Monthly Archive for June, 2010Page 2 of 4

Can legalized Medical Marijuana survive in the Wild Wild West?

Medicinal Marijuana use is becoming more accepted, but as the field of legitimate medicinal shops expands, so does the shadow of illegal growers and sham prescriptions. Certain counties are even working on adding marijuana workers to local unions. However, even as acceptance grows, so does the backlash, as medical  marijuana clinics are being attacked by people opposed to legalization.

Back in 2009, the Obama administration advised its US attorneys that they should bow to state law when pursuing marijuana cases in states with marijuana laws. If the operations they investigated were following state law, then they should chose not to prosecute. This goes along with a general policy of using federal resources in the most effective and efficient manner.

With that leniency, the legal marijuana business is growing; but as with any new field they still have significant issues. Since marijuana use (even medical marijuana use) is still technically illegal, there is a hodgepodge of overlapping and contradicting Federal, State, county and city laws which make the lucrative business a risky one as well.

One of the biggest obstacles to legal operations is their illegal competitors. Illegal growers don’t have as many costs as legal growers, i.e. the long and costly permit process, and so can undercut the price point of legal growers. They also operate outside regulations so don’t have to worry about proper business practices, while the legal businesses have to, and are having difficulty getting business loans from banks.

There’s also the issue of legal competition. In certain cities, local government has enacted legislation which restricts the number and placement of legitimate medical marijuana shops. In Los Angeles, CA, the city enacted a cap on the number of shops allowed to operate, but failed to enforce it for a number of years.  When they finally sought to enforce it and faced a backlash of complaints from store-owners who felt they were being unfairly attacked.

As the medical marijuana business continues its efforts to legitimize itself, it must also take up the additional burden of product regulation. At this point, product regulation for quality and safety is largely at the whim of the growers and shop operators, which allows some growers to claim their product is of higher quality than it actually is.  Some growers are even endangering the lives of their customers by using toxic pesticides (which the FDA would not allow any legal farmer to use) on their crops.

Whether they are legal or not, across the board marijuana growers also face threats to their own personal safety. Marijuana is a lucrative business, owing largely in part to its status as a quasi-illegal (or actually illegal) substance. This means that dispensaries, sellers, growers are all in increased danger of theft or physical assault to themselves or their employees. In San Francisco, a local seller was attacked and robbed of his product and $1000 when he went to make a delivery.

When it comes to medical marijuana, the whole industry seems to be stuck in the lucrative but dangerous mentality of the “Wild Wild West.” And while certain forces are trying to curb those influences, without a comprehensive federal policy, the rodeo show will just keep on going.

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Most Employment Discrimination Lawsuits Don’t Net Much Money

Every once in a while, you’ll hear about a lawsuit against a huge employer for some form of employment discrimination. These sensational cases typically allege a long pattern of discrimination, mandated (or at least tacitly endorsed) by top management, all the way down the chain of command. They might involve hundreds, if not thousands, of plaintiffs. Sometimes, you even hear about multimillion dollar settlements or jury awards.

However, these types of cases are extremely rare, considering the number of employment discrimination suits filed across the country every year. The vast majority of job-discrimination complaints are brought by individuals who cannot afford high-powered class-action attorneys.

Indeed, only a miniscule fraction of job-discrimination lawsuits ever make the news, and a similarly small proportion of them ever go to trial. In general, employers will do almost anything to avoid taking an employment discrimination case to trial, not only to avoid the time and money that it costs, but also to avoid the negative publicity, and to take the factor of unpredictable jury awards out of the equation.

Accordingly, employers typically do everything they can to have these cases dismissed as soon as possible. Failing that, they typically offer modest settlements, most of which are accepted by the plaintiffs. However, according to a recent article in the ABA Journal, these settlements tend to be smaller than most people might expect.

That article refers to a study conducted by the American Bar Foundation, looking at federal employment discrimination filings from 1987 to 2003. In addition to the small settlements, the study found that only 6 percent of these cases ever go to trial. Of the cases that make it to trial, only 1/3 of plaintiffs are successful.

