Nevada: want in on the tech bubble 2.0? Get a better anti-SLAPP statute.

April 13, 2012

By J. DeVoy

Earlier this week, Facebook announced its $1B acquisition of hipster staple Instagram.  Everywhere you look, social media companies based on seemingly fragile social momentum are receiving gigantic valuations and making initial public offerings.  Zynga has $8.8 billion in market capitalization – it’s best known for FarmVille, brogrammers and abusing trademark law.  Groupon has lost more money than many firms will ever see, yet IPO’ed, reifying billions of dollars of wealth for shareholders.

Yet California does not have a monopoly on tech.  In fact, California is absurdly expensive.  Nevada, in contrast, is dirt cheap.  And, based on the success of firms like SirsiDynix and Adobe in Utah – seriously, Utah – it’s clear that Silicon Valley does not have a stranglehold on programming and tech manpower.  For all but the most elite developers, young workers will go where the work is – and even then, they will pursue the most challenging opportunities.

But this raises the question of why, exactly all of these wildly successful social media companies started in California.  What is it about California?  What is so profoundly different about the state that gives it a monopoly over these companies?

Maybe it’s one of the country’s best, oldest and most litigated anti-SLAPP statutes?

I know how much we like to wax poetic about the importance of 47 U.S.C. § 230 on this blog, and write about how liberating compliance with the DMCA is.  But the reality is that if some unethical shithead wants to try to grab some cash from your pocket, he/she can and will sue you on utterly frivolous grounds – and if it happens in a state without a good anti-SLAPP statute, and especially a hellhole like Florida or New York, you’re going to just have to grin and eat the costs of proving, for the eightieth time, that the Roommates.com case and its § 230-vitiating FHA violations are in fact an extreme outlier.

That is, unless you live in a state like California with a kick-ass anti-SLAPP statute.  Among others, I would include Washington, Oregon and Texas on the list of states with a good anti-SLAPP statute.  I think, too, that Nevada can and  should be one of these states.

There’s some really good stuff in Nevada’s anti-SLAPP statute.  In October 2011, I wrote about the following provision, which gives a slight testosterone injection to California’s fee-shifting regime:

 Reasonable attorneys’ fees are awarded independent of the Court’s discretion, and the prevailing anti-SLAPP movant has his own cause of action for compensatory damages, punitive damages, and attorney’s fees.  (source)

However, this is all meaningless if it applies only to expression made to a governmental entity.  If this statute is going to have teeth and apply to social networking services that are wrongly sued for third parties’ postings on them, the range of protected expression must be drawn more broadly.  California and Texas provide some good examples of how to define this.

While Zynga, Groupon, Facebook, Google and many others that have yet to publicly reveal their wealth are Delaware Corporations, they all do business in California – and are protected by Cal. Code of Civil Procedure 425.16.  Broad First Amendment protections.  Mandatory fee shifting for a successful motion.  Washington and Seattle-based Avvo Inc. are shaping up to be a similar success story, and a longer post about their recent anti-SLAPP victory is forthcoming.

An anti-SLAPP statute is not the cure-all for Nevada’s drive to diversify its economy, attract new businesses and encourage diversification.  California’s (and specifically the bay area’s) success in social media is attributable to numerous covariants including an entrenched, educated and highly skilled workforce, fed by CalTech, Stanford and UC Berkeley.  Silicon Valley is also host to a surfeit of venture capital and private equity firms; needless to say Las Vegas is not.  However, flying from Las Vegas to SFO is at most a proposition of $200 and… 90 minutes?  possibly less?  This is hardly a barrier to innovation and financing.

The cynic in anyone who understands markets is that the latest tech bubble (perhaps more accurately, the social bubble) is exactly that – an inflated payout for the investors in these services.  But good for them – they got paid, and you’re reading this blog.  Who’s the idiot now?  Regardless of how absurdly overvalued some of these services seem and doubtless are, billions of dollars in paper wealth are being created – and Nevada can capture some of it by making a small but important change to an existing law.  Making Nevada a hospitable place for social media ventures will create or attract jobs to Nevada, especially economically battered and casino-reliant Southern Nevada, and enrich those companies’ employees.  Like the Canadians in the South Park episode “Canada on Strike,” Nevadans must stand up and scream at their representatives: Give us Internet money!

