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Donald Sterling Should Praise His Estate Planner

In case you’re not a sports fan, or you live under a rock –and many would say the two go hand in hand– this past Spring was filled with talk radio topics and blogs about Donald Sterling, the soon-to-be former owner of the Los Angeles Clippers, a professional basketball team. Topics ranged from racism (and hypocrisy) to geriatric cradle robbing to privacy rights.

Sterling is a billionaire in his 80s and is one of the more hated sports owners for two reasons: perpetual futility of the Clippers for close to 3 decades (until the past two seasons) and shrewd landlord practices including shades of racist views and approaches.

Donald, who appears to have nothing more than a business relationship with his wife, has been openly dating young, female “friends” who have no marketable skills –as seems to be the case with dozens of people in reality t.v. these days. In the Spring, one such friend (who I refuse to give a line of publicity to) capitalized on her friendship, receiving a house, car and all kinds of clothes and jewelry. And, as is common with this type of sycophant, she wasn’t satisfied and turned to extortion. When she didn’t get her way, a voice recording of a private conversation was “unintentionally” released to the public where Sterling stated his preference that she not bring men of a certain race to Clippers games.

Suddenly, and despite 30 years of knowing Sterling was a racist, everyone reacted as people seem to do on Twitter, Facebook and traditional media. The NBA was, of course, faced to deal with one of its elephants in the corner of the room by fining Sterling and banning him from his own team’s games. I won’t go into the legalities of the NBA franchise, but the NBA seemed to have grounds to do so.

Shelly, seizing the opportunity to mitigate damages, sought to sell the Clippers, get max dollar for it, and allow everyone to move on. The Clippers, however, were owned by the Sterling Family Trust (or whatever it’s named) and Donald was her co-trustee meaning she could not sell the team –or any large asset– without his signature. What to do?

Fortunately, the scandal had Donald spinning, acting questionably, and making contradicting statements every 12 hours or so. Shelly brought Donald to two physicians to determine whether or not he showed signs of dementia, or incapacity. Why? Because the Trust dictated that either co-trustee could be relieved of their powers if they were deemed incapacitated by two doctors. Both doctors diagnosed him as incapacitated, Shelly sold the team, and the Sterlings will make $2 Billion while the NBA quietly sticks the elephant back in the corner (what, you thought he was the only racist owner?).

Happier times, probably after they completed their Trust documents.

As expected, Donald sued when he came out of his funk. On Monday, July 28, 2014, the LA Superior Court ruled that the doctors who had examined Donald Sterling and ruled him mentally incapacitated had acted appropriately. The trial was narrow in scope, focusing on three issues: whether Shelly Sterling had followed the directions of the trust in removing her husband as co-trustee; whether the probate court had jurisdiction over the matter; and if Shelly Sterling won, whether the sale could proceed even if the decision was appealed.

Although Donald is planning to appeal, he will likely lose the appeal for boring legal reasons you don’t want to read about. But Donald should be happy that the Trust worked exactly as it was designed to.

What if Donald was tired of owning the team and wanted to sell it, but Shelly didn’t want to? And what if Shelly was suffering from early Alzheimer’s and was irrational in her refusal? He would have been able to avail himself of the very clause Shelly used. Get two doctors to properly diagnose her, remove her as co-trustee, and handle the assets as he sees fit.

Many of you may not know that you don’t have to choose two doctors. You can pick anyone to make a determination of incapacity, including the other spouse. You can require a court order that takes months to accomplish. Donald probably wishes he chose this last option, but I’m sure somewhere in the back of his head, he wanted an easier way to manage the Trust if Shelly was incapacitated.

As one of my standard “horror stories” I tell in seminars I give, there are other power triggers that one spouse can use against another because of shoddy wording. I once had a client whose husband was taking money from the community to give to a 20-something fitness instructor he had a crush on. The Trust revealed that he actually had the power to create a second trust, transfer all the property there, and give her everything had he wanted to. Both co-trustees had that power. Scary. If the Sterling Trust contained that clause, Shelly could have done whatever she wanted without even seeking doctors’ opinions. (The happy ending in my story is that we used that clause to transfer the property and kept hubby from dipping into the funds anymore).

At the end of the day, Donald lost his case. He really seemed to be fighting for his reputation and enjoyment of being a team owner and can’t cry too hard over splitting $2 Billion when he paid only $12.5 Million back in 1981. But, as a successful, shrewd businessman, I’m sure there’s a part of him that appreciates his Trust can be used as he intended, if the need arises.

Her lawyers are smiling for an entirely different reason.

And this is why it’s always a good idea to have your Trust reviewed every few years.


Snowboarders Cross about the 14th Amendment

Just in time for the February 2014 Sochi Winter Olympics, snow aficionados –of which I am one– will get a taste of Constitutional Law.

It seems after decades of banning snowboarders, someone finally decided that Alta ski resort in Utah shouldn’t be so discriminatory.

Despite there being about 15 other boarder-friendly resorts in the Salt Lake City area, four snowboarders decided that they want to board at that one.  But Alta is one of three U.S. resorts that says “no snowboarders.”  So, the boarders filed suit as a “protected class” citing to the Equal Protection Clause in the 14th Amendment (see subsection (1)).  But while Alta owns its lifts, it sits on government land. That may give rise to a viable claim.