Therefore, it makes sense that most plaintiffs, especially if they’re represented by a competent employment litigation attorney (who would be aware of their chances of success at trial), would advise them of the likely outcomes.

But why do employment-discrimination lawsuits have such a low success rate? Well, there are a lot of reasons. First, and perhaps most obviously, employers can usually afford better lawyers than employees, who may not be able to afford lawyers at all, and will therefore have to represent themselves, rely on scarce legal aid resources, or find a lawyer willing to represent them on a contingency basis (taking as payment a portion of the settlement or jury award).

Also, in job discrimination cases, the odds are generally stacked against the employee from the start. This is not necessarily a bad thing. After all, in every other civil action, the burden of proof is on the plaintiff, and so it should be in employment cases.

Furthermore, the simple nature of the employer/employee relationship makes proving discrimination difficult. In the absence of a contract to the contrary, employees and employers are governed by the principle of “at-will” employment. This means that the employee can quit at any time, for any reason (or no reason at all). Conversely, the employer can fire the employee at any time for any reason, or no reason. Of course, laws against discrimination serve as exceptions to this general rule: under federal law you can fire an employee for any reason, as long as your reason isn’t solely the employee’s race, color, religion, national origin, or sex. In addition, many states have additional protected classifications, such as sexual orientation, gender identity, and political views.

So, if you’re fired and believe that it was for a prohibited reason, you essentially have to prove what your employer was thinking when he or she fired you. Obviously, this is no easy task.

Because there isn’t a mind-reading machine in every courtroom (if any scientists are reading, get to work on this right away; cancer will be here when you get back), courts have come up with certain sets of facts that an employee must prove to create the inference that employment discrimination occurred.

First, they have to show that they were not hired for, or were fired from, a certain job. Second, they have to show that they were objectively qualified for the job (they had the necessary skills, education, and experience to perform the tasks in the job description). Third, they must show that the position remained open after they were terminated, or not hired, and was eventually filled by someone of a different race, religion, national origin, or whatever other category the alleged discrimination is based on, and that the replacement was not more qualified than the plaintiff.

However, if the plaintiff proves all of these facts, they have not won the case. All they’ve done is raised a “prima facie” case of employment discrimination – these facts, on their face, create a presumption that discrimination has occurred.

At this point, the burden of proof shifts to the employer. To prevail at this stage, they have to prove that they had a legitimate, non-discriminatory reason for their hiring or firing decision. This reason can be just about anything, but they do have to prove that it existed.

If the employer proves those facts, the burden once again shifts to the employee, who has to prove that the employer’s “legitimate” reason for terminating them is merely a pretext for discrimination.

Finally, if the employee proves all of those facts, he or she wins the case. However, if they fail to prove a single one of those facts, they will lose. Obviously, given the number of moving parts involved in making an employment discrimination case, there are many possible points of failure.

Furthermore, the fact that only 1/3 of discrimination suits that go to trial are successful may simply illustrate that most job discrimination suits are without merit. Or, at the very least, that employers who want to discriminate based on race have gotten very savvy at keeping business records which give them plausible deniability.

Obviously, one should hope that the former is true, and not the latter. If very few employment discrimination suits have merit, that would mean that employment discrimination is not terribly widespread. Obviously, that would be a good thing.

On the other hand, the possibility of the second explanation, that employers who want to discriminate based on race have gotten good at hiding it, is quite disturbing. If true, this might mean that employment discrimination is far more widespread than most people suspect.

Obviously, there’s no way to know for sure what explanation is the correct one, and it could be a combination of the two (actual employment discrimination is rare, and employers that do discriminate are good at hiding it).

Whatever the cause of this low success rate, it’s no wonder why so many of these cases settle before they get anywhere near the trial stage. If a competent employment attorney advises his or her client on the chances of success at trial, most will not be willing to roll the dice.