As a tourism mecca, Las Vegas knows a lot about getting the world’s ultra-wealthy to leave a lot of their money here.  By providing sufficient protections to new media businesses, the same dynamic can play out with the rich investing in new businesses, rather than a blackjack table.

(I have nothing against blackjack.)


NYT on Law School Economics

July 18, 2011

By J. DeVoy

Just weeks before the bar exam, the New York Times craps all over the nonsensical economics of legal education.  Based on the Times’ research, US News rankings play a surprisingly large role – and one much larger than the relevance such rankings actually have in practice. (“Oh, you went to Vanderbilt instead of Boalt? I’m not even going to bother replying to your opposition. Guffaw!” /sarcasm.)

While the anti-law school undercurrent has been building for years (see Randazza’s post from 2009), this represents one of its deeper treatments.  Moreover, it’s one of the few inquiries into the law school market failure made by a news outlet of national predominance.


Why filming porn in Las Vegas should make sense (or: unsolicited response to Bobbi Starr)

July 18, 2011

In Nevada, prostitution – defined in NRS 201.295 – operates in a manner very similar to the California statute at issue in Freeman.  Overburdened though Nevada’s courts are, the state lacks an intermediate appeals court and could settle the question of porn production’s legality fairly quickly, with a fairly libertarian Nevada Supreme Court to render the final decision.  Then again, why tempt fate a second before it’s necessary?

In many counties, Nevada has legalized – albeit fairly stringently regulated – prostitution.  The status of prostitution within the state is practically a precursor for porn.  If anything, porn production is the next logical step.  And though the regulations concerning prostitution may be wielded like an axe at porn, they are easily distinguishable, as discussed further on.

Escape from L.A. – and AHF, and CalOSHA.

First Amendment concerns are not the only threat facing the porn industry.  The Scylla and Charibdis of porn for the last many years have been CalOSHA and AHF, the latter organization being capable of hectoring producers nationwide.  As Starr notes:

Here’s the thing — the AHF plans to continue its unwanted crusade across the country. They’ve already made noises in Miami and if the industry moves to Vegas, I don’t see why they wouldn’t show up there as well. If you’re going to make a stand, LA is the place to do it.

As Starr observes in her post, stating that “the AIDS Healthcare Foundation is looking to grandstand and make points with their donors,” the inescapable conclusion is that this controversy boils down to money.  Specifically, AHF needs to do something to justify getting more of it from its backers.  In my opinion, it would be a rational proposition to pit AHF against a bigger, badder entity that needs and wants money even more than AHF does: The city of Las Vegas and state of Nevada.  Is it even a “fight” if only one side shows up to do battle?  The city of Las Vegas isn’t going to care what some outsiders think of it – the area’s reputation for no-tell, debauched vacations is well established.  It’s not as if AHF is going to lower the city’s esteem as… what, a place to raise a family? A clean-livin’ town?  If anything, the chance to catch a glimpse of a favorite star is probably one more reason for a guy to visit Vegas.

At base, Las Vegas and Nevada need money, and now more than ever.  AHF will never win the hearts of minds of locals by trying to keep out reasonably lucrative businesses that need use of the services hardest hit in Las Vegas since the downturn.  Speaking of Las Vegas “locals,” the metro area is so transient that it’s not dissimilar from a 500,000 person city in its character, despite its population being around 2 million.  In some ways, Las Vegas might as well be Milwaukee.  And, yet, many locals rarely venture to the strip, or downtown; instead, they predominantly stay within their master-planned communities.  While some may call this a myopic and provincial way of living, this kind of bedroom community mindset is exactly what will lower any resistance people may have, even in the abstract, to porn companies coming to town.  If it’s not happening in their actual backyard, and they don’t see it, why would they care – assuming, in the first place, that they ever found out the porn industry was in town.

