Nonlawyer at 9th Circuit Beats Toyota on Trademark Law

by: Cheryl Miller, The Recorder
July 09, 2010
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A pro se litigant took on Toyota and won Thursday when the 9th U.S. Circuit Court of Appeals held that her family business's domain names, buy-a-lexus.com and buyorleaselexus.com, did not infringe on the auto giant's trademark.

The trial court's injunction barring Lisa and Farzad Tabari from using the word Lexus in their brokerage's website address was "plainly overbroad," Chief Judge Alex Kozinski wrote for the majority.

"It prohibits domain names that on their face dispel any confusion as to sponsorship or endorsement," Kozinski wrote. "The Tabaris are prohibited from doing business at sites like independentlexus-broker.com and we-are-definitely-not-lexus.com, although a reasonable consumer wouldn't believe Toyota sponsors the websites using those domains."

The three-judge panel remanded the case to the district court where "the injunction must be modified to allow some use of the Lexus mark in domain names by the Tabaris."

Reached at her Mission Viejo, Calif., home Thursday, Lisa Tabari said she was "in shock," as she was focused on preparing for her 12-year-old daughter's birthday party, not a court ruling. "This was the best gift in the world."

She and her husband, Farzad Tabari, ran a mom-and-pop car brokerage that specialized in linking would-be Lexus buyers with dealers. The couple built good relationships with local car lots and thought they had created a thriving business, Lisa Tabari said, until one day when they received a cease-and-desist letter in the mail from Toyota Motor Sales, which sells Lexuses. The company ordered the Tabaris to stop using the Lexus name in their URLs as well as Lexus marks on their website.

"We felt so hurt, so betrayed," Lisa Tabari said. "We kept standing in front of their attorneys saying 'We don't understand what we're doing wrong.'"

Attorneys for Toyota at Greines, Martin, Stein & Richland in Los Angeles were not immediately available for comment Thursday afternoon.

The Tabaris hired a lawyer. But after the legal bills racked up, they decided to go pro se. Neither one has any legal training. Lisa Tabari said she would read and do research on the case at night and then grab some sleep in the morning while her husband watched their two young daughters.

"We decided it's either we're going to throw in the towel or we're going to put our hands together and fight this," she said. "We just decided to put in 150 percent, and we did."

On July 8, 2009, Lisa Tabari approached the three-judge panel for oral arguments "with my legs shaking. It wasn't pretty ... But everyone in the court system, they were so wonderful to us."

The panel held that the Tabaris' use of the word Lexus did not suggest the company sponsored or endorsed the brokerage. The word was descriptive, Kozinski wrote, and a nominative fair use not subject to an infringement claim.

"The wholesale prohibition of nominative use in domain names ... would be unfair," the court held. "The only winners would be companies like Toyota, which would acquire greater control over the markets for goods and services related to their trademarked brands, to the detriment of competition and consumers."

Kozinski was joined in the majority opinion by Judge N. Randy Smith. Judge Ferdinand Fernandez concurred but said in a brief opinion that he could not condone some of Kozinski's rhetorical flourishes or what he saw as the majority's "gratuitous slap" at counsel for Toyota.

Lisa Tabari said that after the district court barred the use of the Lexus domain names, business slowed to a trickle and the family home is now in foreclosure. But if the 9th Circuit's ruling holds, she said, "Please know that we'll be back in business."

10 Tips for Moms Who Run Businesses

Being a Mom and running a business is like having two full-time jobs. We asked women who do it for their advice on how to juggle running a family while building a business.

By Tiffany Black | May, 9, 2010
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Inc.com Senior Producer Tiffany Black asked Lewis and other busy MEOs (Mom Executive Officers) to share their advice for balancing family and business.

1. Set aside some time for yourself

More than one Mom offered this piece of advice. When you are running a business and taking care of a family it's easy to forget about taking care of you. "As a psychologist, I know that everyone needs regular rejuvenation," said Lynda Ariella owner of Porch Light Psychology Services in La Mesa, California. "I take one day off every week; on that day, I don't answer the phone, I don't do work, and I try not to worry about things that usually bother me. I suggest that my patients do the same."

2. It's okay to say 'No'

You say no to your kids all the time but you find it harder to say no when it comes to your business. "It's mandatory to say no," said Lewis. "If you said yes to every request or opportunity or avenue of work you would be busy 24-7 with no time for your family." No doesn't always mean no. No could mean not today or not this week but some other time that works for everyone.

3. Outsource household work

"If you can afford it, outsource as much of the household work as possible so you can spend your home and family time focusing on your children and spouse or significant other, or dating life and activities that relax you and enrich your non-worklife," advises Karen Cornelius, mother of two and president of KLC Associates, an organization and management consultant company with offices in Chicago, New York, London, and Köln, Germany.

4. Be present

"Setting up boundaries for work and motherhood to be separate fosters efficiency in both arenas," said Kristin D. O'Connell, co-owner at Mama Goddess Retreats in Nosara, Costa Rica. "When you are working you give your entire focus to your business, and when you are with your children your entire focus is them." Lewis agreed that your kids know when you aren't tuned in to them. "Kids know when you are secretly checking your BlackBerry in the parking lot of their school," said Lewis. "It means something to them when you are 100 percent focused on them."

5. Don't be afraid to delegate

You delegate at work but find it hard to delegate at home. If you have a spouse or significant other talk to them about how to divide the load for household needs and child-caring. "When our children were small and ill a lot, we tried to take turns staying home with them, but also would check with each other to see who had the most critical work-related meetings or events on our calendar," said Cornelius.

6. Create a support network of other working Moms

A search on LinkedIn for "working moms" pulls up over 60 groups for Moms. You can also meet and bond with other Moms through your child's day care or play group. Also, groups devoted to Women's leadership might have resources devoted to supporting Moms.

7. Stay healthy

Moms have to be ready for anything, and you can't take care of your family if you don't take care of yourself. "A regular exercise routines is a lifesaver," said Debbie Kane, public relations consultant and owner of Exeter, New Hampshire-based Kane Communications. "I plan my workouts for early morning before the kids go to school or during my lunch hour so that I have energy to carry me through my day."

8. Treat your home office like a corporate office

When you have to go in to an office every day you have specific goals and come up with a plan to meet those goals. The same rule applies when you work at home. "Set a schedule and goals just like you would if you were reporting to a workplace," said Julia Wright, an independent contractor at The Wright Family in Bellingham, Washington. "If you have errands to do, calendar that in."

9. Be flexible and plan for the unexpected

Kids gets sick unexpectanty but you can plan for when they do. "Each morning I write down the top three things I must accomplish that day," said Lewis. "I tackle them first, because you never know when a call to pick up a sick child might quash the rest of the day's work."

10. Don't feel guilty

Working Moms deal with various types of guilt; the guilt of choosing to work to feeling guilty for taking some time out for themselves and everything in between. "There is nothing wrong with contributing to the financial support and stability of your family – and the college fund," said Lewis. Ariella adds, "It's hard to take time for ourselves without feeling guilty, especially when children need our attention, but a rested parent is more effective than an overwhelmed parent."

Facebook Suit Could Snag Users

By Craig Anderson
Daily Journal Staff Writer
May, 2010
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SAN JOSE - The Electronic Frontier Foundation is stepping into a legal battle between Facebook and aggregator Power Ventures, arguing that Facebook's lawsuit alleging violations of criminal law would leave the social networking site's users vulnerable to prosecution.

Facebook claims San Francisco-based Power Ventures Inc. is violating the California Comprehensive Computer Data Access and Fraud Act, among other statutes, by allowing users to get onto Facebook through Power Ventures and send unsolicited messages to their "friends" that appear to come from Facebook.

In an amicus brief filed Monday, the Electronic Frontier Foundation said Facebook is asking the court to "create a massive expansion of the scope of California criminal law" in order to go after Power Ventures. But the EFF argues that such an outcome could put all users of social networking sites, including Facebook, at risk of prosecution.

Cindy Cohn, EFF's San Francisco-based legal director, said a court decision in Facebook's favor would transform violations of a social networking site's terms of use into a violation of the California Comprehensive Computer Data Access and Fraud Act.

"This would be a global rule," Cohn said. "Any violation of the rule would turn the person into a computer criminal." The EFF brief does not address many of Facebook's claims, including allegations that Power Ventures is infringing the company's copyright and trademarks as well as violating the federal Digital Millennium Copyright Act and two other federal laws.

EFF civil liberties director Jennifer Granick's brief supports Power Ventures' motion for summary judgment asking for the dismissal of Facebook's claims that accuse the defendant of violating the California penal code.

U.S. District Judge James Ware will consider Facebook's motion for a judgment on the pleadings and Power Ventures' motion for summary judgment next month. Facebook Inc. v. Power Ventures Inc., C-08-05780.

Facebook fired back at the EFF on Tuesday. Company spokesman Barry Schnitt said in a prepared statement that the privacy rights group "fundamentally misunderstands what this case is about."

The lawsuit does not target any individual users, and Schnitt said Facebook has "no intention to criminalize users' access to their data through automated means."

The company instead portrays itself as a protector of its users' privacy against a defendant that is using Facebook users' login information to gain unauthorized access to its network and to send unsolicited messages to other users.

But Cohn, who is most concerned about setting a dangerous precedent that would apply to all social networking sites, regards Facebook's stance as a protector of users' privacy as "funny."

"What Facebook is really saying is that we can sell your information," she said. "You can't."

Cohn said Power Ventures is simply providing a tool that allows people to view all information from their social networking sites in one place without having to access each of them one by one. "Power is offering a service to users that Facebook doesn't provide," she said.