“Because of Alta’s relationship with the government, Alta’s actions must comply with the Constitution’s Equal Protection Clause,” says the boarders’ attorney, Jonathan Schofield. “Alta’s prohibition against snowboarders excludes a particular class of individuals from use and enjoyment of public land based on irrational discrimination against snowboarders, which denies them equal protection under the law as guaranteed by the Fourteenth Amendment.”

Now, this may seem like a frivolous suit, and Con Law geeks (as I liked to call them in law school…mostly out of jealousy) everywhere are jumping to the “boarders aren’t a class!” arguments. But the twist is that the resort operates under a Forest Service Permit which provides that federal lands must remain open to the public for all lawful purposes. So the question is, are snowboarders discriminated against in violation of the permit and the equal protection clause?

The message boards were filled today with anti-boarder hate speech coupled with “snobby skier” name-calling. The crux of the argument comes down to whether or not snowboarders are a protected “class,” a term which has historically been addressed for purposes of bringing equality of race, gender, etc.

Intuitively, this just seems wrong…

As a skier-turned-snowboarder, I can tell you that we are definitely a different class. But I have spent the bulk of my boarding career (11 years) side-by-side with my fellow skiers. So what’s the big deal, Alta? Well, skiers apparently hate the way we ride the snow. Well, I hate the way skiers shoot past my blindside or cut in front of me.

So will the suit have merit? Let’s see…

(with credit to BLM09 on the Livefyre message board who expounded on my point)

It is true that snowboarders are not a suspect class (race, religion, national origin etc) and will, therefore, not enjoy the strict scrutiny analysis enjoyed by such plaintiffs.  However, snowboarders may still qualify for a non-suspect, but purely economic or social classification. And, if so, the court would still review the case under a “minimum rationality standard;” specifically, the court will ask whether the prohibition against snowboarders is “related to a legitimate public interest?”  It may be hard to argue that snowboarders and skiers are not similarly situated, and it will be hard to argue that their prohibition serves an interest that is not at issue with regard to skiers.  Alta and USFS would have to show that it is rational to conclude that snowboarders create public risks/dangers not created by skiers. Setting basic prejudice against snowboarders aside, this will be hard to show.

The counter-argument is that all people are allowed access to the mountain, you just can’t snowboard there, so the owners of the private lift on public property can do what they want. Unfortunately, that may not be true. As mentioned above there are safety reasons typically attached to such rules. For example, we all know that the north side of the HB Pier is reserved for surfers. Or, rather, [cue loudspeaker] “no boards on the south side of the pier!” Is this discriminatory against surfers? Yes. But it also protects the population that doesn’t surf from ugly face and body gashes. There’s a great public interest.

For you non-beachies, this is a black ball flag.

It’s the same reason you can be ticketed for riding your beach cruiser on the Newport Beach boardwalk at faster than 5 mph.  But where’s the argument to protect skiers? Is there evidence of major accidents caused solely by boarders? No. Are there pedestrians walking around the snow? No. Though it was interesting to learn that Alta was one of the first resorts to allow boarders way back when. There were too many accidents (and the elitist sussing snobs complained enough) that they imposed the ban back in the 80s.

In fact, the Alta rule would be like owning the Toll Roads and prohibiting motorcyclists because you “just don’t like the way they look, sound, and drive and they sometimes make car drivers uncomfortable.” Not good enough. Yes, there are laws that limit vehicles -big rigs- usually due to road width or weight-bearing issues. But that’s a safety issue. And if you want to serve the public, you gotta treat ‘em equally.

We’ll probably be in the middle of watching Snowboarder Cross in February when Alta’s motion to dismiss is heard. And when the announcers talk about it, you can thank me for enlightening you.

Happy Sussing/Carving:


[*For those of you ConLaw geeks, here’s some more cerebral material: As for the applicability of the 14th amendment to this issue, it can apply to non-state actors if there is a sufficient nexus between the non-state actor (Alta) and the state (USFS). As this is public property under the regulatory control of the USFS, the nexus is probably sufficient to extend the equal protection clause to these plaintiffs.

Some Useful and Not-So-Useful New Laws in 2013

Another year. Another set of new laws aimed at making things easier, harder or more costly for us whether we’re business owners or consumers.

The Serious: 

  • -Banks can’t initiate foreclosure procedures while you are in the middle of a loan modification application. They also have to give you one point of contact;
  • -The Westboro Baptist Church (and any other whacked group) is prohibited from picketing funerals one hour before, during, and one hour after any funeral.  It’s a misdemeanor.  It’s also a misdemeanor or felony to throw things at or otherwise physically injure such picketers, though you’re likely to get court leniency…
  • -Debtors filing bankruptcy are entitled to keep their tools of trade and an automobile so that they continue to engage in work or otherwise seek employment.
  • -Employers cannot request/require employees or job applicants to disclose social media usernames or passwords and cannot make them open up their social media sites in the presence of the employer. Also, no retaliation for failing to comply with such (illegal) requests.

“But you keep spelling ‘Tiberius’ wrong. Besides, that’s everyone’s password on this ship.”

