Ind. Legislative Action Not Involving the You-Know-What Amendment

Just in case you were wondering, there are a few things going on in the Indiana General Assembly that have nothing to do with HJR 3, the Resolution formerly known as HJR 6.  Here, in no particular order, are some goings on under the dome.

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Bill: HB 1141
Boring Name: Methamphetamine Lab Disclosures in Property Sales House List.
Fun Name: Meth House. (♪It’s a meth . . . house. It’s mighty-mighty. Just letting it all hang out.♪)

Summary: If any house is used for meth-manufacturing purposes, it would go on a list maintained by the state police. It comes off the list 90 days after it is declared clean. The law also requires homeowners to disclose if a property has been used to manufacture meth.

What’s good: Presumably nobody wants to buy a house that has undiscovered anhydrous ammonia in the spare bedroom closet just waiting for a chance freeze your appendages off.

What’s not-so-good: It seems duplicative or unnecessary.  The State already licenses home inspectors.  Couldn’t consumers start to demand that a meth-house check be part of an adequate home inspection?  Couldn’t banks that finance home purchases demand that title searches–which already search for judgments in various databases–also inquire with law enforcement about any manufacturing history?  Of course.  If the market already demands something, and there are no legal prohibitions to providing it, the market tends to get what it wants.  This well-intentioned bill will create another special inspector. And in a housing market that needs to decrease transaction costs, this will have the opposite effect–making it more difficult to buy and sell houses, particularly in rural and poor urban neighborhoods.  Even property with zero contamination will not be sold until someone has paid the costs of an inspection.

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Bill: HB 1174
Boring Name: Taxation of Electronic Cigarettes
Fun Name: If it Quacks Like a Duck, Tax it Like a Duck.

Summary: Vapor-producing machines, commonly called “electronic cigarettes” would be taxed just like cigarettes.

What’s good: This is the closest Indiana has come since it’s controversial state-wide smoking ban to showing respect for smokers, of sorts, in that it promises to tax them at the same level once they become former smokers. Ah, parity.

What’s not-so-good: Whatever one’s reaction to the word “tax,” taxing goods to raise revenue is at least logical. Taxing behavior to offset the state’s costs of cleaning up after that behavior is also logical.  This tax is neither. About 2.5 million people in the entire country use e-cigarettes, and even assuming Indiana’s trends are equal to the entire country, that’s just over 50,000 people in Indiana using vapor machines. So a few bucks a month from a population roughly the size of Elkhart Indiana is hardly a budget-saving measure. Nor can the state be jumping in to protect consumers from health dangers of water vapor, unless dumber-than-dirt teens are putting their faces over boiling pans of water hoping to “ride the vape” high. On second thought, give it time.  That’ll probably happen.

Instead, this measure seems designed to keep the perceived competitor (e-cigs) from having a significant cost advantage over conventional cigarettes because its customers would otherwise not have to pay taxes.  Vapor pens are what economists call “substitute goods” which are a natural part of how markets respond to innovation. Vapor doesn’t have the lung cancer-causing impact of cigarettes because–wait for it–they aren’t cigarettes. They don’t contain tobacco. Come on, why should a little thing like not actually being cigarettes stop them from being taxed like cigarettes?  Right. That’s a bit like taxing bicycles like cars just because someone might choose to ride a bike to work instead of driving.  Nevermind that bicycles don’t cause potholes, and don’t pollute.  They commit a greater sin.  They compete.

On July 1, 2012, when Indiana relegated smoking to private homes, clubs, outdoors (sometimes) and at least 8 feet from every door in the state, we were told that public health was paramount.  Apparently, that concern does not extend to the state’s tax policy, as taxing vapor machines will create a completely artificial disincentive to those trying to kick the habit. Dear Hoosier Health Crusaders: You’ll have to speak louder. I can’t hear you over these these crickets.

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Bill: HB 1351
Boring Name: Welfare matters; drug testing.
Fun Name: Keep a stash, get no cash.

