Archive for December, 2007

Music Industry Loses Round in Music Piracy Case, a Rare Stand for Privacy

Monday, December 31st, 2007

By ADAM LIPTAK  December 31, 2007 New York Times
The record industry got a surprise when it subpoenaed the University of Oregon in September, asking it to identify 17 students who had made available songs from Journey, the Cars, Dire Straits, Sting and Madonna on a file-sharing network.

 The surprise was not that 20-year-olds listen to Sting. It was that the university fought back.

Represented by the state’s attorney general, Hardy Myers, the university filed a blistering motion to quash the subpoena, accusing the industry of misleading the judge, violating student privacy laws and engaging in questionable investigative practices. Cary Sherman, the president of the Recording Industry Association of America, said the industry had seen “a lot of crazy stuff� filed in response to its lawsuits and subpoenas. “But coming from the office of an attorney general of a state?� Mr. Sherman asked, incredulous. “We found it really surprising and disappointing.�

No one should shed tears for people who steal music and have to face the consequences. But it is nonetheless heartening to see a university decline to become the industry’s police officer and instead to defend the privacy of its students.

The recording industry may not be selling as much music these days, but it has built a pretty impressive and innovative litigation subsidiary.

In the past four years, record companies have sued tens of thousands of people for violating the copyright laws by sharing music on the Internet. The people it sues tend to settle, paying the industry a few thousand dollars rather than risking a potentially ruinous judgment by fighting in court.

“People get pushed into settlements,� said Fred von Lohmann, a lawyer with the Electronic Frontier Foundation, a civil liberties group. “The Oregon attorney general is showing what a real fight among equals would look like.�

In his filings, Mr. Myers claimed to be looking for a middle ground.

“Certainly it is appropriate for victims of copyright infringement to lawfully pursue statutory remedies,� Mr. Myers wrote last month. “However, that pursuit must be tempered by basic notions of privacy and due process.�

“The larger issue,� Mr. Myers said, “is whether plaintiffs’ investigative and litigation strategies are appropriate.�

Mr. Myers questioned the tactics of MediaSentry, an investigative company hired by the recording industry. He said the company seemed to use data mining techniques to obtain “private, confidential information unrelated to copyright infringement.� He added that it may have violated an Oregon criminal law requiring investigators to be licensed.

A spokeswoman for MediaSentry said it collected only information that users of peer-to-peer networks make available to anyone who cared to look. She had no comment on the licensing law.

The record companies, in an apoplectic response in court, accused the university of having “a political agenda.� They said that it was protecting people who had broken the law and that it was not entitled to raise privacy and due process arguments on behalf of its students.

“Hundreds of universities and dozens of commercial Internet service providers have responded to the exact same subpoenas,� the record companies’ lawyers wrote.

James Gibson, a law professor at the University of Richmond, said Mr. Myers’s arguments had been raised in other cases and had met with little success. Still, Professor Gibson said, “it’s significant that a public university and its state apparatus is standing up to the R.I.A.A.�

Mr. Sherman, of the recording industry association, predicted that Mr. Myers’s motion would fail and said the industry’s litigation strategy had worked well.

“The litigation program, as controversial as it is often written up to be, has been very successful in transforming public awareness,� Mr. Sherman said. “Everybody used to think this was legal. Now everybody knows it’s illegal.�

Indeed, the program seems to be expanding, and universities are being asked to play an even bigger role. In February, the association started asking universities to identify students suspected of file sharing and to pass along “prelitigation letters� to them. The association says it has provided some 4,000 such letters to more than 150 colleges and universities. The letters offer the students what they call bargain settlements of about $3,000 if they act fast, by punching in a credit card number at

“The ‘reduced’ settlement amount, in other words, represents the record companies’ savings from cutting out the middleman — our justice system,� the Electronic Frontier Foundation said in a recent report.

The universities are under no legal obligation to pass the letters along, but most do. Those that don’t typically receive subpoenas like the one issued to the University of Oregon.

At least one other public university in Oregon has cooperated with the industry. In 2004, Portland State responded to a record industry subpoena by blandly and efficiently providing the names, addresses, phone numbers and goofy e-mail addresses of two roommates. The university said it could not say which student’s computer was involved, so it fingered both of them.

“We definitely felt betrayed,� said Karen Conway, the mother of one of the roommates. “They readily turned over private information without notifying us. They placed responding to a legal subpoena far above a student’s right to privacy.�

Though her daughter Delaney was blameless, the record companies’ lawyers demanded $4,500. It was, Ms. Conway said, “basically extortion,� and the family was forced to hire a lawyer. The case against Delaney Conway was eventually dropped. Her roommate settled.

Mr. Sherman said the University of Oregon should disclose what it knew and let the legal system sort out the rest. “It’s no different than us subpoenaing Verizon,� he said.

But an institution of higher education has different aspirations and obligations than an Internet service provider, which is why Portland State’s actions are so unsettling. The University of Oregon’s efforts may be doomed, but there is something bracing about them nonetheless.

All the university is saying, after all, is that the record industry must make its case in court before the university will point a finger at one of its own.



Sunday, December 30th, 2007

From the C-J’s sports section page C-3:  

24th:  David Thomas of The Fort Worth Star-Telegram suggested it’s time for a new baseball statistic:  “MIMR:  Mentions in the Mitchell Report.�  An example:  “Eric Gagne signed a one-year, $10 million contract with Milwaukee.  In 2007, Gagne was 4-2, with 16 saves, a 3.81 ERA, and 21 MIMR.  

25th:  Dennis Miller, on his TV show “Sports Unfiltered�:  “Barry Bonds’ former mistress will testify against him at his upcoming perjury and obstruction of justice trial.  Defense lawyers plan to portray the woman as an angry, bitter, vindictive liar.  You know, Barry’s soul mate.� 

27th:  The agent for Rich Rodriquez can’t understand the criticism leveled at his client after he left West Virginia to become Michigan’s football coach.  Mike Brown told The Associated Press that coaches are human beings who should be “afforded the same grace that others get.  They should hear, ‘Thanks for your hard work; good luck in the future,’� he said.  “What’s the difference between a head coach changing jobs and an executive going from IBM to Honeywell?� 

Responded The Los Angeles Times’ John Weyler:  “Well, one difference is that nobody at IBM paints their face and chest with the company’s colors and stands out in freezing weather exhorting them to make really great business machines.� 


Common law vs. continental law: Rules vs. truth

Saturday, December 29th, 2007

Worldnet – December 29, 2007
The criminal is to go free because the constable has blundered. – Justice Benjamin Cardozo
You’re out of order! You’re out of order! The whole trial is out of order!  – Arthur Kirkland (Al Pacino’s character) movie: “And Justice for All” (1979)
In the movie, “And Justice for All,” Al Pacino’s character is an unrealistic and rather naïve young lawyer who is literally the man the ancient Greek philosopher, Diogenes (412-323 B.C.), spent his entire life looking for in vain – an honest man.
The narrative is about the trials and tribulations of this idealistic and upstanding lawyer in the midst of a perverse society and a corrupt legal system. In one scene, Pacino’s law partner is shipped off to the insane asylum because a client he successfully defended for murdering a child later killed two more children.
Pacino’s utopian worldview is slowly crashing in on him. The final straw occurs when Pacino’s character is compelled to defend an arrogant, corrupt judge who is obviously guilty of numerous criminal charges including fraud, bribery and multiple counts of sexual battery against a woman.
At trial, just before Pacino’s opening argument, his client leans over to Pacino’s ear as he looks over his shoulder at the woman victim he so unmercifully abused and uttered the vilest blasphemy – “That’s an attractive woman; I’d like to have her again!”
Pacino could take no more. Would Pacino now cross the Rubicon? If so, he could never turn back again. A defense attorney usually spends his opening argument defending his client, however, Pacino now understands is completely guilty, therefore he becomes a zealous prosecutor against his own client by telling the judge and a shocked courtroom audience basically – my client is a pig! Pandemonium ensues as bailiffs drag Pacino out of the courtroom. His last words were memorable – Hold it! Hold it! I’ve just completed my opening statement!
This brings me to the thesis of this article – why did they drag Pacino out of the courtroom? Did he do anything wrong? Was he supposed to zealously defend his client, or justice and truth? Under the Anglo-American/common law system of jurisprudence, especially over the past 100 years, rules trump the truth. However, in this article I would like to explore the continental (civil or European) legal system of jurisprudence which I argue by design usually chooses to defend justice which is veritas (truth).
The main difference usually drawn between the two systems is that common law draws abstract rules from specific cases, whereas civil law starts with abstract rules, which judges must then apply to the various cases before them. For example, the Warren court (1953-69) and the Burger court (1969-85), made up out of whole cloth a plethora of criminal defenses from two abstract rules: 1) the exclusionary rule; 2) the incorporation doctrine, whereby portions of the U.S. Bill of Rights are applied to the states through the due process clause of the Fourteenth Amendment.
Below are some of the most infamous cases from this era:

  • Mapp v. Ohio (1961), Decided that evidence obtained in violation of the Fourth Amendment protection against “unreasonable searches and seizures” may not be used in criminal prosecutions in state courts, as well as federal courts.
  • Gideon v. Wainwright (1963), Required that all felons (including the indigent) be given their Sixth Amendment right to legal counsel.
  • Miranda v. Arizona (1966) The court held that criminal suspects must be informed of their right to consult with an attorney and of their right against self-incrimination prior to questioning by police.
  • Swann v. Charlotte-Mecklenburg Board of Education (1971) Supporting busing to reduce de facto racial segregation in schools.
  • In United States v. U.S. District Court (1972) the Burger court issued another unanimous ruling against the Nixon administration’s desire to invalidate the need for a search warrant and the requirements of the Fourth Amendment to the United States Constitution in cases of domestic surveillance.
  • In Furman v. Georgia (1972) the court, in a 5-4 decision, invalidated all death penalty laws then in force.
  • Roe v. Wade (1973), Burger voted with the majority to recognize a broad right to privacy that prohibited states from banning all abortions.