The Less-Applicable:

  • -You can no longer use trained dogs to track bears and chase them into trees, then call your hunter buddies to come shoot them.
  • -Ministers, priests, rabbis, etc. do not have to perform marriages contrary to the tenets of their respective faiths. But this law is contingent upon any ruling or law that permits same-sex marriages in California.
  • “First, I need proof of gender. I mean, I can see you’re a guy, Frank…”

    -Passengers in off-road vehicles have to have a manufacturer’s seat and both feet need to be on the floorboard. It took almost 30 years since they outlawed 3-wheelers to come up with this.

The Practical:

  • -Proof of insurance can be shown to cops on your mobile device instead of the outdated one sitting in your wallet. It’s not clear if cops will let you slide if you show him a photo of your outdated insurance card, though.
  • -Hormonal contraceptives such as the pill, patch, and ring can now be dispensed by RNs instead of doctors, though a routine health assessment must be performed. This should go over well at all high schools that employ an RN.
  • -Pro Sports Complexes have to post text addresses and phone numbers to reach security to report disturbances and violent acts.  Despite the fact that cops are already on the premises, this should be faster than 9-1-1 calls.
  • -Dictation texting in the car is permitted. But when Siri mistakes “What do you want for dinner?” with “What dogs do wine Volkswagen?” you still can’t manually correct it. And, yes, it’s still considered littering if you throw your phone along with Siri out your window.

Come on, you know you laughed.

To see the rest, go here.

Happy New Year!


Did CO and WA Create a “Pot” Hole to Pave the Way for CA?

After spending about four months in mostly-courteous FaceBook and office debates about politics, one subject was off the radar.  I had no idea Colorado and Washington were seeking state laws in support of legalizing marijuana, though I’m not surprised. In fact, I’m probably more surprised that other states didn’t do the same (cue foreshadowing to 2013 bills nationwide).

With apologies to Cheech and Chong, here’s how I imagine the conversation went:

[skipping the first 50 mj-enhanced lines between the two just to get to the actual topic. Oh, and it helps to use their voices and accents]:

Legislator Cheech: “We should do something to make the doobie legal, ya know?”

Advocate Chong: “I dunno, man, the feds have been all over the medical marijuana stores.”

Cheech: “So what? Let’s make it easy for the state to get more taxes, man, and too much of a pain for the federalies.”

Chong: “How do we do that, man?”

Cheech: “We make a proposition that people have to be the legal drinking age and they don’t get busted for having an ounce of pot on them.”

Chong: “Only an ounce? I don’t have small enough baggies.”

Cheech: “Look, man, you make it so no cop has to waste his time taking you into the crowded jail for such a small amount and you make it so they have to buy it from a store so the state can tax it like crazy…like cigarettes, man.”

Chong:  “I get it. We get state and police, jail and court support. But what about the feds, man?  Pot’s still against the federal law.”

Cheech: “Don’t try to confuse me with all that ‘states’ rights vs. federal rights’ mumbo jumbo. The feds don’t want to deal with a bunch of one-ounce violators. Plus, this is what I’m talking about. We start easy, ya know, with one ounce. Then, after the state enjoys the new income and other states jump on the bandwagon with some “save our schools” slogan, the feds will take notice and want to tax it like gasoline.”

Chong: “But what about Obama and the DEA and IRS?”

Cheech: “Tch, maaaan, Obama don’t care. He needs to get the deficit down. Plus, you know this whole thing is going to get to the Supreme Court and with the judges he’ll appoint, the states will win.”

Chong: “Is that how it works? You know a lot about laws, man.”

Cheech: “Yeah, I watch a lot of Law & Order and I learn stuff.”

Chong: “You know what would be great is if we could slip something in about letting people grow some plants in their own homes.” [End.]

Is this in our future?

And there you have it. Colorado’s Amendment 64 and Washington’s Measure 502 (foreshadowing?) were passed last Tuesday by the people. While Colorado’s Governor Hickenlooper reminded his constituents to keep the Scooby Snacks locked up for now, it’s clear that tie-dyed entrepeneurs will be opening state-licensed stores with two goals in mind: money and getting the issue before the courts with the hope that the almighty dollar will drive the issue in their favor.

Sure, there are slippery slope and safety arguments galore, and it will be an ugly battle.  But this is how laws get changed. In fact, I just took a page from Randy Pausch’s book and gave you the “head fake.”  It’s usually baby steps that get that contractor’s  indemnity clause changed or that Three Strike’s law down to where it should be.  I expected to see this approach with Prop 37’s Genetic Food disclosure. It didn’t include all industries, but it seemed to be a good start that would pull them in eventually. It didn’t pass, but you get the idea.

And in case you thought Chong’s last idea was ludicrous, check out Colorado’s 6-plant allowance.

Coming to California, soon…


The Unromantic Side of Marriage

When we heard about Kobe and Vanessa finally splitting up, it was inevitable that we’d hear about how Kobe “foolishly” didn’t require a pre-nup. But how do you blame a 21 year old-straight-into-the-NBA-circus-out-of-high-school who is in love with a high school senior? You can’t. Call it naivete or immaturity. . .or even romance. Call it hard-headedness – a trait Kobe is known for. But it’s tough to call it “stupid.” It was the first year of his new contract where he jumped from $1.3M to $9M a season. Life was good. He was marrying his “college” sweetheart and the last thing he wanted to do was ruin the moment by saying, “honey, I love you, but I don’t see us lasting forever, so sign this.” What 18 year old high school doe-eyed relationship idealistic girl isn’t going to storm off or hold it against him for the rest of their relationship? And so, Vanessa gets half.

