Tag: Preston Rezaee

Piercing The Veil

Nevada’s Supreme Court Confirms That Limited Liability Companies Are Subject To The Alter-Ego Doctrine & Corporate Veil-Piercing Claims

-By J. Malcolm DeVoy, Esq. & Erica A. Bobak, Esq.

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Nevada has long been regarded as a business haven because of its favorable laws regarding corporate governance and strong protections for business owners’ assets. These protections, however, are not limitless. One area of interest for transactional attorneys and litigators alike has been whether and how the alter-ego doctrine—the idea that corporate formality should be disregarded in favor of finding that a company and its owners are one and the same—should apply to Nevada limited liability companies. For years, the Nevada Supreme Court avoided directly addressing the question, but finally was forced to do so in Gardner v. Henderson Water Park, 133 Nev. Adv. Op. 89.

1. Understanding the Alter-Ego Doctrine in Nevada.

Alter-ego liability for business entities such as corporations and limited liability companies has been around for decades, colloquially referred to as “piercing the corporate veil.” Under common law, this remedy was available to prevent injustice in the event of an entity being created to enrich its owners and protect them from liability, while leaving those harmed by the company or corporation without an adequate remedy. Some of the hallmarks of cases justifying a finding that the business entity was merely the alter-ego of its owner or owners, and designed solely to avoid liability, are facts indicating fraud, undercapitalization, and commingling of personal and business funds.

In 2001, the Nevada Legislature codified Nevada’s alter-ego doctrine as it applied to corporations in NRS 78.747. This legislation wrote Nevada’s alter-ego doctrine into the State’s corporate law. This provision did not, however, find an analogue enacted in NRS Chapter 86, which governs the existence of limited liability companies. The argument then arose that the omission of this provision from Chapter 86 was intentional, and that limited liability companies were intended to be exempt from the alter-ego doctrine. Indeed, prior Nevada law confirmed that “omissions of subject matters from statutory provisions are presumed to have been intentional.”1

But like many things in life, the law also abhors that which appears too good to be true, or that would lead to an absurd result. Without directly deciding the issue, Nevada’s courts assumed for years that the alter-ego doctrine codified in NRS 78.747 would apply to limited liability companies as well.2 The Nevada Legislature’s enactment of NRS Chapter 86 in 1991 also contemplated that limited liability companies would be subject to the same doctrine of alter ego as corporations, which at that time was applied by the courts, rather than embodied within a statute.3 Although the Nevada Supreme Court had not directly spoken on whether the alter-ego doctrine would apply to limited liability companies, whether before or after the 2001 enactment of NRS 78.747, cautious transactional attorneys and intrepid litigators assumed that it would.

2. The Facts of the Gardner Case Required the Nevada Supreme Court to Confront the Alter-Ego Doctrine.

The Gardner case arose from the non-fatal drowning of a six-year-old boy at Cowabunga Bay Water Park in Henderson, which is operated by Henderson Water Park LLC. The injured youth’s parents brought suit against Henderson Water Park LLC, and ultimately wished to pursue its members and managers. Henderson Water Park LLC’s members—the company’s owners—consisted of two other limited liability companies, a strategy regularly used by attorneys to further shield individual clients from personal liability.4 In that arrangement, one or more individuals or entities create a special purpose limited liability company to hold their interest in a company such as Henderson Water Park LLC, which does business with the outside world, and faces the prospects of on-site accidents, injured patrons, and other risks.

During the course of litigation, Gardners’ counsel conducted discovery on Henderson Water Park LLC and its two managing members, West Coast Water Parks, LLC and Double Ott Water Holdings, LLC (the “Member LLCs”). In turn, seven individuals were owners or managers of the Member LLCs, and these individuals also served on a committee to manage Henderson Water Park LLC. Based on their findings in discovery, the Gardners’ counsel moved to amend their complaint to name the Member LLCs and the seven individuals who owned or managed the Member LLCs, and managed Henderson Water Park LLC, as individual defendants in the lawsuit. Within the proposed amended complaint, the Gardners intended to assert claims for alter-ego against Henderson Water Park LLC and the Member LLCs to reach the personal assets of the seven individuals who managed the businesses.

The district court denied the motion for leave to amend the complaint, finding that Nevada law did not allow for alter-ego liability against Henderson Water Park LLC and its members or managers. The Gardners’ counsel petitioned the Nevada Supreme Court for an emergency writ of mandamus, ordering the district court to allow the Gardners to file their amended complaint. The Nevada Supreme court granted the petition and ordered that the district court should allow the Gardners to file their amended complaint.

First, the Nevada Supreme Court held that the proposed amended complaint alleged negligence claims against the individual managers based on their personal duties, rather than Henderson Water Park LLC’s duties to the injured minor. This portion of the Gardner opinion reaffirmed the protection of managers under NRS 86.371 extended to claims against the company, but not to them personally. The Nevada Supreme Court drew this distinction between Henderson Water Park LLC and its individual members by noting that “the Gardners’ proposed amended complaint contained multiple allegations of individual negligence by the [m]anagers concerning their direct knowledge and actions that threatened physical injury to patrons,” including the injured youth in that case. Based on these allegations, Henderson Water Park LLC’s managers were pulled outside the protections of NRS 86.371—for the purposes of pleading—and could be named as defendants.

Most significantly, the Nevada Supreme Court reversed the district court and unequivocally stated “the alter-ego doctrine applies to LLCs.” Recognizing that this was the norm across several states to have considered the issue, the Nevada Supreme Court analyzed authority that subjected limited liability companies to the alter-ego theory of liability, whether based on express statutory requirements under common law. Noting that the Nevada Legislature’s creation of NRS 78.747 in 2001 merely “codified” a “judicially created doctrine,” the Nevada Supreme Court rejected any argument that the creation of NRS 78.747 was intended to negatively imply limited liability companies were not subject to the alter-ego doctrine. Yielding to concerns about fraud, abuse, and inequitable results, the Nevada Supreme Court wrote: “As recognized by courts across the country, LLCs provide the same sort of possibilities for abuse as corporations, and creditors of LLCs need the same ability to pierce the LLCs’ veil when such abuse exists.”

Thus, any remaining question about whether and how the alter-ego doctrine would apply to Nevada limited liability companies was resolved by the Gardner decision.

3. Implications for the Future: The Nevada Supreme Court Confirms the Expectations of Litigators and Transactional Attorneys Alike.

While Gardner provides an important confirmation of what many had long suspected, and crushes any wiggle room that might have existed about the alter-ego doctrine’s application, it is more of a confirmation than a new declaration of law. The decision’s holdings as to the personal liability of managers and members draw new attention to the importance of determining what acts, if any, a company will indemnify its managers or members for taking. While Gardner itself may lead to a rise in alter-ego claims, the pleading standards for bringing such claims, including the need to allege acts constituting an abuse of the corporate form leading to injustice, remain a barrier to drive-by allegations of alter-ego.

