public and prosecutors unfairly demonized him.

Tablet Wars: Samsung Electronics Co. is heading to court later this month in Europe to challenge a ruling that banned the company from selling its Galaxy tablet computer in most of the European Union, The Wall Street Journal reports. A regional court in Düsseldorf, at the request of Apple Inc., issued a preliminary injunction against Samsung.

Absent: The New York Times spends the day in Manhattan housing court waiting for the arrival of a defendant named Faye Dunaway. Yes, the Faye Dunaway. Her landlord is seeking to evict her from her one-bedroom apartment on the Upper East Side. Dunaway did not make an appearance in court.

Typo: The U.S. Court of Appeals for the Federal Circuit said a trial judge has the authority to fix an obvious drafting error in a patent. The appeals court unanimously reversed a July 2008 summary judgment ruling that had deemed a patent invalid.

Death After Surgery: A woman in Framingham, Massachusetts, died one day after a breast augmentation procedure. The Boston Globe said the woman's family has hired a lawyer. Autopsy results are pending. "Woozy on the afternoon after the operation, she fell in her parents’ bathroom and hit her head," according to the report.

Michael Jackson's Former Manager Pleads Guilty in Tax Case

The former general manager for the late pop idol Michael Jackson pleaded guilty in Washington federal district court today to charges she failed to file federal and District income tax returns.

Raymone Bain, a resident of the District, faces a maximum of a year in prison and a $100,000 fine for the federal charge, six months in prison, and a $5,000 fine for the D.C. criminal violation, the U.S. Justice Department said. U.S. Magistrate Alan Kay scheduled sentencing for Aug. 31.

Bain of Washington’s Davis, Bain & Associates, a public relations firm, became the personal general manager for Jackson in 2006. DOJ officials said Bain was responsible for the daily operations of the Michael Jackson Company, including financial, public relations and marketing tasks. She received $30,000 monthly as general manager and president.

Bain received a law degree from Georgetown University Law Center in 1984 but was not a licensed attorney, according to court records.

Prosecutors alleged Bain did not pay income tax from 2006 to 2008. The government estimated the tax loss between $200,000 and $400,000. In 2007 and in 2008, Bain, according to court records, requested an extension to file U.S. income tax returns.

Assistant U.S. Attorney Susan Menzer and DOJ Tax Division trial attorney Karen Kelly were not immediately reached for comment this morning on the plea deal. Kelly is the assistant chief for the division’s Northern Criminal Enforcement Section.

“Bain well knew, and was fully aware that the law required she file federal tax returns and DC tax returns each year, but nevertheless failed to file,” prosecutors said in court papers. A copy of the plea agreement is here.

Bain’s attorney, Frederick Cooke Jr. of Washington’s Rubin, Winston, Diercks, Harris & Cooke, was not immediately reached for comment. Bain also was not reached for comment.

The Washington Post in 2006 wrote this profile of Bain, describing her as a "master of the care and coddling of famous folk, especially those who happen to find themselves in exceedingly hot water."

The death of Jackson in June 2009 left behind multiple lawsuits involving the pop music star. In one suit filed before Jackson's death, Bain demanded $44 million she claimed under a contract with Jackson. A trial judge in May 2010 sided with the Jackson estate. Bain's lawyers are fighting to get the judgment set aside.

DOJ Demands $225K Payment From Film Distributor

Updated 7:08 p.m.

On Oct. 15, 2008, the Smithsonian Institution wired $300,000 to a company for the licensing and exhibition of the film, "Dinosaurs: Giants of Patagonia."

The very next day, the company received a $300,000 check from the Smithsonian for the same invoice. Mistake? That's what the government maintains.

The Justice Department wants the extra money returned. Alleging unjust enrichment, prosecutors this week sued Fort Lauderdale-based Comet Distribution Ltd. in Washington federal district court to force the return of the overpayment.

DOJ lawyers said the Comet president promised to refund the government its extra money but has failed to do so. The suit (PDF) said Comet has returned $75,000 of the extra $300,000, leaving a $225,000 debt to the government.

Justice Department lawyers said in the suit that the government is seeking “a debt owed to the United States for an overpayment mistakenly paid” to Comet. The suit does not explain how the Smithsonian paid twice on the same invoice.

Comet and the Smithsonian entered into a 50-year contract (PDF) that included a $600,000 licensing fee, to be paid in two installments—one by March 2008 and the other by October 2008. The suit indicates the Smithsonian made a double-payment in October 2008.