These and many other cases from this period have thoroughly perverted the rule of law and the original intent of the Constitution’s framers, plunging American law, culture and society into our present state of chaos.
Under the Anglo-American and common-law jurisprudence this rigid, illogical adherence to “rules,” if broken anywhere during the trial, can, in effect, have key evidence withheld from the jury causing a mistrial, and the prosecutor will either have to start anew or perhaps, because of financial constraints, allow the criminal to go free. Mapp, Gideon and Miranda all have a built-in exclusionary rule. On this point, Supreme Court Justice Benjamin Cardozo once cynically remarked in a famous opinion – “The criminal is to go free because the constable [police] has blundered.” The other cases cited above have no legitimate constitutional foundation outside of the judge-created incorporation doctrine.
However, under the continental system of jurisprudence (also in England) you have the lord (judge), solicitor (prosecutor) and the barrister (defense attorney). The only concern of the court is not merely strictly following procedure (rules), but determining veritas (truth).
Regrettably, judges in America are supposed to be “neutral and detached,” which in my opinion likens the judge to a referee or a neutered dog. However, judges under the continental legal system in Europe are engaging, dynamic, Socratic, independent, probing and powerful judges who actively participate in discovering the truth and also can cross-examine witnesses for himself. Ironically, at the Court of Appeals and Supreme Court levels they follow a modified continental legal system – firing questions at the attorneys on both sides of the issue in an effort to get at the truth. Why not adopt this European system at all levels in our American courts?
The standard division to be made between the two systems is that the common law system is case-centered and thus judge-centered, allowing room for an agile, pragmatic approach to the particular problems that appear before the courts. The law can be developed on a case-by-case basis. Conversely, the civil law system tends to be a codified body of general abstract principles (truth, justice, equality under law) which manage the exercise of judicial discretion.
Following the continental system of jurisprudence would remedy these deficits cited above. How? Because the law’s primary purpose should not be to legalistically follow a case-driven, judge-centered template, not the rules of evidence, not politics, liberalism, conservatism, feminism, humanism, secularism, positivism, pragmatism or any other “ism”… but justice, equality under law and veritas – truth.
Ellis Washington, former editor at The Michigan Law Review and law clerk at The Rutherford Institute, is a graduate of John Marshall Law School and a lecturer and freelance writer on constitutional law, legal history, political philosophy and critical race theory. He has written over a dozen law review articles and several books, including “The Inseparability of Law and Morality: The Constitution, Natural Law and the Rule of Law” (2002). See his law review article “Reply to Judge Richard Posner.” Washington has just completed the manuscript to his latest book, “The Nuremberg Trials: Last Tragedy of the Holocaust” (2008

Attorneys avoiding medical malpractice suits because California limits -pain and suffering- awards to $250,000.

Saturday, December 29th, 2007

By Daniel Costello, Los Angeles Times Staff Writer   December 29, 2007

A spokesman for Kaiser Permanente said its drop in malpractice filings was the result of a company program begun five years ago in which doctors apologized to patients for errors rather than wait to fight the accusations in court.

Dave Stewart’s 72-year-old mother went to Stanford University Medical Center for double knee-replacement surgery in April. Four days later, she was dead.

To Stewart, an anesthesiologist, it seemed a classic case of medical malpractice. After the operation, his mother developed sharp abdominal pain that she described as “10 on a scale of 1 to 10,” according to her medical records.
The hospital failed to diagnose the cause of her pain and continued to treat her with narcotics. Her vital signs became unstable and she was moved to the intensive care unit, but she died of complications from an untreated bowel obstruction. State regulators cited the hospital in the case this fall.

Stewart and his two sisters decided to sue, and they approached two dozen lawyers. One after another declined to take the case, always for the same reason: It wasn’t worth the money.

In 1975, California enacted legislation capping malpractice payments after an outcry from doctors and insurers that oversized awards and skyrocketing insurance rates were driving physicians out of the state.

The law limited the amount of money for “pain and suffering” — usually the physical and emotional stress caused from an injury — to $250,000. There is no limit on what patients can collect for loss of future wages or other expenses.

Over the years, it has been easy to quantify the effects of the law, known as the Medical Injury Compensation Reform Act, or MICRA. In the years since the law was enacted, malpractice premiums in California have risen by just a third of the national average, and doctors say the law now helps attract physicians to the state. Proponents also say it discourages frivolous lawsuits.

Thirty states have enacted similar legislation. Two Republican presidential candidates — Mitt Romney and Rudolph W. Giuliani — have recently endorsed the approach as a possible national model.

It’s been harder to tally the law’s costs. Critics say it is increasingly preventing victims and their families from getting their day in court, especially low-income workers, children and the elderly. Their reasoning: The cap on pain and suffering has never been raised nor tied to inflation.

Meanwhile, the costs of putting on trials are often paid by attorneys and continue to rise each year. That means those who rely mainly on pain and suffering awards — typically people who didn’t make much money at the time of their injury — are increasingly unattractive to lawyers.

Several states have set their malpractice caps considerably higher than California’s because of worries that they affected poorer patients the most. Some state courts have begun to examine the fairness of their malpractice laws, especially those not tied to inflation. California lawmakers have rarely reconsidered the state’s malpractice legislation.

Yet a Times analysis of state court records, physician payment data and insurer financial records suggests that the cap is increasingly preventing families such as the Stewarts from getting their day in court.

Among the findings:

* Court malpractice filings have fallen in eight of the 10 most populous counties in California that track such information. In Los Angeles, they’re down 48% since 2001 to their lowest per-capita level in nearly four decades. In Orange County, they fell 29% over the same period

* At Kaiser Permanente, where members must resolve malpractice claims in arbitration rather than court, claims have fallen almost 20% since 2001.

* The number of payments to victims and their families across the state was down 24% since 1991, according to a review of a federal government database of nearly half a million claims. Nationally, the decline over the same period was 10%.

* The malpractice earnings of California insurers has far outpaced national averages in recent years. According to financial reports, insurers in the state have paid out just 39 cents of every premium dollar since 1991. The national average was 63 cents.

Proponents of the law attribute the state’s recent decline in malpractice lawsuits to several reasons unrelated to its award cap, including a slight drop in overall personal injury cases nationwide and a possible decrease in medical errors in recent years.

Some states have seen larger per-capita declines in malpractice cases than California, after they enacted caps on medical malpractice awards.

Despite Sensational Newspaper Reports Crime Rates are Actually Falling

Saturday, December 29th, 2007

By Steven D. Levitt  Dedc. 29, 2007


I have blogged repeatedly about the propensity of the media to distort official crime reports to make it appear as if things are getting inexorably worse. (You can see past examples here, here, and here.) Crime has more or less been treading water in the United States over the last few years, although you would never know it from the media.

About six months ago, I took a quick look at the data and saw that 2007 homicide rates were going to be way down in large U.S. cities. The major newspapers are finally starting to report these encouraging numbers, as Alexander Belenky’s interesting blog at the U.K. Guardian points out.


Last month, Al Baker at the Times noted that homicide is down, and that only 35 of the city’s homicides were committed by strangers. Meanwhile, Chicago’s murder rate is down 7 percent.


But here is my favorite:

Two weeks ago, I blogged about an article bemoaning the L.A. gang problem. I noted in my blog post that it didn’t sound right to me that gang problems were worse than ever in L.A. This conclusion was merely informed speculation on my part.


Last week, that speculation was confirmed when the Los Angeles Daily News reported that L.A. is on track to have its lowest homicide rate since 1970, with the greatest declines occurring in gang-related murders

Charles Orange, Commonwealth Attn. for Logan and Todd Dies of Heart Attack

Saturday, December 29th, 2007

 Charles Orange, 52, died after suffering a heart attack.  Logan County Judge Executive Logan Chick said Orange was well-known and respected in the community and always willing to help those in need. 


Funeral arrangements are being handled by the Young Funeral Chapel in Russellville, Ky.


WCPO to operate new website for No. Ky. News after close of the Ky. Post.

Saturday, December 29th, 2007

 Dec. 29, 2007 –
 Monday Dec. 31, The Kentucky Post will publish its final edition, as the paper and its companion the Cincinnati Post close their doors, and shut down their presses.  This will leave the states third largest metropolitan area unofficially known, as “Northern Ky.� covering eight counties with a population of over 400,000 people, without a daily newspaper.