This is probably a common result with many who are afraid to broach the pre-nup subject. Obviously, life and wisdom teach us that such prudence may be necessary and it’s generally accepted when large sums of previously-acquired income and assets are involved.

But let’s talk about powers of attorney. These are prepared not at the beginning of a marriage, but typically after the first child is born and the first house is purchased. For those of you who aren’t sure what POAs are, there are essentially two types: medical and property. The first allows someone to make your health decisions when you are unable to do so due to physical, mental or emotional incapacity. (This is NOT the advanced directive which guides someone as to whether or not to terminate your life and what to do with your remains.) The second gives someone control over your property. This power is so great that clients are cautioned to be very careful who they pick as their attorney-in-fact for such necessary times because the designee can do anything with your property, depending on the extent to which the power is granted.

An interesting debate popped up between a colleague and me last week when we discussed the “triggering” event that gives someone power. See, POAs can either be effective immediately upon execution (aka “durable”) or upon incapacitation (aka “springing”).  In most situations, married couples are going to designate each other. Seems innocuous enough. And typically, people are cautioned to select their back-up agents with care. But let’s delve into the unromantic question of whether or not one should consider not blindly trusting his or her spouse.

When I prepare POAs for clients (they’re part of the trust preparation package), I always prepare them as springing. Why? Because I don’t trust anyone. Conversely, my colleague always prepares them as durable. Why? Because he has only done them for married couples and he believes in the sanctity and preciousness of marriage and all that is good and intended. He ignores the fact that many marriages don’t make it to the end and that you just really don’t know what’s going on behind closed doors. Now, I don’t mean to sound like I’m mocking marriage or my colleague because I believe there are plenty of marriages where trust is never in question. In fact, I have many friends with whom I know will be on the happy side of the 50%. That said, I’ve been around the block enough to know that both men and women cannot be trusted regardless of marriage and regardless of religion.

Exhibit A: I know several good “Christian” husbands who have a certain similar behavior that cost Tiger Woods at least one tooth and a 5-iron.

Exhibit B: I’ve heard plenty of stories of wives stepping out on their husbands and planning their moves with precision…biding their time.

The moral: People get in ruts. The original flame sometimes dies. Why risk it?

Okay, these two are probably going to go the distance.

Still, my colleague insisted that his couples would never use an active POA to do harm to the other. Bless his heart. The only problem is that by the time the ‘victim’ spouse learns of the abuse of power, it’s too late. Either the other spouse is gone or the funds are. And how many couples sit down and look at their accounts and investments together, and regularly? Sadly, most don’t. They set something up and let it sit forever assuming everything is just fine.

Well, I just dealt with a couple where Husband was stepping out on Wife. And their money (half of which is hers) has been disappearing over time. It was time to take steps to protect Wife. A quick look at the POAs they signed 20 years ago indicated that Husband could have done a lot of damage to Wife’s interest because the POA was valid immediately upon signing. I’m sure the attorney who prepared the trust and POAs had the same optimism and attitude as my colleague, but I shudder to think what kind of damage Husband could have done had he simply read the POA at any time. Based on the specific powers granted, he could have transferred the home into a new trust and then encumbered the home, fleeing with hundreds of thousands of dollars. He could have squandered her separate property which she inherited from her parents. And what if she owned 50% of his shares in a company? He could have fixed her real good. I could have been dealing with a very different problem. Luckily, the family caught him taking a smaller, but still large, sum of money from the wrong account to give to a woman with no shame (she’s half his age).

Now, how to turn this lemon into lemonade? Since Husband has been incapacitated for the past few weeks, we were able to exercise his POA and protect (move) all the remaining assets for his own good and for the good of Wife’s community property interest (not everything was placed into their trust so she couldn’t exercise her co-trustee powers over some things).

Corny, I know. But it's pretty much how it went down.

This is going to turn out okay and, admittedly, the threat is an anomalous one (and hopefully I didn’t just give a bunch of people ideas). Still, when it comes to the pursuit of the fairytale marriages, there’s nothing wrong with exercising a little prudence. The difference in exercising the springing power versus the durable one is negligible and it will save the world from a whole lot of evil-doing.

Happy Planning,




Why You and Your Attorney Need to Pay Attention to Your Termination Clauses

I just read about how the three-year old Women’s Professional Soccer league has decided to postpone its 2012 season because someone allegedly didn’t read the franchise agreement when they kicked out the owner of magicJack (not the Emilio Estevez movie similarly titled Freejack, but the long-distance phone price-saving device). It didn’t have to go this way. There was a protocol set in place for addressing disputes and, according to a Florida judge, the WPS didn’t follow it.

Apparently Dan Borislow, magicJack owner, is a real jerk and a terrible owner. He allegedly treats his players horribly and doesn’t pay his franchise bills. Why he wants to continue to own the team makes no sense to me (I’d say the same thing about Donald Sterling, but the Clippers are finally for real). But, a contract is a contract. And somebody got bad advice or took good advice and swiftly ignored it.

This is why you have to really think about some of those terms you're signing

I imagine the conversation went something like this:

-WPS board: “Hey, lawyer, we hate this guy and want to get rid of him. Can we? Well, I know we can, but can we just, you know, fire him?”

