Sneaking Suspicions

Archives-- September 29-October 5, 2002

Commentary from a practical perspective

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This page includes posts from September 29-October 5, 2002 in the usual reverse order. Each week's postings on the home page are perma-linked to these pages.

October 5, 2002

If you can only see your land during low tide, don’t be surprised if you can’t develop it.

My work includes a lot of contact with the real estate industry, especially during the rezoning and subdivision process.

Sometimes I wonder who was doing the thinking for developers when they throw money at a dicey piece of property.

A Ninth Circuit decision issued October 3 raised that question once again, in an inverse taking claim brought against the City of Seattle, Washington.

Esplanade Properties, LLC decided to enter the marketplace for residential waterfront property on the Puget Sound side of Seattle. As with most other coastal cities, prime vacant land for that kind of development is not often available.

In 1991, the company plopped down a nice little $41,000 for a parcel near a large city park and a marina. It was big enough to fit the company’s plans to build nine houses.

Nonetheless, the relatively low price for a city lot that could be subdivided into nine homes should have been a warning.

This land was not only waterfront. Depending on the tide, it was also watertop, waterbottom, and water on the sides:

The property is classified as first class tideland, and is submerged completely for roughly half of the day, during which time it resembles a large sand bar.

Undaunted by the fact that the “land” was actually “water” twelve hours a day, the company moved forward with their scheme to build the homes on platforms, supported by pilings. A causeway would connect the homes to the rest of Seattle. Parking spaces for the cars would also take up space on the platform above the water.

As a matter of local history, this kind of project was not unheard of before Esplanade bought the parcel. Even after the State of Washington enacted its Shoreline Management Act in 1971, the city adopted a Shoreline Master Program in 1992 that apparently permitted above-water residential construction, even where the lots contained less than 30 feet of dry land.

Even so, this parcel had other problems.

The city took issue with the size of the project’s piers and docks, the causeway access design, and the fact that none of the required off-street parking would be on dry land. After losing these arguments during the late 1990’s, including an unsuccessful appeal through the state court system, Esplanade found itself owning a parcel on which their plans for development were pretty comprehensively thwarted.

Naturally, this result led to an inverse condemnation lawsuit in Federal District Court.

Esplanade’s investment prospects faired no better before the trial court, which ruled in favor of Seattle. The company then appealed to the 9th Circuit.

The appellate court first dealt with Esplanade’s claim that Seattle’s land use decisions violated the company’s federal substantive due process rights. Citing prior decisions of the Circuit as well as the Supreme Court, the Circuit panel affirmed the dismissal of this count of the complaint.

In essence, the fact that Esplanade could assert a taking claim precluded the plaintiff from also asserting a substantive due process claim.

Esplanade also filed a substantive due process claim under the state law, but that argument didn’t pass muster either:

We agree with the district court that the Washington Constitution is “no more solicitous of substantive due process concerns than is the federal constitution.” Thus, Esplanade’s state due process claim fails as well.

The main claim, of course, was that the failure to approve the development acted as a taking of Esplanade property rights in the parcel, thus requiring Seattle to compensate the company for its lost investment opportunity.

The Circuit Court’s handling of this part of the claim is worth considering in some detail.

This is one of the rare cases where the effect of the regulatory process was to deny all effective economic uses of the parcel. That fact would normally require compensation, but only if there was an affirmative answer to the initial question that should have been asked—did the company have any property right to do what it wanted in the first place?

Here’s how the 9th Circuit framed the issue:

“Courts have had little success in devising any set formula for determining when government regulation of private property amounts to a regulatory taking,” [citations omitted.] However, it is clear that under the “categorical” takings doctrine articulated in Lucas, “when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking.” [citations omitted.] Where a regulation “denies all economically beneficial or productive use of land,” the multi-factor analysis established in Penn Central is not applied, and a compensable taking has occurred unless “the logically antecedent inquiry into the nature of the owner’s estate shows that the proscribed use interests were not part of his title to begin with.” Lucas, 505 U.S. at 1027. In other words, for a government entity to avoid liability, any “law or decree” depriving the property owner of all economically beneficial use of her property “must inhere in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already place upon land ownership.” Id. at 1029.

In this case, Washington State’s version of the Public Trust Doctrine blocked the plaintiff’s claims for compensation.

As detailed by the 9th Circuit by reference to Washington State Supreme Court decisions, that state’s public trust doctrine is similar to most other states. The state essentially claims ultimate dominion over tidelands and shorelands, as a public trustee. This state trusteeship is what permits others to fish, waterski, boat, and otherwise use and enjoy the waters flowing over these areas, even if someone else claims title to the underlying sea bed or tidal flat.

