Monthly Archive for July, 2010

Who’s Your Daddy? When Paternity is an Issue

I grew up in a very nuclear family, so the idea of not knowing my father was never an issue.  The recent press over Leicester Bryce Stovell, the man claiming to be basketball star LeBron James father got me thinking about the paternity process.

But first, here is the latest in LeBron’s case: Stovell claims that the results of the paternity test he recently took were falsified by James and his mother, Gloria, and that James’s committed fraud and misrepresentation in an effort to conceal the identity of James’ father.  Stovell further alleges that his character was defamed by James’ comment, “I want to be a better father than mine was.”
This is not your typical paternity dispute (neither is this one involving deceased Chess champion Bobby Fischer being exhumed from his grave to determine whether he is the father to a nine year old Pilipino girl) in that paternity tests usually involve the mother or child seeking the test in order to establish a relationship, child support, custody and visitation rights, adoption, inheritance, and other parenting issues.  In this case, it is the father wishing to establish the biological relationship and also seeking millions of dollars in damages for being denied access to his “son.”

A paternity test is essentially a DNA test to prove beyond a legal doubt that by taking samples from the child and the father that there is a biological relationship.  States vary as to the standard they require but the test is the same. Paternity tests claim 99% accuracy and can be completed in a couple of days, plus both before birth and after death.

In a recent study conducted by LegalMatch, there was as much interest in determining paternity as there was contesting paternity.  This is not too surprising as this can be a very costly issue for both parties and there is a lot at stake.  Highly emotional, the paternity test can serve as the final adjudicator in the issue of fatherhood.

Reading these various articles and cases surrounding paternity, I am still amazed how far technology has come.  The fact that we can test a baby in the womb or exhume a dead body to establish paternity is quite a feat and can hopefully serve to answer the important question of fatherhood.

In the case of LeBron James, I think it is a shame that Stovell has only come forward after James has made millions of dollars and been raised by his single mother.  One aspect of paternity that I do like hearing about is the increase in companies granting father’s paternity leave in the same way mothers take maternity leave.  I think this is a great trend and one that seems to be gaining momentum.

The Scariest Way To Be Evicted

Buckle up fellow readers, because I got a tale that’ll make your head spin.  The other day I heard one of the saddest and scariest eviction stories in my entire life.  It was sad because the evicted tenant was an elderly woman.  And it was scary because I had no idea that such an eviction method was even possible until I was told the story by an attorney friend who was handling the case.

My lawyer friend got a call from a frantic woman last week.  After calming her down, he began to ask her to tell him what had happened.  The woman, Ethel, said she had just been evicted from her apartment less than five hours ago.  The surprising thing is that according to her, she was not given notice beforehand at all – not even a few minutes, let alone the standard 30 days.  Ethel claimed she was just sitting in her apartment when all of a sudden she heard a loud knock on the door followed by a man shout, “Sheriff’s department, this is an eviction.”  Thinking it to be a joke, she went to the door and sure enough, it was a local sheriff who was there to kick her and everyone else in her apartment complex out.  Ethel stated she was always on time with her rent and now had nowhere to go.

Such claims are standard fair when it comes to evictions.  Most of my lawyer friends tell me that many of their eviction clients tell them that they never had any notice of eviction.  Whether or not it’s usually true is up to debate, but the odd thing is that this time it was.  Now as mentioned before, tenants do in fact have property rights; however in this case, as Ethel explained, she and her tenant rights weren’t the problem.  The problem was her landlord.

In a strange twist, the landlord was the one who was being evicted by his bank for not being able to keep up with the mortgage payments.  The bank then secured a judgment against the landlord, which allowed the bank to seize the apartment complex to recoup on the landlord’s defaulted loan.  The problem was that despite the fact that the court ordered the landlord to give notice to his tenants, the landlord failed to tell any of his tenants that both he and they were going to be kicked out.

Sad story, huh?  The immediate question that jumps to mind is that, “what can tenants do to stop this from happening to them?”  The scary thing is that the answer might not give you much comfort.

Generally, if a defendant has a judgment secured against them that affect other third parties, that defendant also has a court imposed duty to notify the affected third parties.  Usually that duty comes by way of court order.  However, like all court orders it’s up to the defendant to decide whether or not to comply with it.  If the defendant chooses not to, then the consequence usually is tossing the defendant in jail and/or issuing a fine.

Basically all this means is that if these deterrents aren’t enough for someone like the evicted landlord to comply with the court’s order, then there isn’t much else the landlord’s tenants can actually do to protect themselves from a sudden eviction.

“But what about the bank, don’t they have to do anything?”  Well, aside from maybe sending additional notice to the defendant that they’re going to be seizing the property soon, any notice given beyond that isn’t really required.