Facebook's attorneys at Orrick, Herrington & Sutcliffe, led by Menlo Park-based Neel Chatterjee, argue in court papers that Power Ventures knowingly accesses Facebook's computer servers without authorization. "This means of 'accessing' and 'obtaining information' is commonly known as 'scraping,' a well-recognized form of cyber attack on the Internet involving the trespass of a computer server," the Orrick attorneys write.

Last year, U.S. District Judge Jeremy Fogel rejected Power Ventures' motion to dismiss the case.

Scott Bursor, a New York attorney who represents Power Ventures, could not be reached for comment Tuesday.

O'Melveny Is Accused Of Aiding Deceptive Deals

By Anna Scott and Kari Hamanaka
Daily Journal Staff Writers
May, 2010
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The trustee of a bankrupt real estate development company has accused O'Melveny & Myers and one of its top partners of helping the company engage in deceptive financial transactions that ultimately led to $35 million in losses for its creditors, according to a new federal lawsuit.

The transactions were designed to help the chairman and chief executive of the company, Empire Land, remove a clause from a loan agreement with now-defunct lender IndyMac Bank in which he personally guaranteed half of an $89 million loan, the lawsuit said. The O'Melveny partner was on the company's board of directors.

The complaint, filed April 23 in U.S. Bankruptcy Court in Riverside, called the acts by the firm and the partner, Peter T. Healy, "malicious" and "outrageous." It was filed by lawyers for Richard K. Diamond, the Chapter 7 bankruptcy trustee for Empire Land and seven of its affiliated companies. In addition to O'Melveny and Healy, the complaint named as defendants Empire Land's chairman and CEO, James P. Previti, along with three other former Empire officials and the developer's management company, Empire Partners Inc.

The complaint, filed by the Century City-based Landau Gottfried & Berger, seeks $80 million in economic damages plus punitive damages from O'Melveny for claims including professional negligence and breach of fiduciary duty to the debtors.

Healy, who is based in San Francisco, is co-chair of O'Melveny's corporate finance and capital markets practice and leads the office's transactions practice. The lawsuit said he joined the firm in 1989; his firm biography said he specializes in capital market transactions, ranging from public offerings to private placements, and has advised boards on mergers and acquisitions.

In a statement, an O'Melveny spokeswoman said the allegations in the lawsuit are "baseless and without merit" but declined to comment on them specifically or in detail. Healy did not respond to several requests for an interview.

Previti could not be reached for comment. Larry R. Day, former in-house counsel for Empire Land and a defendant, declined comment.

The complaint targets Healy for his role in the financial transfers as an Empire Partners director. It also charges that, because he was acting as an agent of O'Melveny for Empire at the time, the firm is liable for his conduct and guilty of professional negligence.

Lawyers say trustee-filed lawsuits are not unusual in large bankruptcy cases. Trustees often analyze the behavior of the bankrupt entity's principals prior to their filing and look for any culpability as part of the normal due diligence process.

"The trustee certainly took very seriously filing action against O'Melveny as a firm and understands it's a large institution," said Michael Gottfried, a partner at Landau Gottfried. "It was considered very, very seriously."

Previti, a veteran homebuilder, founded the Ontario-based Empire Land in the early part of the decade. The company made its mark building master-planned communities in California, mostly in the Inland Empire, and Arizona. Empire Land listed assets of about $106 million and liabilities of about $500 million when it filed for bankruptcy, according to published reports.

Healy, the O'Melveny partner, had a business relationship with Empire that pre-dated his joining the law firm, and he brought the company in as a client, according to the lawsuit. Healy served as a director of Empire Land Inc. from 2002 until 2008 and as the general partner for four of its real estate projects, according to Diamond's complaint. Meanwhile, O'Melveny served as Empire Land's outside corporate counsel on various matters during the same time period.

The lawsuit stems from dealings involving a Palmdale master-planned residential development, Anaverde, for which Healy provided legal services. The IndyMac loan on the project was coming due in August 2007, and the company did not have the funds to repay it, the complaint said.

Rather than going into default, the executives sought to extend the loan term. To do so, Empire Land had to prove it had $10 million in ready cash. So Previti and the other defendants allegedly infused Empire Land with money from several of its 100 affiliated companies to temporarily give the appearance of liquidity, the complaint said. The money was later transferred back.

"It was essentially a matter of... putting the money into the entity and transferring it out shortly after," said Gottfried. "It was giving the impression that the money was part of the Empire Land assets."

Because of the extension, Previti was able to refinance the IndyMac loan with a new lender and remove the personal guaranty clause.

Empire Land and seven of its affiliates eventually filed bankruptcy in April 2008. The companies would have sought bankruptcy protection nearly a year earlier, however, had Previti defaulted on the IndyMac loan, according to the complaint. By the time the companies did file, Diamond alleges, they wasted tens of millions of dollars continuing to operate as active businesses.

The Empire-related bankruptcy cases were consolidated and converted from Chapter 11 to Chapter 7 in December 2008.

NACA Is Gearing Up For The Next "Save the Dream" Tour 2010

The Neighborhood Assistance Corporation of America ("NACA") is a non-profit, community advocacy and homeownership organization. NACA’s primary goal is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable homeownership. NACA has made the dream of homeownership a reality for thousands of working people by counseling them honestly and effectively, enabling even those with poor credit to purchase a home or refinance a predatory loan with far better terms than those provided even in the prime market.

Investing In Working People

The NACA homeownership program is our answer to the huge subprime and predatory lending industry. NACA has conclusively shown that when working people get the benefit of a prime rate loan, they can resolve their financial problems, make their mortgage payments and become prime borrowers. NACA’s track record of helping people who have credit problems become homeowners or refinance out of a predatory loan debunks the myth that high rates and fees are necessary to compensate for their "credit risk."

Started in 1988, NACA has a tremendous track record of successful advocacy against predatory and discriminatory lenders as well as providing the best mortgage program in America with $10 billion in funding commitments. NACA is the largest housing services organization in the country and is rapidly expanding by growing its existing 30+ offices, headquartered in Boston, MA, opening many new offices nationwide, and expanding the services it offers its membership. NACA’s confrontational community organizing and unprecedented mortgage program have set the national standard for assisting low- and moderate-income people to achieve the dream of homeownership.

NACA – America’s Best Mortgage Program

The incredible NACA mortgage allows NACA Members to purchase or refinance homes with:

no down payment,

no closing costs,

no fees,

no requirement for perfect credit,

and at a below-market interest rate.

Everyone gets the same incredible terms, including the below-market interest rate, regardless of their credit score or other factors. NACA also provides free, comprehensive housing services. NACA counsels Members into the extraordinary NACA mortgage using character-based lending criteria that takes each Member’s circumstances into account to determine whether they are ready for homeownership and what they can afford. This is in contrast to risk-based pricing where people are often given loans they cannot afford while brokers and others make tremendous fees and profits.

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Soon, NACA will once again travel across the county in order to help America’s at risk homeowners. Here are some of the projected cities for 2010:

◦Miami, FL April 15-19

◦Chicago, IL May 13-19

◦Atlantic City, NJ May 21-25

◦Los Angeles, CA June 3-7

◦Minneapolis, MN To-be-announced

◦Dallas, TX To-be-announced

◦Jackson, MS To-be-announced

◦Seattle, WA To-be-announced

This is a Save-a-Thon, that means 24 hours a day or over 100 straight hours. We expect many thousands of homeowners with an unaffordable mortgage to attend these events. NACA’s historic Save the Dream Tour has been an incredible success with over 375,000 participants in fifteen cities and many thousands of homeowners receiving same day solutions. Most people have had their mortgages payments permanently reduced by over $500 and many by over $1,000 a month often with interest rates reduced to 3% or 2% and sometimes a principal reduction. All of NACA’s services are FREE. Over 300 NACA counselors will work with you to determine an affordable mortgage payment. In addition, the servicers/lenders have hundreds of staff on-site and in their offices to approve your solution.

Her Husband's Last Name: Does a Woman's Identity Change, Too?

By: Joann M. Weiner - Contributor of Woman Up
www.politicsdaily.com
April, 2010
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Hey gals, it's wedding season and women everywhere will be making one of the most important choices of their lives: not "I Do," that's easy. The difficult question is whether to change your name. Want to honor your new spouse's lineage? Studies suggest that perhaps you should reconsider. It seems that what name you use affects how others perceive you. Does our identity change along with our name? With the stroke of a pen, do we, along with the surname of our new husbands, suddenly take on a new persona? Some people think so.

But, first, some facts.

We've always known that names mean a lot. New parents agonize for months about what to call their newborn. For a boy, will it be traditional like Michael, John, or David? Or, dare to be different, with Pierce, Ward, or Luke? For girls, is it feminine Priscilla, or androgynous Morgan?

Popular names change over time, of course, and those changes tell the world a lot about when you were born. For example, in 2008, the five most common girls' names were Emma, Isabella, Emily, Madison, and Ava, whereas 50 years ago, the most used girl names were Mary, Susan, Linda, Karen and Donna. So, regardless of whether you intend to give this impression, if your name is Madison, chances are that people will assume you are younger than your colleague Karen. Boys don't face such prejudice. Michael, James, and William were as popular 50 years ago as they are now.

Freakonomics, the economics bible for non-economists, told us that names parents give their kids can make the difference between success and failure. Who doesn't think that a girl named "Wynne" will be a winner? But be careful, names with unusual spellings or with strong ethnic connotations may saddle their owners with an unintended burden.

Whereas we can't do much about the name our parents gave us (we can use our middle name, as the oilman T. Boone Pickens has done, but women rarely do so), we women have an opportunity when marrying to do something about the family name we use. We can decide to use our mother's name, our father's name, our husband's name, or a hyphenated version of all of the above. But, that choice might make a big difference in our professional outlook, even in how much we are paid.