 There will be a new website that will attempt to pickup some of the slack, but will focus mainly on just Boone, Kenton and Campbell county news.  The site is styled, and its tag line is “life in the 859�.  (859 is the area code for most counties in the No. Ky. area. The site will be owned by E.W.Scripps publishing which owns WCPO television.


The site will use Cincinnati televisions stations WCPO news coverage and feeds from the Associated Press and features created and distributed by the Scripps Media Center in Washington, D.C.


The venture will be supported by advertising

Court Rejects Bid to obtain law firms Work Product in class action settlement

Friday, December 28th, 2007

shareholder had sought internal documents to support claim that settlement did not adequately account for company fraud

Anthony Lin  New York Law Journal  December 28, 2007
A Manhattan appeals court has rejected a billionaire investor’s bid to obtain the work product of three plaintiffs firms, led by Milberg Weiss, which he claims settled a class action against software maker CA Inc., for too little.
Sam Wyly, a major CA shareholder, had sought internal documents from Milberg Weiss; Stull, Stull & Brody; and Schiffrin Barroway Topaz & Kessler to support his claims that the 2003 settlement they negotiated, valued at $134 million, failed to adequately account for fraud at CA, which ultimately landed top executives — including CEO Sanjay Kumar and general counsel Steven Woghin — in jail.
But in a decision issued Thursday, the Appellate Division, 1st Department, ruled that Wyly, as an absent class member in the CA suit, did not have the same right to lawyers’ files as a client in a traditional “bipolar” attorney-client relationship.
In a unanimous decision written by Justice Eugene Nardelli on behalf of a panel that also included Justices Richard T. Andrias, John W. Sweeny and Bernard J. Malone, the court said the Court of Appeals’ 1997 decision in Sage Realty Corp. v. Proskauer Rose, 91 NY2d 30, which held that clients are entitled to all of their attorney’s work product, did not apply to absent class members.
Sage Realty … involved an attorney-client relationship in the traditional sense, in that the single voice of a client governs, among other things, the lawyer’s conduct; the direction of a case, including any decision on when, if, and under what terms it should be settled; and the attorney’s continued employment,” Justice Nardelli wrote in Wyly v. Milberg Weiss, 104553/05.
“In contrast,” he continued, “it has been observed, by courts and commentators alike, that the relationship between appointed counsel and an absent member in a class action differs fundamentally from that found in the traditional relationship.”
The panel said absent class members were entitled to some of the benefits of an attorney-client relationship, such as privileged communications with class counsel, but had no right to direct the course of litigation. The court noted that Wyly had been free to hire his own lawyer in the CA class action, though his role still would have been limited, or opt out of the class action altogether.
The court also said Wyly had not sufficiently shown why he needed access to the lawyers’ files.
Nardelli wrote that Wyly appeared to be using the state court proceeding as a “fishing expedition” for evidence that might support his ongoing battle in federal court to have the CA settlement vacated.
Last month, Wyly also filed a legal malpractice suit in Manhattan Supreme Court against Milberg Weiss and the other two class action firms in the CA case. In that suit, Wyly alleges the firms fraudulently induced class members to participate in an inadequate settlement that still paid $40 million in legal fees.
Wyly’s lawyer, William Brewer of Bickel & Brewer, Thursday said his client was on firm legal ground bringing a legal malpractice case as class member and would be able to obtain the documents he sought in the course of that case. But Brewer said they would nevertheless appeal the Appellate Division’s decision because it was “bad law” that allowed class action lawyers to act against the interests of class member.
Milberg Weiss, which did not respond Thursday to an e-mail request for comment, and the other firms appeared pro se.
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Ohio Supreme Court Upholds Caps On Damage Awards

Thursday, December 27th, 2007
December 27, 2007

COLUMBUS A state law that limits how much a person injured by a defective product can collect in pain-and-suffering damages was upheld Thursday by the Ohio Supreme Court, a reversal of its last ruling on the issue eight years ago.


The challenge has been closely watched across the country by attorneys representing injured people and companies that support the concept of caps.


The 5-2 ruling came in a lawsuit filed by Melisa Arbino, a Cincinnati property manager, over the Ortho Evra Birth Control Patch made by Johnson & Johnson. She contended that the product caused her permanent physical damage and threatened her ability to have children, and her lawyer argued that limits on damages were unconstitutional.


The majority opinion, written by Chief Justice Thomas J. Moyer, said the Ohio law revised in 2004 did not violate the constitutional rights of injured parties to trial by jury, to a remedy for their injuries or to due process and equal protection.


The U.S. Chamber of Commerce, National Association of Manufacturers and the National Federation of Independent Business Legal Foundation had joined in urging the court to uphold the law.


Groups urging the court to overturn it included the Ohio Academy of Trial Lawyers, the Ohio Conference of the National Association for the Advancement of Colored People and Mothers Against Drunk Driving.

Governor Beshear Addresses Budget Shortfall For This Fiscal Year and Projections for Next Two Fiscal Years

Thursday, December 27th, 2007

Dec. 27, 2007
Governor Steve Beshear today announced that the Commonwealth’s financial condition, as discovered upon his taking office December 11th, is much worse than anticipated.
“We are confronted by three very significant problems,� the Governor explained. “First and foremost, between now and the end of June, the state will not have enough money to pay its bills and maintain a balanced budget.�
Projected revenues, or income, will not sustain current spending levels. The shortfall is approximately $434 million.
In fact, last week the Consensus Forecasting Group reported the downward revisions of revenue for this fiscal year.
“The report indicated that the Commonwealth’s revenues will be approximately $120 million less than budgeted,� said Mary Lassiter, State Budget Director. “The revenue shortfall in the current year is of great concern.�
“The enacted budget was based upon assumed revenue growth of 4.5% over the last year,â€? Governor Beshear said. “However, revised estimates now predict revenue growth of less than 1% — as a matter of fact, only eight tenths of a percent for this fiscal year.â€?
Secondly, insufficient revenue is anticipated during the next fiscal year. Last October’s estimate for the next two fiscal years calculated revenue growth of just 2.4% in FY 09 and 3.6% in FY 10.
“These estimates will be revisited in January,� said the Governor. “However, we expect more bad news. The economic outlook has become worse since this past October. Therefore there could be a decline in earlier numbers.�
When it comes to spending, several areas of state government have experienced further expenditures since the enactment of the present budget.
More than $166 million of additional spending authority has been requested in the current fiscal year by various state agencies to maintain their program and service levels.
“Most notably and despite claims last summer that the Medicaid budget was balanced, the truth is otherwise,� explained Governor Beshear. “We are facing a current year shortfall of $389 million. About a third of that comes from General Funds.�
“We must find additional dollars for our Corrections Department,� he added. “Moreover, several other areas of state government, including Mental Health/Mental Retardation, State Police, Parks and Public Advocacy face challenges we must address.�
An additional $138 million in spending previously authorized by the General Assembly, but not accommodated in the present budget, must also be addressed.
The third problem is structural. A structurally balanced budget refers to the ability of recurring revenues to meet recurring expenses.
“Relying on one-time funds to balance the budget is risky business,� explained Beshear. “Although most budgets have some one-time funds in them, unfortunately, the enacted budget for this fiscal year relies on more than a half billion dollars in one-time funds – most of which won’t be available next year.�
“In situations such as this, we hope future revenue growth will prevail,� Beshear continued. “Unfortunately, this does not seem to be in our future for at least the next two years. Projected revenue growth will not meet our current spending levels.�
Aside from the structural deficit, the Commonwealth’s current budget situation is faced with the following:
*                     a national economic downturn;
*                     subprime mortgage difficulties affecting our housing industry and durable goods manufacturing;
*                     the lowest state employment growth in several years.
“We are facing nothing short of a budgetary crisis for the coming biennium,� said Governor Beshear. “Although the construction and evolution of this problem occurred before I was elected, it is my job to solve it. We’re setting about to do exactly that.�
“The Governor will exercise his authority and responsibility to balance the budget for the current fiscal year as prescribed in the enacted budget through a Budget Reduction Order next week,� Lassiter said. “He has asked state agencies, the Department of Education, the postsecondary education community and the other branches of government to develop budget reduction plans to help address the shortfall. Support Education Excellence in Kentucky (SEEK) and health insurance for school districts are exempt from the reduction analysis.�
The specific budget reduction actions will be announced on January 4th. “The additional current year spending that is needed to sustain certain programs, including Medicaid, will be addressed as part of the Governor’s recommended budget to the General Assembly,� Lassiter added.
The Governor stressed that in finding resolutions for the unfortunate budget quandary facing the Commonwealth, his utmost priority is sustaining essential services – especially among the most needy among us.
“Concurrently, public safety, government efficiency and other factors bearing on what is best for all Kentuckians will dominate our decision-making,� Beshear said.
*                     Listen to audio of Governor Beshear Address Budget Shortfall. [MP3 - 715KB]
See video of Governor Beshear Address Budget Shortfall. [WMV - 3.05MB]

Governor Beshear Appoints Steve Nunn Deputy Secretary of Health & Family Services Cabinet

Thursday, December 27th, 2007

Dec. 27, 2007 

Governor Steve Beshear today announced the appointment of Janie Miller to the position of Secretary of the Health and Family Services Cabinet and former Rep. Steve Nunn as Deputy Secretary of the Cabinet.