It’s true that a jury might award the victim of employment discrimination a huge sum of money, much greater than any settlement that any defendant would ever offer. However, the chances are much greater that the jury will rule against them, or award them a small sum. Therefore, many plaintiffs might jump at a relatively small settlement, simply to get some compensation for the wrong (or perceived wrong) they have suffered, and move on with their lives.

It’s possible that this state of affairs leads to many people with legitimate discrimination claims settling for small amounts of money. However, under the current at-will employment system, not much can be done to change that. Some have suggested doing away with at-will employment altogether, especially considering the fact that the rule has been chipped away to the point that it largely serves as a preamble to its exceptions.

However, most people agree that it’s wrong for employers to discriminate, and even in an at-will system, there are certain grounds for termination which are simply unacceptable. Racial, religious, and gender discrimination are among them. At-will employment, which necessarily creates a system where the firing of an employee is presumed to be justified, means that discrimination is extremely difficult to prove, even when it takes place.

Unfortunately for the legitimate victims of discrimination, this is the system we’ve chosen, and, as always, there are tradeoffs.

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Top Breathalyzer Myths Debunked

Even though MythBusters already did their “Beat the Breath Test” episode, people all over still want to know how to beat a breathalyzer DUI test.  In case you missed Adam and Jamie’s spirited experiments, here are some of the top urban myths about beating a breathalyzer test:

Myth #1: Put pennies in your mouth

Why it supposedly works- The copper in pennies is supposed to create an electrical current in your mouth, which in turn will disrupt the readings from the breathalyzer device.

 

Why it really doesn’t work- Pennies are made of about 97% zinc, and are only coated topically with the copper.  Moreover, police officers allow a 15-20 minute delay before rendering the test.  This allows any trace amounts of interfering substances to dissipate (such as mouth alcohol or copper).

So, while the price of gold is at an all time high lately, it turn’s out that copper is pretty much useless when it comes to tricking the breath machine.  But if you enjoy putting one of the dirtiest objects known to man in your mouth, feel free to do so.

Myth #2: Bart Simpson style:  Eat your underwear

Why it supposedly works- The cotton (or silk if you prefer) is supposed to absorb the alcohol in your stomach.  This is what David Zurflah of Canada did- while seated in the back of a patrol car, Zurflah quickly tore the crotch out of his underpants and stuffed it in his mouth.

 

Why it really doesn’t work- Breathalyzer tests work by analyzing what’s coming out of your lungs, not the alcohol in your stomach.  Zurflah ended up registering a 0.08%, the legal limit.  On that note, ingesting other items such as garlic, onions, or even peanuts won’t do the trick either, and neither will belching.

While it sounds funny, this myth can eat my shorts, dude.  Your delicates are not a delicacy.

Myth #3:  Use breath mints, breath spray, or mouthwash

Why it supposedly works- Such products will mask the odor of alcohol, and police will likely skip the breathalyzer test as your breath will be minty and fresh.

 

Why it really doesn’t work- These products can actually contain alcohol, especially the sprays and mouthwashes.  (On a side note, Nyquil and other over-the-counter medicines also contain alcohol.) Using them prior to a breathalyzer test will actually result in a higher reading on the device.  And if you’ve been pulled over, chances are the cops already suspect you are drunk.

Do not use unless you are trying to score a date with the officer.

Myth #4: Zima is the drink of choice

Why it supposedly works- Zima, a popular colorless alcopop beverage, has been reported to leave no alcohol smell on your breath.

 

Why it really doesn’t work- Even if there are no alcohol odors coming from your trap, the breathalyzer can still read it.  Zima contains about as much alcohol as a beer, and the device will definitely pick it up.

Verdict: Not a good “malternative”.

Myth #5:  Hyperventilating, holding your breath and other breath manipulations

Why it supposedly works- The breath that is stored in the deeper parts of your lungs contain more alcohol, while shallow breaths only reach the top part of your lungs where less alcohol is emitted.