As with other fundamental responsibilities of state governance, there are limits to state actions that would run counter to those obligations:

“The state can no more convey or give away this jus publicum interest than it can ‘abdicate its police powers in the administration of government and the preservation of the peace.’ ” [citations omitted.] Instead, the state may only divest itself of interests in the state’s waters in a manner that does not substantially impair the public interest....

The doctrine is “partially encapsulated in the language of [Washington’s] constitution which reserves state ownership in ‘the beds and shores of all navigable waters in the state.’ ” [citations omitted.]

The 1971 Shoreline Management Act essentially acted as a reminder of this original understanding:

Following a long history “favoring the sale of tidelands and shorelands,” resulting in the privatization of approximately 60 percent of the tidelands and 30 percent of the shorelands originally owned by the state, [citation omitted] the Washington legislature found that the SMA was necessary because “unrestricted construction on the privately owned or public owned shorelines . . . is not in the best public interest.” RCW 90.58.020.

Citing a Washington State Supreme Court decision on the public trust doctrine, the 9th Circuit concluded that Esplanade never really had a right to develop their tidal property in the first place. The public trust doctrine acted to limit severely the extent of the rights they acquired when they bought the parcel in 1991.

It’s hard to imagine how the Circuit Court’s conclusion could have been expressed more bluntly than this:

Esplanade’s proposal to construct concrete pilings, driveways and houses in the navigable tidelands of Elliot Bay, an area regularly used by the public for various recreational and other activities, was inconsistent with the public trust that the State of Washington is obligated to protect.

To some extent, Esplanade’s decision to try their luck with the development approval process in Seattle is understandable. Anyone who’s ever seen the Seattle shoreline, especially when viewed from Puget Sound north of the famous Pike Place Fish Market, could well imagine that another few houses stuck on the eastern edge of the Sound would hardly be noticed.

On the other hand, once the State of Washington decided to reassert its tideland responsibilities under the public trust doctrine, all bets were off.

October 4, 2002

Perhaps the increased assessment will cover the government’s costs of defending it

Each week an edition of West’s Atlantic Reporter 2d Series crosses my desk. For the sake of non-lawyers reading this post, this publication is a compilation of court opinions from several East Coast states and the District of Columbia.  I read the Delaware court cases.

Sometimes the pages flop open to case decisions from other jurisdictions, and my curiosity is piqued. It happened with this week's edition, with a property tax assessment appeal decision issued by the D.C. Court of Appeals called Bender v. District of Columbia.

This is one of those cases where the truly intriguing material is stuck inside the footnotes. For example, footnote 3 describes the residential property involved:

[A]ppellants’ home is “a two and one half story plus basement stone/stucco dwelling resembling a French chateau which was built in 1931 and gut-renovated in the 1990’s. The home has eight bedrooms, nine full baths, and three half baths. The above-grade floors contain 8,394 square feet of gross living area, and the basement contains 2,646 square feet of gross living area. The basement is fully finished, fully furnished and completely carpeted. It has a separate exit to the rear of the premises where the patio and in-ground pool are located. The quality attributes of the [house], that is, its material, design, and workmanship are of the highest order.” The lot, which contains 20,284 square feet, is located “in the Massachusetts Avenue Heights neighborhood,...a neighborhood of embassies and upper tier residential properties.”

Footnote 1 comments that the DC government’s initial Tax Year 1999 assessment of $2,912,000 was not shown to be incorrect, illegal, or even directly attacked on appeal. The note also included this little bit of advice to those considering an appeal from such decisions:

“Once the case has come before the Superior Court, the District is entitled to attempt to establish that the value of the property is in excess of the assessed value,” District of Columbia v. New York Life Ins. Co., 650 A.2d 671, 673 (D.C. 1994), and the trial court has the power to increase the assessment. See D.C. Code § 47-3303 (2001).

That’s what happened here. The eventual assessment was revised to $3,184,000, a tidy little $272,000 increase from the original value. The property owners then took the new determination up to the Court of Appeals.

In addition to an dispute about which valuation technique should have been applied, the big argument seemed to be about how to value the basement portion of the house. As shown in footnote 5, here’s why:

Vinson pointed out that the square footage of the basement “is bigger than most houses in the District of Columbia. There is an enormous amount of space in that basement that’s finished, and it’s finished every bit as well as the space on the second floor of that house.” Earlier in his testimony, he had observed that “the basement finish is substantial. . . . It is not like a rec room. It is very high quality finish. It is – you couldn’t really tell that you are in a basement when you are in the basement.’ See also note 3, supra.

The Court of Appeals affirmed the trial court’s decision, largely because there was no showing that the trial court’s decision to rely upon the District’s expert testimony was irrational or unfounded. Except for the property involved, it’s actually a pretty routine decision.