As criminal defense attorneys have balked that prosecutors could indict a ham sandwich, it remains true that, subject to Rule 11, a plaintiff can allege what he or she pleases. Proving alter-ego, however, is a different matter. For attorneys that do not practice litigation, this decision re-emphasizes the importance of having clients document their operations with bylaws, operating agreements, minutes of meetings and significant activities, and reasonable internal controls to maintain strong borders between or among the entity, its management, and its ownership. Although Gardner does not change the law or necessarily change the expectations of attorneys, it brings several issues to the fore that can be costly for businesses to remedy and even more painful to litigate.


J. Malcolm (“Jay”) DeVoy is the owner of DeVoy Law P.C., and Erica A. Bobak is an associate attorney with the firm, joining upon completing her clerkship for Department 30 of the Eighth Judicial District Court. DeVoy Law focuses on providing representation to clients in significant business disputes, serious personal matters, and advising medical professionals and practices about issues including licensure, HIPAA, Stark Law, and the Anti-Kickback Statute.

1Dep’t of Taxation v. DaimlerChrysler, 121 Nev. 541, 548, 119 P.3d 135, 139 (2005); Galloway v. Truesdell, 83 Nev. 13, 26, 422 P.2d 237, 246 (1967).
2 Webb v. Shull, 270 P.3d 1266, 1271 n.3 (Nev. 2012) (citing Montgomery v. eTreppid Technologies, LLC, 548 F. Supp. 2d 1175, 1180-81 (D. Nev. 2008) (recognizing that federal and state courts have consistently applied to LLCs corporate laws for piercing the corporate veil under the alter ego doctrine); see Volvo Constr. Equip. Rents, Inc. v. NRL Rentals, LLC, 614 F. Appx. 876, 878 n.1, 880 (9th Cir. 2015); see also In re Giampietro, 317 B.R. 841, 845-46 (Bankr. D. Nev. 2004) (Wherein the court first noted its belief that Nevada courts would apply the same common law standards for alter ego liability to members of limited liability companies that they had placed upon shareholders of corporations).
3 See Hearing on A.B. 655 Before the Assembly Judiciary Comm., 66th Leg. (Nev., May 21, 1991).
4 The Gardner case has generated at least one other reported Nevada Supreme Court decision that is closely related to this issue, but distinct enough that succinctly discussing it here risks complicating the alter-ego issues discussed in this article. For that reason, this article will not address the other Nevada Supreme Court decision relating to Gardner, although the authors recommend reading it.

Saving Sandoval: Las Vegas Attorney & Iraq Veteran Releases New Book

SavingWhile deployed to the most dangerous area in Iraq in 2007 known as the “Triangle of Death,” U.S. Army Specialist Jorge Sandoval, an airborne infantryman and elite sniper, was instructed to “take the shot” and kill an enemy insurgent wearing civilian clothes. Two weeks later, Army investigators descended upon Sandoval’s unit and began interrogating the soldiers and trying to link Sandoval and others to war crimes. Sandoval was ultimately charged with six felony level offenses, to include two counts of murder. The case made international headlines with leading stories in the New York Times and Washington Post.

Then, Captain Craig W. Drummond was the Army JAG military defense attorney assigned to Sandoval’s case. The new book covers the events from the moment the trigger is pulled on the battlefield through the trial that took place in a U.S. military compound on the outskirts of Baghdad during the height of the enemy uprisings in Iraq. The book brings the reader into the reality of modern warfare in a post September 11th environment where the enemy does not always wear a uniform. The detailed account of the investigation and trial testimony from elite Army snipers brings the reader into the courtroom and onto the battlefield of Iraq.

The book is receiving rave reviews and high praise from the legal and military community.

“A revealing, real-life courtroom drama, reminiscent of A Few Good Men.”–Hunter R. Clark, Director, International Law and Human Rights Program, Drake University Law School.

“Armed forces continue to operate in uncertain and complex environments and this story is an insightful and powerful look into the challenges and judgments faced by a young sniper deployed to the battlefield of Iraq.”–Brigadier General Jeffery L. Underhill, U.S. Army Retired, (Iraq Veteran).


SAVING SANDOVAL was published by Wild Blue Press which is owned by New York Times Bestselling Author Steve Jackson. The book is available now on Amazon.com. Craig W. Drummond is a Las Vegas attorney at the Drummond Law Firm practicing in Personal Injury and Criminal Defense. He received the Bronze Star for his service in Iraq. More information about Craig and the book can be found at DrummondFirm.com

Protect Your Fee, Perfect Your Lien

-By Nedda Ghandi, Esq.

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Picture this: You are retained as plaintiff’s counsel in a personal injury action on a contingent fee basis. Through your expert handling of the matter, you procure a favorable settlement or judgment for your client. Your client is pleased with the result, and you are ready to collect your fee. But will you get paid if your client files a bankruptcy petition?

If your client’s finances or even medical bills from their injury are such that bankruptcy is inevitable, a properly perfected charging lien may be crucial to protect your right to payment. See In re Nicholson, 57 B.R. 672, 675 (D. Nev. 1986) (holding a bankruptcy trustee may avoid an unperfected charging lien). Indeed, my firm has been involved in several bankruptcy cases in which the debtor’s personal injury counsel was unable to recover his or her fee as an unsecured creditor. If those firms had taken advantage of the statutory lien afforded to Nevada attorneys, however, they would have been in a much better position to recover their fees, as claims secured by statutory liens take priority over many other claims that may be made against the debtor’s assets, such as most medical bills and credit card debt. See generally 11 U.S.C. § 507 (priorities); 11 U.S.C. § 724 (treatment of certain liens). Thus, an attorney’s contingent fee is much more likely to be paid when secured by a perfected charging lien.

Charging Liens & How To Perfect Them

To perfect a charging lien, you must serve both the client and the defendant(s) personally or by certified mail, return receipt requested, with written notice stating that you are claiming a lien and the amount claimed. See NRS 18.015(3)1. Where the amount of the attorney’s agreed-upon fee is a percentage of the proceeds, the notice must disclose the attorney’s contingency percentage and claim court costs and out-of-pocket costs advanced by the attorney in an amount to be determined. See Golightly & Vannah, 373 P.3d at 106, 132 Nev. at ___. Importantly, proper notice must be given before any funds are received. Id. If this procedure is timely completed, your charging lien will be perfected and attach to any money or property recovered on account of your client’s claims—and, in the event of a bankruptcy, you will likely be at or near the front of the line to be paid as a secured creditor. Should you fail to serve the appropriate notice to all necessary parties before a settlement is carried out, the lien will not attach and you will be relegated to unsecured creditor status in the event of a bankruptcy.