As Catherine Rampell wrote this week in the New York Times, a group of Dutch researchers recently found that women who change their name at marriage make nearly $400,000 less over their lifetimes than women who do not. To add insult to injury, they are viewed as older, less educated and unmotivated compared to women who kept their names when they tied the knot.

What? Does this study really say that just because I changed my last name when I got married (so that I'd have the same name as our future kids) people think I'm old and dumb and not worth paying as much as a woman who keeps her maiden name? 'That can't be right,' I thought, but what if it is? I asked my WomanUP colleagues, if "Mrs." misses, then what's a girl to do?

My query set loose a torrent of torment that my sister bloggers have endured over their names.

To start, there's Suzi Parker, whose name has a solid pedigree. But she never really liked the traditional spelling, Susie, so chose a unique version. I like that spunk. I also like that her e-mail name is Emma Peel, which conjures up images of Diana Rigg as the very sexy fictional spy who regularly rescued her partner, John Steed, from his mishaps. Interestingly, Wikipedia tells me that the name Emma Peel is allegedly a play on the words "Man Appeal" or "M. Appeal" supposedly because of Emma's fatal attraction. Hmmm, Suzi, I now view you in a totally different light than before. Choosing such a spectacular e-mail name reminds me of the old cartoon that appeared in the New Yorker in 1993 that on the internet, no one knows you're a dog. Suzi, you're no dog, but you're something else on the web.

Frankie Tobin, our gal out in Cal, has a great story. Her mom and her aunts all kept their birth name, Finch, when they married, and her mom gave Frankie (a.k.a., Frances) the name Finch as a middle name. After reading Harper Lee's To Kill a Mockingbird as a child, Frankie promised her mother than she would give her future son the name Atticus and convince his father to give him Finch as a last name. Bravo, Frankie. Giving your son the name Atticus Finch follows the tradition of parents who give their children inspirational names. Would Bill Clinton have aspired to be president if his middle name had not been Jefferson? Would George W. Bush have become president had it not been for his dad, George Herbert Walker Bush?

Then there's Jamie Stiehm, who could have had the coolest name ever --- Jamie Bondy --- if she had taken her ex-husband's name when she married. But she didn't. Come to think of it, would she really want to respond, yes, my name is "Bondy, Jamie Bondy" every time she met someone new?

Mary C. Curtis, Politics Daily's conscience-in-chief, was ready and willing to change her name when she married, until her husband-to-be asked her "why?" Not having a good answer, she stuck with her famous byline. If she had changed her name to Mary Olsen, maybe her thoughtful stories would instead conjure up images of teenage twins.

Our indomitable Lizzie Skurnick questioned the study's implications, suggesting that women who change their names may be on the run from the law. She has a point there, cinema's favorite uppity women Thelma and Louise were women on the run.

Luisita Lopez Torregrosa pointed out the complicated naming in the Spanish tradition. When her mother married, she became known as Maria Luisa Torregrosa de Lopez Candal. Since her mother never dropped her birth name, a subsequent divorce created no identity problem, she simply cut off the "de Lopez Candal." I have never understood that Latin tradition of calling a woman "of" her husband anyway.

Sandra Fish explained that out in Iowa, when women got married, it was expected that they changed their last name. She didn't want to do that, so she remained a fish, even though she'd suffered school bullies who mocked her over her last name. Middle school is no fun wherever you are.

Jan Battaille reminded us of how far we have come with our naming conventions. When long ago Jan declined to change to her husband's surname, her father thought people would think she was living in sin. Things got worse when they had a boy and gave him her last name. "What?" her father cried, "Now people will think you have an illegitimate son!''

Then, we have Delia Lloyd. Delia, who is struggling more openly than the rest of us over her identity, poses a real challenge to herself. She struggles over her religion, what holiday to celebrate, and, particularly, what to call herself.

For me, I can give the following answer, people make very different pre-judgments about me when I give my last name as "Weiner," my husband's birth name, rather than as "Martens," which was mine. To those who think that because my name is Joann Weiner, that I am not completely educated, or well paid, and for those who know me as Joann Martens and consider me an independent, educated and well-paid woman, you are both right. Changing my name did not change who I am.

I'm proud of my heritage, and I use Martens as my middle name. But, I'm also proud of who I am now. (The one time I made sure that Martens wouldn't get lost, was when I authored my one and only book under Joann Martens-Weiner.) Was I old and uneducated when I made the choice to use Weiner as my last name? Well I was 30 when I got married and, in the 1960's, anyone over 30 was considered old. I was still in the midst of a PhD program, so I guess I wasn't quite as educated as I was about to become. Whatever the study shows, for me my identity is shaped by who I am, not what I am called.

How to Amend a Discharged Chapter 7 Bankruptcy

By Anthony Briguglio, eHow.com Contributing Writer
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You've been through a Chapter 7 bankruptcy and gotten your discharge. Your "fresh start" is underway. A few days later, the phone rings; it's a bill collector. Or the mail comes; it's a collection letter. You were sure you were through with the phone calls and the letters, and that your discharge prevented them from hounding you. Then you realize the call or the letter is for a debt you forgot to include in your bankruptcy. After you get past the "What was I thinking?" stage, amending your bankruptcy is the solution.

INSTRUCTIONS
 
STEP 1:  Reopen your closed bankruptcy case by filing a motion for leave to amend your bankruptcy petition. This is done by leave of court, and the way to obtain leave of court is by a "motion." Find the website of the bankruptcy court for the district in which your discharge was issued. Most court websites have a form bank where you can download forms, including a motion to reopen the case to amend the petition (see Reference #2). If it is unavailable online, the clerk's office may have a form you can copy, or they might allow you access to the court's law library. While you are researching, locate a form "order" the judge can sign, granting the motion.
 
STEP 2:  Prepare an amended schedule on which the new information will appear. If your amendment is to add a creditor, the amendment will be to Schedules D, E or F, depending on whether the creditor is secured (a mortgage or car loan), priority (taxes, student loans, child support) or non-priority (credit cards, personal loans). If you are amending to add omitted property, the amendment will be to Schedule A (real property) or B (personal property). If the property you are adding is covered by an exemption, make sure to amend Schedule C (the exemption schedule) to assert the exemption.
 
STEP 3:  Assemble the motion package, pay the fee and file it with the clerk's office. Motion practice requires that a motion be filed, usually 30 days prior to the "return" date, so check with the clerk or the judge's chambers about available motion days and set the return date accordingly. In some districts, the motion may be done on "presentment," meaning that if there is no opposition, the motion will be granted, and the order signed, on the return date. Most bankruptcy filings are done electronically, by practitioners having a password issued by the court. Check with the clerk to be certain how paper filings are handled. You will need several additional copies of the motion papers to be served, by mail, upon the omitted creditor, the trustee and upon any party that appeared in your earlier bankruptcy proceeding. This can be determined by reviewing the PACER information of your case from the court's computer. Once you know whom to serve, mail copies to all of the necessary parties and certify to the court that this was done.
 
STEP 4:  Appear in court on the return date of the motion, if local practice requires. If you fail to appear on the return date, and an appearance was required, the motion will be denied, and you will have to start over, and maybe have to pay another filing fee. Once the Order is signed, mail a copy to the newly included creditor and certify that you did so to the court.

Keeping Tabs on Your Employees' Facebook Activity

A new software will allow you to track everything your employees publicly do on social media. But should you?

by Courtney Rubin
Inc. Magazine - March 30, 2010
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There's no need to wonder what, exactly, your employees are doing on social media – for a fee, you can track it in real time.

Mountain View, California-based software company Teneros has launched Social Sentry, which – for $2 to $8 per employee, depending on how much information you want – will track their every move on Facebook and Twitter, whether it's from their desktop computer or their own smartphone or anywhere else. It will also provide charts tracking exactly how much time employees are spending (wasting?) on social media. (By summer, the company will add YouTube, MySpace and LinkedIn to the list of social media Social Sentry tracks.)

From the software's data sheet: "Social Sentry provides automatic detection of employee social networking presence, even if employees are using personal aliases for communication. It provides the ability to record, and archive, all of the monitored communications and content, whether for a single employee or a select set of employees based on risk assessment for legal and compliance issues."

Translation: If you choose, you can use the software to discover and monitor even information employees post using aliases – though only information they post publicly. You can also receive alerts when employees post specific words or terms – the company name, a product name, a competitor's name, or anything else you choose.

Half of small businesses have a social media policy – and some 90 percent try to enforce it, says a recent survey by security firm Webroot. To date, though, the enforcement mostly has consisted of sending out an email at least once a year reminding employees of the policy – something 46 percent of companies do, says Webroot.

If Social Sentry-style tracking sounds a bit Big Brother-ish, consider that a separate survey last year revealed 45 percent of companies are now using social networks to check out prospective employees and 22 percent say that they did not offer a job to potential hires because of what they’ve found on these networks . Teneros itself points out that 70 percent of white collar workers have Facebook accounts that they regularly access during work hours. What's more, huge companies such as Domino's Pizza have sustained major damage from hits their brand images took thanks to employees' behavior on social networks. (For some small business social media faux pas, click here.)

Of course, Social Sentry only tracks information that is already public, but as social media researcher Danah Boyd, a fellow at Harvard University's Berkman Center for Internet and Society, noted in her SXSW keynote earlier this month, even collecting seemingly public data quickly can feel like an invasion of privacy.

Legally speaking, you have a right to keep tabs on any public information related to an employee and to check on his or her productivity, says Nancy Flynn, executive director of the ePolicy Institute.