The really interesting footnote, however, appears directly under the caption, immediately after the notation that the case was decided on April 25, 2002. (That's several months earlier than one would expect to see in an Atlantic Reporter received in October.)

The relevant portion of this note reads as follows:

*The opinion in this case was originally issued in the form of an unpublished Memorandum Opinion and Judgment. It is now being published on the motion of the Corporation Counsel.

I have the distinct impression that the city attorney wanted to use this opinion to send a signal to the private attorneys who handle DC property tax appeals.

I’ll bet the message was received, loud and clear.

October 3, 2002

Gore not helped by fair NYT article

That is a newsworthy headline, BTW.

In fact, the story by Adam Nagourney about Gore’s October 2 speech at the Brookings Institution is notable for the manner in which it treats the former vice-president. If this report is any indication, the NYT editors are not now in the Gore camp for 2004, and perhaps may never be.

Consider the headline, first of all:

Gore Criticizes Bush on Creating Crisis Over Economic Leadership But Offers Few Suggestions

Frankly, I’d expect the Washington Times or some other non-Gore-friendly publication to use an extremely similar headline, with perhaps only a slight change of emphasis, such as

Gore Offers Few Suggestions, But Criticizes Bush on Creating Crisis Over Economic Leadership

Then consider the actual report. After the ritual Bush-bashing recounted in the first three paragraphs, Nagourney took care to note what was missing from the speech:

Mr. Gore, who ran against Mr. Bush in 2000 and is considering whether to run in 2004, offered few details about which policies he thought had failed or what Mr. Bush and Congress should do.

He repeatedly declined to say whether he supported the call by many Democrats to postpone or suspend Mr. Bush's tax cuts that many Democrats argue have contributed to the nation's economic woes. In a 35-minute speech on Mr. Bush's economics program, Mr. Gore did not use the word "taxes" once, nor did he discuss the merits of the cuts that anchor Mr. Bush's plan.

Asked afterward whether he would support suspending the next phase of the cuts, Mr. Gore responded, "I think that he ought to put his economic plan on the table and engage the bipartisan leadership in a complete reassessment of all of his existing policies."

Mr. Gore then left for a plane home to Tennessee.

If the NYT currently supported Gore’s attempt at electoral redemption in 2004, I would not expect to have read those four grafs.

On the other hand, avoiding talk about eliminating tax cuts is in line with current Democratic tactics for the November elections:

Democratic officials said they had asked Mr. Gore to avoid explicitly attacking the tax cuts, out of fear that it might hurt Democratic candidates in close races.

The story also included two other noteworthy features. First, to maintain the NYT’s newfound interest in editorial balance, the piece included a partisan comment by RNC Chairman Marc Racicot that repeated Nagourney’s own assessment about the dearth of action items in Gore’s speech:

"He didn't offer any proposals at all. He simply mentioned the economy."

Second, while noting some attempts at humor during the affair, the reporter inserted an anecdote that the notoriously sensitive Gore could not possibly enjoy reading in the nation’s alleged “newspaper of record”:

At the end of the speech, a reporter asked Mr. Gore why he was not wearing his wedding ring. Mr. Gore's face turned scarlet as he confided that he had "gained so much weight" that once he had taken off the ring "I couldn't get it back on again."

Perhaps while back home in Tennessee Mr. Gore could investigate the potential benefits of switching to salad.

In any event, for the NYT this was a somewhat surprisingly balanced article about a speech that may have tasted great for its Democratic audience, but which was less filling than necessary to be considered a serious position statement.

Wonders never cease.

October 3, 2002

Now it can be told

For many months earlier this year, bloggers wondered what had occurred to one of their favorite fellow web writers, whom they knew as Shiloh Bucher.

Operating from a website called dropscan (for reasons others could only guess) this bright student and young bride from Austin, Texas wrote sprightly, thoughtful commentary about a host of subjects, with a bit of a specialty in health policy. Her site also featured a popular collection of photographs from Afghanistan taken during the recent conflict.

Then she disappeared.

Occasionally there would be a short note at her site, referring to some necessary outside work that kept her from posting.

More recently, however, Ms. Bucher appeared back on the web with a new site, maintaining a pleasantly productive blogging schedule.

The real mystery remained: Where was Ms. Bucher all this time?

Now it can be told.

Shiloh Bucher is actually Janeane Garafolo.

It makes sense, once one considers two sets of facts.

First, take a look at the 2002 filmography of Ms. Garafolo, as reported on the website. She's been involved in no less than seven projects.