Don’t let your hard work go to waste due to your client’s financial circumstances. Follow the simple procedure for perfecting a charging lien and protect your hard work and corresponding fee!

1. In relevant part, NRS 18.015(1)(a) provides that an attorney “shall have a lien . . . [u]pon any claim, demand or case of action, including any claim for unliquidated damages, which has been placed in the attorney’s hands by a client for suit or collection, or upon which a suit or other action has been instituted.” This “charging lien” secures the amount of any fee agreed upon by the attorney and the client, or, absent an agreement, a reasonable fee for the attorney’s services, and attaches to any judgment entered and any money or property recovered on account of the suit or other action. See NRS 18.015(2)-(3). However, the charging lien does not spring into existence the moment judgment is entered or settlement papers are signed. Rather, in order for the lien to attach and provide the intended security, the attorney must strictly comply with the procedure for perfecting the lien before recovery is obtained. See NRS 18.015(4); Golightly & Vannah, PLLC v. TJ Allen, LLC, 373 P.3d 103, 132 Nev. Adv. Op. 41 (2016).


Nedda Ghandi, Esq., is the founding partner of Ghandi Deeter Blackham Law Offices. A Nevada native, Ghandi is a graduate of the University of Nevada, Las Vegas William S. Boyd School of Law and has practiced law in Las Vegas for 9 years. Ghandi has written numerous articles for publications concerning interesting developments in the law, and has been selected as a member of Nevada’s Legal Elite and as a Super Lawyer every year since 2013. Ghandi Deeter Blackham specializes in family law, bankruptcy, guardianship, and probate. Consultations may be scheduled by calling 702.878.1115 or visiting www.ghandilaw.com.

Highs & No’s: The Do’s & Don’ts of Cannabis Investing

-By Caleb M. Zobrist, Esq., Glenn H. Truitt, Esq. & David J. Housey

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Investors – especially those unfamiliar with the cannabis market – have traditionally been hesitant to invest in an industry the federal government views as illegal. While this still holds true for most institutional investors, smaller firms and groups of wealthy individuals are becoming increasingly interested in cannabis.1 However, the majority of information surrounding these investments still lies somewhere between rumor and nuance, and the dizzying array of so-called cannabis “experts” can lead one to the conclusion that there is no such thing (there is, but they’re hard to spot).

The Cannabis industry has a lot in common with business in general. The industry includes agricultural, commercial processing, retail and laboratory businesses – each of which has a broad market of comparable enterprises for comparison. The maturity of these sectors also means that traditional accounting and financial reporting is more than adequate for business analysis purposes.

So, you’re looking to invest in marijuana. You’re not alone. Billions of dollars of private equity are flowing into the cannabis business – with billions more flowing into the rapidly growing public market for marijuana securities. However, if you have even a remote connection to this sector – you’ve likely been solicited (or know someone who has) with a private equity opportunity. Despite the federal illegality of the cannabis industry, in general (owing to the classification of marijuana as a Schedule I drug, as governed by the federal Controlled Substances Act), federal securities laws still apply to investment in marijuana businesses. Here’s a quick guide to what to do next.

Securities

The Supreme Court has adopted a flexible and liberal approach in determining what constitutes a security. In its famous decision of SEC v. W.J. Howey Co., 328 U.S. 293, 90 L.Ed. 1244, 66 S.Ct. 1100 (1946), the Court held that land sales contracts for citrus groves in Florida, coupled with warranty deeds for the land, and a contract to service the land, were “investment contracts” and thus securities. The Court stated that

[a]n investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party. 66 S.Ct. at 1103.

In general, all securities offered in the U.S. must be registered with the SEC or must qualify for an exemption from the registration requirements. Registering securities (as publicly traded companies do) is an exceptionally expensive undertaking, and requires the full-time support of an experienced securities law firm. It is critical for the success of the issuance of private securities that they avoid registration by qualifying for a Regulation D exemption and properly documenting that exemption.

No matter what you are told by a cannabis company seeking investment, if you give them money, with an expectation of return on your investment without any material effort on your part: you are being issued a security. As a result, you should be provided with a private placement memorandum (“PPM”; a prospectus and required legal disclosure statement) and a Subscription Agreement (providing the terms of your investment – and your qualification as an accredited and/or sophisticated investor). The PPM must include information regarding its qualification for a Regulation D exemption.

Valuation

One of the greatest challenges facing investors in new markets is proper valuation of marijuana enterprises. Speculation and short supply can drive equity valuations into inflated multiples based on rapid growth expectations. Conversely, perceived risk can be overestimated and drive equity valuations into substandard positions. No matter what, the one valuation you should be skeptical of is the one provided by the issuing company. The offer, itself, represents a valuation (e.g. if you get offered 10% of a company for $100,000 investment – that’s a $1,000,000 valuation), but may also include detailed analysis to highlight the valuation discount or premium.

Nevertheless, you should have the pro forma financials reviewed by an independent financial professional – including an independent valuation, for perspective. The resulting quantitative analysis will provide important information on the nature of the offer you’ve been provided.

Compliance

For the amateur investor, legal compliance is likely your biggest concern. For professional money, the regulatory environment is just another variable in the valuation. While compliance risk has always been a material element of cannabis investing (and will be until marijuana is legalized at the federal level), it has become particularly sensitive in light of Attorney General Jeff Sessions rescinding the 2013 Cole Memo, which had directed US attorneys not to pursue properly-licensed marijuana businesses in marijuana-legal states.

If this repeal had gone unmentioned or unopposed, the increased risk would materially depress valuations and chill investment. However, opposition to the repeal was swift and widespread, including (at the federal level) U.S. Congressmen Polis of Colorado, Rohrabacher of California, and Blumenauer of Oregon sponsoring an amendment to the House’s next budget bill prohibiting the Justice department from spending money on the prosecution of legally-compliant cannabis businesses.

Additionally, Cannabis-legal states have indicated they will aggressively fight back any federal action taken to shut down state-legal Cannabis businesses. Many industry analysts cite the expected tax revenues that have already been budgeted, and the increase in local economies via job creation and the deep political unpopularity involved in eliminating or even reducing those revenues.

The bottom line is that cannabis investment remains at record levels with stable valuations and public sentiment strongly in favor of legalization (across both parties). Eventual legalization is all but inevitable.

Conclusion

It’s a great time to invest in cannabis, despite what you may have heard in the news. When it comes to investment, follow the money – and with little or no money exiting cannabis companies, it remains a bull market. However, once you’re ready to invest:

Make sure private securities offers are properly documented; and
Secure your own independent valuation.

Because a good investment can still be a bad (or illegal) deal.