-Lawyer: “I need to see the contract. Because even though you might think we lawyers are omniscient, I need to see if there are any well-placed commas or “ands” instead of “ors.”

-WPS board: “Here you go. It says something about us having to go through mediation or arbitration. Do we have to?”

-Lawyer: “Yes, I see it here. You’ve agreed to go to mediation first and he will have 30 days to agree or not. If not, you can then file immediately for arbitration. Or, if you have some claims that lie outside the contract, just file in court.”

-WPS board: “30 days?! We don’t want to have to wait. Can’t we just get rid of him now? Even if we go through some type of dispute resolution, we simply want him gone. What if we get rid of him and then dispute any money matters after the fact.”

-Lawyer [wanting to tell client what he thinks they want to hear]: “Well, you could do that. He probably won’t fight it. I mean, if he knows he’s not wanted, why would he want to stick around [ignoring any history about this guy’s behavior so far and apparently never dealing with a multi-millionaire before]?

-WPS Board: “Okay, so we don’t have to follow this contract we paid thousands of dollars to have drawn up and then fought over with other owners before finally signing?”

-Lawyer: “Well, I wouldn’t go that far, but it’s possible your strategy of not following this dispute resolution protocol will allow you to play the 2012 season and avoid dealing with this snake oil salesman.”

Without having access to much about the dispute, I can only guess that the reason for not following dispute protocol was a matter of getting the season underway without magicJack and that there wasn’t enough time to follow the contract. Oftentimes, this can work. But more often than not, in litigation, someone’s going to point out the protocol and insist on it. I think almost every time I attend court for a hearing, there’s always a status conference involving someone trying to enforce an arbitration clause. So that tells you something.

I’m reminded of a recent dispute with a construction client of mine. The owner stopped paying before the job’s completion and the client wanted to terminate. Without boring you, it’s pretty easy to walk off the job for non-payment, but there are protocols to follow if you want to avoid being bogged down by unnecessary defenses. As it turned out, the particular contract used included several particular notice and timing requirements where the owner had an opportunity to cure the defect or lack of payment. One included requesting assurance of the ability to pay in the future.

The problem? My client was dead set on terminating without giving the owner a chance to cure such that my client might be stuck finishing the job.

I wanted to be able to tell him, “just leave.” But that would have been irresponsible. I could have told him it was a strategy that might work and it would be the fastest way to end the relationship. However, it also would have been a trap-filled path to take. My prudence paid off. The owner has disputed some of the claims and asserted some claims of its own. But it can’t avoid its failure to provide the financial assurance. My client is free to terminate. I’ve also secured my client’s right to claim lost profits, which he wouldn’t have necessarily been able to do had he not followed the protocols for terminating.

Yes, there was a risk that the extra seven days might have resulted in a longer termination process. But in this case it worked out. Now, consider if we had cut some corners on this. When this case becomes a lawsuit, we wouldn’t have been able to rest on our compliance with the contract.

And look out for those mediation clauses. Sometimes, a party forfeits attorney’s fees they could have received had they followed the contract protocols and proceeded with mediation first.

Here's one way to teach Borislow a lesson

As for consequences, consider a 5-team women’s soccer league that has managed to survive for three years having to cancel a season and all of those players losing their salaries. Way to go magicJack.



Did Online Texas Hold ‘Em Just Get a Favorable Flop?

Several years ago, I had a love-hate relationship with Internet poker. I loved the ease of playing in the comfort of my own home and the way that I was pretty good at winning early rounds in tournaments or other low-buy-in games.  That said, I hated that there were cheaters using bots or different wi-fi cards so that they could conspire against us honest players. I also hated that my money was held offshore and my own bank wouldn’t honor my meager payout check because it was from some bank in the Bahamas. But while I have my own trust issues with who’s on the other side, I like the idea that people can play online. The old school form of playing has been modernized by faster play and more aggressive strategies as evidenced by the great Doyle Brunson’s failure to keep up anymore (sorry, Doyle).

Then came the Department of Justice (“DOJ”) to shake down several poker websites earlier this year on April 15th on a day known as poker’s “Black Friday.” In addition to bank fraud and illegal gambling, the DOJ accused these sites of “money laundering,”  in order to skirt the laws against interstate and inter-continental gambling. These companies are currently being prosecuted and accounts were frozen.  The worst part? Companies like Full Tilt Poker held onto money, refusing to pay many of its customers. It got so bad that several pro players sponsored by Full Tilt actually refused to play in headline tournaments as a form of protest for this practice. Meanwhile, other pro players are right in the middle of it all where $300 Million has gone missing (paid out to the owners/investors) that belongs to customers like you and me. High Stakes Report has done a great job providing a historical timeline through September here.

Chris "Jesus" Ferguson is one of the accused. Innocent pawn or diabolical schemer?

So what at first appeared to be the government’s attempts to shut down “illegal gambling” appears to be more geared at preventing money laundering, bank fraud and outright theft against consumers. And this has been supported by the DOJ’s Christmas present to the world of online poker….sort of.