  1. 10029 (2002)
  2. Gigantic: A Tale of Two Johns (2002) .... Herself
  3. Manhood (2002) .... Jill
  4. TV's Most Censored Moments (2002) (TV) .... Herself
  5. Big Trouble (2002) .... Monica Ramiro
  6. Martin & Orloff (2002) .... Hairdresser
  7. Laramie Project, The (2002) .... Catherine Connolly

Nobody that busy could also keep up with blogging, even under an intriguing pseudonym with its own detailed "backstory".

Second, and more important, take a look at these two pictures:

Ms. Garafolo
(A standard publicity photo)

"Ms. Bucher"
(Note that this photo is slightly out-of-focus, obviously designed to trick those who might otherwise make the connection too easily.)

I rest my case.

Personally, I'm just glad to see the talented Ms. Garafolo back on the web and writing great stuff, even if she continues to post her impressive essays as "Ms. Bucher."

SPOOF ALERT: Apparently my ability to write persuasively is a bit more advanced than I thought.

This post is a spoof. It is a hoax. It is not true. Really.

I know some readers may have read posts that assumed otherwise, but still. It's a put-on, similar to one I've done before.

Sorry for any confusion!

October 2, 2002

Don’t count on what is feasible unless you’re the one who decides what is feasible

The 9th Circuit Court of Appeals issued a 2000 Census decision on September 27 that (except for Howard Bashman’s short note) seems to have been overshadowed by other newsworthy stories, such as the fustercluck in the New Jersey U.S. Senate race.

For those who use or rely upon Census data, however, this is an important case.

The cities of Los Angeles, San Antonio, San Francisco, Chicago, New York, and several other local governments jointly sued the Commerce Department over Secretary Evan’s decision to not adopt statistically adjusted population data for redistricting purposes.

The case centered on the interpretation and implementation of the administrative authority granted in 13 U.S.C. Section 195, amended in 1976 to read as follows:

Except for the determination of population for purposes of apportionment of Representatives in Congress among the several States, the Secretary shall, if he considers it feasible, authorize the use of the statistical method known as “sampling” in carrying out the provisions of this title. [emphasis noted in opinion].

In June 2000, the Census Bureau issued an “A.C.E. Report” that made an initial determination that using statistically adjusted data instead of the basic headcount information was feasible for redistricting needs, and could also improve the overall accuracy of Census information.

Even so, the Bureau remained a bit cautious:

To ensure that the final decision was insulated from political manipulation, the Bureau proposed that the Executive Steering Committee for A.C.E. Policy (“ESCAP”)—a committee of senior Bureau officials and statisticians—assess the effectiveness of A.C.E. and “make a recommendation to the Census Bureau Director regarding the use of the statistically corrected census data.” [citation omitted.]

The ESCAP group included the Associate Director for Decennial Census, senior statisticians, demographers, and other senior staffers. In March 2001, this committee recommended against using the adjusted data:

After many weeks of “examining voluminous evidence,” ESCAP was unable to recommend the use of the A.C.E. data due to unresolved concerns about its reliability. [citation omitted.] In particular, ESCAP found that the A.C.E. data diverged widely from the demographic analysis’ estimate of the undercount and reflected possible synthetic and balancing errors. [note and citation omitted.] Although further research may have proved the A.C.E. data to be more accurate, ESCAP’s “uncertainty due to these concerns is too large at this time to allow for a recommendation to adjust.”[citation omitted.]

Secretary Evans adopted the committee’s recommendation, and this suit followed. After the District Court ruled in favor of the Commerce Department, the governments appealed. 

The appellate opinion noted that the particular question about adjusting headcount data for redistricting purposes had not yet been addressed by the Supreme Court.

For all the complexities involved with creating Census data, however, this case actually involved some fairly basic elements of administrative law and statutory interpretation:

Our starting point in construing § 195 is the language of the statute itself.

...Our reading of the plain statutory text is that the combination of terms “shall” and “if he considers it feasible” demonstrates Congress’ intent to strongly encourage the use of sampling while conferring meaningful discretion upon the Secretary to determine whether statistics should be used in any given instance. The language of § 195 is straightforward. It requires the Secretary to incorporate the use of statistical methodologies in the taking of the census if and where he considers it feasible. By its plain terms, the statute directs the Secretary to use sampling, but only “if he considers it feasible.” 13 U.S.C. § 195. As a corollary, no sampling need be used if the Secretary does not consider it feasible.