Janie Miller, 52, has more than 31 years of experience in various public administrative and regulatory roles including 21 years in development and administration of health care programs for the state. She also served approximately 17 years in the Cabinet for Human Resources.

Miller was appointed to the position of Deputy Director of Budget Review for the Legislative Research Commission (LRC) in November 2004. In this position, she was responsible for assisting legislators in developing and facilitating the development of budget bills for all three branches of government. Before that appointment she served as a staff economist in the LRC Chief Economists Office.

Under Governor Paul Patton, Miller served as Public Protection Cabinet Secretary from April 2002 to November 2003. She remained Commissioner of the Kentucky Department of Insurance while serving as cabinet secretary. She has also served as Commissioner of the Department of Insurance and as Deputy Commissioner of Health Insurance in the Department of Insurance.

“Janie has a wealth of knowledge and experience in all branches of state government,� said the Governor. “I am confident that her vast budget experience will be an asset to the citizens of the Commonwealth.�

As Deputy Secretary, Steve Nunn, 55, brings 16 years of experience on the House Health and Welfare Committee where he served as Vice Chair for 10 years. Nunn has also served on the House Appropriations and Revenue Committee, as well as the appropriation and Revenue Budget Review Subcommittee on Human Resources. Nunn is the son of the late Republican Governor Louie B. Nunn.

Throughout his legislative career, he has served on the Subcommittee for Families and Children, the Kentucky Multidisciplinary Commission on Child Sexual Abuse, the Council on Domestic Violence and Sexual Assault and the Kentucky Taskforce on Adoption. He also was on the E-Health and Tele-Health Boards as well as the HB 144 Commission which he and Representative Jimmy Lee sponsored and passed. It ultimately directed an additional $50 million into the Mental Health – Mental Retardation budget to enhance the programs and reduce the waiting list for persons with disabilities. Representative Nunn also has 10 years experience working in the private sector as a physician recruiter and advisor for T.J. Sampson Hospital in Glasgow.

“Steve’s strong knowledge of the Cabinet and excellent working relationship with individuals with disabilities, child advocacy groups, public health departments, health  care providers and other advocacy groups will allow him to serve this administration well in his new capacity,â€? said Beshear.

Judge Hands I.R.S. Victory in Son of Boss Tax Shelter

Thursday, December 27th, 2007

December 27, 2007- New York Times  

A civil court has ruled that a popular tax-avoidance scheme known as Son of Boss was abusive and any deductions claimed for it were invalid, an important victory for the Internal Revenue Service in its battle against questionable tax shelters sold to wealthy individuals.

The decision, by the United States Court of Federal Claims, covers one of the most widely used aggressive tax shelters of the late 1990s through recent years.

The ruling, issued on Friday and discussed by an I.R.S. spokesman for the first time Wednesday, also could have significance for Deutsche Bank, the German bank that is under criminal investigation by Manhattan federal prosecutors over its work with questionable tax shelters that the I.R.S. considers similar to Son of Boss.

Deutsche Bank officials could not be reached immediately last night for comment.

The ruling, in a case that was closely watched by tax specialists, concerned an entity known as Jade Trading, which sued the I.R.S in the Court of Federal Claims in 2003 for a refund after the agency ruled its claims for tax deductions invalid.

Jade Trading was a partnership controlled by Robert W. Ervin of Sturgis, Ky., and was used by him and his brothers in 1999 to help offset income taxes due on $40 million in profit from the sale of their cable television business.

The Ervin brothers paid fees to the American International Group and to Sentinel Advisors, an investment firm, among others, for a Son of Boss shelter that they then used to generate around $40 million in artificial tax losses.

The 75-page ruling, by Judge Mary Ellen Coster Williams, also said that a key part of the transaction “was devised and marketed by a tax accounting group, BDO Seidman’s ‘Tax Sells’ Division, as a tax product, not by an investment adviser as a vehicle to earn profit.�

Son of Boss, which the I.R.S. formally disallowed in 2000 and has never considered valid for deductions, involves creating artificial losses that are then used improperly to offset legitimate gains. The scheme is based on an older shelter, bond and options sales strategy, or Boss.

Mr. Ervin and his partners had tried to claim that they had made $450,000 in investments that had generated $40 million in losses.

Judge Williams’s ruling said that the losses claimed by Mr. Ervin and his partners were “purely fictional.�

She further wrote that the transaction’s “fictional loss, inability to realize a profit, lack of investment character, meaningless inclusion in a partnership and disproportionate tax advantage as compared to the amount invested and potential return, compel a conclusion that the spread transaction objectively lacked economic substance.�

One definition of an abusive tax shelter is a tax-motivated transaction that lacks economic substance.

By 2005, the I.R.S. had persuaded more than 1,200 people who bought Son of Boss tax shelters to come forward and pay $3.7 billion in taxes owed or risk being prosecuted by the government. The government can be expected to use the ruling in this case to pressure additional taxpayers to settle.

Tax shelters similar to Son of Boss are at the center of the government’s criminal case against former employees of the accounting firm KPMG. That case, which federal prosecutors once billed as the largest tax fraud case in history, has faltered since the judge dismissed charges against 13 defendants.



U.S. Ruling allows Employers to Reduce Health Benefits for Retirees

Thursday, December 27th, 2007

 December 27, 2007 The New York Times

WASHINGTON — The Equal Employment Opportunity Commission said Wednesday that employers could reduce or eliminate health benefits for retirees when they turn 65 and become eligible for Medicare.

The policy, set forth in a new regulation, allows employers to establish two classes of retirees, with more comprehensive benefits for those under 65 and more limited benefits — or none at all — for those older.

More than 10 million retirees rely on employer-sponsored health plans as a primary source of coverage or as a supplement to Medicare, and Naomi C. Earp, the commission’s chairwoman, said, “This rule will help employers continue to voluntarily provide and maintain these critically important health benefits.�

Premiums for employer-sponsored health insurance rose an average of 6.1 percent this year and have increased 78 percent since 2001, according to surveys by the Kaiser Family Foundation. Because of the rising cost of health care and the increased life expectancy of workers, the commission said, many employers refuse to provide retiree health benefits or even to negotiate on the issue.

In general, the commission observed, employers are not required by federal law to provide health benefits to either active or retired workers.

Dianna B. Johnston, a lawyer for the commission, said many employers and labor unions had told it that “if they had to provide identical benefits for retirees under 65 and over 65, they would just drop retiree health benefits altogether for both groups.�

In a preamble to the new regulation, published Wednesday in the Federal Register, the commission said, “The final rule is not intended to encourage employers to eliminate any retiree health benefits they may currently provide.�

But AARP and other advocates for older Americans attacked the rule. “This rule gives employers free rein to use age as a basis for reducing or eliminating health care benefits for retirees 65 and older,� said Christopher G. Mackaronis, a lawyer for AARP, which represents millions of people age 50 or above and which had sued in an effort to block issuance of the final regulation. “Ten million people could be affected — adversely affected — by the rule.�

The new policy creates an explicit exemption from age-discrimination laws for employers that scale back benefits of retirees 65 and over. Mr. Mackaronis asserted that the exemption was “in direct conflict� with the Age Discrimination in Employment Act of 1967.

The commission, by contrast, said that under that law, it could establish “such reasonable exemptions� as it might find “necessary and proper in the public interest.� The United States Court of Appeals for the Third Circuit, in Philadelphia, upheld this claim in June, in the case filed by AARP, which has asked the Supreme Court to review the decision.

In its ruling, the appeals court said, “We recognize with some dismay that the proposed exemption may allow employers to reduce health benefits to retirees over the age of 65 while maintaining greater benefits for younger retirees.� But the court said the commission had shown that the exemption was “a reasonable, necessary and proper exercise� of its authority.

Under the new rule, employers may, if they choose, provide retiree health benefits “only to those retirees who are not yet eligible for Medicare.� Likewise, the rule says, retiree health benefits can be “altered, reduced or eliminated� when a retiree becomes eligible for Medicare.

Further, employers will be able to reduce or eliminate health benefits provided to the spouse or dependents of a retired worker 65 or over, regardless of whether benefits for the retiree are changed.

Employers and some unions contend that retirees under 65 have a greater need for employer-sponsored health benefits because they are generally not Medicare-eligible. Large employers have often provided some health benefits to retirees 65 and older, to help cover costs not paid by Medicare. But employers have for years been trying to reduce retiree benefits or to shift more of the cost to retirees.

Lawyers for the commission said the new Medicare drug benefit, now nearing the end of its second year, had strengthened the case for the regulation because it guaranteed that retirees 65 and older would have access to drug coverage. Younger retirees have no such guarantee, so employers may want to provide drug coverage to them in particular, the lawyers said.

Helen Darling, president of the National Business Group on Health, which represents large employers, welcomed the rule.

“If employers could not coordinate with Medicare, they would be far less likely to provide health coverage� to retirees, Ms. Darling said. “They could not afford to.�

A study by the Government Accountability Office in 2001 estimated that one-third of large employers and fewer than one-tenth of small employers offered health benefits to retirees. Ms. Darling said newer retirees often received not comprehensive coverage but instead a fixed amount of money, based on years of service, to help them with their medical costs.