Glenn H. Truitt, Esq. is a managing partner at Ideal Business Partners (www.idealbusinesspartners.com), a multidisciplinary professional services firm serving healthcare professionals with state-of-the-art legal, financial compliance and strategic advice, working together to lift up their practices. IBP consults with ComplyPro (www.mycomplypro.com), a HIPAA compliance services company, serving Nevada and southern California, and employing both traditional and digital compliance tools to develop comprehensive, customized compliance solutions for any size practice.

Malvika Rawal, Ph.D., J.D., is a law clerk at Ideal Business Partners. She received her Master of Science at the University of Delhi in Biomedical Sciences and her doctorate degree in Free Radical and Radiation Biology at the University of Iowa. She then received her Juris Doctor at the University of Iowa College of Law in May 2016. Rawal is deeply involved with ComplyPro, a HIPAA compliances services company.

1 Marijuana Business Daily. Marijuana Business Factbook 2017. p.6. https://mjbizdaily.com/wp-content/uploads/2017/05/Factbook2017ExecutiveSummary.pdf

From Open Murder To Gross Misdemeanor

-By Mark Fierro

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In the pantheon of courthouse stories that will live on forever, there is a new entry: the case of the “Smoke Shop Shooter,” 24-year-old Raad Sunna, who was originally charged with open murder before he ultimately pleaded down to a gross misdemeanor in return for no time served. No trial. No felony record. No time. Zero. Nada.

One reason the case will live long beyond a mortal expiration date is the reaction of Dominic Gentile, the lead defense attorney in the case. Gentile has said that upon reflection, he is disappointed in the outcome.

“I know there are a lot of people applauding the result here, but I’m not one of them,” Gentile said. “It is a criminal defense lawyer’s horror to represent a person who is truly, factually innocent of what he is charged with, because it brings far more pressure. This was a classic example of how frustrating our criminal justice system is, because it is geared toward the negotiated settlement, the disposition, of cases.”

“Here you have a situation where a person should not have to carry on his record that he has been charged with a crime, and certainly should not have to carry that he has been convicted of a crime, because he did nothing illegal. He did nothing wrong. So, when you have somebody like that you are representing, it keeps you up at night — if you’re conscientious.”

Initially, Gentile’s contention of Sunna’s innocence seems to fly in the face of the fact pattern. The deceased person was 13 years old, unarmed, and had been shot in the side once and in the back six times.

The shooting generated sensational headlines from the evening of the incident. It began as a robbery attempt at a smoke shop in a southwest Las Vegas Valley strip mall, with three teenagers putting on layer upon layer of clothing to make themselves appear larger and more menacing. They donned shemagh-style masks, which many people associate with tactical military forces or terrorism.

All of the perpetrators’ preparation for the robbery was caught on surveillance video from a camera at a nearby store.

They burst in the door and rushed toward Sunna, the lone clerk in the family-owned smoke shop at the time. Video from the shop shows two of the attackers leaping behind the store’s counters and Sunna responding by drawing his pistol. Seconds later, one of the masked robbers, Fabriccio Patti, would be dead on the floor.

Thanks in part to the surveillance video footage, Gentile liked his position from the moment he took the case. “When I first saw the video, I never believed the police or the district attorney would file any charges,” Gentile said. “Raad’s background was pristine. I don’t think I could possibly create a fictional client who had more to offer to society than this kid. He was just the poster boy for good behavior.”

Sunna is literally an altar boy. When he sat down with police to answer their questions on the night of the shooting, he asked that his priest accompany him. That priest, Father John Nicholas, would have been a stellar witness had the state decided to proceed to trial. Even though he had an altar boy client with a background that would be any defense attorney’s dream, Gentile was not fully confident in his chances until he saw the results of a pair of focus groups he ordered. (Full disclosure: Fierro Communications, Inc., provided support for Gentile’s firm in preparation for the case, particularly in the area of conducting and analyzing focus groups and mock juries. As a direct result of their work on this case Fierro Communications and Gentile have partnered to launch a business based on focus groups.)

“You always have to stress test your own beliefs and your own point of view and your own evaluation of the evidence against what others may think of it,” Gentile said. “Lawyers are often far removed from the mindset of those who have nothing to do with the law. Sometimes their judgment is too constricted by the rules of law. I know what the jury instructions are, I know what the elements are of murder and all the other included offenses of murder. I know where the burden of proof rests on self-defense. I saw it as self-defense. But there were a couple of powerful factors that were not necessarily working in Raad’s favor. One was the person he shot was 13 years of age. Of course, Raad could not have known that. But at the end of the day you do not know how much sympathy the jury will have for the parents of a dead 13-year-old. Another factor was the dead man was not armed. Again, there was no way for Raad to know that, particularly with the way he ran at him. It turns out one of his cronies was armed with a butterfly knife that could cut your throat in no time. But the dead man was not armed.

“When those factors are in the mix, you have to worry about it. How is that going to impact emotionally the members of the jury? Regardless of what anyone says, the jury decides the case viscerally and then thinks of a rationale. That’s the nature of a group decision-making process. And that’s absolutely what juries do. Any trial lawyer or judge will tell you that.”

In studying the mock juries that made up the focus groups, Gentile’s resolve was strengthened when he observed that both groups independently decided that Sunna should be acquitted. “Both focus groups started out exactly the way I was afraid of,” Gentile said. “They started out by looking at a 13-year-old, unarmed, and looking for a reason to convict Raad Sunna. As they worked through it and started putting themselves in the place of Raad, the focus groups, without knowing what the other one was doing, both unanimously came to the conclusion that it was self-defense. The irony was the paths each one took to that conclusion were different from the other. When you see them reaching the same result from two different paths, it puts steel in your spine.”

On Feb. 1, 2018, a year and two months after the shooting, Sunna was sentenced to probation and community service after pleading guilty to a gross misdemeanor. He originally faced a charge of open murder that carried the possibility of a life sentence without parole.
The outcome followed tense negotiations between Gentile’s firm and the district attorney’s office that lasted until the final possible moments. The focus group research bolstered Gentile’s confidence during the negotiations.

“I strongly believe in focus groups. I’ve been doing them since the early ’80s,” Gentile said. “Focus groups don’t have to cost a lot of money. You can do a focus group without a lot of bells and whistles and benefit from it. What I really want to do is take the experience I’ve had with focus groups as well as juries, and we want to make it affordably available to more lawyers who handle jury-eligible litigation. I stopped counting, but I definitely have had more than 150 jury trials, every one of them as a private practice effort.

“I want to take that experience and share it with other lawyers. In the plaintiff personal injury arena, I think that cases are settled for too little because lawyers don’t want to spend the money for a focus group.