In a letter two days before Christmas, the DOJ responded to inquiries by Illinois and New York to use the Internet for lottery ticket sales that are technically conducted across state lines. Since lotteries are huge revenue-gainers for states, the DOJ had an interest in supporting interstate Powerballs which provide payouts to people in any number of states (customers purchase in their own state, which apparently matters).

But for those of you non-lawyers and politicians, the DOJ also set a precedent that will help legalize online poker. The actual wording of the Wire Act prohibits “information assisting in the placing of bets or wagers on any sporting event or contest [referring mostly to horse racing and things like football].” Online poker involves betting in the game. Yes, that one preposition makes all the difference.

The other boring lawyer/legislator stuff is that our country has a system where states are permitted to pass their own laws on certain subjects where the federal government must acquiesce (you may be familiar with the perennial topic of abortion and whether or not it should be a states issue versus a federal one).  Anyway, both Nevada (of course) and Washington D.C. have legalized intra-state gaming where no federal law exists at this time to cause a conflict of laws.  So, in short, what’s good for the lotto is good for poker.

Consider that the Wire Act is really designed to prevent Bugsy and his gang of racketeers from engaging in illegal sports-booking and money laundering overseas. Trust me, Congress is moving toward legalizing online poker because there is so much money to be made and our states and fed need it. And, luckily, we even have a few leaders who actually care about the consumer and want better laws to protect them.  So, what the DOJ did was to draw a clear box around what is illegal so that states, businesses, and customers can act accordingly. Another great article for those of you who like how bills become laws is one by Professor I. Nelson –an internet law guru in our own backyard– found here. I’ll cut to the chase: it’s about whether or not the federal leadership can take credit for creating one-law-for-all or if it will be left to each state.

Sorry, Barney, but the states may take the wind out of your sails.

The good news is that internet gambling took a huge step in being legalized with laws designed to protect us from dishonest people using offshore accounts to steal from us. The bad news is that I still don’t trust that the system is cheater-proof sufficient that I’m willing to play with any real money.

Happy (Responsible) Gambling,


Best (Worst?) Lawsuits of 2011

I’ve never checked the stats, but I have to guess that a million lawsuits a year are filed in the U.S. Okay, I just checked and it’s something like 20 million. A lot of these are necessary for things like divorce cases, probate cases and things like that. Most, however, are more along the lines of “I’m mad at you for something and I’m going to sue you for it.”

Since I represent some of these people and businesses, I can tell you that many claims are legitimate. Someone did work and didn’t get paid, but then claim that the first guy’s work was somehow defective. Somebody lied about his intent for using undeveloped property and now they’re trying to take advantage. Some employee was fired in a discriminatory manner. Sometimes, it’s just part of the process of collecting against someone and those take up very little court time.

Well, thanks to the wonderful world of Twitter, somebody took the time to find the most ridiculous lawsuits of the year. In the good old days of law school, these kinds of claims set precedents to help forge our civil laws today. Now, the impact is less, but there’s still a chance some type of liability may be held against a company or person. This is why there’s so much legalese on everything. Yes, it annoys me, too.

So with credit to FacesOfLawsuitAbuse.Org, I give you some of the craziest lawsuits filed in 2011:

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Trust me lady, your cruise could have ended up a lot worse.

You should recognize the Chuck E. Cheese case from one of my earlier blogs (no update, yet). But, look at some of these.  I’d have to say my favorite is either the woman suing for misleading movie advertising (someone has to start holding these producers accountable) or the guy who sues the bar for not protecting him from his own dangerous self. You laugh, but this is exactly why some of your kids no longer get to play dodge ball on the blacktop.

Seriously, this was my son's playground during lunch thanks to lawsuit fears. But they were allowed to play butt's up with a racquetball...

As for the criminal in Kansas who sued the couple for breaching their agreement to help him evade the police, I leave you with this lesson: Illegal contracts are unenforceable. So if you make an illegal bet on this weekend’s game and your buddy doesn’t pay up, don’t think you can win that case, even though you have a 1 in 3 chance of finding an attorney who would actually file the lawsuit for you.

12/29/11 UPDATE: So apparently the winner by some reader vote somewhere was the criminal who sued his captors for not helping him evade police.  That’s probably what I would have voted for.

Looking forward to seeing what’s in store for the 2012 court dockets,


Beyond a Reasonable Doubt?

As the resident legal blogger, even though I’m not a criminal attorney, I feel compelled to comment on the jury’s verdict in the Casey Anthony case. While this happened in that other Orange County, the case has pretty much captivated a large portion of the population if FaceBook and Twitter are anything to go by. For those of you who live under a rock or simply don’t care about sensationalized court cases (especially after the OJ trial), today the jury acquitted Casey Anthony of the charges of killing her 2-year old daughter Cayley, either intentionally or negligently,  and also of any child abuse.

I don’t need to be the 100,000th person to write the prevailing opinion of the masses: “What a travesty our justice system is!” “That *&#$* got away with murder!” and so on…

Personally, I think she did it. I think her behavior (as submitted) and pathological lies are evidence enough, based on my experience with human behavior and, unfortunately, pathological liars. But I wasn’t on the jury. Twelve others were. And the thing I find most interesting is the jury vote: 12-0 as to each of the three major counts. 12-nothing?!