"You definitely want to take advantage of your legal right to monitor," she told The New York Times.

What do you think? Do you already monitor your employees' behavior on social networks? How? What has the effect been?

New Spouse's Income in Factoring Child Support

By Mitchell Jacobs and Patty Rabiola
Daily Journal, March, 2010
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One of the most common questions asked by family law clients is, "Does my new spouse's income increase my obligation to pay support for my child from a previous marriage?" The answer is that courts are reluctant to include a new spouse's income for purposes of calculating child support. Prior to 1994, the court had the authority and discretion to consider a new spouse's income when setting a child support award. Thereafter, the Legislature enacted Family Code Section 4057.5. The statute prohibits family law courts from considering a new spouse or non-marital partner's income for purposes of determining or modifying child support, except in extraordinary cases where excluding the new spouse's income would lead to extreme and severe hardship to the minor child. For the exception to apply, the court looks to the needs of the child, not the needs or conduct of the parents.

What happens when the parent's income is passive income from investments? The case of In re Marriage of Knowles (2009) 178 Cal.App.4th 35 answers this question. Thomas and Elizabeth were married and had one son, Carter. In 1995, Thomas and Elizabeth were divorced. Thereafter, Thomas married Sara. At the time of his dissolution, Thomas was ordered to pay $506 per month to Elizabeth for child support. In 2005, Elizabeth sought a modification to increase child support. In determining child support, one of the factors that the court takes into consideration is the income of both parents. The definition of income includes wages, salary and passive income from investments.

Thomas had previously worked full-time in his family's ranch business. In December 2005, he stopped working for the family business because of his success in certain real estate investments. Based on Thomas' former employment in the family business, the trial court imputed income to him of $50,000 per year. As a result of his investments, Thomas earned $3.1 million in capital gains in 2004 and 2005. The investment income Thomas earned was after his marriage to Elizabeth. In fact, the capital gains increased when Thomas was remarried to Sara, so the capital gains belonged in their community property. Most of the capital gains were invested into a brokerage account and real estate development investment held in Sara's name alone. During the trial, Thomas and Sara testified that the brokerage account was held in Sara's name alone for "convenience."

In calculating child support, the trial court imputed employment income to Thomas of $50,000 per year or $4,166 per month. In addition, the trial court determined that a reasonable return on Thomas' investments was $18,450 per month. The $18,450 per month included $10,950 from the brokerage account and $7,500 from the real estate development. The trial court used the entire monthly investment amount of $18,450 per month for purposes of calculating Thomas' child support obligation. Based on Thomas' income, the trial court awarded Elizabeth increased child support of $1,557 per month. The trial court made its order retroactive to 2005 when Elizabeth filed her motion to increase child support.

Thomas appealed the trial court's decision and the Court of Appeal reversed and remanded. Thomas argued on appeal that the income from investments was community property belonging to him jointly with his new spouse, Sara. Thomas contended that the trial court incorrectly used the full amount of the community property income in determining his child support obligation. Thomas also argued that by doing so, the trial court violated Family Code Section 4057.5, which prohibits the court from using his new spouse's income when modifying child support. Thomas claimed that the trial court should have attributed one-half of the investment income in the sum of $9,225 to him, rather than $18,450.

The Court of Appeal agreed. It held that in determining child support, the trial court is limited to considering only one-half of the community income of a parent even if that income is passive, absent evidence that the minor child would suffer extreme or severe hardship if the new spouse's income were not considered. The Court of Appeal reasoned that Family Code Section 4057.5 prohibits using the community income attributable to the new spouse, whether the income is earned or is a return on investment, in calculating a child support obligation.

Further, the Court of Appeal held that the trial court made no finding that extreme or severe hardship would result if the new spouse's income was not included in the child support calculation. If the trial court had made such a finding of extreme or severe hardship in its statement of decision, the Court of Appeal may have upheld the trial court's decision to include the portion of the new spouse's investment income. However, there was no such finding in this case. Other cases have held that extreme and severe hardship is determined on a case-by-case basis after review of the income of both parents.

Elizabeth argued on public policy grounds. She claimed that public policy should interpret the term "income" broadly for the purpose of calculating a parent's child support obligation. The Court of Appeal stated that when a statute is on point, the public policy of the statute is contained in the statute itself, and that this applied to Family Code Section 4057.5. Thus, this interpretation of the child support statute limits judicial discretion in determining what portion of the new spouse's income is available for child support.

It is apparent from this recent case that courts are reluctant to use a new spouse's income, even in the form of passive investment income, in the equation when calculating a child support obligation. The logic is that payment of child support is the parent's obligation, and not the obligation of the new spouse or non-marital partner.

The decision by the Court of Appeal is important in cases where a parent wants to modify a previous child support order. The parent seeking a modification should be aware that courts disfavor using the new spouse's income, and will not even use passive investment income of the new spouse in calculating child support. There must be a finding that an extreme or severe hardship will occur if the investment income of the new spouse is not used in calculating child support. Otherwise, similar to the Knowles decision, the court will view the passive income from capital gains, interest and dividends as community property, and use only one-half of the income for purposes of calculating child support.

Mitchell A. Jacobs of the Law Office of Mitchell A. Jacobs in Los Angeles is a certified family law specialist who limits his practice to marital dissolution and other family law matters. Patty Rabiola is an associate with the Law Office of Mitchell A. Jacobs.

Courts Must Ask Debtors To Establish Hardship

By Lawrence Hurley
Daily Journal Staff Writer, March, 2010
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WASHINGTON - In a unanimous ruling, the U.S. Supreme Court concluded Tuesday that the failure of a debtor to show that he would struggle to pay what he owed did not void a bankruptcy court judgment discharging his student loan debt.

But the court stressed that in the future, bankruptcy courts should always order debtors to prove "undue hardship," a requirement for those seeking to discharge student loan debt via a Chapter 13 bankruptcy.

The outcome means that although the debtor in question, Francisco J. Espinosa, won his case, bankruptcy courts are on notice that they have to order an undue hardship determination if the debtor does not raise it first. Student loan companies, which had raised concerns about debtors abusing the system, welcomed this part of the ruling. United Student Aid Funds Inc. v. Espinosa, 2010 DJDAR 4307.

The decision comes a week after the Administrative Office of the U.S. Courts announced that non-business bankruptcy filings increased by 32 percent during 2009.

The case also saw the Supreme Court affirm the 9th U.S. Circuit Court of Appeals for the first time this term, although it narrowed the scope of the lower court's ruling.

The 9th Circuit was the only circuit that had allowed debtors to discharge debts without showing undue hardship. Chief Judge Alex Kozinski wrote the opinion for a unanimous three-judge panel in October 2008.

The case focused on the efforts of Indianapolis-based nonprofit student loan company United Student Aid Funds Inc. to recover the $4,000 in interest that Espinosa failed to pay on his $13,250 loan after he filed a Chapter 13 petition in 1992. In his Chapter 13 plan, Espinosa agreed to pay back the principal but not the interest. He did not file a claim asserting undue hardship, but the bankruptcy court nevertheless endorsed the plan in 1993.

The loan company did not object until the U.S. Department of Education got involved in 2000 after the government was assigned the unpaid debt. In 2003, Espinosa then petitioned the bankruptcy court to stop the government from intercepting his income tax refunds on the grounds that he had already paid everything covered by his bankruptcy plan. This prompted United Student Aid to argue in a cross-motion that the 1993 order was void because there had been no finding of undue hardship.

A year later, Tucson, Ariz.-based bankruptcy judge, Eileen W. Hollowell, said she was bound by 9th Circuit precedent to find in favor of Espinosa. In 2006, U.S. District Judge Raner C. Collins in Arizona found in favor of the student loan company before the 9th Circuit reversed.

Justice Clarence Thomas wrote in the opinion issued Tuesday that the bankruptcy court's order was not void because it was a final judgment of which the loan company had failed to appeal.

The failure of the bankruptcy court to make an undue hardship finding was a legal error but did not void the final judgment, he added.

The Supreme Court differed with the 9th Circuit on one key point. Thomas wrote that bankruptcy courts should not sign off on a bankruptcy plan in such cases unless there is an undue hardship determination. Kozinski had suggested that courts could unless the creditor objected.

Thomas acknowledged that "unscrupulous debtors" could try to abuse the process by hoping that bankruptcy judges will overlook the undue hardship question, but he noted that both debtors and attorneys could face penalties for improper conduct under the bankruptcy code.

"The specter of such penalties should deter bad-faith attempts to discharge student loan debt without the undue hardship finding Congress required," Thomas wrote.

Bob Murray, vice president of corporate communications at United Student Aid Funds, welcomed the clarifying language in Thomas' opinion that will "broadcast loud and clear" that bankruptcy judges have to ensure that undue hardship determinations are made before entering a final judgment.

Thomas had also sent "a pretty strong message" to debtors and their lawyers that should prevent any abuse, he added.

Murray noted that the loan company's own lawyers are also now much more proactive about monitoring all Chapter 13 plans to ensure that debtors don't attempt to circumvent the law.

Bankruptcy law expert G. Eric Brunstad, Jr., a partner at Dechert in Hartford, Conn. who filed an amicus brief in support of Espinosa, also had praise for the ruling because it recognizes the finality of bankruptcy plans endorsed by a judge.