James A. Klein, president of the American Benefits Council, a lobby for large employers, said: “The new rule is a victory for common sense and for retirees. Retiree health coverage has been declining for many years. Without this rule, many more retirees, especially early retirees, could find themselves without employer-sponsored coverage.�

Gerald M. Shea, assistant to the president of the A.F.L.-C.I.O., also saw merit in the new rule.

“Given the enormous cost pressures on employer-sponsored health benefits,� Mr. Shea said, “we support the flexibility reflected in the rule as a way to maximize our ability to maintain comprehensive coverage for active and retired workers.�

Schoolteachers, like many other public employees, often retire early and rely on employer-provided health benefits until they become eligible for Medicare. At a Congressional hearing in 2005, the National Education Association and Representative John A. Boehner of Ohio, who is now the House Republican leader, supported the proposed rule. The teachers union said it feared that employers would cut health benefits for early retirees if they had to provide identical benefits to those over 65 and those under.

Decide for yourself, Did Judge Ryan Get Anti Smoking Ruling Right?

Wednesday, December 26th, 2007

LawReader – The Law Behind the News -Dec. 27, 2007-

  On Dec. 21st, Senior Judge Steve Ryan voided the entire Jefferson County Smoke Free Ordinance.  This law had previously been judicially reviewed, and only one section was voided.  The voided provision made an exemption for Churchill Downs.  That exemption was struck down as being in violation of the “equal protection� provisions of the Federal and State constitutions.  The Court of Appeals reviewed the ruling and upheld the first reviewing court.  The first court ruling left the balance of the ordinance in force.In that Court of Appeals review, Judge Tom Wine was quoted by Judge Ryan in his decision as stating:

“even if the exemption (for Churchill Downs) was found to be unconstitutional,� “the severability clause would, essentially, save the ordinance.�

Nevertheless Judge Ryan ignored the advice from the Court of Appeals and found grounds to void the entire ordinance.  This article discusses the laws applicable to the type of judicial review with which Judge Ryan was charged.

Judge Ryan begins his decision by crediting a 1940 case dealing with labor law as the basis for his decision:    “…pursuant to the tenets of Burrow v. Kapfhammer, 145 SW2d 1067(Ky. 1940) the Smoke Free Law must be stricken in its entirety.� Judge Ryan Dec. 21, 2007.Burrow v. Kapfhammer states:“   9. Statutes. — Generally, if it is manifestly apparent that a statute would not have been enacted with its unconstitutional provisions deleted, because invalid, entire statute is stricken down by a decision holding that part of statute is invalid, but if court concludes otherwise, only the invalid portion becomes annulled, with remaining portions being untouched by decision, and such rule prevails although statute contains a separable clause stating that if any part of statute is held invalid it is intention of Legislature that remaining portion shall stand.

  10. Statutes. — When a separable clause is contained in a statute which is attacked as invalid, the clause will be given some force, especially where statute is one dealing with subject of labor.

  11. Statutes. — The invalidity of Section 17 of the statute relating to employer-employee relations as applied to the operator of a restaurant does not render remainder of statute void, since it cannot be said that Legislature would not have enacted remainder of statute without such section (Acts 1940, c. 105, art. 1, sec. 17).

  15. Statutes. — If a statute is rendered void because of unauthorized discrimination with respect to exemptions from its operation, statute cannot be applied to either the one discriminated against or to the exempted one.�

    We review this ruling by first noting that the Kentucky legislature adopted legislation two years after the Burrow ruling which sets out statutory construction rules regarding severability of unconstitutional provisions of laws.  See KRS 446.090 (below) which was adopted in l942. This statute appears to negate the reasoning followed in Burrow.  We also raise an eyebrow over the use of a 67 year old case which had issues unique to labor law.

We note that the Ky. Compiler of Statutes wrote the legislative history to KRS 446.090 as follows:
“History: Created 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, to obviate the necessity of attaching a severability clause to each Act as it is passed.”


While, Judge Ryan noted that the Anti Smoking ordinance contained a severability clause, he gave no weight to that clause.

The Smoke Free Ordinance stated as Section 90.98 as follows:

“If any provision, clause, sentence or paragraph of this chapter or the application thereof to any person or circumstances shall be held invalid, that invalidity shall not affect the other provisions of this chapter which can be given effect without the invalid provision or application, and to this end the provision of this chapter are declared to be severable.�


Ryan’s decision also mentions but ignores an intervening ruling of the Ky. Court of Appeals which upheld the severability clause of this ordinance.  Judge Ryan disposes of these issues by saying: “Metro’s (the Metro Government) arguments are certainly not without merit; however , its emphasis on the validity of the severability clauses completely ignores an established area of case law specifically addressing how Courts are to deal with partially invalid statutes or ordinances, case law which, incidentally, is mentioned nowhere in the Court of Appeals’ aforementioned Orders. The Coalition (plaintiffs herein)  relies heavily on the holding of Burrow v. Kapfhammer (citation given) …�

“metro attempts to question the validity of the Burrow holding, contending it was superseded by the passage of KRS 446.090 in l942 and arguing it has never been cited in Kentucky for the proposition the Coalition attempts to make in the case at bar. “

     The language of KRS 446.090 is very clear that the legislative intent on the issue of severability is to be given weight.  The law states:“It shall be considered that it is the intent of the General Assembly, in enacting any statute, that if any part of the statute be held unconstitutional the remaining parts shall remain in force, unless the statute provides otherwise..�

That clearly means that unless the legislative body writing the law declares that any severance voids the entire act, then only the severed portions are to be voided, and the remaining provisions are to remain in full force and effect.  The Metro ordinance clearly included a provision that said it was the intent of the Metro Council that any severed provision would not sever or void any other provision of the ordinance.  The result is that Judge Ryan did not give any weight to the legislative intent spelled out in the actual language of the ordinance regarding severability. Instead he bases his ruling on the “apparent� political intent of the various members of the Metro Council.

Judge Ryan stated:

“That being the case, the Court turns to the record to determine whether the Metro Council’s passage of the Smoke Free Law was dependent upon Churchill Downs’ exemption from its terms, i.e. whether the ordinance would have passed without the exemption to Churchill Downs.� (emphasis added)

Judge Ryan cites “the record� for his opinion about the political motivation of the Metro Council.  We suggest that a review of the political motivation of the legislative body is not the type legislative intent permitted to be considered by the reviewing court.

This ruling brings to mind the old advice that “one should never watch how a law or a sausage are made.� In this instance Judge Ryan did review how the law was made and even refers to “the minutes of the Metro Council meeting held on Oct. 12, 2006�.

It is a general rule of law in this state (which is clearly codified in KRS 446.090), that one provision of a statute may be unconstitutional and the remaining provisions may be upheld and remain in force.

If that rule of construction had been followed, then the Jefferson Metro Council’s anti-smoking ordinance would remain in effect, even though the exemption for Churchill Downs would have remained stricken.

Further, Judge Ryan emphasized that he relied on a determination of what the intent of the Metro Council was.  He wrote in his decision said:

“… it is manifestly apparent the Metro Council was so determined to exempt Churchill Downs from the smoking ban that it would not have passed the ordinance without the exemption,”

“Moreover … it is apparent that the council would not have enacted the remaining parts without the exemption.”

This language suggests that Judge Ryan based his judicial review on a personal evaluation of the political intent of the Council members. Judge Ryan appears to reason, that the ordinance needed the exemption in order to garner enough votes to pass and therefore without the exemption favoring Churchill Downs, that the majority of the Metro Council would not have adopted the ordinance.

He may or may not be correct in this conclusion about the political intent of the Metro Council.  However, any judicial review should look only to the actual wording of the statute itself except in very rare situations such as “where the law is of doubtful meaning�. Reviewing Judges usually leave speculation about the motivations of the individual council members to historians and law professors.

 It is difficult enough sometimes to make sense out of a piece of legislation in just trying to understand the language used. While there is a place for the use of “legislative intent�, the application of that doctrine has been strictly limited, and even when used applies to interpretation of the wording of the statute and does not concern the political motivations of the lawmakers.  In l990 the Sup. Ct. limited the use of legislative intent in the interpretation of a statute:

See: Overnite Transportation Co. v. Gaddis, Ky. App., 793 S.W.2d 129, 131 (1990

“Only where the language is of doubtful meaning or where an adherence to the letter of it would lead to absurdity can we consider extraneous evidence of legislative intent.�    Adding to the courts judicial review role the additional duty or right to explore the political motivations of the legislators would open every piece of legislation to the wildest speculation about the lawmakers intent.  Our reading of KRS 446.090, suggests that the proper judicial review should focus on whether the “remaining parts are essentially and inseparably connected with and dependent upon the unconstitutional part…�  That means, the relevant portions of the statute are to be reviewed, and not the political motivations of the council members.

The correct procedure for a judicial review of a statute or ordinance is to ignore the portion that is unconstitutional, and then read the remaining part and see if it makes sense.  In this case, the unconstitutional part was an exemption from the act.  Remove the exemption and no violence is done to the logic or reasoning of the original act which prohibits smoking in certain public places.  Judge Wine in his Court of Appeals decision clearly recognized such a reasoning.