“Alright, well what about the court?”  Minimally, the court can send a sheriff to post a notice of eviction in the lobby of the building to give the tenants notice – which they actually did in this case.  The problem was that the landlord removed the notice immediately after the sheriff left.  Why?  Because some people are just jerks.

Essentially, the only real way for a tenant in this situation to prevent eviction or at least delay it would be to file a notice of claim, which is basically a form that says you have a stake in the lawsuit.  The tenant could also try to join themselves into the litigation itself.  However, the problem with both of these solutions is that it requires the tenant to know that their landlord is actually being sued.  And in this case, no one but the landlord, the bank, and the court knew that eviction was imminent.

Fortunately, because the situation is so unusual, generally the court will have more sympathy for the aggrieved tenants.  But recovery of losses will likely be limited to recouping paid rent.

Not much comfort, I know.  However, the best advice anyone can give you if you find yourself in a similar situation is to call a lawyer, because it doesn’t get more complicated than this.

The End Of Mandatory Arbitration Clauses For Consumers?

Bills go through congress like sand through the hourglass.  The two seem mixed together as well as the Gulf Coast and British Petroleum.  It’s no stretch of the imagination to say that lawmaking in Washington D.C. is anything but a long, slow and expensive process accessible by only society’s “elite” (and not the everymen they may like you to believe).  But every once in a while a good bill actually makes it through to become a law and change America for the better.  Well, it seems like we may be on the precipice of another such change.

There was a lot of text in that last link I know.  But buried beneath that 2,319 page document is a spectacular little provision that may be a big victory for consumers nationwide if this bill, titled the Dodd-Frank Wall Street Reform Act, goes through.  Here’s that relevant and important passage of text:


(a) STUDY AND REPORT – The Bureau shall conduct a study of, and shall provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.

(b) FURTHER AUTHORITY – The Bureau, by regulation, may prohibit or impose conditions or limitations on the use of an agreement between a covered person and a consumer for a consumer financial product or service providing for arbitration of any future dispute between the parties, if the Bureau finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers. The findings in such rule shall be consistent with the study conducted under subsection (a).”

Crazy, huh?  What this bill potentially means is that all those mandatory binding arbitration clauses may soon become a thing of the past.  You know, the kind of mandatory arbitration clauses that appear in every contract we consumers have to agree to whenever we want to get a new cell phone carrier or sign up for cable service.

Now I know that this may not exactly seem ZOMG-worthy since by a strict reading of the text the Act clearly indicates that this will only be a study, but it’s a start.  Like all potential acts of congress, they have to start somewhere and for something as radical as what this reform proposes, it’s amazing that this act has made it this far.

And of course, the Act is not without its dissenters.  When something this big is in the pipe, you’d better believe that the many of the corporations out there will be ready to fight it tooth and nail.  And not just the mandatory arbitration reform either, the Act contains a lot of changes targeted at Wall Street.

But if the bill does go through and mandatory arbitration in consumer contracts becomes a thing of the past, you can expect a lot of changes in corporate behavior.  For one thing, many legal analysts believe that the bill will encourage corporations to draft more consumer friendly terms, such as more forgiving early termination methods and fees and even giving customer service representative more leeway in meeting the needs of consumers who feel that they’ve been wronged by their contract.

Why?  Because mandatory arbitration clauses normally give consumers only one option: resolving their disputes with a company through private dispute resolution.  But if that safeguard were to be removed, well, goodbye few-hundreds-of-dollars-settlement, hello million-dollar-lawsuits.

At the very least, the removal of mandatory arbitration will be a strong deterrent that’ll make it more likely corporations everywhere will treat us consumers better and not just toss phone covers at us.

Are Medical Marijuana Trademarks in the Pipeline?

In what could have conceivably been an April Fool’s Day joke, the U.S. Patent and Trademark Office (USPTO) created on April 1 of this year a new category (also reported here and here) for trademarks: “processed plant matter for medicinal purposes, namely medical marijuana.”

About 3 months later, the category was removed. However, during that time, the USPTO received around 250 trademark applications for strains of medical marijuana, and related products.

This clearly illustrates that medical marijuana is a booming business, and that those who engage in it are eager to ply their trade through the ordinary legal channels that every other legitimate business takes advantage of, such as federal trademark and patent protection. Given the number of applications that the office received when it created this category, it seems clear that the growers and sellers of medical marijuana are chomping at the bit to operate as legitimate businesses. The USPTO received applications to trademark the names of particular strains, like Acapulco Gold. Some food companies applied for trademarks for soda and candy made with marijuana.

