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OpenMarket: August 2012

  • Two July 31 wins for the Center

    August 23, 2012 9:42 AM

    On July 31, district courts substantially reduced attorney fees in two class action settlements where Center for Class Action Fairness attorneys objected.

    In the Nutella litigation in the District of New Jersey, Judge Wolfson agreed with our objection that the parties overstated the value of the injunctive relief, and reduced the fee award from $3,725,000 to $1,125,000. More discussion at Point of Law.

    And in the remand of the Bluetooth class action settlement in the Central District of California, the court reduced the requested fee award from $850,000 to $282,729.05. The National Law Journal covered without asking me for a quote. The precision of the nickel seems a poor use of court resources, and demonstrates why we argue for recovery based on benefit to the class with lodestar to be used only as a cross-check ceiling. We also think that the court erred in failing to consider the substantial evidence that the injunctive relief was not only worthless but harmful to the class. But we're obviously less dissatisfied with a $282 thousand mistake than a $850 thousand mistake.

  • Government of unions, by unions, for unions

    August 23, 2012 9:03 AM

    The Washington Times

    In 2009, the U.S. government bailed out the auto industry, ostensibly to save the livelihoods of thousands of Americans who work for automakers and their supporting companies.

    Sounds nice, except that this federal largesse was not distributed equally. In fact, some employees who were also members of the powerful, politically influential United Auto Workers (UAW) union got far, far better treatment from Uncle Sam than their nonunion brethren.

    That was exactly what happened to Delphi, a chief supplier of auto parts to General Motors Co. Government emails recently obtained and publicized by the Daily Caller show that the U.S. Treasury Department maneuvered in 2009 to shore up the pensions of union employees at Delphi while letting the pensions of nonunion workers at the same company — some 20,000 people — go under.

    PATTERSON: Government of unions, by unions, for unions - Washington Times

  • Prominent Lawyer: Obama Administration Illegally "Eviscerates Welfare Reform"

    August 22, 2012 3:13 PM

    In The Washington Times and a recent study, attorney Andrew Grossman explains in detail how the Obama administration violated the law in claiming the authority to waive the work requirements in the 1996 welfare reform law. (Grossman, who received an award from the Library of Congress, has helped write federal legislation, and handles high-profile Supreme Court cases.) The fact-checkers at The Washington Post may consider any such legal violation to be a mere "process foul," but I think the Obama administration should have complied with the law forbidding such waivers regardless of whether they are supposedly good for welfare recipients' careers in the long run (an idea that clashes with the "work-first" philosophy behind the 1996 law). Congress has the power to rewrite laws, not the president, and the Obama administration's action flouted the language, structure, and purpose of the welfare-reform law.

    Other experts have also concluded that the Obama administration has gutted welfare reform, conclusions summarized in my essay, "Obama guts welfare reform, independent experts say; work requirement weakened."

  • Regulation And Government "Science" Cost Us More Than Dollars

    August 22, 2012 1:04 PM

    Today, the Independent Women's Forum blog highlights a new NERA Economic Consulting study (produced for Manufacturers Alliance for Productivity and Innovation) on the costs of regulation. IWF's Emily Wismer notes:

    According to the report, a major federal regulation is one for which compliance costs more than $100 million per year. Using cost estimates from the federal government, which the Washington Post calls conservative, Clinton averaged 27 major regulations per year, Bush 35 per year, and Obama has averaged 44 per year in his first three years. ... Regulations are meant to keep us safe and should increase the quality and competitiveness of American products. Yet when compliance costs $164 billion per year, it is appropriate to question the role of regulations and whether or not 44 regulations per year costing over $100 million really make sense. We should also note that these regulations tend to come from federal agencies and are divorced from Congress, the body responsible for writing the laws guiding our nation and affecting Americans.

    Meanwhile, environmental activists and others complain that the Obama administration's Office of Management and Budget (OMB) is holding up too many regulations. In a story for Inside EPA last week, a coalition of environmental groups suggested that Congress or the president himself (via executive order) should eliminate policies demanding regulatory review and cost-benefit analysis at OMB. But this is a very bad idea.

  • Tampa Express Lanes Planning Director Corrects Record Distorted By Honolulu City Planner

    August 21, 2012 3:37 PM

    Over at Peter Samuel's invaluable TOLLROADSnews, we learn that Marty Stone, director of planning for Tampa's successful all-electronic reversible tolled Lee Roy Selmon Expressway, has a bone to pick with rail-obsessed Honolulu planner Toru Hamayasu. Specifically, Stone writes [PDF] to the Honolulu Advertiser to correct Hamayasu's "intentional[] misrepresent[ion of] the facts associated with the cost and operation" of the Tampa toll road. Samuel provides an excellent summary of Stone's corrections here.

    OpenMarket readers may recall Honolulu's proposed elevated rail project to nowhere. Honolulu suffers from serious traffic congestion problems, yet rail advocates have opted to build a multi-billion-dollar rail transit system that will do nothing to alleviate congestion, will ruin Honolulu's famous ocean views, and will do little to address existing environmental concerns. The Cato Institute's Randal O'Toole has been covering the Honolulu rail project for some time and in great detail. One of the latest galling aspects he flags was a claim made by Honolulu's transit agency that the 1964 Civil Rights Act required them to issue expensive, pro-rail propaganda.