Summary: Some TANF recipients would be required to undergo drug testing.  Those who fail the tests could risk losing benefits if they refuse to seek treatment for addictions.  Those supporting the law believe it will weed out (pun intended) drug users from the deserving welfare recipients.  Opponents claim that the costs will exceed the savings achieved.

What’s good: Someone is still willing to put it in writing that using drugs is bad.  And paying people to use drugs is idiocy.

What’s not-so good: While I’m not sure the “this experiment has failed in other states” criticism takes the deterrent effect into account, it is not hard to imagine that the costs of drug testing would exceed the benefits that can be measured.  Instead of creating a new program, we should find a way to use metrics already known and inexpensively gathered, like drug convictions, serving as a basis to limit or monitor benefits.

UPDATE:  As if reading my mind, I noticed today that the bill has been amended to include only those with drug convictions within the prior 10 years.  Probably to lower costs.

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Bill: SB 101
Boring Name: Agriculture Operations and Criminal Trespass
Fun Name: Ag Gag

Summary: Undercover videotaping of farm activities would be a crime.  Recent changes limit the crime to situations in which a trespasser causes property damage.

What’s good: Protection of private property, though last year’s version had more teeth.

What’s not-so-good: The limitation of the crime to incidents that have caused property damage seems to effectively gut this bill.  It’s already a crime to cause property damage.  And it’s already a crime to trespass.  Surely creating a new category of crime by doing them both at the same time is a not a net benefit.

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Bill: HB 1143
Boring Name: Environmental Rules and Standards
Fun Name: The IDEM Leash

Summary: Prohibits the Indiana Department of Environmental Management from adopting any rule or standard that is more stringent what its federal equivalent.

What’s good: Consistency.  While Indiana can’t prevent the feds from doing anything, it can give businesses and individuals some predictability in knowing that IDEM’s rules won’t be more restrictive than their federal counterparts.

What’s not-so-good: If this becomes law, expect significant litigation.  Interest groups will parse the shades of meaning in the ample volumes of federal environmental regulation to fight over what is or is not more restrictive than the fed’s version.

The Curious Case of Sherlock’s Copyright

In a federal court ruling earlier this week, the Northern District of Illinois ruled that the bulk of Sir Arthur Canon Doyle’s Sherlock Holmes stories and character elements are not protected by copyright.

If you’re like me (and that’s often not a wise aspiration), you probably thought that these works became part of the public domain some time ago.  But it’s a bit more complicated than that.

First, some background. Until relatively recently, American copyright works had expired 50 years after the death of their author.  This is one reason why Hollywood in general (and Disney in particular) finds old source material so attractive–no need to give royalties to the estate of Lewis Carroll for another Alice remake.

In 1998 the Copyright Term Extension Act (CTEA) changed, allowing up to 70 years after the death of an individual author.  For corporate authorship, it was extended to 120 years after creation or 95 years after publication, whichever came sooner.

As a recent L.A. Times article points out, these changes have caused many would-be public works to remain private works.  Among those books and songs that would have been public without CTEA: Atlas Shrugged and The Cat in the Hat, and the musical West Side Story.

But the 1998 CTEA law only applies to works created since 1923. Therein lies the rub.  The four novels and 56 short stories that comprise the Sherlock Holmes “canon” span this gap.  The majority of the stories were written prior to January 1, 1923–and are presumptively in the public domain–but the final 10 appeared in America after that year.  The copyright holder, which is a corporation set up by the family of the late Conan Doyle, argued that the development of the characters Holmes and Watson cannot be distinguished between the old and new stories; that if any part of the original character is protected, then the entire character ought to be considered protected.

The judge disagreed. He divided elements of the characters into “pre-1923 story elements” and “post-1923 story elements.”  It then examined whether the elements of the post-1923 stories were eligible for copyright.  It is an axiom of copyright law that no one may copyright an idea.  H.G. Wells’s The Time Machine has sentences, character names, and other unique qualities which may be copyrighted, but the mere idea of time travel cannot be copyrighted.  Ideas are simply too broad.

