Monthly Archives: July 2013

Legal Online Poker In The U.S.?

Online poker lawListen up American poker enthusiasts, for the time is nigh. A bill legalizing online poker has finally found its way to the hopper. Entitled the “Internet Poker Freedom Act of 2013,” HR 2666 was introduced by Rep. Joe Barton (R-TX). In short, if passed, Barton’s bill would make it easier for states to establish their own online poker laws and regulations. It also officially categorizes poker as a game of skill, thereby exempting it from action under other online gaming laws.

Poker Is A Game Of Skill, And That Should Make All The Difference…

Since the Illegal Gambling Business Act only criminalizes “clear games of chance,” HR 2666 accomplishes the legalization of online poker by defining it as a game of skill. Using case law precedence to support the notion of poker’s inherent skill element, the Internet Poker Freedom Act of 2013 will be a hard law to knock down on legal grounds. (Social grounds are another issue.)

The Internet Poker Freedom Act Could Open A Whole New Job-Creating, Revenue-Generating Market Right Here In the U.S.

Proponents of the Internet Poker Freedom Act maintain that passing the bill could open up a new market benefiting the private sector, in addition to federal, state and tribal governments:

“United States consumers would benefit from a program of Internet poker regulation which recognizes the interstate nature of the Internet,” the bill says, “but nevertheless preserves the prerogatives of States and Federally recognized Indian tribes.”

OK, So What Types of Regulations Are Included In Internet Poker Freedom Act of 2013 Bill Proposal?

HR 2666 confers strict licensee operator regulations. Under the draft proposal:

  • Licensee operators would have to put measures in place to keep minors from participating.
  • Licensee operators would have to implement a system for identifying and handling problem gamblers.
  • Licensee operators would have to ensure that players from non-participant states are prohibited from playing.
  • Licensee operators must allow players to limit losses.
  • Licensee operators must work to prevent money laundering.

Will This Online Poker Law Be The One To Finally Pass?

Barton is not a stranger to online poker legislating. In 2011, the Texas politician introduced HR2366, the Online Poker Act of 20i1. It didn’t pass. HR2666, however, may have better luck as people seem to be ready for an online gambling option. Plus, the revenue generating possibilities are attractive to reelection-seeking politicians looking to improve their communities’ economic situations.

The Internet Poker Freedom Act of 2013 includes provisions to help ensure honest business practices. It calls for an “Office of Internet Poker Oversight,” to be set up in the Department of Commerce. It also has a “fair and honest”clause to crackdown on rigged games.

All in all, HR2666 “The Internet Poker Freedom act of 2013” is a comprehensive, long-considered online gaming bill. Now we just have to wait and see if our lawmakers bite. If they do, we may just see a whole new, revenue-friendly marketplace develop around online poker.

Nuclear Defamation Fracas Going Down In Japan

A Japanese defamation lawsuit involving the 2011 earthquake and tsunami is making headlines in Japan.
A defamation lawsuit involving the 2011 earthquake and tsunami is making headlines in Japan.

A high-profile defamation case, with strong political undertones, is rocking Japan. Former Prime Minister, Naoto Kan, filed a libel lawsuit against current Prime Minister, Shinzo Abe. At the center of the controversy is the now defunct Fukushima-Daiichi nuclear power plant.

Disaster Struck in 2011, Which Made Nuclear Energy A Political Hot Topic In Japan

On March 11, 2011 a 9.0 magnitude earthquake shook Japan. Soon after, 14-meter tsunami waves crashed into the island nation’s shores, causing the Fukushima-Daiichi nuclear power plant to suffer severe damage.

During and after the crisis, Kan was credited with providing strong leadership that helped mitigate negative effects of the power plant disaster. Specifically, it was Kan who insisted that employees of the Tokyo Electric Power remain on post – a decision which is widely believed to have curtailed damage. Moreover, Kan is said to have been instrumental in developing and implementing the idea to use seawater as a reactor coolant.