Medical marijuana is already legal, to varying degrees, in about 20 states. And every election cycle, it seems like one or two additional states legalize it. California is even flirting with the idea of fully legalizing (along with regulation and taxation) the possession, cultivation, use, and sale of marijuana for recreational purposes. The issue will be decided by that state’s voters through a ballot initiative this November.

Although marijuana is illegal under federal law, with no exceptions for medical use, the Justice Department, under Attorney General Eric Holder, has indicated that it will not arrest or prosecute people who grow, sell, and use medical marijuana when they are in compliance with the laws of their state. This is a major departure from the policies of the Bush administration, which took a hard line against medical marijuana. Earlier this year, a poll by ABC News indicated that 81% of Americans support the legalization of medical marijuana, and nearly half support legalizing or decriminalizing recreational use.

It seems that the U.S. is slowly but surely adopting a more permissive attitude towards marijuana use. If the U.S. is on the gradual road to legalization of medical marijuana (with full legalization for recreational use likely being farther down the line, if it ever happens), it stands to reason that those who are in the business of selling it should get the same legal rights and protections that every other legitimate business enjoys.

A huge benefit that most businesses in the U.S. take for granted is federal trademark protection. Trademark law is what makes modern branding and marketing possible (or at least what allows it to be worth the time and money involved).

Trademark law allows businesses to prevent others from using their names and logos in association with other products.

Suppose you invented Coca-Cola (congratulations, by the way). You spent many years marketing your new product, and it gradually developed a rock-solid reputation among consumers as a delicious and refreshing beverage. Consumers could immediately recognize your product on store shelves by its name, the distinctive shape of its bottle, and its red and white packaging. Many consumers have developed a brand loyalty to your product, and often add it to their shopping carts without even looking at other alternatives. In short, you’re living the dream.

Now, suppose that another company, seeing your success, wanted to take a shortcut. It began making an inferior soft drink, and started selling it under the name “Coca-Cola,” and sold it in packaging that looks identical to yours. This would hurt your business in a number of ways. In the short run, people who would ordinarily buy your product might buy the competitor’s product by mistake, robbing you of sales. Furthermore, because it is selling an inferior product under the name of your product, your product’s reputation among consumers is going to be hurt. And on a moral level, this company is simply freeloading off of you, riding on your years of hard work to make a quick buck for itself. On top of that, consumers are being misled into buying a product which is inferior to the product they wanted to buy.

Trademark law lets producers stop their competitors from doing this through lawsuits, which provide successful plaintiffs with large monetary rewards, serving as a deterrent. Obviously, any business that values the integrity of its brands should seriously consider getting a registered trademark.

However, this presents a major problem for the producers of medical marijuana, who are struggling to get on equal footing with other businesses: to receive federal trademark protection, the product that the mark will be associated with must be legal to sell under U.S. law. As it stands, federal law clearly prohibits the sale of marijuana. Accordingly, every application for marijuana-related trademarks has been denied, and it’s unlikely that any will be granted in the near future.

It seems clear that if legalization of marijuana is going to proceed, far more needs to be done than simply lifting prohibitions on its sale and use. The ultimate goal of legalizing marijuana (either for medicinal or recreational use) should be to bring it on par with any other legitimate business in terms of legal rights, and public acceptance.

Now, I don’t expect marijuana to be legal under federal law any time soon, which pretty much excludes the producers of marijuana getting federal trademark protection. However, unlike other areas of intellectual property law (patents and copyrights), trademark is not, constitutionally, the exclusive domain of the federal government.

There are many circumstances where state law can and does get involved in trademark disputes. Perhaps states which have legalized medical marijuana, and want to remain on the cutting edge of what may well become a booming industry sooner than we think, should adopt more robust trademark registration systems, allowing for cannabis-related products to receive trademark protection. Obviously, the state could only provide protection within its own borders, but almost all growers and sellers of medical marijuana operate exclusively in their state of residence, so this wouldn’t be a huge problem.

It’s obvious that the federal government won’t legalize medical marijuana any time soon, so states that want to turn it into a legitimate, taxable business, shouldn’t bother waiting around.

Legal Snake Oil: The Tax Protest Movement

A federal appeals court has just upheld a verdict (also seen here) against (former?) actor Wesley Snipes, who was convicted a few years ago of 3 counts of deliberately failing to file a tax return. Nobody likes to pay taxes, but most of us recognize that they’re a necessary evil, and many of the government services we take for granted (military and police protection, schools, fire departments, roads, etc.) are paid for with our taxes. It’s no fun, but them’s the breaks.

Some people, however, have taken advantage of this fact by concocting some elaborate and fascinating legal theories, which they claim prove that the federal government can’t legally tax your income. The fact that most of these people don’t follow their own advice, live in cabins in the woods so they don’t have any income to tax, or are in jail, should be telling.