The court then examined the earlier and later story elements to distinguish them.  For example, if Holmes smoked a pipe and wore a deerstalker cap in the early stories, these traits (“increments of expression” in copyright lingo) are in the public domain and fair game for new works.  However, if Conan Doyle saved other key elements of the characters–such as Sherlock’s love of Angry Birds and stumbling into east London Karaoke bars to belt out the Black-Eyed Peas–for the later adventures, these would be protected.  The court determined that the later elements are not merely story or plot ideas, too broad to be copyrighted, but are valid increments of expression, protected under copyright.  Nevertheless, this decision does not remove the characters themselves from the public domain.

Illinois sits in the 7th Circuit with Indiana.  While not binding on Indiana now, the decision could become precedent if it is upheld by the 7th Circuit Court of Appeals in Chicago.

There’s No Justice Like Show Justice

The First Amendment isn’t what it used to be.  It used to be an integral part of the Bill of Rights.  It’s more of a slogan now.  Its common meaning, once vigorous, has been slaughtered on the altar of intellectual complacency and insipid self-gratification.  Its invocation today is more banal than brave; more ordinary than audacious.

One recent illustration of this is the opposition to Indiana’s Senate Bill 373. The bill would make it illegal for someone to take video or images of an agricultural operation without the consent of the owner. The bill would not apply to law enforcement officers.  Since the Fourth Amendment requires a warrant, the net effect of the bill is to say that only police officers (presumably for good cause shown) can enter into private agricultural property and take pictures without the permission of the owner.

By the reaction of some, including Matthew Tully of the Indy Star, you would think SB 373 protected Abu Ghraib-style secret prison abuse of animals.  Tully recently lamented the bill, arguing that it creates a society where “bad actors know they’ll be able to get away with more,” and “face less chance of public embarrassment and ridicule[.]” Of course, those playing by the rules will also face less chance of unwarranted public embarrassment and ridicule, and that’s the point the bill’s detractors are missing.  But like the proverbial hammer-wielding carpenter for whom everything begins to look like a nail, Tully suggests that the weapons of free speech – “embarrassment and ridicule” – are the most effective tools society has to combat wrongdoing.

You Tube justice pretends to be a crusader of the First Amendment, but has no patience with the Constitution.

In reality, law enforcement is both more effective and better-equipped to address most criminal behavior, including animal cruelty.  Aside from some specific exceptions, law enforcement officers must seek a warrant before entering onto private property.  This requires probable cause, shown to a judge. Only then can the alleged wrongdoer be charged with a crime, and only if guilt is proven beyond a reasonable doubt will punishment be tolerated.  These steps are rooted in protections as integral to the Constitution as the vaunted First Amendment.

But for the Über Free Speech crowd, that path is too slow and ineffective.  After all, they say, what if the system protects its own and the wrongdoer escapes the justice of the First Amendment posse?  Ask Richard Jewel, George Zimmerman, or the Duke lacrosse team about the “justice” of embarrassment and ridicule in lieu of thorough criminal investigations.

Tully even acknowledges that the bill creates an exception for those who turn the video over to law enforcement within 48 hours.  But that’s still not good enough: “So, what, we’re going to hope that the sheriff in Farmtown, Indiana, suddenly joins PETA?” he asks.  With all due respect, this question betrays the heart of the bill’s opposition.  Not only is Tully impatient with Constitutional protections that happen to reside outside of the First Amendment, he doesn’t trust elected officials in “Farmtown” to uphold their oaths of office.  (I’ve never been to Farmtown, but I’m guessing it lies somewhere outside of the commute between Carmel and downtown Indianapolis.)  A single prosecution for animal cruelty, while effective, is not sensational. It’s not You Tube-worthy.  Which means it’s dull news and not an effective fund raiser for PETA.

By the way, would Tully’s boss object to a broadcasted hidden video of the goings-on of the editorial boardroom of the Indianapolis Star?  Of course he would. Hidden video is only a noble cause when it finds wrongdoing.  All of the hidden video that is taken and unused–or worse, falls in the hands of competitors–doesn’t catch bad behavior at all. It erodes private property rights.