Abe Criticized Kan, Which Resulted In A Defamation Lawsuit

Shinzo Abe, however, never believed Kan deserved credit for his role in the Fukushima-Daiichi disaster. In fact, Abe penned a critical essay about the incident – which specifically questioned Kan’s leadership during the crisis – and posted it on his website. Apparently, Kan is most perturbed over that Abe’s accusation that Kan stopped the seawater cooling initiative before consulting experts and allowing it to continue. (Basically, it sounds like a “she was for the bridge before she was against the bridge” issue.)

Why Is This Even Considered Defamation? Isn’t Abe Just Exercising Free Speech Rights?

The definition of defamation is very different in the United States than it is in Japan. In the U.S., a plaintiff must prove that the defendant purposefully or negligently made a false statement of fact to inflict harm. In Japan, however, a statement doesn’t necessarily have to be false to be considered defamatory, because it’s all about honor in Japan, which is made clear in Kan’s claim. “The content is based on totally false information,” Kan asserted at a parliament news conference where he announced his suit. “The article has severely damaged my honor,” he finished.

It will be interesting to see how this defamation lawsuit out of Japan turns out.

Disgraced Politician Sued For Defamation By Finance Fat Cat

Eliot-SpitzerThis defamation suit comes to us from the “disgraced politicians and the people who loathe them” file.

Former New York State Governor Eliot Spitzer is being sued by Maurice” Hank” Greenberg for defamation of character. On Friday, July 12th, 2013, the Supreme Court in New York’s Putnam County accepted the defamation suit, just before the statute of limitation ran out.

Hank Greenberg is accusing the now candidate for city comptroller with discrediting and damaging his reputation. The suit states that from 2004 to 2012, Mr. Spitzer exacted a campaign to build his own reputation by tearing down Mr. Greenberg’s.

Hank and Eliot have a history. While Spitzer was the New York State Attorney General, he pointed a very large finger at Hank Greenberg, accusing him of accounting fraud and exaggerating AIG’s earnings. The accusations resulted in Greenberg’s 2005 resignation from AIG. Greenberg has consistently denied the charges; however, AIG later settled with federal and state securities regulators to the tune of $1.64 billion, and admitted to deceptive business practices. Till this day, Spitzer maintains his allegations against Hank Greenberg are true.

The defamation lawsuit highlights Mr. Greenberg‘s good reputation as a successful business man and philanthropist. It also makes sure to point out Mr. Spitzer’s extramarital short comings, in addition to reports that he used a personal email account to gather information on political opponents and allegedly misused the State Police for his own needs.

Specifically, Greenberg’s defamation lawsuit highlights Spitzer’s statements in a May 2012 New York Law Journal interview.  In the interview conducted by John Caher, Mr. Spitzer accused Greenberg of running AIG “in a corrupt way.” Spitzer also averred, “Greenberg ran from answering questions when I was attorney general until the statute of limitations had run; he was thrown out by his own board, and his accounting was fraudulent”. The suit insists these statements are false.

A month later, in June of 2012, Eliot Spitzer, in an interview with CNBC’s Maria Bartiromo, made statements regarding Greenberg running a “corrupt company” and “committing fraud”. “Lets deal with reality here; Hank Greenberg’s accounting was fraudulent,” opined the former NY governor.

The suit comes right when Spitzer begins his campaign to rebuild his tarnished career. In response to the action, Spitzer has called the lawsuit “frivolous” and says he “will be happy to discuss the relevant facts in the days ahead.”

Hank Greenberg is now also facing fraud charges brought by Eliot Spitzer during his tenure as Attorney General. Greenberg is arguing the fraud suit is not valid because of a $115 Million settlement accepted as a resolution to a class action lawsuit against him and Howard Smith (former chief financial officer of AIG).

ISP Operator Refuses To Comply With Administrative Subpoenas

anonymous defamation
Are warrant-less, administrative subpoenas unconstitutional? An ISP in Utah thinks so, and he’s opting not to comply with law enforcement officials. Will he land in legal trouble?

A Utah ISP operator is engaging in a little civil disobedience when it comes to warrant-less subpoenas. He contends they’re unconstitutional – and he may have a point. But if state prosecutors pursue action against the ISP, they may end up shooting themselves in the foot. A tricky legal standoff, indeed.

