Monthly Archive for November, 2011

Black Friday + Walmart + Pepper Spray Battery = Jail

I hoped you guys all enjoyed your Cyber Monday, the hyper-marketed corporation-created online shopping holiday that ranks up there right next to Grandparent’s Day and Boss’s Day.  Because I bet it was a heck of a lot better than this year’s Black Friday, which included the use of pepper spray this time around.

If you didn’t see the story, apparently a Los Angeles woman was all too eager to get into her local Walmart and grab a video game console for her lucky (and probably ungrateful) son or daughter.  I say ungrateful because I’m just betting that if your parent is willing to brave a horde of angry shoppers just to get a gift for you, you probably are already used to getting what you want.  That or your mom or dad, you know, “care” about you or whatever.

Anyway, the store was scheduled to open at 10 p.m., but five minutes before staffers could get the doors open, the angry crowd did what angry crowds always do and turned violent.  Patrons started ripping open packages and it was at that point that the suspect decided to use her secret weapon and pepper sprayed the crowd to get her pick of the toys.  The woman’s identity still hasn’t been released by police yet, but she has turned herself into authorities.  Though she’s invoked her Fifth Amendment right and is refusing to talk to the police.

Insane, right?  I mean, who still does their Christmas shopping at brick-and-mortar stores, let alone on the day after Thanksgiving instead of in July like a reasonable person?  And since when did parents care so much about getting their kids what they actually want for Christmas?  I got socks, underwear, and sweatpants every year from my parents, and that’s what my kids are going to get to, instead of that Optimus Prime Transformer figure they explicitly asked about . . .

But seriously, I think this story illustrates why the whole Black Friday thing has gotten out of control.  When people start thinking that it’s okay to pepper spray other people just to buy a toy at a barely reduced price, then I think it’s time to bring the day to a close.  I would like to believe that people know that burning someone’s eyes in order to grab a gift isn’t a justification for battery.  And if you think this too, you’d be wrong because the competitive Walmart shopper brought the pepper spray on purpose according to news reports.

Lest anyone think what this woman did was okay, let me just run down what assault and battery in the criminal justice system really means.  A “battery” occurs when someone commits any non-consented physical contact against another person.  “Assault” is generally described as an attempted battery.  It’s when a person intends to physically contact another person without that person’s consent and the person is placed in imminent apprehension of the impending contact.

There’s no question that the suspect committed a battery.  Reports have already stated that she acted purposefully in spraying the other shoppers, though I suppose there may be a question as to whether the shoppers actually saw it coming.  And the latter, even if true won’t do much to reduce the woman’s sentence.  I don’t think that district attorneys are all that lenient when it comes to sentencing just because the assault portion of a battery is missing.  “Oh, so the crowd didn’t know you were about to burn their eyes with pepper spray just to pick up that Xbox?  What an angel you are . . . “

You all might also be thinking that all the jostling and pushing that occurred before, during, and after the shopping should also be considered assault and battery, and well, you’d be right.  For years these big box retailers have gotten away with hosting these chaotic and poorly organized annual shopping events.  Though the onus is on shoppers to not descend into chaos, retailers should know by now that they always do and take more steps to keep the peace.  Something as simple as 1) restricting the amount of shoppers in the store at one time and 2) hiring extra security to stand at each aisle would probably do wonders in keeping shoppers from tearing each other apart.  But that’s a blog for another time.

Thanks to the Internet, We Are All Now Criminals

How many contracts did you enter into this year? Can you count off the top of your head? If you signed a car purchase agreement, a lease, or a mortgage, I’m sure you remember those. Maybe you joined some type of club or organization, or started a new job, which required you to enter into formal agreements with another party.

But if you’re a computer user, the contracts whose terms you bothered to learn, or even remember entering, are almost certainly a small fraction of the total number of legally-binding agreements you entered.

Here’s a better question: how many times did you click “I agree” when visiting a website or installing a piece of software? I’m going to guess it’s more than you can count. And how many times did you read the entire agreement you purportedly just agreed to? If you’re anything like me, and the vast majority of people, you probably read none of them. After all, if you did, it’s what you’d spend most of your life doing.

An example: the simple act of buying music, which once upon a time involved walking into a store, picking the CD you want, and exchanging it for money with the clerk behind the counter. You might have gone through the whole process without saying a word, let alone signing a contract (though, technically, you’re still entering one, it just happens that the whole thing is performed as quickly as it’s formed). The fact is, we probably enter into more formal legal agreements in a year than our grandparents did in their lifetimes.