"If you get a plan and the court approves it, that's a final order and creditors can't come and upset that," he said. "It's a great principle."

lawrence_hurley@dailyjournal.com

Choose Your 'Friends' Carefully

By Wendy Patrick
Daily Journal, March, 2010
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When a modern lawyer sits down at her desk in the morning and turns on her computer, her home page may come up as anything from Yahoo finance, to the New York Times, to her Facebook "wall." Social networking Web sites are used heavily by modern lawyers, and offer many benefits to those who know how to use them safely and with the appropriate levels of caution. Lawyers are well advised, however, to choose their "friends" carefully on social networking Web sites. When a lawyer is connected as a friend to clients, judges, witnesses or other lawyers, he or she might be implicating issues of confidentiality, conflicts of interest, or the appearance of impropriety.

In an age of electronic communication and social networking, lawyers must be aware of their ethical and professional responsibilities and how they apply within the public realm of electronic communication. The use of popular social networking sites such as Facebook, Twitter, and LinkedIn both professionally and personally can raise issues relating to client confidentiality, the attorney-client privilege, advertising, the unauthorized practice of law, and more.

Almost 50 percent of lawyers who responded to a recent 2008 Network's counsel survey commissioned by LexisNexis and Martindale Hubbell said they participated in online social networks. While many law firms and lawyers use business-focused sites such as LinkedIn and Avvo, Facebook offers the opportunity for both business and social contacts, and thus appeals to a wide variety of professionals. One of the issues raised by these sites, however, is the careful selection of "friends."

In most jurisdictions, the answer will likely include not a judge that you practice in front of. In November 2009, the Florida Supreme Court's Judicial Ethics Advisory Committee opinion number 2009-20 stated that while a judge may post comments and other material on the judge social networking site page as long as they did not violate the Code of Judicial Conduct, a judge may not add lawyers who may appear before him or her as "friends" on such sites, nor can they permit lawyers to add the judge as a "friend." The Committee explained that when a judge lists lawyers that may appear before the judge as social networking "friends," that display may convey the impression that these lawyers "are in a special position to influence the judge." The rationale is about the appearance of impropriety in a public forum than concerns over actual influence. The Committee pointed out that judges are permitted to list other people as "friends," including lawyers that do not practice in front of the judge.

A North Carolina judge was reprimanded for "friending" a lawyer in a pending case, accessing the opposing party's Web site, and reading messages relating to the litigation. Regarding judges' use of social networking sites in general, the New York Advisory Committee on Judicial Ethics op. 08-176 (2009) concluded that as long as a judge complies with the applicable Rules Governing Judicial Conduct, he or she can participate on an internet-based social network, assuming an acceptable level of competence with the network features.

It may be improper, however, for a judge to view the Web site of a party appearing before him or her (North Carolina Judicial Standards Commission Inquiry No. 08-234 (2009) [judge also engaged in ex parte communications with counsel])

Are there other activities that a judge should refrain from on social networking sites? A Georgia superior court judge who just stepped down could answer that question for you. The Georgia judge apparently developed a personal relationships on Facebook with a woman who was a defendant in a case that was pending in his courtroom. The relationship began when the judge contacted the woman asking about a haircut because he saw that she worked for a hair salon, and progressed over time to the judge advising the woman on strategy and negotiation in her own case, even stating "I can help you more behind the scenes so long as very few people know it." The relationship then progressed to in-person contact. While the judge was not prosecuted criminally, his conduct appeared to violate the Georgia Code of Judicial Conduct, which states among other things that judges shall maintain high standards of conduct, and avoid both impropriety and the appearance of impropriety "in all their activities."

Regarding the appearance of impropriety, would "following" someone else on Twitter cause a problem? What if you, as an attorney, are "following" an adverse party? Is it different if they are "following" you? Does it matter if you are only reading each other's "tweets" and not communicating with each other directly? Some lawyers balk at the idea of having to run a conflicts check on every person or entity with whom they interact in some fashion on social networking sites, but is there an argument that such diligence is required? We are all interested to see how court decisions and ethics opinions will continue to define rules and standards in this fast-evolving arena.

Many lawyers choose to avoid social networking Web sites like the plague. They see too many opportunities for mischief, misunderstanding, and miscommunication. Not to mention the potential damage to their reputation that could result from any evidence of impropriety that might be displayed on their Facebook "wall" or their friends' "wall." And if you accidentally accept a "friend" request from someone whom you don't know, perhaps by inadvertently hitting "accept" instead of "ignore," you might find out the hard way that you have unwittingly become associated with a person or a cause that may cause damage to your practice and to your reputation. The same goes if you accidentally sign up for someone's "fan page." Instead of worrying about becoming "guilty by association," some lawyers prefer not to jump into the social networking fray in the first place.

Facebook and other social networking sites are a great way to keep in touch, but be wary of who you call your "friends." A working knowledge of the law and evolving ethical opinions in this area will keep you connected, and also protected. Good luck!

This article does not constitute legal advice. Please shepardize all case law before using.

Wendy L. Patrick is a San Diego County Deputy District Attorney in the Sex Crimes and Stalking Division. She has been a Chair of the San Diego County Bar Association Legal Ethics Committee for over five years and is a member of the California State Bar Committee on Professional Responsibility and Conduct. She has an ethics column in the San Diego Daily Transcript and also lectures on ethics.

Louis Vuitton Wins Injunction

By Craig Anderson
Daily Journal Staff Writer, March, 2010
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As he indicated during a January hearing, U.S. District Judge James Ware of San Jose granted a permanent injunction late Friday against an Internet service provider for hosting Web sites that sold knockoffs of high-end retailer Louis Vuitton.

The judge agreed that it would be an unreasonable burden to require Louis Vuitton to continue monitoring the site operated by Fremont-based Akanoc Solutions Inc., which sold the goods, often overseas.

"The court finds that granting an appropriate injunction here would merely require defendants to enforce their own terms of use policy and come into compliance with federal statutes that a jury found the defendants violated," Ware wrote.

A jury awarded Louis Vuitton $32 million in damages last summer.

Attorney Barred From Real Estate

By Jason W. Armstrong
Daily Journal Staff Writer, March, 2010
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California Attorney General Jerry Brown Jr. Monday shut down two nationwide foreclosure assistance companies accused of defrauding several thousand struggling homeowners and announced a settlement barring the three men behind the operations, including an attorney, from working in the real estate industry.

Under the agreement, which resolves federal and state authorities' eight-month-old lawsuit against Orange County attorney Adrian Pomery and businessmen George Escalante and Cesar Lopez, the trio also must pay more than $1 million in restitution to former clients of their Orange County-based businesses, U.S. Foreclosure Relief Corp. and offshoot H.E. Servicing, Inc.

The settlement was reached March 11. It is the latest in several cases being pursued by Brown's office, the Federal Trade Commission and other agencies as part of "Operation Loan Lies," a yearlong nationwide crackdown on sham loan-modification consultants.

Pomery, a sole practitioner who was admitted to the State Bar in 2007, was an attorney for U.S. Foreclosure Relief and H.E. Servicing. He is one of 16 lawyers the State Bar announced in September it was investigating for misconduct relating to the mortgage workout business. Pomery is still an active attorney, according to the State Bar's records.

According to Brown's office, the illicit mortgage modification ventures operated under boiler room-type settings in which high-pressure salespeople, fielding hundreds of calls each day, would promise distressed homeowners that they could avoid foreclosure for $1,800 to $2,800 in upfront fees. But the companies performed only a handful of workouts, Brown said. In the case of H.E. Servicing, he said, the company boasted about completing 10,000 successful modifications and having a 90 percent success rate, but in reality had opened only 2,960 files and finished 311 workouts.

The men, Brown said in a statement Monday, "used their loan modification companies to sell false hope to hundreds of Californians facing foreclosure."

Neither Pomery nor Lopez could be reached Monday. Both men are representing themselves in the litigation.

An Irvine attorney for Escalante and U.S. Foreclosure Relief and H.E. Servicing, Steven L. Krongold, said his clients are "happy to have the case resolved." He said Escalante relied on advice of lawyers working with the companies, including Pomery. "He thought he was in compliance with the law," Krongold said Monday. "This was a legitimate business."

Brown and the Federal Trade Commission are still investigating another defendant in the lawsuit, Santa Ana attorney Brandon Moreno. Like Pomery, Moreno advised H.E. Servicing and U.S. Foreclosure Relief, according to Brown's office, and falsely promised customers mortgage modifications.

Moreno, who like Pomery is under investigation by the State Bar, could not be reached Monday. He is still an active attorney, according to State Bar records.

The case is Federal Trade Commission v. U.S. Foreclosure Relief Corp., 09-00768 (C.D. filed July 2009).

jason_armstrong@dailyjournal.com

Staff Layoffs: The Wrong Solution

By Lou Shapiro
Daily Journal, March, 2010
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Calling laying off 320 court employees a solution to the budgetary deficit is like putting a cast on a patient's healthy foot, when he has an ailing heart.

The reason why there is a deficit is not due to an overstaff-dilemma in the court staff arena. It is because inefficiency is being tolerated on a daily basis. I invite the reader to go to their local courthouse, and spend a few minutes in a criminal courtroom to observe the execution of the daily calendar. You will find that many, if not most of the defendants, have either a mental illness, a substance abuse addiction, or both. These defendants are most likely being prosecuted for offenses such as drinking alcohol in public, theft of a candy bar, or sleeping on the sidewalk.

Now, take note of the following resources that are being exhausted to deal with a matter such as sleeping on the sidewalk. Two police have to make an arrest, transport the person to the station, and draft a police report, which will probably take four hours. Then, another police officer has to process the person and book him or her, taking another two hours. This person is then brought to court on a bus, staffed by Los Angeles County Sheriff's deputies. A filing prosecutor spends time reading the report and filing a charge. A public defender then spends at least an hour reviewing the report and advising the person. Then the person is brought to court, where more police are needed to assist.