Five Ideas About Contracts that are Just Plain Wrong.

Contracts come in all varieties: leases, purchases, employment, options, licensing, construction, and just about every other kind you could imagine.  Sometimes the proliferation of contractual agreements threatens to be an avalanche on our senses and we shut them out. We’ve all had our eyes glaze over as when scrolled through a EULA (End User License Agreement) when we installed software, or skipped over the fine print of our credit card agreement.  But as sigh-inducing as contracts can be, we know that, deep down, we need them. However, some misconceptions get handed down through families like holiday fruitcake or tacky Elvis snow globes.  Here are my five favorite contract myths, in no particular order.

1.  It’s always important to get a contract notarized.  I’m always amazed by the magical influence of a notary stamp.  The public at large gives it more respect than copyright claims or speeding signs, which are arguably more important.  Perhaps because it is a rare formality in a world that is brazenly familiar and informal, a notary stamp holds a special place in people’s minds. To the public, there is a mystic quality to a notary stamp that transforms any cocktail napkin-scribbling into the Magna Carta.  In truth, there are usually only two reasons why a contract might have a notary stamp: (1) To prove it was signed, or (2) because a special statute or other law requires it for the type of contract.  It’s more common to require a notary stamp on government forms than on contracts between individuals, but mostly because the government just doesn’t trust you. (See reason #1).  Although it’s hard to think of a situation where a notary would harm a contract, it’s not required as often as you might think.

2.  All oral contracts are invalid.  As a general rule, oral contracts are just as valid as written contracts.

3.  All oral contracts are valid.  Well, rules are made to be broken.  Written ones–contracts, not rules–definitely help prove the existence of the contract.  The exception to the “oral contracts are perfectly valid” statement is when the state specifies some types of contracts which must be in writing to be valid.  These include contracts for the sale of real estate, contracts for the sale of anything over $500, and others. The collection of these special types of contracts is called the “Statute of Frauds,” which unfortunately for logical, clear-headed types, has almost nothing to do with fraud.

4.  Both sides must meet with an attorney to make the contract valid.  While an ounce of prevention is worth a pound of cure, having an attorney (or not) does not influence of validity of the contract.  Some special contracts, like prenuptial agreements, have been thrown out by courts if it was determined that one side was pressured into signing it.  Part of a court’s examination of that pressure might include finding out if both sides had a chance to meet with attorneys and discuss the contract.  But this goes to whether each side really signed it voluntarily, not whether the language was more or less enforceable.  You’re a grown up.  Put on your big boy pants and realize that you’re responsible for your own contracts.  If you don’t understand something, ask before you sign it.

5.  Legal contracts are for people who don’t keep their word.  Only a dishonest man, the thinking goes, would not take another man at his word.  First, this is bogus because it presumes that contract disputes only happen between dishonest people. Or one honest person and one scoundrel.  I disagree.  Most contract disputes are between honest people with botched expectations. Contracts help prevent disputes by focusing expectations–written contracts even more so.  If honesty is the prize, let’s be honest enough to know that we all make mistakes, we are forgetful, and we are capable of misunderstandings and miscommunications.  In fact, it’s the scoundrel who will shy away from being held accountable.

These are the tip of the iceberg.  Most of these myths show either too much or too little trust in legal formalities.  Formalities, from the king’s seal of ancient times to the modern notary stamp, existed to verify the truth of the document, not to create the document.  At the core of every contract is the intent of the parties.  So, “don’t sign anything you don’t understand,” might not be such a bad cliché after all.

I Call Do-Over: Legal Finality and the Narrow Perspective of Now.

Project of the Week: Answering some common questions about legal resolutions and how the public at large perceives them.  Consider the following FAQs.

Q.    Why do criminals get so long to appeal their convictions?  It seems like it just goes on and on forever.

One of the most common critiques of the American legal system is the supposed endless nature of litigation.  In the context of criminal appeals, the public at large perceives the process as unending, spending precious public funds on criminals, with no real finality.