Now, when I looked at the jury pool yesterday, I saw a few biographies that made me assume Casey would have some support in the room. So, I knew Murder in the 1st was going to be tough to secure. But aggravated child abuse and aggravated manslaughter? I thought for sure she’d be found guilty on one of these counts. The mere fact that one of Cayley’s post-deceased hairs was found in Casey’s trunk, the tape on over the mouth, and the confirmation of the death smell by several witnesses, including her own father, suggested Casey did something wrong.  But, clearly there were gaps that needed to be filled.

I even heard myself utter “uh oh” during Prosecutor Jeff Ashton’s closing argument when he said, “somebody in that house killed Cayley.” Yep, someone most likely did because that’s usually how murder goes . . . it’s someone close. But, he left the door wide open to reasonable doubt, or rather, he didn’t, but the facts did. For the record, I thought Ashton did a great job pointing out that only one person had something to gain by Cayley’s death. So, if we assume somebody in the house killed Cayley –accidental or otherwise– it was likely Casey.

But, 12-0. That’s a pretty resounding vote. What that tells me is that the prosecution was simply unable to connect the minimal dots they had available with all of the circumstantial evidence. Now, I don’t think Jose Baez was anything special and found him bumbling a lot during examination and cross-examination, oftentimes threatening his own defense. But, as he stated on Sunday, he didn’t have to present any testimony in Casey’s defense. It was up to the prosecution to prove beyond a reasonable doubt that Casey was guilty of the crimes being charged. And, according to the unanimity of the jury, they did not. If you remove your prejudices and desires for justice, and simply look objectively at what was presented to the jury, there was enough for them to vote either way.

We know Cayley died. We know some bad things happened. But we also know that the Anthony house is a den of liars. And that gives me enough doubt to wonder what the heck actually happened?! I trust Cindy’s hysterical phone call that she didn’t know anything. I also trust that she lied when it was convenient to protect her daughter. And brother Lee probably was as clueless as he appeared to be. So that leaves George, Casey and any number of cohorts (consider who she partied with) who may have done something stupid. So was it intentional or accidental? There’s limited evidence.

Liar, liar...

I agree with the prosecution that there is absolutely no reason to put three pieces of duct tape over a child’s face, but does that get me to intentional suffocation? Personally, yes, but I don’t expect everyone to agree with me. And the chloroform that was detected? I heard all kinds of testimony. I don’t now who to believe. I know who I wanted to believe.

But the bottom line is that nobody in the jury felt convinced by any sequence of evidence. And that speaks volumes about the case. Basically, they said, “I’m not putting someone away for life based on at least ten assumptions.” I respect the jury for that and I respect the system. I considered that if Casey had a life insurance policy on Cayley, the jury might have been convinced to vote guilty since other juries seem to convict for murders without a body based on much less evidence while factoring in greed. The “money” in this case was Casey’s independence and the thing she was greedy for, but the jury didn’t see it the way I would. And that, in my opinion is too bad.

I do believe the system works, but I also believe it has inherent flaws. Here’s a case where someone managed to stall and spoil the evidence long enough to make the prosecution’s job of proving the case beyond a reasonable doubt very, very tough. And I hate to say it, but we live in a world now where almost anything can be thrown out there and will stick as “reasonable.” Consequently, it doesn’t take much for 12 people in a vacuum to decide that plausible = reasonable doubt.

If only this was a Law & Order episode. . .

Jack McCoy plays every card...

Then Jack McCoy would press charges against the parents and Casey would come running with a confession (before double jeopardy kicked in). But, who am I kidding? A sociopath wouldn’t come to the rescue of anyone.

But, I digress. I’d like to see someone write a book entitled, “12-0″ because that’s the one thing that keeps me level-headed about what was, yes, a travesty today.

Keep the Faith,



Mom v. Mouse

Here’s a fun one.

It seems that Denise Keller, the mother of 3- and 5-year old kids decided she’d had it with cardboard-like pizza, a handful of broken games (guaranteed at the Costa Mesa location), and a 35¢ return on $10 worth of tokens.  But instead of boycotting Chuck E. Cheese’s, like most of us did, she sued them.

In a federal class action suit filed in the county just south of the OC, Keller and her lawyer, a 15-year law veteran, read California Penal Code § 330(a) and (b) and figured out that some of the games may just be considered gambling devices.  When a colleague posted the headline, I read responsive posts of “I hope that lawyer gets sanctioned for filing a frivolous lawsuit” and other statements about how unethical this suit is.

Now, I’m not going to go into what’s required in a class action this time around (but that post is coming).  But, I will say that it may be difficult to find the class of people who can prove they purchased tokens and then played those specific games listed in the complaint (Thunderation, Wheel of Fortune, Deal or No Deal, made the list).  I’m thinking the CSI crew may need to confirm finger prints.