No court has yet ruled that it was an anti-smoking ordinance is itself unconstitutional.  The portion of the anti-smoking ordinance remaining after the first judge struck down the exemption is clearly not “dependent upon the unconstitutional part�.  Leave out the exemption and the body and meaning of the original act is left entirely intact. There is no violence done to the scheme for interpretation of the remaining portions of the act.

Statutory construction rules have been frequently discussed by the courts.

See: LWD Equipment, Inc. v. Revenue Cabinet, Commonwealth, 136 S.W.3d 472 (Ky. 06/17/2004)  “KRS 446.080 provides in pertinent part:  (1) All statutes of this state shall be liberally construed with a view to promote their objects and carry out the intent of the legislature,�     In reading KRS 446.090 we are talking about the law that is to be applied in the interpretation of a statute. This statute was adopted after the Burrow decision. The intent of this legislation was to set out the rules in this state for dealing with the interpretation of statutes.  Therefore, the reviewing court is supposed to carry out the intent of the legislature and to enforce these rules.Judge Ryan argues in effect that the legislature can be ignored when he suggests the Ct. of Appeals has never specifically overruled Burrow.   Legislative acts virtually never mention the case ruling they eviscerate.  That does not mean that the legislative act has no force. (Otherwise the Courts could simply ignore any legislative act until they chose to give there judicial permission.)

Judge Ryan argues that the statute supports his theory of the law, but we must respectfully reach an opposite conclusion. The clear language of KRS 446.090 supports the practice upholding the constitutional portions of statutes. Even Burrow, the case he cites,  acknowledges that in general “only the invalid portion becomes annulled, with remaining portions being untouched by decision…�.

   Reviewing courts are not permitted to base their decision on the intent of the law makers unless the words of the statute are so doubtful as to their meaning that one must resort to the review of intent to see what they were talking about. Judge Ryan uses his interpretation of “legislative intent� as a main basis for finding the entire ordinance unconstitutional.  He has not demonstrated any unclear or doubtful language in the ordinance which cannot be understand by the plain and simple language of the statute.  Without these issues being found in a statute, then a judge is limited by  court rulings in having the standing to then proceed to raise an issue of “legislative intent�.

We have found no rule of law which says that if the language of the statute or ordinance is clear and understandable, that the reviewing court can take another step and consider the legislative intent.

Judge Ryan bases his ruling on the “intent� of the Metro Council.  We suggest that the only intent of the Metro Council he was empowered to consider was their adoption of Section 90.98, where by a majority vote of the Metro Council they adopted a clause which specifically said the law was to be upheld even it a provision of the law was struck down.  The procedure where he reviewed the minutes and made an evaluation of proposed floor amendments to the ordinance are novel and unprecedented by a reviewing court.

Decide for yourself.  Did Judge Ryan get it right?   Please e-mail your comments to  

Jefferson County Attorney Irv Maze has scheduled a hearing before Judge Ryan on Jan. 2nd. to ask him to delay the enforcement of his Dec. 21st. ruling while the matter is appealed.   Meanwhile, the Metro Council is well on its way of simply adopting a new ordinance which has the troubled Churchill Downs exemption stripped out.  AUTHORITIES:

There is a long history of appellate review of provisions of laws that were held unconstitutional and the remaining parts of the act where upheld.  See:  Democratic Party of Kentucky v. Graham, 976 S.W.2d 423 (KY, 1998) Finally, we must determine what portions of the statutes in question are severable so that the valid portions may be saved and the invalid portions stricken. “It is a fundamental principle that a statute may be valid in one part and invalid in another part, and if the invalid part is severable from the rest, the part which is valid may be sustained.” Burns v. Shepherd, Ky., 264 S.W.2d 685 (1953) (citing State Bd. of Election Commissioners v. Coleman, 235 Ky. 24, 29 S.W.2d 619 (1930)).

Dawson v. Com., Dept. of Transp., Bureau of Highways, 622 S.W.2d 212 (Ky., 1981)

  For fear that there may be some question as to the validity and enforceability of the remaining portions of the Act after placing the ax to a portion of it, see KRS 446.090.

Kentucky Municipal League v. Commonwealth of Kentucky, Department of Labor, Ky., 530 S.W.2d 198 (1975), we said:          ”It is a well-established rule that portions of a statute which are constitutional may be upheld while other portions are eliminated as unconstitutional. * * *

Also see: Karst-Robbins Coal Co., Inc. v. Arch of Kentucky, Inc., 964 S.W.2d 419 (Ky. App., 1997)   November 14, 1997  -  As noted by Arch, the Supreme Court specifically indicated in Akers that it was declaring KRS 381.940 unconstitutional, but not the remaining statutes dealing with the same subject matter. See KRS 381.930, KRS 381.935, and KRS 381.945. Moreover, the court subsequently noted in Ward that Akers had declared only a “portion” of KRS 381.940 to be unconstitutional.Commonwealth v. Plowman, 86 S.W.3d 47 (Ky. 09/26/2002) An unambiguous statute is to be applied without resort to any outside aids. Delta Air Lines. Inc. v. Commonwealth, Revenue Cabinet, Ky., 689 S.W.2d 14 (1985).

Gatewav Construction Co. v. Wailbaum, Ky., 356 S.W.2d 247 (1962). This Court has repeatedly held that statutes must be given a literal interpretation unless they are ambiguous and if the words are not ambiguous, no statutory construction is required.

KRS 446.090 Severability.
It shall be considered that it is the intent of the General Assembly, in enacting any statute, that if any part of the statute be held unconstitutional the remaining parts shall remain in force, unless the statute provides otherwise, or unless the remaining parts are so essentially and inseparably connected with and dependent upon the unconstitutional part that it is apparent that the General Assembly would not have enacted the remaining parts without the unconstitutional part, or unless the remaining parts, standing alone, are incomplete and incapable of being executed in accordance with the intent of the General Assembly.
Effective: October 1, 1942

History: Created 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, to obviate the necessity of attaching a severability clause to each Act as it is passed. 

Dave Stengel Supports movement to restore felons right to vote

Wednesday, December 26th, 2007

Dec. 26, 2007 – Joe Gerth reported in the Courier Journal the effort to seek a constitutional amendment to allow felons who have served their time, to regain their right to vote in Kentucky.  For full story see:  Felons’ voting rights may change
Jefferson County Commonwealth Attorney Dave Stengel supports the measure, whlle Fayette County Commonwealth Attorney Ray Larson opposes the measure.
Excerpts from Courier Journal article:
According to the Voting Rights Coalition — which includes groups such as the NAACP, the Kentucky Council of Churches, the American Civil Liberties Union of Kentucky, the Catholic Conference of Kentucky and the League of Women Voters of Kentucky — about 128,775 adults in Kentucky have served their time but aren’t allowed to vote.

The League of Women Voters says Kentucky has the nation’s highest disenfranchisement rate for African Americans — about one in four — in part because of the ban on felons voting.

But another hurdle the measure faces is opposition from legislators who want to appear tough on crime, said Jefferson County Commonwealth’s Attorney Dave Stengel, who favors it.

“I think (many lawmakers) think it’s just a bleeding-heart bill,” Stengel said.

In 2007, a Senate Bill to restore voting rights for felons died in the Senate Judiciary Committee without a vote.

Stengel’s counterpart in Fayette County, Ray Larson, opposes the amendment.

“I think people can outlive a felony conviction and can earn the right back, but I don’t think it should just be given to them,” Larson said. “I don’t want them … voting until they prove they are a contributing member of the community.”

The proposed amendment would leave in place the voting ban for those convicted of “intentionally killing” someone, for child molesters and for anyone charged with rape or deviate sexual intercourse.

Stengel, who served in the Kentucky House before being elected commonwealth’s attorney, said he would favor restoring voting rights to all felons who complete their sentences, no matter the crime.

He noted that the Kentucky Commonwealth’s Attorneys Association has said it doesn’t oppose the idea, depending on the wording of the amendment.

When Kentucky’s constitution was written, Stengel said, the criminal justice system was more focused on punishment than rehabilitation.

“We spend money to rehabilitate them and then we deny them one of the basic rights of society, to participate in democracy,” Stengel said. “It doesn’t make sense. … I think anyone who wants to vote should be able to. They have paid their debt to society so why continue punishing them?”

Constitutional amendments must be approved by a three-fifths majority in both houses of the General Assembly, and then by voters in a referendum.