The next issue then became how the term “feasible” should be construed in this context, especially when that word was accompanied by additional statutory language:

[T]he choice of language “if he considers it” as a pre-condition of “feasible” demonstrates that Congress intended for the Secretary to make … judgment calls. This phrase indicates that Congress did not intend to limit the Secretary’s discretion to a finding of whether a particular use of sampling is capable of being done. Rather, it left the choice to the Secretary as to whether sampling could be used, bringing to bear his expertise on the effectiveness of different statistical methodologies and their compatibility with the other aspects of the census. Thus, unlike other cases in which the agency had “little administrative discretion” in making a feasibility determination, § 195 reflects Congress’ intent for the Secretary to strike a balance as to the feasibility of using sampling in any given instance. [citation omitted.]

In reviewing how the Commerce Department carried out its tasks under this statute, the Court discussed the ESCAP report, and noted a few of the problems with using adjusted data. For example:

Whereas the demographic analysis estimated that the unadjusted census overcounted the population by 1.8 million persons, the A.C.E. indicated that the census had undercounted the population by 3.3 million persons. [citation omitted.] Even assuming that undocumented immigration had doubled during the 1990s, the demographic analysis estimated an undercount of only 0.9 million persons. [citation omitted.] Although the source of the problem could also have been the 1990 census data or the demographic analysis techniques, ESCAP had pinpointed other concerns about corruption of the A.C.E. data and, therefore, concluded that the inconsistency might be attributable to “an as-yet undiscovered problem in the A.C.E. or census methodology.” [citation omitted.]

The Court also noted a later ESCAP Committee report issued October 17, 2001 that balancing errors and duplicate enumerations led to an overstated net undercount in the adjusted data of at least 3 million persons.

Based on the administrative record, the 9th Circuit upheld the District Court’s decision to dismiss the lawsuit:

We cannot substitute our judgment for that of the agency charged with administering § 195. [citation omitted.] Under our narrow standard of review, it is sufficient that the Bureau’s panel of experts decided, based on their consideration of the relevant factors,  that the data carried too high a risk of a fundamental flaw and could not be certain within the time frame allotted that the adjusted data would improve the accuracy of the census.11 Given the substantial divergence of the A.C.E. data from the demographic analysis, as well as concerns with synthetic and balancing error, we cannot say that the Secretary’s adoption of ESCAP’s recommendation not to use the adjusted data was “arbitrary or capricious.” Therefore, we uphold his adjustment decision.

The dissent by Judge Stephen Reinhardt makes a good political argument about census undercounting, its effects on various minority groups, and the perceived benefits of statistical sampling. On the other hand, I believe Judge Reinhardt’s real beef is with the broad discretion granted by Congress in enacting the 1976 amendment to Section 195. Other statutory uses of the word “feasible,” such as found in 23 U.S.C. Section 138 relating to taking parkland for transportation purposes, give nowhere near as much flexibility to the agencies affected by that statute as is conferred on the Commerce Department in this instance.

If Congress really wanted to require the use of adjusted Census data for redistricting or other non-apportionment purposes, it would not be difficult to draft the language to accomplish that result.

As a political matter, on the other hand, that statutory change would be far more problematical.

In fact, I wouldn’t count on any such legislation passing anytime soon.

October 1, 2002

Smuggling booze into The Frozen North is not a crime

The title to this post is actually a little misleading.

Sneaking liquor into Canada remains a serious crime. On the other hand, it’ll be primarily up to Dudley Do-Right and the rest of the Royal Canadian Mounted Police to do something about those who seek to evade Canadian liquor taxes while quenching the heavy thirst of our friends in The Frozen North.

Other options remain for those engaged in law enforcement south of the border, but a Federal wire fraud prosecution is no longer among them, at least in the states for whom the First and Fourth Circuits exercise appellate federal jurisdiction.

First, a quick little history and economics lesson.

During Prohibition, Al Capone and other enterprising gentlemen figured out that smuggling booze into the U.S. from Canada could be a lucrative if blatantly illegal means of making millions. With a few thousand miles of border to watch, and a painfully lame Customs Service assigned the thankless task of controlling the flow, there were very few risks and very high profits to be made.

The booze smuggling has now switched directions, but not because the Canadian provinces have suddenly adopted Prohibition. Instead, the problem is that the Canadian and provincial liquor taxes are so high as to entice the criminally inclined to take advantage of the cross-border differential.

According to the testimony in the criminal trial of U.S. v. Pasquantino, the tax difference added up to a cool $100 per case.

As detailed in this Fourth Circuit opinion, two gentlemen from Niagara Falls, New York enlisted a truck driver to assist them in tapping into the Canadian black market for liquor. The scheme utilized dozens of telephone calls, several cooperative liquor stores in Maryland, and a few other truck drivers willing to bring the product over the border while risking detection by the Mounties.

The plan worked pretty well, in fact running from 1996 to 2000. Agents from ATF eventually caught a whiff of the scam, however, and developed a fascinating and thorough collection of evidence to prove how this smuggling operation worked.