Many so-called tax protestors spout their theories in expensive workshops, or through books that they sell. A few people invariably get drawn in by the lure of being able to get out of their tax obligations, with no legal consequences. Many of these people are not very educated or sophisticated, and can be seen as victims.

Other people, however, are reasonably well-educated, and can afford a good tax attorney who would have advised them that their actions would have serious legal and financial consequences. Wesley Snipes was one of these people, and should have known better.

Tax Protestors rely on a wide variety of legal and historical arguments to justify their positions, and you can’t fault them for a lack of creativity – some of these arguments are extremely entertaining. All of them, however, will get you laughed out of court.

Some of the arguments, however, might make some intuitive sense to someone who doesn’t understand tax law, or where the federal government derives its power to collect income taxes.

If somebody has told you that the U.S. Supreme Court has held the federal income tax to be unconstitutional, they were technically correct. In 1894, Congress enacted an income tax law. In 1895, the Supreme Court declared it unconstitutional, ruling that it was a direct tax, which was, at the time, prohibited by the Constitution. However, in 1913, the 16th Amendment to the Constitution was ratified, which explicitly gives the federal government the power to tax the incomes of individuals. Accordingly, the income tax is now perfectly constitutional, and has been for nearly 100 years.

However, tax protesters have many arguments which they claim prove that the 16th Amendment was not properly ratified, or is otherwise invalid. In order to amend the Constitution, the proposed amendment must be passed by a 2/3 majority of both houses of Congress. Then, it must be ratified by the legislatures of 3/4 of the states. Some tax protesters claim that when the various state legislatures took up the amendment, the text of the amendment that some of the states adopted differed slightly in capitalization, spelling, and punctuation. However, they were identical in substance. Every federal court that has taken up the issue has ruled that such minor differences don’t have any effect on the amendment’s validity.

Another, even more bizarre, argument is not used exclusively in tax cases. However, it’s equally ineffective no matter the context it which it’s used. This is the capital letters argument. Because many official court documents often write the parties’ names in all capital letters, tax protestors sometimes argue that, because they don’t use all capital letters to write their name, the documents are addressed at another person, who doesn’t exist. For example, if a tax protester named “John Smith” receives a summons that names him as “JOHN SMITH,” he might argue that it’s addressed to another legal entity. “I’m John Smith. According to this document, you’re obviously looking for JOHN SMITH. That’s not me.”

It should strike you as obvious that this is a ridiculous argument. Every court that has been faced with it has rejected it out of hand.

These last two arguments are what I like to call magic words legal arguments. They center on the idea that, simply by saying something special, you can get out of your legal obligations. I hate to break it to you, but real life doesn’t have cheat codes. There is no magic legal incantation you can tell a court and make them drop all charges against you. Anyone who tells you otherwise has something to sell you (for example, a “get-out-of-tax-liability-free” workshop, which, incidentally, is not free to attend).

There are a few other arguments that tax protesters commonly make. One of them is the show me the law argument. They claim that the U.S. tax code, in the thousands of pages it spends defining what counts as “income” and all of the various credits and deductions available, never gets around to actually requiring anyone to pay taxes. Of course, such laws do exist. 28 USC 6012 makes it a crime to not willfully file a tax return, and 28 USC 6151 specifies that any taxes owed are to be paid at the time the return is filed. Nonetheless, tax protesters continue to demand that the IRS or tax attorneys (tax attorneys are, after all, part of The System, even though they can sometimes help you reduce your tax liability without breaking any laws) “show them the law.”

In the end, if somebody tells you that they can get you out of your obligation to pay taxes, you should take whatever they say with a few spoonfuls of salt (just make sure to drink plenty of water afterwards). Unless they’re truly delusional, they almost certainly have something to sell you.

This is a pattern we’ve seen before: in the mid to late 19th Century, as medical science began to enter the modern era, medicine became more complex and difficult for laypersons to understand. Clever salesmen took advantage of this fact to dupe people into buying ineffective or even harmful concoctions, using pseudoscientific jargon to make more convincing their claims that they could cure any ailment.

The same has happened with the legal system. The scope of the federal government expanded exponentially in the 20th Century. New industries and institutions necessitated the passage of new laws and regulations. These laws have become so complex that lawyers, like doctors, generally have to specialize in a few specific areas of practice. Also, the general public has very little understanding of what the law actually requires, in many situations.

Just like snake oil salesmen, tax protesters offer their marks the promise of keeping more, or all, of their hard-earned money out of the government’s hands. They use phony legalese, and arguments that might make intuitive sense to people with a limited understanding of the law. But make no mistake; the stuff they’re peddling is ineffective, at best. At worst, following their advice will land you in jail, or end up costing you far more than it would have just to pay your taxes.

Bottom line: talk to a licensed tax attorney.