In addition, the services of a judge, prosecutor, court reporter, and two court clerks are needed to address the matter. The person is then housed in county jail, where funding is used to provide for food, living and other associated expenses. I'm sure I am neglecting to mention other people who are involved in this process behind the scenes.

The problem is the failure to implement publicly funded residential rehabilitate services for such people, not under-used court staff. Rather than the court system wasting time and money on prosecuting the mentally-ill and addicts, it can spend a fraction of the price and build support systems for them to heal and get back on their feet. This would avoid having to punish the innocent, hard working court staff, who are every bit as vital to the system as the very laws perpetuated by the system.

To summarize the current cure to the deficit: Well-trained and able working people are losing their jobs and health care benefits so that the schizophrenic veteran, who risked his life for our country, can continue to be prosecuted for trespassing on the beach after-hours. The real crisis is the lack of support to the homeless and underprivileged, which has the effect of jamming and swamping the court system. I cry out to the smart and influential people in Sacramento to stop putting casts on healthy bones, and rather, treat the ailing hearts.

Apparently, publicly funded rehabilitative institutions and services existed until the era of President/Governor Ronald Reagan. But they were cut because of a deficit. As theold saying goes: "You can pay now, or you pay later." Right now, we are paying dearly.

Lou Shapiro is a deputy public defender for the county of Los Angeles. He is currently assigned to the Criminal Courts Building in downtown Los Angeles, where he defends clients accused of committing misdemeanors and felonies.

New Bankruptcy Judge Sworn-In

By Ciaran McEvoy
Daily Journal Staff Writer, March, 2010
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DLA Piper associate Deborah J. Saltzman was sworn in last Thursday as the Central District of California's newest bankruptcy judge.

Saltzman, a 39-year-old University of Virginia School of Law graduate, also practiced law at Hennigan Bennett & Dorman, O'Melveny & Myers and Klee, Tuchin, Bodganoff & Sternl. She fills a vacancy created by the retirement of U.S. Bankruptcy Judge David Naugle in September 2008. Her term is set for 14 years in one of the nation's busiest federal courts, where bankruptcy filings in 2009 totaled more than 109,000 cases, an increase of more than 56 percent from the previous year.

ciaran_mcevoy@dailyjournal.com

Tax Preparer Mistakes You Should Know

By David Howard
Daily Journal, March, 2010
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I have great sympathy for tax return preparers. A nearly endless stream of virus-like complex tax laws and rules are making them ill. New, stiff penalties for preparers who don't have substantial authority are like the Internal Revenue Service standing on their oxygen hose. Throw in a dose of new, revised and confusing tax forms and we've got an epidemic.

Congress, the President and the IRS do not deserve all the blame for this epidemic, however. Many taxpayers exacerbate the situation by delivering information to their tax preparers at the last minute, then demanding that their returns be ready by April 15. Perhaps fewer preparers would fall victim to the epidemic's infection if they simply had more time and took more care in the preparation of the returns.

Regardless, the epidemic is here. Watch for these symptoms.

Forgotten Form 1045. Infected tax preparers sometimes forget that an individual can have a business net operating loss that can be carried back or forward for tax refunds or savings in future years. Thanks to recent economic recovery legislation, a net operating loss from 2008 and 2009 can be carried back up to five years. This allows the taxpayer to get money back from the IRS out of taxes paid in better times. Preparers often forget to compute the business net operating loss because the Form 1040 scrambles non-business income and expenses with the business income and expenses. The Form 1045 is the unscrambler.

If an individual has a loss in a sole proprietorship (Schedule C), partnership, LLC, LLP, S Corporation, farm (Schedule F), or other pass-through entity, this loss flows back to the owners. Form 1045 starts with line 41 of the Form 1040; if that is a negative number the preparer needs to consider preparing the Form 1045 to see if there is a net operating loss that can be carried back for a refund. I have two clients where the infected preparers missed very large business net operating losses with refunds in six digits.

There is a three-year statute of limitations for computing the net operating loss and carrying it back or electing to carry it forward. If there is no money on the table in the past, the net operating loss can be carried forward for 20 years to offset future taxes. Don't let your beleaguered tax preparer miss this item. The Form 1045 for 2009 is good only through the rest of this calendar year and cannot be used for previous years. However, the Form 1040X can still be filed and the refunds claimed.

The good news is if there was a loss years ago, that loss may still be available to carry forward to the current or future years. Even if that tax year is closed by the statute of limitations, there is a possibility the loss may still be carried forward with the right facts.

Forgotten Form 3800. This lead form for claiming the General Business Credit is one monster dose of germs and is easy to forget. Form 3800 is the lead sheet for claiming dozens of credits, each of which requires a separate form. Infected tax preparers may view this as a big waste of time. A great deal of detailed information is required, historically with little payback. But times have changed. There are some significant credits available now.

While politicians may not be able to agree on health care or immigration policy, they all love tax credits. Some view a tax credit like a tax reduction, and others view credits as helping to stimulate the economy, create jobs and protect the environment all good things. For the "sick" tax preparer, however, these nearly endless new credits are like being caught in a cold draft. She fears that she has to plow through the form and there may be no credit actually available at the end of the calculation. If she spends an extra hour or two and finds not a single dollar of credit, will she ever be able to bill for the time? Cough, cough. If she does find the credit, however, it may save money now or may be carried to years where it will save money.

Here are just a few of the credits that appear on Form 3800's long list: alcohol and biofuel; alternative motor vehicle; employer social security and Medicare taxes paid on certain employee tips; employer differential wage payments; employer-provided childcare facilities and services; increasing research activities; small employer pension plan startup costs; disabled access; empowerment zone and renewal community employment; energy efficient home; Indian employment; investment credit; low-income housing credit; new markets credit; work opportunity credit; and many more. Some of the credits for hiring new employees and even employees previously laid off are quite substantial. Owners of small businesses including many law firms should not overlook these potentially big tax benefits.

The above does not include state tax credits; California has a long list of credits as well. If your infected tax person doesn't claim it, you won't get it. Choke.

You may have missed these credits in years past. If the statute is still open, look into going back and getting them. You may be able to carry the credits backward and get money left on the table, or carry them forward for years and years until you use them all.

Failure to report foreign bank accounts, foreign trusts, or foreign controlled corporations. Some tax preparers don't even think of these as tax return forms. While they are only information reports, failure to file can be very expensive. The IRS has the power to impose significant penalties for nondisclosure of a U.S. taxpayer's interest even if it is only a contingent beneficial interest or signature authority over an account in which the taxpayer has no beneficial interest. One key form is the Report of Foreign Bank and Financial Accounts (FBAR) Form TD F 90-22.1. There are yet other forms to disclose the foreign trust and foreign controlled corporations, and there also are boxes to mark on the Schedule B to Form 1040. Finally, don't forget Form 3520 to report the trust that owns your home in Mexico, or to report gifts to U.S. residents from foreign sources.

The penalties for failure to report can be horrible. They range from a mere $10,000 per undisclosed item per year to confiscation of a large percentage of the account balance to criminal penalties. The recent UBS secret Swiss bank account fiasco has created tremendous awareness. I get frequent phone calls from confused and desperate taxpayers and tax preparers alike wondering what they should do about unfiled FBAR reports for the last several years.

I strongly recommend that any taxpayer with nondisclosure issues consult with a tax lawyer who has expertise in this area, as the taxpayer will be able to avail himself of advice and counsel while protected by the cloak of the attorney-client privilege.

A local CPA acquaintance, apparently not yet infected by this epidemic, recently sent me her new client with big-time nondisclosure problems. At the end of our meeting he leaned forward, lowered his voice and asked, "Should my old accountant have told me about these disclosures?"

I leaned forward, lowered my voice and said, "Your former accountant was ill."

IRS Circular 230 Disclosure. IRS regulations generally provide that, for the purpose of avoiding federal tax penalties, a taxpayer may rely only on formal written advice meeting specific requirements. Any tax advice in this article does not meet those requirements and is not intended or written to be used, and cannot be used, for the purpose of avoiding federal tax penalties or promoting, marketing or recommending to another party any transaction or matter addressed herein.

David Howard is of counsel to Hoge Fenton Jones & Appel. A longtime Deloitte tax partner and licensed attorney, he is now an inactive CPA and is practicing law in the focused areas of corporate and business tax strategy. He can be reached at dsh@hogefenton.com.

Woman Who Embezzled From California State Bar Sentenced To Prison

California Bar Journal - March 2010
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A former State Bar employee was sentenced to 32 months in state prison last month after she admitted embezzling more than $600,000 from the agency. Sharon Elyce Pearl, 52, pleaded no contest in December to one count of embezzlement and six counts of filing false tax returns.

She was ordered to make restitution to the bar, as well as pay taxes, penalties and other costs, totaling almost $900,000. Pearl already has paid almost $400,000 to the bar.

Attorney General Edmund G. Brown Jr. said Pearl “methodically embezzled” the funds to spend on spa treatments, designer clothes and other luxury items. “As the State Bar's Director of Real Property, Pearl methodically embezzled more than $600,000 to bankroll a lavish lifestyle,” Brown said.

Pearl was responsible for handling building management and she collected rent from tenants at the bar’s 180 Howard Street headquarters in San Francisco. As early as 2002, she began to embezzle a portion of the rental funds she collected, directing some tenants to make their rent checks payable to “PLOT — The State Bar of California.” PLOT stood for the Piedmont Light Opera Theatre, where Pearl was a signatory on the theater’s accounts. She deposited the checks into theater accounts and then transferred funds to her personal bank account.

When the bar uncovered Pearl’s scheme in 2008, it launched an internal investigation into financial discrepancies and ultimately discovered that Pearl was maintaining two sets of books. The investigation was referred to Brown’s Special Crimes Unit for prosecution.