A Comet official was not immediately reached for comment this afternoon. Court records do not show that Comet has retained counsel.

Assistant U.S. Attorney Judith Kidwell, who filed the suit on behalf of the United States, declined to comment. A Smithsonian spokesperson was not immediately reached for comment this afternoon.

Woman's Suit Over MTV's 'Real World' Videos Survives Legal Hurdle

A woman featured on MTV's "The Real World" who claims she was drunk when she signed an agreement with the show's producers won a victory in federal court here today when a judge refused to hand the case over to an arbitrator.

The woman, Golzar Amirmotazedi of Bethesda, who was a non-cast member of the show, is suing MTV Networks and its parent, Viacom Inc., for airing video last year that allegedly humiliated her. Her suit [.pdf] in Washington’s federal trial court claims invasion of privacy and emotional distress. She is seeking more than $5 million in compensatory and punitive damages.

Lawyers for Viacom allege Amirmotazedi was not intoxicated when she signed a four-page agreement that said an arbitrator would decide any dispute. The agreement covers the terms of entry into “The Real World” group house in addition to a person’s appearance on the show itself.

After a night of drinking with the show’s cast at a midtown bar called The Sign of the Whale, Amirmotazedi signed the document before walking into “The Real World” guest house near Dupont Circle in Northwest Washington. She alleges she was later kicked out of the house because she refused to have sex with one of the men living there, according to the suit.

Senior Judge Gladys Kessler today denied Viacom’s request to let an arbitrator decide whether Amirmotazedi’s intoxication defense has merit. Voluntary intoxication, Kessler said, under District law, is a “type of mental capacity defense that permits an individual to avoid a contract if she was so intoxicated at the time of formation that she could not understand the terms and conditions of the agreement.”

The lawyers in the case dispute the events that led up to Amirmotazedi’s signing of the arbitration agreement.

Amirmotazedi’s attorneys, Jason Ehrenberg and Michael Tilghman II of Washington’s Bailey & Ehrenberg, claim cast members “fed her” eight to 10 drinks. Amirmotazedi said she has no recollection of signing the four-page arbitration agreement due to her heavy intoxication.

Lawyers for Viacom, represented by Washington’s Levine Sullivan Koch & Schulz, argue Amirmotazedi was not drunk at the time she signed the agreement. The TV program has a policy of prohibiting intoxicated people into the group house, according to Viacom’s attorneys, who include Levine Sullivan partner Michael Sullivan.

Viacom’s lawyers said an arbitrator, not a judge, should first decide the merits of Amirmotazedi’s intoxication defense. Click here for Viacom’s motion to compel arbitration.

Sullivan said this afternoon he is reviewing the opinion. He declined to comment immediately on the next steps. It was not immediately known whether Viacom planned to ask the U.S. Court of Appeals for the D.C. Circuit to review whether Kessler got it wrong.

Ehrenberg said this afternoon Kessler’s ruling is "significant from the standpoint that there is not a lot of case law that discusses” the legal issues that surfaced in Amirmotazedi’s suit.

“It’s an important case because we think someone was taken advantage of, quite frankly,” Ehrenberg said. “This is a case where this one individual appeared she was too intoxicated to consent” to signing a contract.

Kessler's ruling, Ehrenberg said, could "provide some protection for young people who get into these situations” on reality television programming. A status conference in the case is scheduled for later this month.

Dannon Agrees to Drop Claims of Activia’s ‘Irregularity’ Benefits

Jamie Lee Curtis is going to have to change her selling point when advertising Activia yogurt.

According to the terms of a settlement between Federal Trade Commission and Dannon Company Inc., Activia can no longer be advertised as helping to relieve digestive “irregularity” unless the company discloses the amount of the product that must be consumed in order to receive those benefits. Dannon is also required to pay $21 million to resolve the state-level investigations opened by 39 state attorneys general.

The settlement, which was announced today, requires Dannon to drop claims about some of the health benefits offered by its Activia Yogurt and DanActive dairy drink product because the FTC deemed those claims to be “deceptive” and “exaggerated.”

The two products, which are among Dannon’s most successful, contain beneficial bacteria known as probiotics. As part of a national advertising campaign featuring Curtis, the actress who starred in the “Halloween” series and “Trading Places,” Dannon claimed that one daily serving of Activia could relieve irregularity and help with “slow intestinal transit time.” In advertisements for its DanActive product, Dannon claimed that the product could help prevent colds and flu.