Wire fraud indictments followed, and after conviction the smugglers appealed to the Fourth Circuit.

On Monday, the appellate court reluctantly concluded that the indictments should have been dismissed:

[A]fter careful review, we agree with the First Circuit that a scheme to defraud a foreign government of tax revenues is not cognizable under the wire fraud statute.

The indictment against appellants should have been dismissed by the district court.

… When the United States attempts to punish a crime whose sole objective is the violation of another country's revenue laws, the "important concerns underlying the revenue rule" are indeed implicated. [citation omitted.] Though this case "does not require us to enforce a foreign tax judgment as such, upholding [appellants'] section 1343 conviction would amount functionally to penal enforcement of Canadian customs and tax laws." Id. The revenue rule is a "longstanding common law doctrine providing that courts of one sovereign will not enforce final tax judgments or unadjudicated tax claims of other sovereigns."

… In this case, the act of smuggling liquor into Canada to avoid import taxes is deplorable. The appellants' scheme was a money-making one, with the governments of Canada and Ontario as the victims. However, the fact remains that this prosecution involves Canada's tax laws.

[W]e hold that a scheme to defraud a foreign government of tax revenues is not cognizable under the wire fraud statute.

These particular enterprising characters are not free from all risk of criminal prosecution, however. The opinion notes that they’ve been indicted in Canada for failure to file excise taxes and possession of unlawfully imported spirits, but the 4th Circuit did not know the disposition of those charges.

In addition, the Federal government on this side of the border continues to possess other prosecutorial options in going after similar miscreants. For example, they could take a page from history and prosecute smugglers like these guys for income tax evasion, just as they did with Al Capone. In addition, there is the added possibility of going after the liquor store owners for violating U.S. Department of Treasury Regulations concerning bulk sales of alcohol. The deal-making used in the Pasquantino case to obtain cooperation from the store owners specifically included refraining from using that enforcement option, but that doesn’t mean a different deal couldn’t be made in some other case.

In contrast to the decisions by the First and Fourth Circuits, the Second Circuit Court of Appeals has ruled the other way on this issue. Therefore, there is a chance that this interpretative conflict will eventually produce a unifying Supreme Court opinion. In the meantime, Federal prosecutors wishing to assist our Friends up North will have to be more careful about choosing which prosecutorial sledgehammer to use when busting the barrels of bogus booze merchants.

As for that last burst of alliteration, I can only say, “Beauty, eh?”

October 1, 2002

History Repeating Itself

We’ve seen this happen before:

  • A high-ranking elected official, extremely disliked by many both within and outside his own political party, attempts to prevent others from obtaining access to records detailing his actions in a criminal matter.
  • A court issues an opinion that forces the release of the information.
  • The official resigns shortly after the court decision, with a maudlin, infuriating speech covered by the national media.

First example: Richard M. Nixon, Supreme Court decision dated July 24, 1974,  Nixon’s resignation August 8, 1974, complete with self-pitying televised speech.

Second example: Robert Torricelli, Third Circuit Court of Appeals decision dated September 20, 2002, Torricelli’s withdrawal from re-election campaign September 30, 2002, complete with self-pitying televised speech.

Somehow I’m feeling all warm and fuzzy again.

September 30, 2002

Hell hath no fury like a sales manager

William Riccard’s efforts to take a piece out of the Rock may continue for at least a little while longer, it appears.

That is the primary holding of the 11th Circuit Court of Appeals in its recent decision about an extraordinarily bitter employment dispute between Riccard and the Prudential Insurance Company.

Readers who are neither related to Mr.Riccard nor investors in the company that uses the Rock of Gibraltar as a primary trademark symbol may wonder why they should care about this case.

There are at least two reasons why others should be as interested in this nasty lawsuit as the litigants themselves.

First, the case nicely illustrates the meaning of the word “vendetta”, at least as sometimes occurs in personnel litigation.

Second, the case shows that dry wit can be a welcome relief when used effectively in a long appellate court opinion.

Riccard worked in sales for Prudential for over 25 years. He and the company had a falling-out. Riccard was eventually placed on disability leave, and later began receiving a pension.

In the meantime, he filed four separate lawsuits against Prudential.

Two of these lawsuits were eventually dismissed because Riccard’s employment agreement permitted Prudential to insist upon arbitration of such claims.

The arbitration proceedings eventually involved 55 separate evidentiary hearings, with over 20 witnesses, and stretched over thirteen months.

Prudential won the arbitration even after a subsequent appeal, but Riccard wasn’t finished fighting. He filed two other lawsuits. One, filed shortly after losing the arbitration, tried to re-litigate the same issues dealt with in the arbitration. The Circuit Court upheld the dismissal of that suit on the grounds that its filing was an “abuse of process.”