All kidding aside, before passing judgment on my fellow shark, I decided to read the Penal Code section to see how he could possibly have thought this was a case that could pass muster.  I mean, Chuck E. Cheese’s has been around forever.  So have places like Dave & Buster’s.   Well, just to give you a feel for what we lawyers get paid the big bucks to draft, get a load of this:

(a) Every person, who has in his or her possession or under his or her control, either as owner, lessee, agent, employee, mortgagee, or otherwise, or who permits to be placed, maintained, or kept in any room, space, inclosure, or building owned, leased, or occupied by him or her, or under his or her management or control, any slot or card machine, contrivance, appliance or mechanical device, upon the result of action of which money or other valuable thing is staked or hazarded, and which is operated, or played, by placing or depositing therein any coins, checks, slugs, balls, or other articles or device, or in any other manner and by means whereof, or as a result of the operation of which any merchandise, money, representative or articles of value, checks, or tokens, redeemable in or exchangeable for money or any other thing of value, is won or lost, or taken from or obtained from the machine, when the result of action or operation of the machine, contrivance, appliance, or mechanical device is dependent upon hazard or chance, and every person, who has in his or her possession or under his or her control, either as owner, lessee, agent, employee, mortgagee, or otherwise, or who permits to be placed, maintained, or kept in any room, space, inclosure, or building owned, leased, or occupied by him or her, or under his or her management or control, any card dice, or any dice having more than six faces or bases each, upon the result of action of which any money or other valuable thing is staked or hazarded, or as a result of the operation of which any merchandise, money, representative or article of value, check or token, redeemable in or exchangeable for money or any other thing of value, is won or lost or taken, when the result of action or operation of the dice is dependent upon hazard or chance, is guilty of a misdemeanor.

Sadly, I followed along pretty well with this monstrous run-on sentence.

In layperson’s terms, you can’t have games that use tokens where you can win or lose things of value (or representative of value) where NO skill is involved (so pinball machines that offer free additional games and Skee Ball would not be considered “gambling devices”).

Smokin' Token?! This game just sounds like it's ready to steal your tokens...

At first I scoffed at the examples in the Complaint (I’ve hooked you now, so you can read the 7-page allegations here).  “There’s skill involved,” I said. In Wheel of Fortune, you have to time the coin drop which means you employ hand-eye coordination and the ability to time a moving object. But, then I considered one of my son’s favorite games, Deal or No Deal.  We play it at D&B’s. Pure luck.  The only question is will you win 2 tickets or 1,000?

I then considered that maybe the code section would be worded in such a way as to allow for the winning of even one ticket to consider a game to be outside the scope of Penal Code § 330.  In other words, if you played with the knowledge that you were guaranteed at least one ticket (versus zero), would this game of chance for one or more tickets be an exception? Nope. The statute isn’t worded that way.  Some will argue that the exchange of money into coins and the subsequent reward of tickets removes Chuck’s games outside the scope of this code.  But not so fast.  These tickets are redeemable for prizes, or “things of value.”  They are worthless anywhere else except at Chuck E.’s restaurant, thereby forcing you to redeem them for crappy toys.  Consequently, quarters become tokens which become tickets which become “things of value.”  I don’t recall if I’m supposed to apply modus tonens or modus tollens from my UCLA philosophy class, so I’ll just apply the law of congruency from high school Geometry and say that quarters = things of value.

"Win some crap!" ~Navin R. Johnson, The Jerk

I think this case might make it past the motion to dismiss, though I have my doubts about obtaining class certification.

Now, I’m not a fan of class actions and, as I stated in a previous post, I hate that the lawyers seem to benefit from their time put in while the consumer gets a coupon that requires additional patronage of the offending business.  However, I really do hate feeling ripped off at these gaming places where I give my kids $25 worth of D&B credits (and every game is 3.4 or 4.7 credits) all so they can win about $3.50 worth of candy and a rubber football.  I don’t really do it for the prizes, but the kids like to save their ticket credits for the big-ticket items, which I’m pretty sure equates to about $100 for a $10 stuffed Homer Simpson.

Oh, and in case you’ve been scratching your head this whole time wondering how a person can sue based on a criminal statute, the law provides for civil claims based on such violations.  The best example of this is a murder trial where the state sues the alleged, but that person can also be sued by the family for wrongful death.

I’ll keep you posted on how this whole madness works out.  And if I were Dave & Buster, I’d start looking out for the process server.

Happy Gaming,


(a) Every person, who has in his or her possession or under
his or her control, either as owner, lessee, agent, employee,
mortgagee, or otherwise, or who permits to be placed, maintained, or
kept in any room, space, inclosure, or building owned, leased, or
occupied by him or her, or under his or her management or control,
any slot or card machine, contrivance, appliance or mechanical
device, upon the result of action of which money or other valuable
thing is staked or hazarded, and which is operated, or played, by
placing or depositing therein any coins, checks, slugs, balls, or
other articles or device, or in any other manner and by means
whereof, or as a result of the operation of which any merchandise,
money, representative or articles of value, checks, or tokens,
redeemable in or exchangeable for money or any other thing of value,
is won or lost, or taken from or obtained from the machine, when the
result of action or operation of the machine, contrivance, appliance,
or mechanical device is dependent upon hazard or chance, and every
person, who has in his or her possession or under his or her control,
either as owner, lessee, agent, employee, mortgagee, or otherwise,
or who permits to be placed, maintained, or kept in any room, space,
inclosure, or building owned, leased, or occupied by him or her, or
under his or her management or control, any card dice, or any dice
having more than six faces or bases each, upon the result of action
of which any money or other valuable thing is staked or hazarded, or
as a result of the operation of which any merchandise, money,
representative or article of value, check or token, redeemable in or
exchangeable for money or any other thing of value, is won or lost or
taken, when the result of action or operation of the dice is
dependent upon hazard or chance, is guilty of a misdemeanor.