Because Nevada is Nevada and California is California, CalOSHA’s risks are mitigated.  If CalOSHA tries to regulate porn shoots occurring within Nevada because the companies they’re done for are based in California, the ensuing legal battle between Nevada and California will resemble a religious crusade.  Despite Californians having a huge presence in Las Vegas as transplants, tourists or otherwise, Nevada’s state character is steeped in making sure everyone knows that it is not California. (This was an overarching theme in BarBri when I studied for the Nevada bar exam.)  Nevada will not respond well to California encroaching its jurisdiction, especially if CalOSHA agents show up within Nevada’s physical territory.

Assuming CalOSHA won’t overstep its jurisdictional mandate, that leaves the porn industry to contend with Nevada OSHA (“NVOSHA”).  To get a sense of the disparity of resources at play here, compare the CalOSHA website with NVOSHA’s.  NVOSHA couldn’t keep six people from dying, most of them brutally, during the completion of America’s largest privately financed construction project.  Between that kind of feeble oversight, Nevada’s far more dangerous industries – such as mining – and the general lack of resources Nevada has relative to California, it’s reasonable to believe that NVOSHA has bigger concerns than whether two consenting, regularly tested adults are wrapping it up when making commercial motion pictures.

A potential slippery slope exists with respect to Nevada’s prostitution regulations, which have numerous onerous requirements, from monthly and weekly testing (depending on the disease) to mandatory condom use.  Prostitution, though, is a service open to the general public, while porn is a closed circle where those on camera are regularly tested and (theoretically) limiting their contact with unknown, untested interlopers.  Because of the inherent differences between porn companies and brothels, and the reduced public health concerns at play, the condom restrictions should not transfer over – but that will be left to the legislature.  If they’re getting all of this new growth because the porn industry wanted to escape the tyranny of condoms, will legislators foist them upon their newest constituents?  It’s possible, but seems unlikely.  Even if those provisions are put into effect, NVOSHA has to actually enforce them – something it may be ill-equipped to do.

Las Vegas Loves Porn… and Anything With Money, Really.

Another point raised by Starr is the suspicion that people don’t really love porn, despite the money it could bring to their local economy.  To some extent, I agree with this.  Some ultra-lib location like Manhattan would look down its collective nose at middle America for feeling uncomfortable about porn — but if production ever showed up below 125th Street with any substantial volume, it would quickly be zoned out as “harmful to property values,” and opposed under the color of PC rhetoric, such as how it’s “degrading” to women and normalizes male violence.  On the other hand, Las Vegas has a robust industry of escorts (despite prostitution being illegal within Clark County) and strip clubs that everyone accepts as part of the landscape.  Without making it sound like Detroit, as I am pretty fond of Las Vegas, I think people will embrace whatever revives the area.  Downtown Las Vegas, despite having a few cool bars and art studios I’m fond of, is underdeveloped for an urban core and fairly low-density.  Thus, it’s practically giving land away for development through tax credits.  They city doesn’t condition the credits on how the land will be used – as long as something’s being done, and people are being employed, Las Vegas is happy.

To those who claim that the tide will turn against porn when the economy improves, I have some good/bad news: Economically, things are never going to get better.  We’re at the dying, spasming end of American-style capitalism.  I hope you own a gun.  Consequently, capital holders can put a collar around places like Las Vegas, making governments and citizens alike do whatever the investors want.  Capitalists have the money, and capacity to bring more, that everyone else needs.  Those who can muster up $1M in liquid assets, and probably down to about $250,000, can basically write their deal’s terms.  The global economy’s collapse isn’t really any one person’s fault, anyway, so it shouldn’t impede making smart business moves in the here and now.  After all, if everyone lived in fear of the world ending tomorrow, nothing would get done, now would it?

A Sidebar About Miami.