Tell that to one of the criminal defendants whose convictions are swiftly affirmed by the Indiana Court of Appeals.  In 2009, the Court of Appeals disposed of 1448 direct criminal appeals, and 1242 (86.1%) resulted in affirming the lower court. In 2010, there were 1286 direct criminal appeals and 1113 (86.5%) were affirmed. (Meaning simply that the Court of Appeals agreed with the lower court’s decision, whatever it was.)  Though the State can appeal certain decisions, the State cannot appeal an acquittal. Therefore, the vast majority of these appeals are initiated by the criminal defendants. And of those not affirmed, some were sent back to the trial court to correct an evidence or sentencing matter, which would not directly result in a defendant’s conviction being overturned.  That means of the 14% that aren’t simply getting affirmed, only a portion of those end up with a clean reversal.  As to the time involved, as of December 31, 2010, the average age of a pending case in front of the Indiana Court of Appeals was a little over 1 month.   (Source: 2010 Court of Appeals Annual Report.).

All in all, that’s hardly a Court where time is a bottomless abyss. So where does the perception of endless criminal appeals come from?  Here are a few contributors:

• Much of the news coverage regarding long-in-the-tooth appeals involves very serious charges, such as murder.  These make up only a small percentage of overall criminal docket of the Court of Appeals.
• In Indiana, there are qualification requirements on attorneys who defend murder cases, to help insure that each defendant receives a qualified attorney.  This means that fewer attorneys are available for murder cases, which does increase both the time and cost involved (usually paid by a county’s Public Defender budget).
• Many news stories do not distinguish between an appeal and a post-conviction matter.  An appeal, or more precisely a “direct appeal,” has very strict time limitations, and can only address what happened at the trial.  A post-conviction action may occur years or even decades later, and has the latitude to address issues such as new evidence, or jury misconduct, which is either impossible or impractical to raise in a direct appeal.  Of course, post-conviction relief petitions are typically even less likely to succeed than appeals, because of the very heavy burden imposed.  Therefore, what NBC describes generically as an “attempt to get a new trial” may not technically be an appeal at all.

Finally, remember this rule: court orders and judgments are valid until the same (or higher) court says differently.  This means while Lefty Malone is appealing his 2001 bank robbery conviction, the conviction stands.  If it takes him 10 years to exhaust his direct appeals and his pursuit of a post-conviction relief request, all of which are unsuccessful, his conviction is no more or less valid in 2011 than it was in 2001.  The conviction does not languish in legal limbo while the appeals process winds its way through the courts. It’s not a conviction with an asterisk.  It’s a conviction.  Challenges only matter if they are successful.

The truth is that the law generally treats final matters with finality.  Because due process requires an appeal criminal cases, a convicted criminal may bring challenges in various forms. But these are rarely successful and it’s a distortion to consider the conviction incomplete while such challenges are proceeding.

Q.     Well, maybe that’s true for criminal cases, but what about civil cases – lawsuits and stuff?  Those kinds of fights are never-ending, aren’t they?

Although it’s small comfort to those in the midst of a civil legal dispute, finality does exist in civil lawsuits and is essential to economic stability.

Unlike criminal matters which are perceived as having endless appeals after the trial is over, the critique of civil cases is that they take a long time to get to the trial.  Many observers mistake this as wasted, preliminary time in which lawyers ask questions, demand documents, and try to increase the number of hours they can bill before the trial starts.  In the late twentieth century, federal and state courts changed the way that parties share information leading up to the trial.  Modern rules require parties to disclose certain information, if asked.  This “discovery” process is designed to run without the involvement of the judge.  It was created to increase settlements, as each party would know the strengths and weaknesses of the other side before the trial started and thereby have a more realistic view of what would happen at the trial.  In one sense, it works, since most civil cases end in settlement and not trial.

Unfortunately, discovery can be abused when one side demands more documents than is really required to evaluate the case or interviews more witnesses than necessary to understand the issues.  Since the courts are not ordinarily involved at that early stage, it is difficult to speed up this process.  However, because modern rules favor allowing the parties to be thoroughly prepared for trial rather than rushing to get to trial, delays can result–especially if the issues are complicated.