“And I’m absolutely certain that more cases should go to trial in the criminal arena. Too many cases are settled for way too great a penalty. This case proves that. It wasn’t finalized until the last minute. The next work day, we were supposed to start picking a jury at 9 a.m. And it was 4:59 p.m. the day before that the case was negotiated for what we had demanded. The district attorney’s office didn’t give in for less than a felony until that moment.”

Even though Sunna and his family were satisfied with the decision, Gentile still does not consider it a just result.

“A just result would have been the district attorney dismissing the charges outright,” Gentile said. “What the district attorney did was play the game to the hilt by giving us the Hobson’s choice of running the risk of a renegade jury, who would not see it as the focus groups did, as opposed to something that was not a felony and would most likely not result in him being incarcerated.

“What was I going to tell the client and his family, ‘Trust me, we can win this case?’ I told them what I would tell my own son: You can’t always get what you want, but you can get what you need. What Raad needed, more than anything else, was not to run the risk of life in prison.

“It was three masked robbers running through the front door of a store, totally surprising him. Anybody with a gun would have done what Raad did. Anyone who would dispute that, I would tell them to go click on the video and watch it. And watch the video from the vestibule next door where they were preparing for the robbery.” Gentile ranks the case among the most memorable in his long and illustrious career. “It is absolutely, without a doubt, in my top five cases,” Gentile said. “Although I don’t feel happy about the result, in some respects it may be the best work I’ve ever done.”


Mark Fierro began his career as a reporter/anchor at KLAS-TV, the CBS television station in Las Vegas. He worked at the U.S. House of Representatives in Washington, D.C. He served as communications consultant on IPO road shows on Wall Street. He provided litigation support for the Michael Jackson death trial. He is president of Fierro Communications, Inc., and author of several books including “Road Rage: The Senseless Murder of Tammy Meyers.” He has made numerous appearances on national TV news programs.

Economic Expert Report: Credit Damages

credit

-By Stan V. Smith, PhD & Kyle Lauterhahn

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“Who steals my purse steals trash. ‘Tis something–nothing; ‘Twas mine, ‘tis his and has been slave to thousands. But he that filches from me my good name robs me of that which not enriches him and makes me poor indeed.” – Othello

Shakespeare’s character Iago offers this wisdom that has uncanny applications to modern consumer law. No one in William Shakespeare’s time was denied an auto Loan due to false credit reporting or was extended a mortgage loan that the lender knew the individual could never repay, leading to a foreclosure. But Shakespeare would still understand the damage done to one’s reputation. In modern times, a quality financial reputation – a good credit record – is very valuable, and one can become literally “poor indeed” when this is lost.

In November 2017, I had the privilege of speaking to many legal colleagues at the National Consumer Law Center (NCLC) Consumer Rights Litigation Conference in Washington, D.C. In a discussion session following the keynote speech by Senator Elizabeth Warren, I shared my research and experience regarding credit damage, the types of loses that can be claimed, and how these claims are to be valued. Here I share this knowledge with you.

Credit damage can arise from a variety of circumstances. Mistakes by consumer reporting agencies (CRAs, or credit bureaus) and by credit or information furnishers (Banks, credit card companies, etc.) result in credit damage to innocent Americans every day. Identity theft or identity confusion resulting in merged records is also a common cause of credit damage. Many errors and problems can arise from credit reporting agencies themselves. A recent revision of Equifax’s data breach assessment now shows a theft of over 143 million Social Security numbers, and counting. People seek credit damage compensation as a result of banks wrongfully extending mortgages during the credit boom that they could not afford, and upon which they subsequently have defaulted and have lost in foreclosure. Failure of banks to offer government-financed mortgage modifications for which applicants qualify can result in excess costs and credit damage. Credit damage also frequently occurs during a divorce when one party ruins the credit history of another on jointly held credit cards or loans. Separating legal responsibility for mortgage payments on a jointly owned house and on other jointly held credit can be problematic when the parties are in emotional and perhaps financial adversity. Further, people can also sustain credit damage when they are injured, sick or wrongfully discharged, and do not work for a protracted period, reaching a point where they cannot pay their bills.

Sometimes credit damage arises in unique and unpredictable ways. One plaintiff paid fire insurance premiums to a bank, along with the mortgage payments on his home. A bank employee embezzled the funds and never made payment on the insurance policy. When the house burned down, the owner stopped making mortgage payments and sued the bank to recover the uninsured losses. The bank disputed the claim and foreclosed on his house. This was reported to the credit bureaus resulting is significant damage to his credit. The damage lasted during several years of litigation, but the reported foreclosure was eventually reversed.

Often, credit damage is reversible. Innocent error can be often corrected, even if not easily. But frequently, even though caused wrongfully and through no fault of the consumer, credit damage may occur and cannot be reversed, except by the passage of time, and sometimes not even then. If a person defaults on a mortgage through a breach of contract by another, the report cannot be reversed. The credit bureaus cannot erase or reverse the correct reporting of a foreclosure or a bankruptcy even if the consumer wins a lawsuit against the tortfeasor that caused this. Foreclosures, late payments, bad debt in collection, and other derogatory information, unless put on in error, remains on a credit report for seven years; bankruptcy remains for ten years. Tax liens remain on a credit report as derogatory information for seven years after they have been paid. If the tax lien has not been paid, Equifax and TransUnion will show the unpaid tax lien indefinitely while Experian shows it for fifteen years. If during a divorce, one spouse informally promises to pay real estate taxes on a jointly held house, or income taxes on a joint return, and subsequently fails to pay, the other spouse can experience credit damage, possibly forever, unless the tax liens are eventually paid.

The damage may persist for as long as seven years in the case of an irreversible error (such as in the instance of the earlier-mentioned house fire) or up to ten years in the instance of a bankruptcy. Even if the bankruptcy results from breach of contract, and even if the consumer obtains a verdict in court that a breach has occurred, the Credit Reporting Agencies cannot reverse such derogatory information if the bankruptcy did occur, despite the fact that it arose through no fault of the consumer. In some instances, it may be difficult to anticipate when the damage might terminate because, after seven or ten years when the credit scores have been restored, former low levels of mortgage rates may not be available.

There can be a variety of consequences to credit damage, among them: (a) withdrawal or loss of job offers, (b) significantly higher borrowing costs on credit cards and loans and higher premiums on auto insurance, (c) reduced credit expectancy or capacity, (d) the considerable expenditure of time, energy and money to remedy the situation, and finally, (e) a significant loss of enjoyment of life. Using standard forensic economic methods, these damages can be valued and claimed in lawsuits against the tortfeasors, many of whom are subject to various consumer protection laws including the Fair Credit Reporting Act (FCRA 15 U.S.C. § 1681 et seq.) and its amendments, and the Fair and Accurate Credit Transactions Act of 2003 (FACT).

Various state and federal laws permit a wide variety of claims, including claims for punitive damages. Perhaps the easiest claims to value are the out-of-pocket expense arising from credit damage. The time lost, valued at some reasonable rate, along with out-of-pocket expenses including legal fees etc. can also be easily valued.

