By now, you probably know that Tariq and Michaela Salahi snuck in to the state dinner the other night at the White House. But I'd bet that you don't have all the details about their companies' bankruptcies and how those bankruptcies may illustrate an under-the-radar form of congressionally-sanctioned bankruptcy abuse. Adam Levitin over at Credit Slips has this long and interesting report on the topic. Here's a taste:
Some of the news reports on the White House dinner crashers (Tariq and Michaela Salahi) have noted that they own a winery that filed for Chapter 11 (reorganization) bankruptcy and then converted to Chapter 7 (liquidation) bankruptcy. My prurient interest was engaged, so I tracked down the petitions and relevant filings (linked below). What follows is my attempt to sort out the Salahi family's business doings, as well as some musings about where we should really look for bankruptcy abuse--small business filings where the business is the alter ego of the owner, but where corporate law might not allow veil piercing. In these cases the sophisticated creditors get personal guarantees, but the tax authorities, tort creditors, and unsophisticated creditors get screwed by the corporate form.
In advance of the holiday-season toy-buying orgy, U.S. PIRG has issued its 24th annual "Trouble in Toyland" Report, which warns parents of unsafe toys --- toys that pose choking hazards for young kids, that contain lead, phthalates, or other toxic substances, and that are dangerously loud. The Report's Executive Summary contains both a synopsis of current problems and suggestions for future legislative and regulatory reform.
Today's Washington Post contains this article on the Report and the Consumer Product Safety Commission's recent efforts to rid toys of dangerous chemicals, and a video clip from PIRG's press conference featuring Liz Hitchcock, PIRG's public health advocate.
PIRG's press release highlights four of the Report's findings:
• Despite a ban on small parts in toys for children under three, PIRG
researchers found toys that pose serious choking hazards. U.S. PIRG’s
analysis of CPSC recalls and other actions in 2009 showed that these
hazards were the cause of more than 5 million products being recalled
from store shelves. Between 1990 and 2008, at least 196 children died
after choking or asphyxiating on a toy or toy part; three died in 2008
alone.
• Some toys tested exceeded 85 decibels sound level,
which is the volume threshold established under American Society for
Testing and Materials standards. Almost 15 percent of children aged 6
to 17 show signs of hearing loss.
• Effective February 2009,
toys and other children’s products containing more than 0.1% of
phthalates were banned. Still, PIRG researchers found children’s
products that contained concentrations of phthalates up to 7.2%.
•
Lead has negative health effects on almost every organ and system in
the human body. In August 2009, the allowable level of lead in the
paint on a children’s product was reduced to 90 ppm, and the allowable
level of lead in a children’s product was reduced to 300ppm. The CPSC
has announced recalls and other regulatory actions involving nearly 1.3
million toys and other children’s product in 2009 for violations of the
lead paint standard. PIRG researchers found three children’s toys or
jewelry containing high levels of lead or lead paint. U.S. PIRG
notified the CPSC in October of one preschool book that contained lead
paint at 1900 ppm, or more than 20 times the allowable maximum of 90
ppm.
by Deepak Gupta
With increasing frequency, debt collectors accused of engaging in abusive tactics in the context of consumer collection litigation have been raising a novel defense based on the Petition Clause of the First Amendment, which guarantees a right of access to the courts. They argue that their conduct constitutes protected petitioning activity and is thus completely immune from liability under the Petition Clause, and the Noerr-Pennington doctrine that developed out of it. In the last few weeks, I've seen new notices of constitutional challenges raised along those lines in several federal district courts.
In May, I flew out to Anchorage to argue the issue in the Alaska Supreme Court, on appeal from a lower-court decision dismissing a consumer's case on petition-clause grounds. (You can find our briefs here and here.)
I'm pleased to report that, on Friday, the Alaska Supreme Court ruled that debt collectors who employ unfair or deceptive tactics during collection lawsuits are not shielded by the First Amendment. The decision is the first appellate ruling on the issue by any court nationwide. As I say in the Public Citizen press release about the case, "the Alaska Supreme Court’s ruling sends the message that debt collection companies can’t get away with abusive tactics simply by hiring lawyers. The court rejected a dangerous new immunity defense that would have created a gaping hole in consumer protection law."
Our case arose out of an attempt by an Anchorage collection agency to sue Robin Pepper, a mentally disabled woman, without providing her with proper notice. The agency sent papers to a nonexistent address, misrepresented to the court that Pepper was competent, and tried to get a default judgment against her. Pepper, represented by Alaska Legal Services, then brought a separate lawsuit, alleging that the collection agency’s practices violated the state Unfair Trade Practices Act. The collection agency asked the court to dismiss Pepper’s case on the theory that its litigation conduct was protected by the First Amendment, and the lower court agreed. Alaska Legal Services asked Public Citizen to handle the case on appeal.
The Alaska Supreme Court broadly rejected the debt collector’s immunity defense, ruling that the First Amendment’s petition clause does not extend to conduct that was unfair, deceptive, and in violation of the Unfair Trade Practices Act. Quoting our brief, the court ruled that debt collectors have “no legitimate interest in pursuing collection litigation without notifying debtors, or in seeking to default incompetent debtors without notice to their lawyers or guardians.”