A very interesting article in the Wall Street Journal talks about some of the issues associated with the fact that we enter hundreds of legal agreements each year without bothering to familiarize ourselves with their terms. And thanks to the Computer Fraud and Abuse Act, which makes it a crime to access any computer system without the authorization of the owner, and the expansive interpretation of that law that the Justice Department and federal courts have settled on, breaking any one of these agreements could, in theory, be a criminal act.

This happened a few years ago. You may remember the “MySpace suicide” case, in which a woman set up a fake MySpace account, posing as a teenage boy. She then befriended a teenage girl who her daughter considered to be an enemy. The girl fell in love with this fictional boy. The woman then revealed the whole thing to be a ruse. Tragically, the victim of this sick prank took her own life.

Because the state in which this occurred, as well as the federal government, had no laws against so-called “cyber-bullying” at the time, a clever federal prosecutor charged her with a violation of the Computer Fraud and Abuse Act. His argument was that setting up a fake account violated MySpace’s terms of service, and in accessing a website in violation of its terms, the woman was accessing a computer system “without authorization,” which amounted to a criminal violation of the CFAA.

She was actually convicted, though her conviction was later overturned on appeal.

Since then, there have been many other cases of people being charged with crimes after they accessed a work computer after being fired, set up fake Facebook accounts, and other things that most of us wouldn’t consider to be the stuff of criminal liability.

Now, most of the conduct that gave rise to these cases was bad, and the law shouldn’t completely ignore it, when it causes actual harm. But that’s why we have civil lawsuits. By criminalizing such a wide range of conduct, we’re actually trivializing crime.

I should also note that I’m not terribly worried that the FBI is going to start arresting married people who join dating sites (that’s against most dating sites’ terms of service), or teenagers who use Google (that site’s terms of service say that you can’t use it unless you’re of the legal age to enter a contract – 18 in most jurisdictions).

What I am worried about is that the CFAA might become a catch-all criminal statute for federal prosecutors to use when they don’t have any real evidence against a defendant, but they “just know” that the defendant did something wrong.

One of the many running themes of my blogging over the last couple years has been the need to avoid vague criminal statutes. Imagine if there were a law on the books which made a crime “punishable by whatever sentence the Court sees fit” to do “anything the government doesn’t like.”

Obviously, I’m not saying that this is likely to happen anytime soon, but with infinitely-elastic laws like the CFAA in existence, I’m not saying that it couldn’t ever happen, either.

For that reason, I agree with Orin Kerr of the Volokh Conspiracy, on his argument that the CFAA needs a serious re-work. Obviously, we want to punish legitimate crimes that can be committed through computers, like identity theft and espionage; but the CFAA, or another law altogether, could accomplish that goal while being much narrower in scope.

Broke USPS Needs Its Bins Back, Giving Amnesty From Felony Charge

You’ve a rebel for blatantly getting away with a federal crime for too long.  Need amnesty?  Well, if you currently possess a United States Postal Service plastic mail bin (which is a felony, punishable by up to 3 years in prison) now is the time to do so because you can return them free of prosecution.  Sure it’s a lame crime, but hey, a crime is a crime and you can always dress up the story later at the bar with car chases and shootouts.  Because we all know that the ladies dig a bad boy, oh and vampires, too, for some reason.

In any case, you heard right.  The increasingly cash-strapped USPS is currently looking for any way to cut expenses and increase its dwindling revenue streams.  So after years of pointlessly and ineffectively pursuing holders of its mail bins, the agency has announced a temporary period of amnesty starting from November 12 to November 26.  Perhaps it’s simply to spread some early Christmas cheer?  Or more likely it’s because USPS has lost $50 million worth of the bins, which run $4 a pop.  USPS has even gone the extra mile by directing soon-to-be-bin-less citizens towards retailers who sell comparable and/or better bins for $6.

Times must be really tough for the USPS.  Don’t people know that we have to do everything we can to keep it afloat less our society crumble into a post-apocalyptic wasteland.

Seriously though, this really is an interesting turn of events and it will be fascinating to see how it plays out, especially since there is an odd curve ball thrown into the mix of all this.  USPS is only offering amnesty for the return of its mail bins, but is also requesting that people return stolen mail pallets and crates.  The latter two are stolen particularly often as they serve as makeshift furniture for many a dorm room all over the nation.  The twist is that the USPS isn’t offering amnesty to those who return those last two items.  From a criminal theory research perspective, the USPS has inadvertently created a nationwide experiment on effective prosecution and decriminalization.

I know, it all might sound a little crazy, but before you jump to have me committed, take a moment to consider the elements of this predicament and how it relates to current criminal law practices.  Our current criminal justices system has long been one reliant on plea bargains to keep it from collapsing on itself.  This is because the sheer number of criminal defendants makes the notion of prosecuting each and every case impossible.