The reversal of a criminal conviction is news precisely because it is unusual.  The setting aside of a divorce agreement, or business contract, is perhaps even more so.  I am often taken aback by the casual nature with which many believe a conviction can be reversed, expunged, or set aside.  Likewise, many think that attorneys posses all manner of “tricks” to secure one party’s avoidance of the terms of a contract.  It’s not that these things never happen.  Convictions get reversed.  Contracts do get set aside by the courts.  But these are the exception, not the rule.

For good reason, too.  The inability to rely on contractual relationships, and the inability to enforce them, retards economic growth. I recently read that a man is seeking to set aside his divorce agreement because the value of assets assigned to him – and against which he paid his ex-wife – happened to be held with Bernie Madoff and turned out not to be quite as valuable as he thought.  Not surprisingly, he wants some of the money he paid his ex-wife back. It may seem unfair to deny his request, but the alternative has its own set if dangers.  Allowing a court to re-write a 5 year-old divorce agreement could undermine the necessary finality of divorce agreements and, in turn, contracts generally. BIZCLIR provides a good summary of the relationship between contract law and economic growth.

Q.     Does that mean everything that is said in the media about court cases is bogus?

No.  But it does suffer from the narrow perspective of now.  Author and screenwriter Ben Hecht (1893-1964) described this type of media distortion this way:

Trying to determine what is going on in the world by reading newspapers is like trying to tell the time by watching the second hand of a clock.

Perspective is important.  News about airline travel, consumer products, diet fads, and cancer risks, regularly prepare us to be on guard against particular, specific dangers, when others of more statistical importance and real-world risk may go unnoticed.  Consultant David Ropiek calls this the “Perception Gap” that divides the real risk from the one we perceive.

Perspective about the legal world is important, too.  News tends to focus on statistical outliers like the plane that did not land safely, or the not-so-peaceful demonstration.  Coverage of courts is no different.  News often highlights the most sensational crimes or the lawsuits with the most money at issue.  Of course, this is what makes them newsworthy in the first place.  These weighty criminal and civil matters are accompanied by procedural safeguards to help courts attempt to reach the right decision.  Just as most criminal cases aren’t murders or rapes, most appeals don’t take a decade.  Likewise, most civil suits are not multi-billion dollar patent infringement cases, so most discovery doesn’t take seven years to complete.

The truth is that most court decisions are final, so do not take them lightly. Do not assume that you can always come back to court and undo something that you’ve done.  Courts are not a good place to ask for a do-over.

Duck, Duck, Goose.

According to Aesop’s fable The Goose that Laid the Golden Eggs:

“A cottager and his wife had a Hen that laid a golden egg every day. They supposed that the Hen must contain a great lump of gold in its inside, and in order to get the gold they killed it. Having done so, they found to their surprise that the Hen differed in no respect from their other hens. The foolish pair, thus hoping to become rich all at once, deprived themselves of the gain of which they were assured day by day.”

Like that bullion birthing bird (!), America’s small businesses lifted up the middle class and made it the envy of the world in the twentieth century, paying off day by day, year by year in the form of a stable economy, reliable jobs, high consumer confidence, and even a reliable tax base.  However, supposing that increasing regulation, taxes, and fees can continue to be put upon the backs of small businesses without consequences is foolishness.  Not only will more existing businesses fail, but the spark of invention, accomplishment and risk-taking necessary for the incubation of a new business might never happen — the unseen casualty of discouragement brought on by the perception (often correct) that the hurdles are just too high.

Few things are more discouraging to would-be entrepreneurs than the morass of regulations by bureaucrats, vested interests, and rule making do-gooders.  This video from the Institute for Justice is a great illustration.

The webs that entangle small business will only get swept away when regulators, legislators, and the public stop passing laws that are perceived as “a good idea” and reserve the intractable hand of the state for those issues in which its involvement is an absolute necessity.  Only then can we loosen the choke hold on the goose laying the golden eggs.