Riccard filed yet another lawsuit, this time alleging retaliation among other charges. The District Court eventually dismissed these claims, ruling that two were outside the statute of limitations and two others “did not amount to adverse employment actions, an essential element of his prima facie case.”

On appeal, the Circuit Court agreed that Riccard had actually made a legitimate point about one of the retaliation claims and its legal sufficiency, at least at the modest level of analysis required for considering a motion to dismiss, and reversed the trial court on that issue.

Riccard was not finished fighting, by any means. He and his counsel also filed motions for sanctions against Prudential.

This tactic backfired, badly.

The District Court not only dismissed Riccard’s request, it also ordered sanctions against the plaintiff and his counsel, including an injunction to prevent filing of even more claims against his former employer:

The district court found that a monetary sanction was insufficient to deter Riccard from future baseless, bad-faith filings and therefore would be insufficient to protect the court's ability to carry out its judicial functions, because: (1) Riccard was not financially well off and could not afford to pay a sanction; and (2) even if he could afford to pay, Riccard would gladly do so in order to "continue his vendetta" against Prudential. The district court reasoned that "given Riccard's near-obsession regarding his former employer, injunctive relief is the only means that offers any chance of preventing further harassment of Prudential, further clogging of the judicial machinery with meritless pleadings, and further overloading of already overloaded court dockets." We cannot fault that reasoning.

Even after this injunction was entered, however, Riccard remained undeterred. He broadened the formal scope of his ire to other arenas:

Those complaints, signed by Riccard with his "thanks for listening," consisted of court orders, transcript excerpts, letters, pleadings, and affidavits, for a total of two-hundred pages of exhibits, and they complained about Prudential's alleged criminal activity, reiterating Riccard's accusations about Prudential fraudulently misrepresenting its NASD membership status to courts and charging Prudential with obstruction of justice. Riccard filed those complaints with the NASD, the Securities and Exchange Commission, the Commissioner of the New Jersey Department of Banking and Insurance, the United States Attorney's Office for the Middle District of Florida, and the Florida Department of Agriculture, with copies to various newspapers. And Riccard also filed ethical grievances against Prudential's attorneys with the New York State Bar Association and the Florida Bar Association.

After due notice and a show cause hearing, the District Court held Riccard in civil contempt for these new filings, including a hefty award of attorney’s fees and costs.

On appeal, the Circuit Court upheld the fundamental reasoning for the District Court’s sanctions against Riccard, including the injunctions, but reversed on ancillary matters, such as the fact that the injunction against complaint filing did not apply to the charges filed against Prudential’s attorneys with their respective state bars.

While so holding, however, the Court relieved the tension with a wry comment or two:

There was no abuse of discretion in the sanction the district court imposed against Riccard. Three or four lawsuits over one employment relationship is enough. [footnote omitted.]

…There was also every reason to believe that Riccard might seek other innovative ways to evade or circumvent the injunction, so the court attempted to foreclose as many of them as possible by broadening the injunction.

…Riccard also contends that the breadth of the modified injunction is unwarranted, because he only filed four lawsuits against Prudential over several years and never actually sued any judges or lawyers. His point, we suppose, is that he should get credit for what little restraint he has shown so far.... Perhaps the lawyers against whom Riccard filed ethical grievances with their bar associations stemming from the same subject can take some comfort from the fact that Riccard has not yet sued them, but the district court was not required to wait until he did. 

The appellate court’s decision gives the plaintiff a very slight chance at an eventual hearing on one of his claims, with no prediction of eventual victory. Otherwise, Prudential has essentially “won” each round of this stunningly acrimonious litigation.

Even so, on this record it wouldn’t surprise me to see an eventual new round of lawsuits, with a few judges added to the list of defendants.

That wouldn’t be smart. Unfortunately, it also wouldn’t be the first time.

September 29, 2002

Two-Day Spaghetti Sauce, with sausage and meatballs

On the way home from work a few days ago, I decided it would be fun to fix up a big pasta dinner with friends this weekend, featuring a spaghetti sauce made from scratch.  Since I also planned to play golf Sunday afternoon, I assumed I’d fix everything up and we’d have the bash on Saturday night.

Someone else in the family had a different idea, suggesting I prepare the sauce on Saturday, but we’d still eat on Sunday night. She also said she’d been meaning to try out her pasta machine, which was a very pleasant addition to the plan.

There was also the small matter of cleaning the house that also needed to be fitted into the schedule.

On Friday I started looking on the Internet for recipes, and was surprised to find how many included some variation on this simple phrase:

Open jar of tomato sauce, and pour into mixture.