However, many legal theorists agree that one of the main reasons why there are so many crimes today is because there are too many obscure, harsh, and/or unnecessary criminal laws in existence.  In essence, these laws can make normative and/or less harmful behavior into violations that carry stiff punishments, and in turn force those who commit them into hiding while also increasing the cost and burden on law officials and prosecutors to put violators behind bars.

Now, in the case of USPS’s missing bins, aside from the convenience and utility they offer to customers who hold onto them, one of the main reasons why they aren’t returned is that those who do so after the proscribed return time may be worried about facing prosecution.  Thus they are faced with a rock-and-a-hard-place situation.  They can either return the bin and face potential prosecution, or they can keep the bin and hide their crime.  Either way, USPS doesn’t really benefit in the long run as the latter situation causes them to lose money from not getting their bins back, and the former situation still causes them to lose money since they must expend resources to pursue unnecessary prosecution efforts.

But we won’t know how effective this amnesty attempt will be for USPS’s bottom line until after the experiment is over and the data on it is released.  Though my bet is that the USPS will see a positive spike in returned bins while simultaneously seeing no change on returned pallets and crates.  People I believe, after all, are essentially honest and good.  And I think given the chance most will do the right thing when it’s convenient and safe, as idealistic as that all may sound.

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Zynga Demanding that Employees Return Stock Or Be Fired

If you’ve used Facebook at any point in the last few years, you’ve probably noticed your news feed getting clogged up with messages like “Bob just harvested 12 bushels of kumquats in FarmTown” or something similar. These simple, addictive games have proven to be a cash cow for a few companies. And the undisputed king of so-called “social gaming” is a company called Zynga. They make games like Mafia Wars and Farmville.

The people who founded the company, as well as its top executives, are now fabulously wealthy. However, like just about every successful tech company, Zynga was once a plucky startup with limited funding, and its future prospects were far from certain.

Cash-strapped startups, in a bid to attract the best possible talent, often offer new hires stock options, to supplement below-market salaries. Presumably, this is also meant to encourage these new hires to work hard to help the company succeed, and to attract employees who honestly believe in the company’s long-term success, by essentially forcing them to bet on it.

This has led to some relatively low-level employees (like secretaries and cooks) who got into a startup on the ground floor who end up with multimillion dollar windfalls when the company goes public. One famous example is a chef who was hired in Google’s early days ending up with $20 million when the company went public in 2004. Zynga, apparently, wants to avoid situations like this.

Basically, in anticipation of an initial public offering, Zynga appears to be looking at employees whose contributions to the company they don’t believe warrant a potentially-huge financial windfall. The company is telling them to give back their stock, or lose their jobs.

The company claims that they gave out too much stock to employees in the early days, and now they don’t have enough unvested shares to give out to attract top talent.

I honestly am not knowledgeable enough on the subject to say if this is legal or not. But, it seems like these employees are getting an incredibly raw deal. The whole reason that stock options are a good way to attract top talent in a company’s early days is that they offer the promise of a huge financial windfall a few years down the line, if the company is successful. It seems incredibly shortsighted for a company like Zynga to go back on this deal now that it’s inconvenient.

After all, stock options won’t be nearly as effective in attracting new employees if they have reason to suspect that they’ll be asked to give their shares back, or be fired, as soon as it’s convenient to the top executives in the company. Furthermore, actions like this will serve as a disincentive for employees at startups to put in the long hours and personal sacrifice that are usually required to turn a startup into a successful business. After all, how hard would you work to make a company successful if you know that your bosses might take away your major reward for doing so (your now-valuable stock options).

Of course, this maybe could have been avoided if the employees had pushed for a contract stating that the employer would not be able to pull this kind of move. Now that Zynga has set this precedent, prospective employees at other startups might start pushing for terms in employment contracts stating that they cannot be forced to give up their stock options as a condition of continued employment.

In this economy, it may seem that prospective employees aren’t in much of a position to be making demands of their employers, but with startups, the situation is a little different. Unless they’re flush with venture capital funding, tech startups often operate on a shoestring budget. Their need to attract talent, and the limited incentives they have to offer, give talented employees a good deal more leverage over their employers than the average worker has.

Employment is generally “at-will,” meaning that employees can be terminated for any reason, or no reason at all (presumably including failing to give back their stock options). However, this is the default arrangement, and it can be modified by contract. Of course, both parties have to agree to the terms of a contract for it to be valid, which is why employment contracts are relatively rare in non-unionized workplaces: the employer has little to gain by signing an employment contract which will almost certainly limit their rights to fire employees bound by the agreement.

But as I said, the situation with startups is different. Their employees have leverage. Hopefully, they’ll take this case as an object lesson in flexing their leverage, so situations like this don’t happen in the future.