Frequently consumers make claims for loss of opportunity, in particular loss of job offers. If a person is offered a job at $45,000 a year and suffers a withdrawal of that offer as a result of credit damage, the loss can be the difference between the lost offer and the next best available alternative, for as many years as the reduced salary can be expected to persist. The loss of opportunity may be more than just a reduction in salary, it may involve a once-in-a-lifetime offer for a position that can never be regained.

Claims can also arise for higher-than-warranted interest costs on credit cards or loans. If a mortgage should have been issued at 4 percent, and the credit damage resulted in a mortgage rate of 6 percent, the two percent difference per annum over the life of the mortgage is a significant sum of money, and can easily be calculated.

Another credit damage claim that can be made is the loss or reduction in credit expectancy. Some consumers simply cannot obtain credit cards or loans at any rate whatsoever and hence cannot make major purchases such as homes, boats, or other assets that require loans, and must carry cash for all lesser purchases. Imagine a world where you cannot buy an airline ticket online or pay for your cell phone usage with a credit card, and where all transactions must be paid for in cash? This loss of credit expectancy can be valued by comparing the rate the consumer might have expected with the highest rate charged by credit card companies, as a floor on the loss of expectancy damages. The loss of credit expectancy is estimated by the cost of credit extended under normal circumstances versus the cost charged to those who are viewed as high credit risks to whom credit is extended, but at the highest rates charged. Normal credit costs are approximately 1 to 1.5 percent per month; the costs charged to high credit risk accounts can run to 3 percent per month or higher. For persons with prior good, or even fair, credit they had the ability to borrow considerable sums beyond his or her diminished credit. I frequently estimate this additional capacity of be at least $100,000, and likely more. This standby credit under normal conditions has a value similar to the value of a safety net for a trapeze artist, or the value of a term life policy for a person who continues to live a healthy life – the value does not depend on the actual use. It is an option, and options have value. In my earlier days, I had a seat on the Chicago board of Trade, formed in 1848 to help farmers manage their options against weather losses, price changes, and other financial ups and downs.

Finally, claims can be made and testimony can be provided for the loss of enjoyment of life, well-recognized in the State of Nevada. (See my article in Vegas Legal, August 2016 “Economic Damages in Nevada) Victims of credit damage frequently report going through protracted emotional turbulence and upset, experiencing significant loss of enjoyment of life. These damages can persist long after financial restoration is made as in some instances relationships are destroyed as a consequence of the credit damage. The standard process for evaluating the loss of enjoyment of life applies in these instances. Typically, consumers must be interviewed extensively to obtain detailed information about all these losses.

Credit damage and its consequences can arise easily in the lives of virtually any consumer despite public awareness and programs and laws to prevent this. The consequences can be financially and emotionally devastating. Forensic economists, using standard approaches, can assist in evaluating the losses.

While the filching of one’s good name and the resulting credit damage can arise from a variety of causes – and the consequences can make one very poor indeed – our legal system offers relief and the prospect of significant economic recovery for the aggrieved party.


Stan V. Smith, Ph.D., is president of Smith Economics Group, Ltd. headquartered in Chicago. Trained at the University of Chicago (one of the world’s pre-eminent institutions for the study of economics and the home of the law and economics movement), Smith has also taught at the university and co-authored the first textbook on the subject of economic damages. A nationally-renowned expert in economics who has testified nationwide in personal injury, wrongful death and commercial damages cases, Smith has assisted thousands of law firms in successful results for both plaintiffs and defendants, including the U.S. Department of Justice. To that end, Smith also developed the first course in forensic economics at DePaul University, and pioneered the concept of “hedonic damages,” testifying about the topic in landmark cases. His work has been featured in the ABA Journal, National Law Journal, and on the front page of The Wall Street Journal. Kyle Lauterhahn is a Senior Economic Analyst at Smith Economics Group in Chicago.

Meet The Incumbent: Judge Mark Bailus

Bailus

In 2017, Judge Mark Bailus was appointed by Governor Brian Sandoval to serve in Department 18 of the District Court. He is a graduate of Pepperdine University School of Law and was admitted to the Nevada Bar in 1980. Prior to becoming a judge, Mr. Bailus was a partner at the law firm Bailus Cook & Kelesis, with a focus on civil and criminal litigation and appeals.

Vegas Legal Magazine: What did you do before becoming a judge?

Judge Bailus: I was an attorney for over 37 years and I am one of the relatively few sitting judges who has an extensive background in both civil and criminal law at the trial and appellate levels.

VLM: What is the most memorable case you tried as an attorney before taking the bench?

JB: My most memorable or significant case was not a trial but rather, a complex tort litigation which resulted in a multi-million-dollar settlement. I, along with my former partner Michael Cherry, were lead counsel for all of the personal injury plaintiffs (except for one) and all of the uninsured property damage plaintiffs in the mass tort litigation commonly known as the “PEPCON Explosion Litigation” resulting in a multi-million-dollar settlement for the plaintiffs. A courtroom battle involving dozens of insurance companies and over 50 law firms resulted in a $71 million 1992 settlement with contributions from multiple parties that were divided among insurance companies on subrogation claims as well as the victims and their families. This case was significant to me as, at the time, I was still a fairly young attorney and the defendants had retained many high-powered law firms to defend them. The defendants embarked on a strategy to attempt to overwhelm my clients by filing numerous dismissal and/or summary judgment motions against them to circumvent a trial. Unfortunately for the defendants, their strategy failed. I fought long and hard in defending against the onslaught of pretrial motions filed by the defendants and was successful in defeating the same. As a result, this case was settled with the plaintiffs being fairly compensated for their losses and/or injuries.

VLM: What made you decide to run for judge?

JB: I had been an attorney for over 37 years and it was a new challenge that I was uniquely qualified to undertake due to my many years of experience, knowledge and success as an attorney before the state and federal courts in Nevada in both civil and criminal law.

VLM: What does being a judge mean to you?

JB: Being a judge is an honor and privilege that I very much respect. It has allowed me to make a difference. As a judge, there is nothing that is going to come before me that I am not prepared to handle. I have endeavored to make rulings based on sound legal reasoning and to draft clear, thoughtful and thorough decisions.

VLM: What is your favorite and least favorite thing about being a judge?

JB: I would say my least favorite thing as a judge is having to run for office. I have always been a straight shooter and this doesn’t always play well in politics. However, I am not going to change as I think the public will appreciate someone who is forthright.

My favorite thing is the interaction between myself and the litigants who appear before me. I always try to be patient, courteous and respectful to all litigants and most of all, be a good listener. No matter what my rulings are, I think the litigants appreciate the courtesies I extend to them.