    For more information on Honolulu's ridiculous planned rail boondoggle, see And here's a campaign ad from former Hawaii Governor Ben Cayetano, who is running for Honolulu mayor, which highlights the absurdity of this project:

  • In re Online DVD Rental Antitrust Litigation

    August 21, 2012 12:07 PM

    The Class Action Fairness Act puts limitations on coupon settlements. In In re Online DVD Rental Antitrust Litigation, however, the district court approved a settlement that would pay $5.2 million in cash and $8.9 million in coupons to the class and held CAFA did not apply because the parties called the coupons "gift cards." Does the Class Action Fairness Act regulate semantics or something more? I argue the latter in a Ninth Circuit opening brief filed today.

    The district court also awarded a disproportionate $8.512 million to the attorneys. Our appeal addresses that issue as well. And because I miss Lionel Hutz, the brief cites the classic case of Homer Simpson v. The Frying Dutchman Restaurant.

  • Today's Links: August 21, 2012

    August 21, 2012 10:59 AM


    SALLY PIPES: "Gov. Deval Patrick's New Health Law Is Flat-Out Dangerous"
    "Beacon Hill was the scene of great fanfare earlier this month when Governor Deval Patrick signed controversial new healthcare reform legislation into law. The governor proudly proclaimed that Massachusetts was 'the first to crack the code' on the problem of ever-increasing healthcare costs. The mood outside the statehouse, however, has been far more sober. "

    PETER GALLAGHER: "How Government-Grade Spy Tech Used A Fake Scandal To Dupe Journalists"
    "An email claiming to reveal a political scandal will grab the attention of almost any journalist. But what if the email was just a ruse to make you download government-grade spyware designed to take total control of your computer? It could happen—as a team of award-winning Moroccan reporters recently found out."

    MASHA GESSEN: "We Must All Stand With Pussy Riot"
    "The case of Pussy Riot, three young women sentenced last Friday to two years behind bars for performing a protest song in a Moscow cathedral, has drawn more attention than any Russian cause in at least a couple of decades. People who have never followed news from Russia have felt moved to speak up in support of Nadezhda Tolokonnikova, Maria Alyokhina and Yekaterina Samutsevich. I am sure that at least some members of the Russian leadership are now scratching their heads."

  • Imagine There Are No Countries

    August 20, 2012 4:01 PM

    “Imagine there’s no countries. It isn’t hard to do,” John Lennon once told us. Ignoring Lennon's grammatical error, that is exactly what University of Wisconsin-Madison economist John Kennan tried to do in a new paper released this month by the National Bureau of Economic Research (NBER). Kennan modeled the world economy without immigration restrictions and found that free labor mobility could have a dramatically positive effect on global GDP.

    “The estimated gains from removing immigration restrictions are huge,” he concluded, “more than $10,000 a year for a randomly selected worker from a less-developed country (including nonmigrants)… with a relatively small reduction in the real wage in developed countries, and even this effect disappears as the capital-labor ratio adjusts over time; indeed if immigration restrictions are relaxed gradually, allowing time for investment in physical capital to keep pace, there is no implied reduction in real wages.”

    This rapid increase in worldwide wealth achievable at very little cost is due to productivity disparities for workers in different countries. Similarly skilled workers from different countries can have dramatically different levels of productivity. One paper (Clemens, Montenegro, and Pritchett (2005)) found, for example, that Mexican worker wages are 2.5 times less than those in the United States, which means their labor produces far less than the American worker with similar skills.

    Therefore, simply allowing that Mexican to relocate, without any increase in education or skills, would dramatically increase his or her productivity. These wage differences have everything to do with America’s free market institutions and capital that has developed over time. Preventing from foreigners from accessing America’s capital and institutions results in massive inefficiencies, as workers produce far less than they would in the U.S. Higher production levels mean lower prices for American consumers, not to mention the rest of the world.

  • Fred Weekly: Assaults On Capitalism

    August 20, 2012 2:52 PM

    CEI President Fred L. Smith, Jr., discusses how businesses respond to assaults on the free market in the latest episode of his vodcast.

  • New Moody's Standards Give Clearer Picture Of Public Pension Crisis

    August 20, 2012 12:37 PM

    The public pension funding crisis has led to a vigorous debate over how those pension liabilities are valued and how large they are. The debate is long overdue. For state and local governments across the nation to get their finances in order, they first need to define the problem they need to tackle -- and it appears to be worse than previously thought, as The Washington Post reports:

    The latest rules come on line from the bond-rating firm Moody’s at the end of this month. They are projected to triple the gap between what states and municipalities report they have in their funds and what they have promised to pay out to retirees. That hole would stand at $2.2 trillion.

    For the worst-off cities, the new pension debt calculations could mean bond rating downgrades and increased borrowing costs when localities try to raise money for new projects, Moody’s has warned.

    The accounting changes themselves will not force policymakers to alter how they fund pensions. But finance experts say that by simply highlighting greater funding gaps, the rules will intensify pressure on state and local governments to allocate more of taxpayers’ dollars to their pension funds. More likely, public workers may have to contribute more to their retirements or see promised benefits curtailed, measures that have already been implemented in more than 40 states

    Nationwide public pension liabilities being greater than expected is nothing to cheer about. However, the Moody's accounting rule change is welcome, because it presents a clearer picture, a necessary first step toward addressing the public pension crisis.


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