As part of her sentence, she was ordered to pay $615,790 in restitution to the State Bar; 
$167,422 in staff, audit and attorney costs to the State Bar; and
$116,652 in taxes, penalties, interest and investigation costs to the Franchise Tax Board.

The sentence, issued in Alameda County Superior Court, did not include federal taxes Pearl may owe.

When Gov. Schwarzenegger vetoed the bar’s fee bill last October, he singled out the embezzlement as an example of what he called “a lack of internal controls.”

10 Places NOT To Use Your Debit Card

by Dana Dratch
Friday, March 19, 2010
Privided by http://www.creditcards.com/
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Debit cards have different protections and uses. Sometimes they're not the best choice.
 
Sometimes reaching for your wallet is like a multiple choice test: How do you really want to pay?  While credit cards and debit cards may look almost identical, not all plastic is the same.
 
"It's important that consumers understand the difference between a debit card and a credit card," says John Breyault, director of the Fraud Center for the National Consumers League, a Washington, D.C.-based advocacy group. "There's a difference in how the transactions are processed and the protections offered to consumers when they use them."
 
While debit cards and credit cards each have advantages, each is also better suited to certain situations. And since a debit card is a direct line to your bank account, there are places where it can be wise to avoid handing it over -- if for no other reason than complete peace of mind.
 
Here are 10 places and situations where it can pay to leave that debit card in your wallet:
 
1. Online
 
"You don't use a debit card online," says Susan Tiffany, director of consumer periodicals for the Credit Union National Association. Since the debit card links directly to a checking account, "you have potential vulnerability there," she says.
 
Her reasoning: If you have problems with a purchase or the card number gets hijacked, a debit card is "vulnerable because it happens to be linked to an account," says Linda Foley, founder of the Identity Theft Resource Center. She also includes phone orders in this category.
 
The Federal Reserve's Regulation E (commonly dubbed Reg E), covers debit card transfers. It sets a consumer's liability for fraudulent purchases at $50, provided they notify the bank within two days of discovering that their card or card number has been stolen.
 
Most banks have additional voluntary policies that set their own customers' liability with debit cards at $0, says Nessa Feddis, vice president and senior counsel for the American Bankers Association.
 
But the protections don't relieve consumers of hassle: The prospect of trying to get money put back into their bank account, and the problems that a lower-than-expected balance can cause in terms of fees and refused checks or payments, make some online shoppers reach first for credit cards.
 
2. Big-Ticket Items
 
With a big ticket item, a credit card is safer, says Chi Chi Wu, staff attorney with the National Consumer Law Center. A credit card offers dispute rights if something goes wrong with the merchandise or the purchase, she says.
 
"With a debit card, you have fewer protections," she says.
 
In addition, some cards will also offer extended warrantees. And in some situations, such as buying electronics or renting a car, some credit cards also offer additional property insurance to cover the item.
 
Two caveats, says Wu. Don't carry a balance. Otherwise, you also risk paying some high-ticket interest. And "avoid store cards with deferred interest," Wu advises.
 
3. Deposit Required
 
When Peter Garuccio recently rented some home improvement equipment at a big-box store, it required a sizable deposit. "This is where you want to use a credit card instead of a debit," says Garuccio, spokesman for the national trade group American Bankers Association.
 
That way, the store has its security deposit, and you still have access to all of the money in your bank account. With any luck, you'll never actually have to part with a dollar.
 
4. Restaurants
 
"To me, it's dangerous," says Gary Foreman, editor of the frugality minded Web site The Dollar Stretcher. "You have so many people around."
 
Foreman bases his conclusions on what he hears from readers. "Anecdotally, the cases that I'm hearing of credit or debit information being stolen, as often as not, it's in a restaurant," he says.
 
The danger: Restaurants are one of the few places where you have to let cards leave your sight when you use them. But others think that avoiding such situations is not workable.
 
The "conventional advice of 'don't let the card out of your sight' -- that's just not practical," says Tiffany.
 
The other problem with using a debit card at restaurants: Some establishments will approve the card for more than your purchase amount because, presumably, you intend to leave a tip. So the amount of money frozen for the transaction could be quite a bit more than the amount of your tab. And it could be a few days before you get the cash back in your account.
 
5. You're a New Customer
 
Online or in the real world, if you're a first-time customer in a store, skip the debit card the first couple of times you buy, says Breyault.
 
That way, you get a feel for how the business is run, how you're treated and the quality of the merchandise before you hand over a card that links to your checking account.
 
6. Buy Now, Take Delivery Later
 
Buying now but taking delivery days or weeks from now? A credit card offers dispute rights that a debit card typically does not.
 
"It may be an outfit you're familiar with and trust, but something might go wrong," says Breyault, "and you need protection."
 
But be aware that some cards will limit the protection to a specific time period, says Feddis. So settle any problems as soon as possible.
 
7. Recurring Payments
 
We've all heard the urban legend about the gym that won't stop billing an ex-member's credit card. Now imagine the charges aren't going onto your card, but instead coming right out of your bank account.
 
Another reason not to use the debit card for recurring charges: your own memory and math skills. Forget to deduct that automatic bill payment from your checkbook one month, and you could either face fees or embarrassment (depending on whether you've opted to allow overdrafting or not). So if you don't keep a cash buffer in your account, "to protect yourself from over-limit fees, you may want to think about using a credit card" for recurring payments, says Breyault.
 
8. Future Travel
 
Book your travel with a check card, and "they debit it immediately," says Foley. So if you're buying travel that you won't use for six months or making a reservation for a few weeks from now, you'll be out the money immediately.
 
Another factor that bothers Foley: Hotels aren't immune to hackers and data breaches, and several name-brand establishments have suffered the problem recently. Do you want your debit card information "to sit in a system for four months, waiting for you to arrive?" she asks. "I would not."
 
9. Gas Stations and Hotels
 
This one depends on the individual business. Some gas stations and hotels will place holds to cover customers who may leave without settling the entire bill. That means that even though you only bought $10 in gas, you could have a temporary bank hold for $50 to $100, says Tiffany.
 
Ditto hotels, where there are sometimes holds or deposits in the hundreds to make sure you don't run up a long distance bill, empty the mini bar or trash the room. The practice is almost unnoticeable if you're using credit, but can be problematic if you're using a debit card and have just enough in the account to cover what you need.
 
At hotels, ask about deposits and holds before you present your card, says Feddis. At the pump, select the pin-number option, she says, which should debit only the amount you've actually spent.
 
10. Checkouts or ATMs That Look 'Off'
 
Criminals are getting better with skimmers and planting them in places you'd never suspect -- like ATM machines on bank property, says Foley.
 
So take a good look at the machine or card reader the next time you use an ATM or self-check lane, she advises. Does the machine fit together well or does something look off, different or like it doesn't quite belong? Says Foley, "Make sure it doesn't look like it's been tampered with."

Census 2010 - Key Dates

Key Dates - 2010 Census

Black people must leave, NJ Walmart announcer says

By Bruce Shipkowski
Associated Press Writer with Yahoo Finance
Thursday, March 18, 2010
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WASHINGTON TOWNSHIP, N.J. (AP) -- A Walmart store announcement ordering black people to leave brought chagrin and apologies Wednesday from leaders of the company, which has built a fragile trust among minority communities.

A male voice came over the public-address system Sunday evening at a store in Washington Township, in southern New Jersey, and calmly announced: "Attention, Walmart customers: All black people, leave the store now."

Shoppers in the store at the time said a manager quickly got on the public-address system and apologized for the remark. And while it was unclear whether a rogue patron or an employee was responsible for the comment, many customers expressed their anger to store management.

"I want to know why such statements are being made, because it flies in the face of what we teach our children about tolerance for all," said Sheila Ellington, who was in the store at the time with a friend. "If this was meant to be a prank, there's only one person laughing, and it's not either one of us."

Ellington, of Monroe, and her friend Patricia Covington said they plan to boycott the retailer until they're assured the issue has been addressed so it doesn't happen again.

The pair said they were stunned when they heard the announcement and initially believed they had misheard it. But once the words sank in, they grew angry.

"I depended on Walmart for all my needs, because the store has pretty much everything you could want," Covington said. "But until this issue is addressed in a way I'm comfortable with, I can't walk through those doors again."

Officials with Wal-Mart Stores Inc., based in Bentonville, Ark., said that the announcement was "unacceptable" and that they're trying to determine who made it and how it happened.

"We are just as appalled by this incident as our customers," the company said in a statement. "Whoever did this is just wrong and acted in an inappropriate manner. Clearly, this is completely unacceptable to us and to our customers."

This is not the first time the retailer has faced such problems.

There have been several past instances of black customers claiming they were treated unfairly at Walmart stores, and the company faced lawsuits alleging that women were passed over in favor of men for pay raises and promotions.

In February 2009, the retailer paid $17.5 million to settle a class action lawsuit alleging racial discrimination in its hiring of truck drivers.

And the U.S. Equal Employment Opportunity Commission sued the company in May 2009, claiming some Hispanic employees at a Sam's Club subsidiary in California were subjected to a hostile work environment. That suit alleges managers failed to stop repeated verbal harassment, including the use of derogatory words, against employees of Mexican descent.

However, the National Association for the Advancement of Colored People has said the company has worked hard in recent years to show it cares about diversity.

Bill Mitchell, a former Walmart employee who was shopping Wednesday at the store, said that he was saddened to hear about the announcement but that "as a black man, I've heard worse things."

As customer Sharon Osbourne, of Williamstown, left the store Wednesday, she called the announcement "appalling, stupid and sad."