 

Why it really doesn’t work- Of all these myths, this one seems to hold the most weight.  It turns out that studies have shown hyperventilating reduces readings by as much as 10%.  Running up and down a flight of stairs also has similar effects.  Holding your breath, however, increases the readings up to 20%.  Not blowing hard into the breathalyzer is now out of the picture, as newer models can detect such irregularities.

The problem with these breath techniques is that you may become dizzy, even more dizzy than you already are.  Better yet, you might simply just pass out, in which case a breathalyzer test obviously won’t be necessary.

 

Conclusion

Sorry to spoil the party, but it looks like the only way to be absolutely safe is to not drive while you are drunk.  Drunk driving is not cool anyways, and the idea of trying to fool the breathalyzer test ignores the real problem- dangerous drivers on the road.  So be safe out there, and realize that efforts to skirt the test are pretty much futile, like an uphill battle.  Or as our patron of pennies Abraham Lincoln put it, when you’ve got an elephant by the hind legs and he’s trying to run, it’s best to just let him run.

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BP Can’t Avoid Paying Up with Bankruptcy, Can It?

BP, the company largely being blamed for the massive oil spill currently fouling the Gulf of Mexico, has some money troubles. It’s already spent billions of dollars on efforts to stop the leak, as well as cleaning up the spill. Once the well is finally and completely capped, stopping the flow of oil, cleanup and ecological restoration efforts will take years, if not decades, and cost many billions of dollars. And let’s not forget the coming lawsuits, inevitable settlements, and probably attempts to fight some of the suits if their lawyers believe that some of them are without merit. The settlements and court-ordered damages are going to be huge, likely in the billions of dollars. And even if they refuse to settle any of the lawsuits, and fight every one of them, and are somehow found not liable (this will never happen), they’ll have paid a bunch of lawyers from global mega-firms millions upon millions of dollars, by the time all is said and done (our grandchildren might live to see that day).

Nobody is seriously arguing that BP, one of the largest oil companies in the world, shouldn’t be made to pay for these costs. Finally, on top of all of these costs, BP also faces the possibility of criminal fines imposed by the federal government.

BP probably has enough money to pay out all of these costs, but some analysts are saying that it only has just enough. Making good on all of these debts (which they, of course, should do) could prove ruinous.

Bankruptcy is looking like an increasingly attractive option for BP. Its liability for this, when all is said and done, could be up to $40 billion. BP is estimated to have about $12 billion in cash and other fungible assets. Their stock price has plummeted since the spill began, and the company, while still worth billions and billions of dollars, has lost more than a third of its value. And let’s not forget the possibility of a runaway jury verdict that shoots into the hundreds of billions of dollars (not so inconceivable, especially if the case is tried in a state that’s been affected by the spill, with local jurors).

So, could BP file for bankruptcy and walk away? A segment of the market seems to think so. Some experts suspect that BP’s competitors are salivating at the possibility of the company becoming insolvent and having to liquidate; that’s a lot of energy infrastructure all over the world that will be available on the cheap.

But, if BP did decide to file for bankruptcy, what would that mean? Could it seriously walk away from its financial obligations? Well, corporate bankruptcy is complicated enough. But bankruptcy for an entity like BP, which spans countless nations, has mind-bogglingly huge amounts of assets, and a nigh-incomprehensible web of legal and financial obligations; it’s going to get complicated.

If BP actually becomes completely insolvent, it could file for Chapter 7 bankruptcy. Basically, this is “true” bankruptcy – the debtor’s assets are sold off (with some exemptions), and the proceeds used to pay as much of their debt as they can. This is obviously a worst-case scenario for BP (though I’m sure many people, especially residents of the Gulf Coast region, don’t really care if BP survives this ordeal) and a best-case scenario for its competitors, who could buy up its assets at bargain-basement prices.

But one has to wonder how this is in any way an acceptable result. Sure, a bankrupt BP could sell off all its assets, leaving its competitors to pick up the pieces, but a corporation is not a person, and it was the decisions of individual people that led to this mess in the first place.