VLM: Describe a situation where you had to support a legal position that conflicted with your personal beliefs? Please tell us how you handled it.

JB: I view a judge’s role is to enforce the laws that have been enacted by the legislature. When I think the law should be changed, I can express that to the legislators and I would be willing to do so and state my reasons.

VLM: What’s your biggest pet peeve caused by attorneys that appear in your courtroom?

JB: I’m not sure this is really a pet peeve, but I am insistent that the attorneys who appear before me are prepared and are civil to each other.

VLM: What is your best piece of advice for litigants and/or attorneys?

JB: As a follow up to the preceding question, I think the best piece of advice I could give to the litigants and attorneys is to be civil to each other and not make personal attacks and further, to have complete candor with the Court.

VLM: What is your passion outside of law?

JB: While I enjoy doing things with my family, I really don’t have any hobbies. I enjoy reading. However, being a judge consumes most of my time as I am either at work or I am constantly reading books and cases related to the law to gain knowledge, so I can make informed decisions. I can’t remember the last time I read a book for pleasure.

VLM: What do you love most about Vegas?

JB: The thing I love most about Las Vegas is the people. I am a long-time resident of Las Vegas with my family first coming here in 1955 and I grew up here and am a graduate of UNLV. I have practiced law in Las Vegas since my admission to the bar in 1980. I returned to [Las Vegas] after graduating from Pepperdine University School of Law to begin my legal career and start my family. Practicing law in Las Vegas has been very rewarding to me professionally. Most importantly, it has given me the opportunity to meet many wonderful people who have been a part of my life.

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Wynn Resorts Settles Most Claims In Legal Fight With Former Partner

-By Carol Miller

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Las Vegas-based Wynn Resorts has agreed to pay a total of $2.4 billion to a Japanese gaming company to settle claims involving an involuntary stock redemption that resulted in a six-year-long lawsuit, Wynn Resorts announced. The March 9 settlement, between Wynn Resorts Ltd. and Tokyo-based Universal Entertainment Corp., and Universal’s subsidy, Aruze USA Inc. does not stop the planned April 2018 trial in the case. Wynn Resort, however, has agreed to pay the sum by March 31, 2018.

Wynn Resorts is still suing Kazuo Okada, a Japanese pachinko king and formerly the largest shareholder in Wynn Resorts, for allegedly breaching his fiduciary duties by engaging in corrupt business practices in his dealings with officials in the Philippines’.

Those allegations of foreign corrupt practices in the Philippines, involving Okada, were used by Wynn Resorts to oust Okada, and his related companies — Universal Entertainment Aruze USA – from Wynn Resorts. The “Okada parties,” as the three were referred to in court, had their Wynn Resorts stock forcibly redeemed in February 2012, which resulted in a loss in redemption value of the stock of nearly $2 billion. In addition, Okada’s lawyers argued that another $463.6 million had been lost due to the interest rate at the actual time of the stock redemption note.

Kazuo Okada was also voted off the Wynn board of directors in February 2012, as a result of the corruption claims against him. Okada’s lawyers have long denied any wrongdoing by their client. Universal Entertainment Corp., previously held an almost 20 percent stake in Wynn Resorts through its subsidiary Aruze USA Inc. Wynn Resorts.

Steve Wynn, the founder and then-chairman and CEO of Wynn Resorts, became the largest shareholder in the company with the 2012 ouster of his longtime business partner, Kazuo Okada. Steve Wynn resigned as chairman of Wynn Resorts on Feb. 6, 2018, after numerous sexual misconduct allegations against the mogul began surfacing a month before, in January. Most notably, the news of a $7.5 million settlement — made in 2005 to an unnamed former Wynn Resorts’ manicurist — was made public. A February 2018 Bloomberg News report revealed that the settlement involved a paternity claim against Steve Wynn in relation to the manicurist. Bloomberg’s published report said that no child was born of the alleged relationship between Steve Wynn and his employee.

A January 2018 Wall Street Journal report alleged that the same then-Wynn Resorts’ manicurist had complained to others at the company that Steve Wynn had pressured her into having sex with him. That claim was vigorously denied in a statement issued by Steve Wynn.

“The idea that I ever assaulted any woman is preposterous,” Steve Wynn said in a statement.

Steve Wynn was replaced by Matt Maddox, who has been president of Wynn Resorts since 2013. Maddox had been with the company since 2002. Steve Wynn’s ex-wife Elaine Wynn joined the lawsuit between Steve Wynn, Wynn Resorts and the Okada entities shortly after the legal battle started. Elaine Wynn originally sought to have her stockholder agreement with her ex-husband voided. The two agreed, upon divorcing, that Steve would control Elaine’s shares of Wynn’s stock to avoid a hostile takeover of Wynn Resorts. But Elaine wanted out of the agreement shortly after the Wynn Resorts’ legal fight with Okada started.

After Steve Wynn resigned in February, he offered to give Elaine control of her stock back. But Elaine opted to continue the legal fight on that, and other claims, involving Steve Wynn and Wynn Resorts. The case is being heard by Judge Elizabeth Gonzalez in Clark County District Court in Las Vegas.

Wynn Resort, however, has agreed to pay the sum by March 31, 2018.

Las Vegans Chime In On Golden Knights Fever

-By Howard Reill

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What the NHL’s Golden Knights’ arrival means most of all to many in Las Vegas’ legal and business communities is, in one way or another, a sense of legitimacy.

“It has been phenomenal,” says Joseph Ganley, Senior Partner with Hutchison & Steffen, LLC. “We are enjoying having the Golden Knights in Las Vegas more than we ever anticipated.”

On a grander scale, Ganley continues, “It means we are a Big League city now. Most of us knew we had the potential to embrace big league professional sports, but now it has manifested far beyond those expectations.”

“It’s been amazing for the city and our locals,” agrees Lou D’Angeli, Vice President of Marketing and Public Relations for Cirque du Soleil. “Being a hockey fan and knowing how players touch the community and influence kids to play, learn team sports, not have an ego, is amazing for everyone to experience. The atmosphere is unreal and top of the league for sure. They have done an amazing job creating something very special for Las Vegas.”

“The Golden Knights have been the most exciting civic development since I moved to town in 2011,” explains Glenn H. Truitt, a partner in Ideal Business Partners. “I’ve been to eight games and watched a dozen more with friends. It’s nice to have an identity that doesn’t involve the Strip, casinos, etc.”

“Everything about Vegas Golden Knights has been first class,” agrees Tami Belt, owner and CEO of Blue Cube Marketing Solutions. “I love that Las Vegas is being seen as more than Sin City and returning to the Entertainment Capital of the World.”