L.A. Superior Court Lays Off 329 Employees; State Budget Deficit Shrinks System and Staff

(News Release) March 16, 2010
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Beset by an unprecedented budget crisis, the Los Angeles Superior Court – the nation’s largest trial court system – today laid off 329 employees and announced closure of 17 courtrooms, a number that is certain to grow.

The Court has a total of about 5,400 workers. It operates about 580 courtrooms.

In addition to the layoffs, the Court expects to close as many as 50 courtrooms by September, in addition to 17 already shut down or in the process of being closed. These 17 courtrooms are throughout the county, including at the Stanley Mosk, Clara Shortridge Foltz, Malibu, Hollywood, Santa Monica, West Los Angeles, San Fernando and Central Civil West courthouses.

The layoffs are in addition to 156 voluntary departures through attrition that are projected during the 2009-10 fiscal year. The Court is currently in a hiring freeze. With layoffs and attrition, by June, a total of 485 jobs will be eliminated.

Still more layoffs are anticipated in 2010—as many as 500 by September.

The courtrooms to be eliminated span nearly the entire breadth of the Court’s work. They include courtrooms handling criminal, family law, general civil, limited civil, complex litigation and small claims caseloads.

Employees who have been laid off range from entry level clerks to secretaries, computer system workers and supervisors, court reporters and child advocacy specialists.

“Our Court’s deficit is $79.3 million in Fiscal Year 2009-10, and we have few means of achieving substantial savings other than staff reductions,” said Presiding Judge Charles W. “Tim” McCoy Jr.

“We have explored every financial scenario before taking this action, but more than 80 percent of our budget goes to salaries and benefits, which forces today’s drastic measures,” said McCoy. With annual budget deficits expected to be as high as $140 million over the next four years, up to 1,800 staff positions may be eliminated.

Examples The effect of today’s terminations will be felt immediately with curtailments of services that include:

• Operator service will be eliminated immediately at the Traffic Telephone Call Center. Automated functions such as fine payments or requests to extend a court appearance will continue uninterrupted. However, callers in need of assistance from court personnel will have to visit a traffic court location or call the local traffic court office. With the reduction in court personnel, busy phone lines and longer lines at the traffic windows are expected. Recent statistics reflect that of the 19,200 daily calls to the call center, some 10 percent require the assistance of an operator.

• Traffic night court sessions will be reduced from twice to once a month at the Metropolitan Courthouse. About 120 people generally attend a night court session. Due to the popularity of the night court sessions, requests for night court are now being scheduled for October of 2010. Further delays are inevitable.

• With the addition of today’s layoffs, the total staff reduction in the Archives Records Center since February 2009 is 42 percent. The time to process requests for files and case reproduction will increase by 50 percent; paid file requests waiting times may increase from four to eight months and no-fee requests may increase from six months to a year. Reproduction waiting time will double.

• At the Clara Shortridge Foltz Criminal Justice Center, the fifth floor clerk’s office will be closed. Cashier functions, criminal background checks, criminal case file requests and certification will only be available at the second floor clerk’s office. Court forms, directions and case details are still available at the lobby Information desk and automated kiosks.

• The Court has eliminated the unit at the Clara Shortridge Foltz Criminal Justice Center (commonly known as the Criminal Courts Building) that performed ”bulk’ criminal name searches. These name searches are generally done for private companies looking to hire new employees. The bulk name searches will now be performed at all courthouses hearing criminal matters, but, they will be processed along with all other clerical requests. Service response time will be delayed significantly and job candidates’ clearances may be affected.

• With the reduction of Family Court services specialists, family law courts will see a delay in the scheduling and completion of mediation appointments, which are legally mandated in divorce cases involving children. The wait for a mediation appointment , which has averaged from three to nine weeks depending on location and the availability of staff will increase, delaying court orders on dissolution cases.

• The Court will no longer provide financial support and supervising personnel to the Court-Appointed Special Advocates (CASA) program, based at the Edward D. Edelman Children’s Court. CASA volunteers work on behalf of abused, neglected and abandoned children involved in dependency court matters. A court-funded manager, clerical worker and six supervisors of volunteers will be laid off.

• The Court made $16 million in non-staff cuts and is using reserves to minimize staffing reductions as long as possible. In 2002, with a budget deficit of $57.3 million, the Court laid off 150 employees and closed courthouses in Culver City, Monrovia and South Gate.

The layoffs anticipated in later fiscal years, coupled with an ongoing hiring freeze, will leave the LASC unable to support current levels of processing cases. The Court’s leaders are investigating how staffing reductions impact the Court’s ability to handle its workload.

“If the Court’s budget forecast is correct, courtroom and courthouse closures remain in our future for a very long time,” said John A. Clarke, court executive officer, “and its impact on Los Angeles County families, public safety and the economy remain our main focus as we continue seek solutions to the budget crisis.

“We have prepared as well as any court could, and we are committed, along with all of the bench officers to manage it and not be managed by it,” said Clarke.

Recent Changes in Civil at the Los Angeles Superior Court

Superior Court of California, County of Los Angeles
    eNewsletter - Volume 2 No. 3 March 2010
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Over the last several months a number of changes have taken place in the Central District of the Los Angeles Superior Court due to reassignments, retirements, and budgetary constraints.

Judicial Assignments

Judge Rex Heeseman is now presiding in the individual calendar, general jurisdiction Department 19 of the Mosk Courthouse, taking over the calendar of Judge Judith Chirlin, who recently retired. Judge Heeseman most recently sat in one of the limited jurisdiction courts of Mosk. Prior to his appointment to the bench in 2005, Judge Heeseman was a partner in the law firm of Luce, Forward, Hamilton & Scripps and earlier at Adams, Duque & Hazeltine, specializing in commercial litigation.

Judge Debre Katz Weintraub is in charge of Department 47, formerly the courtroom of Judge Aurelio Munoz, who is now retired. Judge Weintraub previously sat in the appellate division of the court and in a criminal law assignment in Van Nuys. Before becoming a judicial officer in 1995, Judge Weintraub was a partner at Loeb & Loeb.
Judge Aurelio Munoz (Ret.) is now sitting on assignment in Department 77 in charge of the master calendar for limited jurisdiction cases.

Judge Michelle R. Rosenblatt has transferred to the downtown Mosk Courthouse Department 40 from her previous civil assignment at the Burbank Courthouse. She has taken over the caseload of Judge Ann I. Jones, who has moved to the Complex Litigation Center at Central Civil West, replacing Justice Victoria Chaney. Judge Rosenblatt also has served in criminal law assignments in Pasadena and Van Nuys.

Judge Steven J. Kleifeld is presiding in Department 76, a limited jurisdiction civil courtroom. Previously, Judge Kleifeld had criminal law assignments at the Clara Shortridge Foltz Criminal Justice Center and the Airport, Huntington Park, and East Los Angeles courthouses. Prior to his appointment to the court in 2002, Judge Kleifeld was in civil private practice for 22 years.

Judge Jan G. Levine has transferred to Department 81, a limited jurisdiction civil courtroom, from the Juvenile Court, where she handled both dependency and delinquency calendars. Before becoming a jurist in 2003, Judge Levine was in private practice, specializing in civil litigation.

Prejudgment writs of attachment proceedings, previously presided over by recently retired Judge Brett Klein, are now being heard by Judge Barbara A. Meiers in Department 12. In addition, Judge Meiers is handling rent and profits receivership cases and Los Angeles City tax cases.

All civil harassment temporary restraining orders and orders to show cause regarding stay-away injunctions are being heard by Judge Carol Boas Goodson in Department 75.

Court Closures

As a result of the serious state budget deficit, the allocation of funds to the judicial branch has been substantially reduced. In turn, the funding to the Los Angeles Superior Court has diminished. For the fiscal year 2009-2010 (ending June 30, 2010), the court currently has a $79.3 million budget deficit.

Since the state financial crisis is expected to continue for at least the next four years, it is anticipated that the superior court deficit will grow to $140 million by the fiscal year 2011-2012 and continue at that level for a number of years.

In response to the reality of these budgetary limitations, the court is constrained to take action to reduce the deficits by rational contraction through, among other actions, a hiring freeze and employee attrition, monthly furlough days, and employee layoffs. The court has already announced the layoff of 329 employees in March, and another 500 will be laid off later this year in September.

Ultimately, 1,800 employees, or one-third of the court work force, will have to be laid off for the court to live within its reduced budgets. Without these necessary employees, it will be impossible for the court to maintain its current level of operations. On average, 10 employees are required to support a courtroom, including in-court personnel as well as back-office staff for such functions as filing window, file maintenance, copying services, imaging, information technology, accounting, and jury services, among others. The layoff of 1,800 employees will require the closure of some 180 courtrooms.

Because criminal cases and many family law and juvenile cases have priority over civil actions, the heaviest burden of court closures will fall on our civil courts. Due to the financial crisis, it is anticipated that the superior court will most likely have to shutter over one-half of the civil courtrooms. As a necessary consequence, inventories of cases in the remaining courtrooms will increase enormously, resulting in greater delays in bringing cases to trial and having motions heard.

In response to the 2009 budgetary crisis, the Los Angeles Superior Court closed one small claims department and two limited jurisdiction departments. So far, in 2010, the court has already announced the closure of four long-cause trial departments, the specialized eminent domain department, and one complex litigation courtroom. Judge Peter Lichtman will be moving in April from Complex Litigation Center in Central Civil West to the Mosk Courthouse to establish a new settlement program. Further court closures will be announced during the year.

The court is in the process of organizing a bench-bar committee to consult and advise as to the future of civil litigation in this era of substantially reduced court resources.