The actual people who made the decisions that led to this situation could largely get off relatively unscathed, while the legal entity that is the corporation is the one that gets “punished.”

This is due to the legal doctrine in common-law countries, particularly the United States, known as “corporate personhood,” which essentially says that corporations are legal entities separate and distinct from any of the people who actually make up the corporation. It’s a fairly abstract concept, and the more one thinks about it, the stranger it seems.

However, it does lead to certain economic efficiencies, and it’s currently the system we have. Of course, there are ways to “pierce the corporate veil” and hold the actual decision-makers personally responsible for the actions of a corporation. This generally happens if a corporation is insufficiently capitalized to meet its obligations, or if there is serious negligence or other malfeasance involved.

The exact chain of decisions that led up to this disaster isn’t clear, but it is clear that some people screwed up really bad. Whether this will be sufficient to pierce the corporate veil remains to be seen.

Whatever happens, one must hope that those responsible for this disaster are made to compensate everyone who was directly harmed by their decisions is compensated, to the extent possible.

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Does Transocean really expect to pay only 2% of the bill?

The complicated web of liability stemming from the April 22 Deepwater Horizon oil spill poses some complicated legal questions; but one of the most pressing to many affected by the spill is who is responsible for the bill?

Possible contenders obviously include the giant oil conglomerate BP, but they also include its many contractors, the US government and the owner of the rig Transocean Ltd.. BP is expected to carry the majority of the load, but the other companies involved are already trying to place strict caps on their liability.

Transocean has submitted an application to the courts to limit its liability to only $27million based on the “Shipowners’ Limitation of Liability Act of 1851” (SLLA). With recent estimates of expected damages surpassing $1.25 billion, this calculation seems ludicrous to many.

However, it is important to note that under the SLLA, the $27 million figure only relates to personal injury and wrongful death suits, and due to the passing of the Oil Pollution Act (OPA) in 1990, does not restrict suits with respect to oil pollution damages. A Transocean spokesman has asserted that the company never intended to include oil pollution damages in that calculation.

But where does this calculation even come from? Eleven workers are presumed dead and 151 of their comrades were injured in the explosion and subsequent sinking of the rig. Transocean is worth approximately $23 billion and are expected to receive an estimated $560 million in insurance payouts stemming from the incident. In fact, despite the devastation wreaked across the gulf, Transocean actually expects to see a profit of $270 million based on those insurance payouts. Can their losses really be limited to such a proportionally trivial sum?

The calculation is based on the SLLA provision that liability is limited to the value of the ship, post disaster. Before April 22nd, the rig was worth approximately $650 million, but today the value of the hunk of junk sitting at the bottom of the sea, is ZERO. So where does the $27 million come from? It mainly refers to the rent money BP still owed Transocean for the rig’s lease as of April 28.

The SLLA cap can be lifted if the plaintiffs can prove that the owner was complicit in the negligence that caused the accident. This is an unlikely result because the owners in Transocean were the high-level officers sitting in their offices oceans away from the site of the spill.

In regard to the oil pollution damages, the OPA made any parties deemed responsible for the spill automatically liable for the cost of the cleanup as well as damages to natural resources, property and revenue. However, it places a cap on this liability: $75 million for vessels and $350 million for offshore facilities. This also poses an issue because it is not completely settled which category the Deep Horizon rig falls into since rigs are often tied to the ocean floor or part of artificial islands, while this rig floats and is mobile, not stationary.

Once the amount owed by the responsible parties is exhausted, the US government is then responsible for up to $1 billion per spill; paid from the Oil Spill Liability Trust Fund. The fund is financed by the tax on both imported and domestically produced petroleum.

The Exxon Valdez disaster of 1989 took 20 years to work its way through US courts and that occurred in Alaska and as such had far fewer litigants and nowhere near the jurisdictional issues that the Deep Horizon spill will face. Undoubtedly, even with the streamlined payments enforced by the OPA as a direct result of the 1989 disaster, the resulting legal mess could take even longer than 20 years to clean up.

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