It is not justice if not equal, even in civil proceedings

Wednesday, December 26th, 2007

STANLEY A. BASTIAN and SCOTT A. SMITH  – GUEST COLUMNISTS-Seattle Post Intelligizer – Dec. 26, 2007
We know from movies and television shows that if you’re arrested, the police will read you your rights, which includes the right to an attorney if you cannot afford one. That’s been the law of the land since 1963 when the U.S. Supreme Court recognized that to have a fair trial, you need adequate legal representation. What many people do not realize is that you are not entitled to legal representation in civil cases even when fundamental rights are at stake.
The Brenda King case is a good example. Mrs. King stayed at home to raise her children. When her marriage ended, her husband hired an attorney to sue for custody. She could not afford a lawyer or find a free one to help her out. The stakes were enormous and she was forced to defend herself at trial. With a ninth-grade education and no legal training, she did not understand the complex laws and procedures of the courtroom. Pitted against her husband’s experienced trial lawyer, she lost. Her husband was granted primary custody and decision-making authority for raising their children.
Unfortunately, the Brenda King situation happens far too often in our legal system. On any given day, someone faced with losing basic personal or family needs such as shelter, sustenance, health care, or child custody must do so without legal assistance. For low-income individuals our open public courts might as well remain closed.
Judges traditionally accommodate pro se, or unrepresented individuals, by helping them understand legal procedures or slowing courtroom proceedings. In Brenda King’s case, the court allowed what probably should have been a two day trial to take more than twice as long. Such delays are needed in pro se cases, but they eat up valuable court time and public resources.
Lawmakers and private attorneys are working to provide legal assistance to low-income individuals. State and federal legislators understand the issue and have provided funding for the Northwest Justice Project, which operates legal services offices throughout the state. New offices recently opened in Port Angeles, Aberdeen, and Longview. Moreover, the Washington State Bar Association and local bar associations encourage attorneys to provide free legal services in their communities. Washington lawyers currently contribute an estimated 80,000 hours (worth $12 million) each year helping low-income individuals with legal matters. Lawyers have also joined with local bar associations and legal aid programs to create the Campaign for Equal Justice. Last year, these efforts raised over $2.5 million for low-income legal assistance in Washington.
Volunteer legal help and private fundraising, however, can accomplish only so much. A statewide study showed over 80 percent of low-income individuals in Washington facing a critical legal need do so without legal assistance each year. Justice remains out of reach for most low-income residents in Washington.
We need to do more. The additional cost of providing low-income individuals with counsel in limited circumstances would not open the floodgates to unlimited spending. A state study showed that only 7 percent of dissolution cases involved one party being represented by counsel and the other appearing by themselves. The study further showed that a vast majority of such cases were uncontested.
The cost of doing nothing is much greater to individuals and to our communities. Without meaningful access to justice, the consequences can be devastating. Civil legal aid often means the difference between shelter and homelessness, productive employment and bankruptcy, or safe families and domestic violence. Legal aid strengthens families and communities. It helps our court system operate more fairly and efficiently.
The equal justice community in Washington has a simple motto: “It’s Not Justice if it’s Not Equal.” Equal and fair treatment in our justice system may not be a constitutional right, but it is a fundamental right, and no person should be denied access to justice simply because he or she is poor.
Stanley A. Bastian practices law in Wenatchee and is president of the Washington State Bar Association. Scott A. Smith practices law in Seattle and chairs the Equal Justice Coalition

Berea Professor offers $50 reward for proof of mistletoe in Grant County

Wednesday, December 26th, 2007

Dec. 26, 2007


WILLIAMSTOWN, Ky. (AP) — Ralph Thompson has a bounty on a sprig of mistletoe.

Thompson is offering a $50 reward for proof that the parasitic, kiss-facilitating sprig grows in Grant County in northern Kentucky.

Thompson, a Berea College biology professor, and his students have searched the landscape of Kentucky for more than 20 years looking for mistletoe and have found it in 119 of the state’s 120 counties. Mistletoe from Grant County has remained elusive.

“They can’t report what they don’t have,” Thompson said. “But there’s got to be an old-timer somewhere that knows where that stuff is or has seen it. Since it’s so sparse there a lot of people probably don’t truly know what mistletoe is.”

Boone, Kenton and Campbell counties, bordering the Ohio River near Cincinnati, are near the northern edge of where American mistletoe grows. Kenton County was the 119th county where Thompson documented mistletoe. He found the plant growing near Rabbit Hash in Boone County and near St. Anne Convent in Campbell County.

Yet, despite previous appeals, few leads on mistletoe in Grant County have surfaced.

“There was this elderly man who had sold his farm and moved to Williamstown a couple years earlier,” Thompson said. “There was one tree that apparently had a clump in it. Of course it got cut down for lumber and that was the end of that.”

Mistletoe is a hemiparasite that gains water and nutrients from a tree, but it eventually kills the tree by obstructing its water sources.

Thompson’s research has found a variety of host trees for mistletoe, but many of the trees are not found in Grant County.

In addition to colder winters, Thompson believes the prevalence of red cedar, oak and hickory trees in Grant County inhibits mistletoe growth there.

“The terrain of the land and also being near the area that it gets colder in the winter just makes it not likely that it’s going to show up very much,” Thompson said.

Thompson and his students mount their mistletoe finds on special paper and store them at the Berea College Herbarium. Thompson said the mistletoe hunt gives his students something to do outside the classroom in winter.

“They enjoy it. They get authorship on the papers,” Thompson said.

But there is no payout like what Thompson is offering for information leading to the capture of Grant County mistletoe.

“I figured for $50 somebody would say, ‘Hey, I know where it’s at,’” he said.

Better Arrests in New York Decoy Program After Officers Receive More Training

Tuesday, December 25th, 2007

Police decoy program raises entrapment claims.

By CHRISTINE HAUSER December 25, 2007 New York Times:

Earlier this year, prosecutors in Manhattan and the Bronx grew concerned over some arrests stemming from the Police Department’s Operation Lucky Bag, in which an undercover officer leaves an item in the subway to see if someone will take it.

Prosecutors said that in some cases, police officers were not proving that the person who picked up the bag had intended to commit a crime.

“We were in the position of having to dismiss some of the earlier arrests because they were based on false premises,� said Barbara Thompson, a spokeswoman for the Manhattan district attorney’s office, adding that she did not have statistics on the number of cases. So prosecutors in her office had a meeting with police officials.

“We explained to them the proof problems we were having,� she said of the meeting, on March 21.

In response, the department ordered additional training and sent a memo in April telling officers to look for six types of behavior by suspects in the Lucky Bag operation: opening the bag and rifling through the contents; removing money or other items; removing valuables and discarding the bag; hiding the bag; denying to an undercover officer that they had found the items; and displaying “furtive behavior� to see if they were being observed.

Thomas P. Doepfner, the assistant deputy commissioner in the Police Department’s legal bureau, described how the rank-and-file were briefed after the meeting.

“We talked about all those kinds of issues and reinforced with the folks at the Transit Bureau that those are the kinds of things that have to occur to make a case prosecutable,� he said. “And that if you have somebody who simply picks up the bag and jumps on the train, that may not yet be enough for an arrest.�

Ms. Thompson said the district attorney’s office was now seeing “better arrests� after the police “revamped their protocols.�

Officials say that Lucky Bag has netted 100 arrests this year and that it is an effective way to single out criminals in the subway. But critics of the program, who have said it borders on entrapment by baiting otherwise law-abiding citizens, said that the memo did not go far enough and that innocent people could still be stopped and detained, even if not arrested.

“The line between an arrest and a mere stop is blurred here,� said Donna Lieberman, the executive director of the New York Civil Liberties Union, a persistent critic of the decoy program. “If the police detain somebody and don’t find larcenous intent, they have no right to keep them any longer. This fishing expedition for justification to arrest somebody is impermissible.�

The contrasting responses to the revamped program crystallize the ongoing debate.

Initially called “Operation Grand Slam,� the program began about two years ago to curb larceny, which accounts for more than half of the reported crimes in the subway.

So far this year, of the 100 people arrested, 58 had prior arrests in 441 crimes, said a police spokesman, Paul J. Browne. He said the few rejections by prosecutors should not detract from the overall success of the program.

“Was there a couple of cases, one or two, where it was a close call and they dismissed the case? Yes,� he said. “But you are looking at an exception to the rule in a very small program to begin with.�

Mr. Browne said the police Transit Bureau chief, James P. Hall, believed that the operation had had a deterrent effect. He said the number of cases of grand larceny in the subway had fallen to 1,277 as of Dec. 16 from 1,469 in 2006.


A few arrests in the subway program have found their way through the city’s Civilian Complaint Review Board, which investigates accusations against police officers. Some have been dismissed by a judge or not pursued by prosecutors, and others have drawn attention from the news media, academics and civil rights officials, who have said the program could potentially sweep up people who intend to turn in the property or to track down the owners.

“It is a nuanced proposition,� said Eugene O’Donnell, a former assistant district attorney and police officer who is now a professor at John Jay College of Criminal Justice. “You are becoming almost morphed into a suspect, shifting on you a responsibility that you then have to discharge.�

The operation has been scaled back since it was called Operation Grand Slam. At that time, Mr. Doepfner said in a memo that giving suspects an opportunity to turn over the item to a transit authority employee or uniformed police officer could be enough to demonstrate whether they intended to return it.

The operation has since been confined to Manhattan, focusing on station hubs where larceny is reportedly highest. It was discontinued around March in the Bronx because the police decided that the need was greater in Manhattan, said Anthony Schepis, an executive assistant district attorney in the Bronx.

Mr. Schepis said that before the program was halted in the Bronx, assistants reviewing Lucky Bag cases had trouble tying some of them to an intent to steal.

“Lucky Bag presents a difficult case to prove in that often times it is difficult to determine whether someone has actually attempted to steal something or has picked up something with the intent to return it,� he said.