Not what I had in mind.

Eventually, I turned up a scratch recipe called Libby’s Spaghetti Sauce. The site’s four-serving directions became the basis for the following, which will serve at least 12, along with a variation on a separate recipe for meatballs I found in our Fanny Farmer® cookbook:

Sauce Ingredients:

  • 12-14 tomatoes, about 6-7 lbs. in weight
  • 12 plum tomatoes
  • 1 can tomato paste
  • 4-5 tbs olive oil
  • 2 to 2.5 lbs mild Italian sausage
  • 2 stalks celery, chopped fine
  • 1 carrot, chopped fine
  • 4 large white mushrooms, caps only, sliced thin after quartering
  • 4 tbs oregano
  • 1.5 tbs fresh ground black pepper
  • 2 tbs basil
  • 1 tbs Cajun seasoning
  • 2 tbs fresh Italian parsley, chopped fine
  • 12 cloves garlic, peeled and chopped fine
  • 1 tbs salt

Meatball Ingredients:

  • 2.25 lbs ground beef
  • 1.25 cups dried Italian bread crumbs
  • 2 tbs Italian parsley, minced or chopped fine
  • 1 tbs basil
  • 2 eggs, lightly beaten
  • 1 tsp salt
  • ½ tsp black pepper
  • 2 tbs olive oil

Cooking Directions:

Chop up the tomatoes and place into large container (At least 6 quart size--really.)

After preparing the other ingredients (a whole lot of chopping will be going on), put a large (10-quart minimum) stock pot on the range, at mid-heat. Put the olive oil and garlic in the pot, and cook the garlic in the oil until the pieces turn a very light brown.

Add the tomatoes and the rest of the sauce ingredients, except for the sausage, and set range to high heat.

As the mixture heats up, brown the sausage in a separate frying pan on mid-heat, after first drizzling the pan with a little olive oil. Turn the sausage once after about 3 minutes, and remove the link from heat after 6 minutes. Slice the sausage into 1-inch-long pieces, and add them to the sauce.

When the sauce begins to boil, reduce heat to simmer.

Then begin making the meatballs.

Combine all ingredients except the oil in a large mixing bowl. Mix thoroughly (a good squishy workout for the hands and fingers, BTW), and shape into balls about 1.25 inches in diameter. At that size, there will be about 45 meatballs.

Heat the oil in a frying pan, and brown the meatballs for a few minutes, turning at least once for each batch. (Unless you have a really, really large pan, you will not be able to cook them all at one time.) Remove the meatballs from the pan with a slotted spoon, and add them to the simmering sauce.

Let the sauce simmer for at least two to three hours after the meatballs are added to it.

The long simmering will accomplish at least two goals:

  • As with many soups and sauces made from scratch, the longer this sauce cooks, the better-tasting it becomes.
  • Even after cleaning up the kitchen from the sauce and meatball preparations, the simmering will give you plenty of time to clean two bathrooms, dust and straighten up three downstairs rooms, remove dog hair from the love seat in the family room with scotch tape, dry mop and Swiffer® mop the hardwood floors in the house (living room, foyer, kitchen, and dining area), and apply either furniture polish or a cleaning agent to most hard surfaces in the dining area, kitchen, and living rooms. There will also be time to do the windows. (I actually did most of this work beforehand, but the fact remains that there's plenty of time to do these chores while the stock pot fills the house with a great smell.)

After letting the sauce pot cool down, place it in the refrigerator overnight. Take it out a few hours before dinner, and re-heat the sauce as the pasta is prepared and cooked.

Serve over pasta along with a nice loaf of French or Italian bread, perhaps split in half and toasted with garlic butter.

I’ll update this post after dinner tonight and let you know how folks liked it. We tried a meatball last night, just before putting the stock pot in the fridge, and nearly swooned.

UPDATE: After the overnight stay in the fridge and then being warmed up again, the sauce seemed a tiny bit salty. We also became concerned about whether it would be enough, because homemade pasta absorbs sauce more than store-bought. So, we added a 28 oz can of diced tomatoes, a small can of tomato paste, and about a half-cup of red wine (the last part of an Australian Shiraz), about 90 minutes before serving. Those additions worked out fine.

The gang raved about the whole dinner, as well as my wife's delicious Tiramasú dessert.

I'll post that recipe some other time.

Right now I have to take a nap.

Contact Information:

Fritz Schranck
P.O. Box 88
Nassau, DE  19969


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Official small print disclaimer: This is, after all, a personal web site. Any opinions or comments I express here are my own, and don't necessarily reflect the official position of my work as a government attorney or any of my clients.

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© Frederick H. Schranck 2002