ISP Provider Says, “No Way” To Warrant-less Subpoenas

Internet service providers are   often asked by law enforcement officials — and prosecutors — to provide information about their users. Since the Internet has become an integral part of our daily existence, many states have passed laws that allow for expeditious turnaround times for subpoenas requesting identifying information from ISPs. Most jurisdictions achieved this by authorizing the use of administrative subpoenas, which eliminate the need for a judge’s approval.

Utah has a warrant-less subpoena policy. Enacted in 2009, the law has given way to approximately 1,200 warrant-less subpoena requests. Under the statute, authorized individuals can use warrant-less subpoenas for names, addresses, phone records and “other information about suspected child predators.” Prosecutors can get basic information via administrative subpoenas, but they cannot get detailed data. For example, they can request a phone number from an ISP, but they can’t request the transcript of phone calls made on said number. And while the law states noncompliance can result in a contempt of court charges and jail time, officials have yet to enforce the statute.

Enter Mr. Pete Ashdown – founder of Utah-based ISP, Xmission. While Mr. Ashdown is eager to help bring down bad guys, he isn’t keen on unconstitutional laws. And in the opinion of Ashdown, Utah’s warrant-less subpoena system is a clear violation of the Fourth Amendment, which guards against unreasonable search and seizure. As such, he’s chosen not to comply with subpoena requests.

Ashdown’s resistance presents a problem for prosecutors. While the law gives them the ability to bring contempt of court charges against parties that do not comply with the program, in doing so, they also risk a lawsuit. If it’s decided during said hypothetical lawsuit that the administrative subpoena law is unconstitutional, prosecutors will lose an arrow from their quivers. And since most ISPs readily adhere to the law, going through with a test case is a dangerous proposition for law enforcement officials.

Ashdown says, however, that he is up for a test case and doesn’t seem too concerned about  being jailed for civil subpoena disobedience. For as he succinctly pointed out, “When there’s no court involved, I don’t see how they can hold us in contempt of court.”

Administrative Subpoenas, However, Do Help In Catching Seriously Bad Dudes

To be fair, administrative subpoenas are effective in stopping child pornographers and kidnappers. For example, the Utah Internet Crimes Against Children task force says information obtained through an administrative subpoena helped track down a girl who had been kidnapped to California and was an hour away from being smuggled into Mexico.

That said, when prosecutors request information via warrant-less subpoenas, they don’t provide much insight as to why the information is needed. What if officials were using the data to spy on innocent citizens? That, at least, is the lingering question for many people, including Mr. Ashdown.

Kelly Warner Law represents ISPs and other tech-based businesses. Contact us today to learn more about our well-respected, tech-friendly law firm.

Trade Libel Basics: The Pink Slime Lawsuit

ABC pink slime trade libel case
The “Pink Slime” lawsuit involving ABC News is a high-profile trade libel lawsuit currently making headlines.

After fielding a few questions on the matter over the weekend, I thought I’d do a quick-and-dirty, just-the-facts-sir blog post about trade libel.

Super Simple Trade Libel Definition

Healthy competition is allowed and encouraged in the United States.  The difference between healthy competition and libel is the action of knowingly making false statements against a competitor to gain an economic advantage.

Trade libel is the publication of a false statement of fact about a product or business that results in monetary damages. For example: if a person falsely claims an online retailer never shipped a product when it had, that is trade libel.  A business tort, trade libel claims allow the injured party to seek injunctions and compensation for damages incurred.

In order for a company to sue for trade libel, they must prove the defendant published derogatory false statements about a business or product. They must also show that the defendant’s actions negatively interfered with the company’s relationships with customers, suppliers or peers — and led to financial loss.

Some courts require proof that the defendant published the statement with the specific intent to injure.  Other jurisdictions presume mal-intent.  The detail of the law varies depending on the state in which the suit is tried.

Current High Profile Trade Libel Suit: The Case of the Pink Slime

Beef Products Inc. (BPI) sued ABC News, Inc. for defamation over its coverage of a meat product the channel dubbed “pink slime”.   BPI is claiming the network damaged the company by misleading consumers into believing the product is unhealthy and unsafe.