In television, Internet, print ads and on the product’s packaging, Dannon also claimed that there was scientific proof to back up those claims.

But according to the FTC, Dannon failed to substantiate those claims and was thus exaggerating the health benefits of those two products. The FTC also alleged that the health claims for Activia and DanActive were proven false by clinical tests.

The FTC contends that it actually takes three daily servings of Activia to help relieve irregularity.

The settlement bars Dannon from making any claims about cold and flu benefits for its products unless those claims are approved by the Food and Drug Administration. The company cannot make any claims about treating irregularity with fewer than three servings of a yogurt product a day unless those claims are verified by two clinical trials.

In a prepared statement, FTC Chairman Jon Leibowitz said, “These types of misleading claims are enough to give consumers indigestion. Consumers want, and are entitled to, accurate information when it comes to their health. Companies like Dannon shouldn’t exaggerate the strength of scientific support for their products.”

Morning Wrap

Remembering Chandra Levy: As the trial of her murder suspect begins, the story of D.C. intern Chandra Levy still fascinates. The Washington Post has the story.

Maine Man: Via law.com, here is an interview with the Maine lawyer who helped disclose the "robo-signing" foreclosure scandal.

12 Angry Men, One Justice: Fordham University School of Law asked Justice Sonia Sotomayor to pick a law-related movie for its law film festival. She chose Sidney Lumet's "12 Angry Men," attended the screening, and spoke afterward.

They Know Who You Are: If you use Farmville or other annoying or not-so-annoying Facebook apps, advertisers and data miners may know more about you than you thought, The Wall Street Journal reports.

Securities Lawyers Mixed on ‘Wall Street 2’

According to four prominent securities lawyers, Oliver Stone’s latest film, Wall Street 2: Money Never Sleeps, may be a decent movie, but it took the wrong message away from the economic collapse of 2008.

The original Wall Street is perhaps best known for its villain, the iconic Gordon Gekko, who once proclaimed, “Greed is good.” In the sequel, which picks up roughly 20 years after the end of the first movie, Gekko, played again by Michael Douglas, has just gotten out of prison when he meets Jake Moore (Shia LaBeouf), a young stock trader who is about to marry Gekko’s daughter.

When Moore’s firm, Keller Zabel Investments, goes belly up thanks to rumors of instability spread by a competing trader named Bretton James (Josh Brolin), he asks Gekko to help orchestrate a way to get back at James. Gekko appears to have reformed since getting out of prison—but then again, it’s Gordon Gekko. The rest of the story proceeds against the backdrop of the economic collapse.

During a discussion following a screening of the movie on Friday night, Harvey Pitt, who served as chairman of the Securities and Exchange Commission during the attacks of Sept. 11, 2001, and is now CEO of Kalorama Partners, said that while he enjoyed parts of Wall Street 2, it unfairly argues that the proper remedy for the crisis is to send a handful of securities traders to prison.

“The issue is not whether people’s bets one way or the other were illegal. The issue was how their conduct conformed to existing requirements of fiduciary duty once it became clear that these markets were uncontrollable. Unfortunately, a lot of people were in the position to stop these things but that didn’t happen,” said Pitt, who represented Ivan Boesky, the real-life inspiration for Gekko.

Morning Wrap

Prosecutors Misbehaving: A major USA TODAY investigation published yesterday examined hundreds of cases of prosecutors hiding exculpatory evidence or lying to judges and jurors. 

Enforcing Deadlines: A New Jersey judge, fed up with a law firm's disregard for filing deadlines, is imposing a $500-a-day fine for late briefs and says court personnel will no longer call the firm with polite reminders. The New Jersey Law Journal tells the story.

Virginia Executes Lewis: Teresa Lewis sang, prayed, and laughed on her final day before being executed in Virginia Thursday night, according to her lawyer James Rocap. The Washington Post had this report.  

'Outlaw' Should be Outlawed: Dahlia Lithwick, writing in Slate, weighs in on NBC's faux Supreme Court drama "Outlaw." She says "it is so terrible it makes your face hurt." Our similar take on the show is here.  

Eddie Fisher Dead at 82: Eddie Fisher, a music icon in the 1950s, and a serial husband of movie stars, including Elizabeth Taylor, died in Berkeley Wednesday night.