Decades of police work have highlighted the role that decoy and sting operations play in fighting crime in New York City. In the 1970s, police decoys pretended to be tourists or blind people in mugging stings. In 1992, officers took part in a decoy operation in the West Village intended to snare attackers who preyed on gay men. In 2000, after dozens of livery cab drivers were being killed every year, undercover officers drove taxis, reducing the number of deaths.

Back then, the issue of intent might have been less cloudy. “It was more clear-cut in the operations that we were involved in,� said John O’Donnell, a former transit officer who feigned drunkenness as part of a decoy unit from 1985 through 1987. “When somebody snatches a gold chain off a person’s neck, they do not intend to return it.�

The circumstances could change in a split second. Sometimes, people would approach the “drunk� decoy, fish around for his wallet, then look for identification to try to help him, said Mr. O’Donnell, who retired last year and is now a lawyer and professor at John Jay.

“What we were very concerned about is being accused of arresting people prematurely and criminalizing people if they were acting innocently,� he said. “Quite often we would have to break off the operation because they blew it for us. But in Operation Lucky Bag, I think that is one of the problems: When do you know when they are trying to be a good Samaritan or crossing the line?�

Intent can be hard to interpret, especially in a crowded subway car or on a platform; the same is true when men on the trains are accused of “bumping,� or rubbing up against women. .

“Just in terms of proof, it is extraordinarily ambiguous,� said Richard D. Emery, a lawyer who won a class-action suit on behalf of men who were falsely arrested after being accused of bumping and other petty crimes.

With Operation Lucky Bag, the police have been accused of misinterpreting intent. The New York Civil Liberties Union said that was the case with Aquarius Cheers, who was arrested in February when he picked up a shopping bag and then jumped on a train without contacting a uniformed officer about 12 feet away, according to a criminal complaint. Mr. Cheers said he had intended to read the receipt and return the bag to its owner. The case was later dismissed.

“One has to assume that for every case that comes to public light where somebody is improperly detained or arrested, there have to be many more that do not make it into the public eye,� said Ms. Lieberman.

“These programs are a violation of civil rights when they result in the arrest of good Samaritans,� she said.

One case in 2006 and two cases this year have made their way through the Civilian Complaint Review Board, said Andrew Case, a board spokesman. Of the more than 7,000 cases the board handled each year, that number was “minuscule,� he said. In the one case that was closed, the police’s actions were exonerated, he said.

Officials Say They Are Falling Behind on Mortgage Fraud Cases

Tuesday, December 25th, 2007

Attorneys should be aware of Mortgage Fraud claims. This may be a lucrative area for litigation.


By JOHN LELAND December 25, 2007-New York Times


The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said.

Reports of suspected mortgage fraud have doubled since 2005 and increased eightfold since 2002. Banks filed 47,717 reports this year, up from 21,994 two years ago, according to statistics from the Federal Bureau of Investigation and the Financial Crimes Enforcement Network of the Treasury Department. In 2002, banks filed 5,623 reports.

“I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry,� said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. “There’s too many cases, not enough agents.�

Mortgage fraud covers crimes like false statements on mortgage applications and elaborate “flipping� schemes that involve multiple properties and corrupt appraisers, title companies and straw buyers.

In one common flipping plot, someone buys a house, has it appraised for more than its true value and sells it to a straw buyer for the inflated price, pocketing the difference. The straw buyer lets the house fall into foreclosure, leaving the bank with the loss.

The cases coming into view reflect the recent boom in mortgages with limited borrower documentation and lax scrutiny.

Law enforcement agencies say they are overwhelmed, especially because investigating and prosecuting fraud can be complex and time consuming. The officials say career criminals and organized-crime rings have increasingly turned from other crimes to mortgage fraud because it offers lower risks and high profits.

“I could hire a dozen investigators and a dozen prosecutors and only scratch the surface,� said David McLaughlin, a senior assistant attorney general in Georgia who coordinates prosecutions of mortgage fraud.

Losses involving federally insured banks totaled $813 million in the 2007 fiscal year, more than double the $293 million lost in the 2002 fiscal year.

These figures most likely represent “the tip of the iceberg,� said the Mortgage Bankers Association, an industry group, because they do not cover mortgage brokers, who arrange more than half of new mortgages. The industry estimates the total loss this year at $4 billion.

Mortgage fraud can damage whole neighborhoods. Derrick Duckworth, a real estate broker in southwestern Atlanta, has watched “about 40 percent� of the houses in his neighborhood, Adair, become vacant as a result of mortgage fraud. The remaining residents cannot sell their houses because of the abandoned buildings and the neighborhood’s reputation for fraud, he said.

“The other day, someone broke into my neighbor’s crawl space and stole her copper plumbing,� he said. “Last week, we had an 18-year-old shot on the street.�

Fraud is especially common with subprime mortgages, the high-price loans for borrowers with poor credit. Lenders and investigators trace part of the foreclosure crisis to mortgage fraud.

For local law enforcement agencies, fraud is increasing as regulatory budgets are tight and other crimes seem more pressing, said Tom Levanti, a fraud investigator in New York.

“You only have a certain amount of resources,� Mr. Levanti said, “and in New York, you need to spend them on counterterrorism, protecting citizens, reducing violent crime. Mortgage fraud cases are long and time consuming, and the victims are usually financial institutions that can write off the loss. So as a police department, return on investment has to be thought about.�

Lenders say they have good relationships with investigating and prosecuting agencies.

“But law enforcement is just absolutely overwhelmed,� said Corey Carlisle, senior director for government affairs for the Mortgage Bankers Association, which has lobbied for more money to fight fraud. “Lenders say they have to market their cases to law enforcement,� meaning showing extraordinarily high sums or multiple criminals.

John Arterberry, executive deputy chief of the fraud section in the Justice Department, said federal prosecutors and the F.B.I. had made progress on mortgage fraud. Mr. Arterberry cited sweeps in 2004 and 2005 that resulted in more than 150 defendants charged in each sweep.

The bureau has 1,210 open mortgage fraud inquiries, up from 436 in 2003. Last year, those cases led to 204 convictions.

“We have limited resources and have to put them where they do the most good,� Mr. Arterberry said. “We’re able to zero in on hot spots and organized efforts.�

This progress is too slow for Kristine Baugh, who said her neighborhood in Dallas had not recovered from a mortgage fraud that left in six vacant houses on her block. Ms. Baugh, a real estate broker, said she discovered what she believed was a fraud scheme in 2005, when six properties sold for far more than she felt they were worth and remained vacant until being foreclosed.

Suspecting fraudulent appraisals, she gathered documents on the sales and took them to the F.B.I., the district attorney and local officials. With neighbors, she sued an investor who she said was behind the fraud.

Years later, there have been no arrests in the case. The residents ran out of money and dropped their civil suit after the investor filed a countersuit. “Our neighborhood is still in shambles,� Ms. Baugh said. “The properties deteriorated and have to be kept up by the city. They’re a health hazard.�

The swimming pools at the vacant sites are breeding grounds for mosquitoes and potential West Nile virus sources, she said.

Such cases are likely to multiply, said Constance Wilson, executive vice president of Interthinx, which develops fraud detection tools for the lending industry.

“The cases we’re seeing today are from 18, 24, 36 months ago, when the market was still good,� Ms. Wilson said. “Now we’re going to see an increase in mortgage fraud, because all those loan officers, brokers and appraisers who were making six-figure incomes, now their back is against the wall. If that loan doesn’t close, they can’t make their home payment.

“So you have a desperation cycle,� she said. “There’s a lot of push for them originate volume.

“The consequences are that people are getting away with it. It’s damaging the entire real estate market. It’s devastating to victims. Not just lenders but consumers. It’s devastating to entire communities.

“When it’s this prolific,� she said, “we just don’t have enough law enforcement or enough prosecutors for all the cases out there.�

Frequent use of Shock Probation in Jefferson County Panned

Sunday, December 23rd, 2007


In a Courier-Journal article by reporter Jason Riley, the frequent use of shock probation was detailed.  The paper reported:

A Courier-Journal analysis of 260 shock probations granted to felons in Jefferson County last year shows that 120 have been arrested or charged again — in crimes ranging from murder, rape and armed robbery to drug use and driving drunk. More than 60 percent of those new arrests were for felony charges

In fact, nearly two-thirds of felony offenders who received shock probation last year have been rearrested or returned to prison for violating the conditions of their release.
“That’s really disappointing,” said Jefferson Circuit Judge Geoffrey Morris, who granted shock probation to 23 offenders last year but has already revoked 13, with six more revocation cases pending. “Obviously it’s not working very well.”
The newspaper also found that more than three dozen of those offenders who got in trouble after receiving shock probation have been arrested more than once since their release — with one arrested eight times.
John Faine, one of two Western Kentucky University professors who studied shock probation in the late 1970s, said the statistics in Jefferson County were “lousy,” especially given the number of repeat felony offenders.
“It suggests that the program overall isn’t working.”
But other court officials point out that shock probation can be an effective tool for judges. They say hundreds of people who received shock probation are living productive lives.
Appeals Court Judge Wine, who as a circuit court judge last year granted shock probation to 16 people, half of whom have since been arrested, said, “The question is, is the cup half-full or half-empty?”

See full story at:  Shock probation failure: Rearrests common