The meat processor must prove the network knowingly published/broadcasted false information and intended to harm its business.  BPI’s attorney, Dan Webb, feels strongly that the company has a good chance of winning the case.  Some defamation experts, however, disagree.

The lawsuit seeks damages under South Dakota’s defamation law, as well as a 1994 state “veggie libel” law that allow businesses to sue anyone who knowingly spread false information about a perishable food product. BPI is seeking $1.2 billion in damages for roughly 200 “false and misleading and defamatory” statements about their meat.

The 257-page lawsuit names American Broadcasting Companies Inc., ABC News Inc., ABC news anchor Diane Sawyer and ABC correspondents Jim Avila and David Kerley as defendants. It also names Gerald Zirnstein, the USDA microbiologist who named the product “pink slime”; Carl Custer, a former federal food scientist; and Kit Foshee, a former BPI quality assurance manager interviewed by ABC.

ABC News denied BPI’s claims.  “The lawsuit is without merit and we will contest it vigorously “said Jeffrey W. Schneider, the news station’s senior vice president.

Filed in a South Dakota Union County Court, the claim cites network reports alleging the product was made with “low grade” meat, including “scraps” and “waste.” ABC News also allegedly said the beef was made from connective animal tissue, when, according to the lawsuit, it’s made from muscle.

Do you need an experienced trade libel attorney? Contact Kelly Warner Law.

New Arizona Tax System May Effect Online Retailers In The State

Arizona Seal
Is an online tax on the way in Arizona.

A tax change is coming to Arizona. Some people think the adjustment has to do with the impending Marketplace Fairness Act; other folks reason that the modification is simply about making the state tax code fairer. Broadly speaking, the new tax system will change how cities collect taxes and process business audits. Specifically, it will affect which jurisdictions can collect levies for certain commercial projects.

Change In How Cities Can Collect Taxes & Audit Businesses

Currently, supplies for new construction are taxed  in the city where the new structure is built. Under the new system, however, taxes for supplies will be  charged at the time of purchase for re-modelling and home improvement projects. The League of Arizona Cities and Towns originally opposed the bill, because it only would benefit communities with supply stores, but a compromise was reached: new construction projects will still follow the old tax model. The compromise means that cities without supply stores can still benefit from the economic advantages construction development affords.

In addition, the new Arizona tax code will allow businesses with multiple locations to submit their audit records to one city instead of having to remit information to each region in which they have a physical location.

Why This Change May Eventually Effect Online Retailers

You may be wondering, “Why is a law firm that focuses on Internet business law talking about a tax change that seems to affect general contractors?” It’s because of a potential upcoming federal law – the Marketplace Fairness Act.

In brief, if passed, the Marketplace Fairness Act will allow states to impose and online sales tax. At present, e-tailers only have to pay tax in states where they have a physical presence. If consumers don’t get charged at an online checkout, they are expected to remit payment directly to the state. The Marketplace Fairness Act aims to change this standard. The caveat of the MFA, however, is that only states with “simplified tax systems” can establish an online sales tax.

By changing the way construction supplies are taxed in Arizona, the state is effectively “simplifying” the tax code – which positions AZ to take advantage of the Marketplace Fairness Act.

Potential Effects of the Marketplace Fairness Act on Online Businesses in Arizona

Current case law prohibits e-tailers from collecting sales tax. As such, some experts estimate that Internet enterprises enjoy a 12% advantage over brick-and-mortar stores.

Now, while most Arizonans want to see the growth of both online and offline commerce, the fact that the world is “going digital” should not be overlooked. If Arizona is to become a leading technology hub, it’s wise to make the state attractive to online businesses. Simply put, initiating an Internet sales tax may repel them.

If Arizona is to become a leading technology hub, it’s wise to make the state attractive to online businesses. Simply put, initiating an Internet sales tax may repel them.

Guess we’ll just have to wait to see how this plays out.

Kelly Warner is an Arizona-based law firm – with clients from all 50 states, Canada, Australia and the EU — that handles all manners of Internet and business law. If you are looking for an attorney that fully understands the nuances of today’s digital marketplace, get in touch.