States Join Media Groups In Briefs Opposing California's Violent Video Game Ban

Nine states and Puerto Rico joined to file a brief with the Supreme Court late Friday night urging the justices not to uphold a California law that bans the sale or rental of violent video games to minors.

Rhode Island Attorney General Patrick Lynch, supported by lawyers from Irell & Manella in Los Angeles, submitted the brief in the case Schwarzenegger v. Entertainment Merchants Association & Entertainment Software Association on behalf of his state and Arkansas, Georgia, Nebraska, North Dakota, Oklahoma, Puerto Rico, South Carolina, Utah, and Washington. In addition to raising the "specter of censorship," the states agreed that California's law if replicated would waste scarce law enforcement resources and provide support for a Twinkie-style defense argument that "the video game made me do it" for accused criminals.

"The road to unconstitutional and unwise over-regulation is paved with good intentions," the brief states. "Though it fixes nothing, it raises the specter of censorship for any media that finds itself at the center of a politically charged societal debate. This Court has consistently recognized that the Constitution blocks entry to this slippery slope.”

The brief adds, “The law enforcement cost outstrips the questionable benefit of having the government itself dictate and enforce another minimum age requirement in retail stores.” Furthermore, Lynch wrote, "California’s statute legiti-mizes the off-loading of personal responsibility on to a video game.

We wrote about the intense lobbying of states by the video game industry in this story. Both Lynch and Utah Attorney General Mark Shurtleff have received campaign donations from the industry, which generates $10 billion in annual sales. One indicator of the industry's clout is that only 11 states joined in a brief supporting California's law -- an unusually low number given the political appeal of a law claiming to protect minors.

Also filing a brief in support of the video game industry today was the Motion Picture Association of America and other movie industry entities. They assert that upholding the California law and creating a new exception to First Amendment protection would have a "dramatic chilling effect" on filmmakers too. Williams & Connolly D.C. partner Kannon Shanmugam wrote the MPAA brief.

“If the Court’s reasoning is not confined to the particular medium of video games, state and local governments could attempt to impose similar restrictions on depictions of violence in other media, including motion pictures," the brief states. "Such restrictions would have an obvious chilling effect, particularly given the inherent amorphousness of restrictions of that type and the potential for a patchwork of nationwide regulation.”

A brief for the American Booksellers Foundation for Free Expression also makes the point that "to be insulated from depictions and descriptions of violence, one would have to be insulated from the great works of religion, history, art, literature, and culture." The author of the brief is Michael Bamberger, partner in the New York office of Sonnenschein Nath & Rosenthal. He cites numerous violent passages from the Bible and adds that Shakespeare's Macbeth "drips with blood." The case is set for argument at the high court on Nov. 2.

Porn Actress Wants Real Name Kept Secret in Obscenity Trial

Her name is Lorelei Lee, and she’s a porn actress.

Lorelei Lee, of course, is a stage name. Just like Traci Lords and Kayla Kleevage. Lee starred in one of the films—“Jay Sin’s Milk Nymphos”—that is the centerpiece of the government’s prosecution of adult film producer John Stagliano.

Stagliano’s lawyers want to call Lee as a defense witness in federal district court in Washington, but there’s a problem: Lee doesn’t want to provide her real name.

Lee’s lawyer, Carmen Hernandez, a solo practitioner in Maryland, filed court papers today in the U.S. District Court for the District of Columbia asking for a protective order to allow her to testify using her stage name. Click here for the papers.

Hernandez said Lee needs protection, but the attorney didn’t disclose in court documents the basis for the request other than saying that confidentiality will protect Lee from “explicit threats of danger.” The attorney said more information would be provided in a closed door hearing in the chambers of Judge Richard Leon. Hernandez was not immediately reached for comment.

In court papers, Hernandez argues that a trial judge has the authority to allow a witness to testify under a pseudonym as long as opposing counsel has enough information to allow effective cross examination. The government, according to Hernandez, has already been provided Lee’s real name.

“Permitting the witness to testify under her professional stage name will not interfere with the government’s ability to cross examine the witness or to impeach [her],” Hernandez said. “Rather, the use of a pseudonym merely shields the identity of a witness from the press and the public.”

Prosecutors are opposed to Lee’s request, according to Hernandez. But the government did not immediately file a response. Leon did not rule by this afternoon. Stagliano’s trial, which began Tuesday with opening statements, continues Thursday.