Says Patty Wade, President of Wade Development Company, Inc. and Wade Consulting Group, LLC, “We are huge Golden Knights fans, season ticket holders in the lower bowl who fly down from Reno/Lake Tahoe for about 90% of home games… along with following the Knights on the road whenever possible.” She lauds the Knights’ management for being “exceptionally fan-friendly, hosting several events for the community early on and allowing liberal access to the players.”

Dr. Renee Coffman, President of Roseman University of Health Sciences, believes the Golden Knights are “different in that they are not a transplant like the (Oakland) Raiders. They’re our own home-grown, from-scratch team that we can claim without any dilution from a former home city. They are also bringing tons of fans from the opposing team into town, particularly Canadians. I think the whole atmosphere around the Knights has been electric.”

Sheila Kercher, Executive Director of Marketing for the Silverton Casino, points out that “When you go to a game there are always a fair amount of visiting team fans. It makes for another great reason to come to Las Vegas; it’s a win-win for both locals and visitors.”

The NHL’s presence also helps solve an issue the city has been grappling with, Kercher adds. “We’ve been trying to figure out, as a city, what to do as less and less people are gambling, and I think this is a great way to keep tourists coming into our city and spending money.”

“Our whole city is an underdog story, and now our first major professional sports team is one, too,” Truitt suggests. “Before the Knights, Las Vegas was the largest U.S. city without a major pro sports franchise. It was a big missing piece of our civic identity, and it kept it from feeling like we’re a real American city.”

Adds Zach Miles, Director of the Nevada Small Business Development Center at UNLV and Executive Director for the UNLV Research Foundation, the team’s arrivals means the city has “grown up, we are showing unity. It has helped business to grow and drives economic development.”

“We are the entertainment capital,” D’Angeli concludes. “Cirque du Soleil has the best the shows in the world, and partnering with a team this great, with involvement from a 360º perspective, we continue to grow our market and our fans.”


Howard Riell is a veteran journalist who over the past 39 years has written and edited for nearly 200 business and consumer publications, national trade associations, advertising/PR agencies, newspapers, research firms, newsletters, non‑profit groups, e‑zines, blogs, manufacturers and other clients across the country and abroad. He lives in Henderson.

The Parting Advice Of Justice Richard Posner

Posner

“I pay very little attention to legal rules, statutes, and constitutional provisions.”

-Richard Posner1

After authoring more than 3,300 judicial opinions, Richard Posner suddenly retired from the United States Court of Appeals for the Seventh Circuit in September of 2017.  An unofficial “exit interview” Posner granted to the New York Times affirmed the common knowledge of generations of attorneys: A great attorney knows the judge. Although not hostile to the judicial system, Posner’s exit interview reveals that courts rely on past precedent far less than practicing litigators would hope.

Litigators of all stripes inevitably contact an opinion authored or influenced by Justice Posner. The former Chief Justice of the United States Court of Appeals for the Seventh Circuit, and previously under consideration for the United States Supreme Court, Posner’s distinctive writing style was second only to the late Antonin Scalia.  Upon his 1981 appointment to the Court of Appeals, Posner’s interest in economics (he previously was an assistant to the Commissioner of the Federal Trade Commission) came to bear on his rulings at the same time that financial services and securities became a more prominent part of the country’s economy.

Today, Posner is recognized as being one of the leading voices advocating law and economics, grappling with the research of Nobel Prize recipients such as Ronald Coase and Gary Becker in his opinions and other writing. From 2004 until Gary Becker’s 2014 death, both Posner and Becker contributed regularly and prolifically to their joint blog.2 Posner’s non-judicial writing reached far beyond that realm, though, grappling with subjects including national security, literature, and—most relevantly—judicial thinking.

In his observation of judges, Posner notes that some “are, you know, reactionary beasts.”  Posner explained: “They’re reactionary beasts because they want to manipulate the statutes and the Constitution in their own way.” Despite this observation, Posner notes the “very strong formalist tradition in the law,” where judges sincerely apply the Constitution and relevant statutes—unless they themselves are unconstitutional—as if sacrosanct.

Where statutes, precedent, and even the Constitution do not matter, effective presentation steps into the breach. “A case is just a dispute. The first thing you do is ask yourself – forget about the law – what is a sensible resolution of this dispute?” Hardly an endorsement of “feels-over-reals” emotion-driven legal consequentialism, Posner’s view acknowledges the reality that the law will rarely permit an absurd result.

Within his interview, Posner acknowledges how this is done. In determining whether some precedent or other legal requirement obstructs a desired ruling, Posner notes “that’s actually rarely the case.” “When you have a Supreme Court case or something similar, they’re often extremely easy to get around.” Just one more thing that law schools do not teach their students.

When in private practice, one of the sitting district judges for the United States District Court for the Western District of New York had a sign in his office that read, “whoever tells the best story wins.” Posner’s exit interview confirms the accuracy of this advice, even amidst all the disillusionment it may bring to legal formalists. This advice—also the title of Annette Simmons’ book about communicating more effectively—is regularly repeated by trial lawyers and more experienced litigators, but so infrequently ingrained in younger attorneys.

Posner’s advice is not a panacea. While well-regarded and even admired by many, Posner was a firebrand in his later years. In a July 2017 interview with Slate, Posner went out of his way to critique several Supreme Court justices, living and dead, decrying Brennan, Blackmun, Stevens, and Souter as “not giants.”3 “Anyone think there’s a giant or giantess on the Supreme Court today?” Posner asked before he abruptly retired, slipping out from under the specter of being reversed by the country’s highest court.

What the now-former justice recommends may not be advisable before every judge. Some of them, if not many or even all, will decide a motion or even an entire case based on the applicable subsection buried deep within the Code of Federal Regulations.4 His parting commentary vindicates so much of what experienced litigators have told and tried to train dozens if not hundreds of other attorneys to do, though, that it can hardly be ignored.


Malcolm (“Jay”) DeVoy is the owner of DeVoy Law P.C. DeVoy focuses on providing representation in commercial disputes, serious personal matters, and advising medical professionals and practices about issues including HIPAA, Stark Law, and the Anti-Kickback Statute.

1. Adam Liptak, An Exit Interview with Richard Posner, Judicial Provocateur, The New York Times (Sept. 11, 2017).

2 The Becker-Posner Blog, available at becker-posner-blog.com (last accessed Sept. 12, 2017).

3 Joel Cohen, Should There Be Age Limits for Federal Judges?, Slate (July 5, 2017), available at  http://www.slate.com/articles/news_and_politics/jurisprudence/2017/07/should_there_be_age_limits_for_federal_judges.html (last accessed Sept. 13, 2017).

4 See, e.g., Gardner v. Henderson Water Park, LLC, 133 Nev. Adv. Op. 54 (2017); Nationstar Mortgage, LLC v. SFR Investment Pool 1, LLC, 133 Nev. Adv. Op. 34  (2017).

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