Walmart Settles Class Action Netflix Lawsuit, Plaintiffs Can Now Afford That Cup Of Coffee

How many times have you walked around your neighborhood, running errands and generally being the baddest dude on the planet, when you suddenly realize that the freezing chill of winter has rendered you numb with cold.  “Oh wait,” you say, “a coffee shop in the distance, I’ll just pop in for a cup of joe to warm my body and spirit.”  But oh no!  Upon entering said café you find that you have no cash on hand.

Well now you can kiss that problem goodbye, because thanks to the latest class action settlement from Walmart you now have a chance to get enough money to buy that bottomless cup of coffee you were eyeing all along.  Oh, but actually you may want to seek a cheaper beverage because this isn’t the 1950s anymore and that whopping $1.50 you get for filing your claim can’t get you much of anything anymore.

Overly long, but amusing, introductory paragraphs aside, Walmart has just thrown in the towel on its latest class action lawsuit.  The company has agreed to payout a total of $27.25 million to Netflix DVD subscribers.  You may have already gotten an email about it and likely probably deleted thinking it was a Nigerian money scam.  It’s not, by the way.  So if you were a Netflix DVD subscriber between May 19, 2005 to September 2, 2011, you have until February 14, 2012 to file a claim on this website to get a piece of that settlement.

How much of a piece you ask?  Well, as it turns out, only about a $1.50 of that $27.25 million settlement.  The attorneys heading the class action have requested about $6.8 million of the settlement for legal fees and an additional $1.7 million for costs.  At last count, Netflix had about 23.6 million subscribers since last September, so with a little arithmetic and legal history, which states that usually only about half of all class action members ever file a claim, the typical payout per subscriber will only be a slightly over a buck per head.

But hey, money is money, right?  And it’s better that the actual claimants get some of it rather than let it all go to the attorneys.  The bigger head scratcher to most people is probably why they’re getting money in the first place and why Walmart, unlike Netflix, decided to call it quits before the case ever got to court.  Well my friends, it’s a funny tale to say the least.

For those of you following the case, you’ll know that the lawsuit was first filed in 2009 by a few angry Netflix DVD subscribers who didn’t like the sudden increase in Netflix’s monthly fees.  What happened was that back in early 2000s, Walmart launched an ill-fated mail-order DVD rental service á la Netflix.  The new program didn’t do well enough to be very profitable, but it did serve as a thorn in Netflix’s side because it funneled potential subscribers away from the internet DVD rental king and cut into their potential profits.

The two companies were at an impasse: if Walmart shuttered the program, they’d lose out on a potential revenue stream, but if they kept it going it would have taken a lot more investment to keep it afloat.  So the two companies instead decided to come to an agreement.  In exchange for bowing out of the DVD rental business, Netflix would promote Walmart’s DVD sales business and Walmart in turn would promote Netflix.  It was all hunky-dory except for the fact that what they did sounds a lot like collusion.  And thus a class action lawsuit was born.

“But wait!” you may be asking. “What’s wrong with companies promoting each other? Aren’t companies and people free to contract as they please?”

Well, yes and no.  Certainly everyone is free to enter into and set the terms of their contracts.  The problem is that even if the parties agree to a contract, it doesn’t necessarily make the contract itself legal.  For instance, an agreement to buy heroin is completely void because the subject matter of the contract is illegal.

However, the problem here isn’t that renting and selling DVDs is illegal, but rather the collusive nature in the way that the companies went about it.  Collusion is the name of the game.  It happens particularly often in cases where companies or people are the sole players in an industry, in other words when a monopoly or oligopoly is involved.  Netflix is the most dominant DVD rental provider in America today. By Walmart opting out of the market and working with Netflix to help further cement itself, Walmart gave Netflix not only an unfair advantage against other companies looking to jump into the same territory, but it also gave Netflix the ability to essentially dictate the price for online DVD rentals.  And that’s the harm.  Because when Netflix decided it needed to increase its fees, subscribers had few other options to turn to in order to get their DVD rental fix.

But did collusion happen here?  There certainly always some good arguments against it.  I mean, Dish Network’s Blockbuster company is arguably a viable alternative for consumers unwilling to pay Netflix’s fees.  However, the problem is that there isn’t much more competition out there other than Blockbuster.  So because of Netflix’s position in the industry, they still would be able to dictate the prices as their resources far outpaces that of the competition.  And because of this, I think Netflix is making the wrong move by continuing to wage their losing battle against this class action.  Walmart was smart to opt out when it did as they’ll probably save much more money in the long run.

Though in the end, all this legal mumbo jumbo probably won’t be much to calm all you cranky Netflix clients out there.  But hopefully you’ll get some pleasure out of that $1.50.  Maybe the payout will come soon enough before the price for a bag chips increases again.