Starr also notes the recent arrest of Kimberly Kupps on numerous obscenity counts as a reason to avoid Florida. (You can donate to Kupps’ defense fund here.)  This is a reasonable concern, but one that insiders within Florida’s adult community can dismiss with fairly strong assurances.  In addition to geographic distance, Miami and Polk County Florida are culturally very distant and distinct.  Polk County Sheriff, Grady Judd, has made it his life’s work to punish any kind of sexual expression occurring in his jurisdiction, and is a retrograde bully unmatched by any in Florida.  Miami doesn’t have the absolute safe harbor protection that Los Angeles does due to Freeman, but its resident businesses have done very well for themselves, mostly free from significant legal interference.  With that said, a Judd-like epidemic of arrests is unlikely to sweep Miami-Dade county.

Is “Going Underground” Still a Thing?

In this internet age, where everyone competes for Google rankings and traffic, and search engine optimization is a lucrative industry, rather than some annoying B-school buzzword, is it even possible to go underground?  Setting aside competition for internet traffic, since that’s where most of the money is now, going underground carries many possible tax consequences that can consume more than a company’s worth, or makes.  Back-owed interest and penalties are not your friends.

I’m ambivalent in the desirability of porn being mainstream v. underground debate.  There are pros and cons to each side, and I think the best approach depends on the company and its content.  Culturally, though, “porn” qua concept is mainstream, even if certain subsets and niches of it are less known.

One of the concerns raised by Starr is that “legitimate businessmen” would co-opt the industry if it were to go underground, and make it even more volatile than it currently is with CalOSHA and AHF breathing down its neck.  This, too, is a valid concern.  Any city with appreciable population, say over 200,000 people, has competing networks of organized crime.  Though the appearance has changed, from “families” with members wearing pointy-toed shoes and double breasted suits to gentlemen with baggy jeans and neck tattoos, these organizations still exist.  For the most part, their influence seems to have been confined to drug and prostitution trades.

I’m sure that there are intersections between organized crime and legitimate businesses throughout the country — assuming otherwise would be naive.  But, given Las Vegas’ modern origins as a gangster playground, the city and state are concerned about making sure that scenario never happens again.  Because of the efforts of people ranging from Howard Hughes to Steve Wynn, Las Vegas has come totally above ground and is very much a corporate town – all of the casinos on the strip and off are owned by a small handful of companies.  This isn’t to say there aren’t seedy elements of Las Vegas.  Seedy sells, after all.  But Las Vegas now is law-abiding in a way that it wasn’t at its 20th-century inception.

Because of this somewhat nefarious history, Las Vegas and Nevada are particularly sensitive to the presence of organized crime and its intersection with what appear to be legitimate businesses.  MS-13 will always be smuggling in drugs from Central America, no matter what local, state and federal authorities do.  To the extent organized racketeers can be prevented from co-opting businesses and disenfranchising their customers, though, Nevada and Clark County appear to take that threat much more seriously.  Theoretically, a mob takeover of business can happen anywhere.  In my observations, however, it’s less likely to occur in Las Vegas than other places.

Conclusion (a/k/a tl;dr, Summary)

Though Las Vegas is not a perfect location for relocation of the porn industry, it’s a good one – better than many alternatives.  While Miami is an option, it is a more expensive place to be than Las Vegas by most every metric.  Unlike Nevada, Florida still has a pesky capital gains tax.  Las Vegas is much closer to the San Fernando Valley, too, making it easier to get a critical mass of people to make the necessary jump across state lines.

Relocation may be easier and more profitable than digging one’s heels in the dirt and fighting a war nobody particularly wants to have, especially against deep-pocketed adversaries such as CalOSHA and AHF.  Las Vegas is as tolerant as it is willfully blind to the sex industry already here, and it is likely to welcome economic activity in any manner it can obtain it.

As in any business, there are risks involved in relocating – especially to Las Vegas.  But are they any costlier than the slow death of remaining so heavily in Los Angeles, where the thousand cuts of taxation, CalOSHA, AHF and other challenges bleed dry the remaining brick-and-mortar porn companies?  At this point, it hardly seems like it.


Free financial tip for law students

March 17, 2011

By J. DeVoy

Before I started law school, I considered getting my student loans in Yen.  Japan’s Yen, long a stable currency that reliably stayed around 110-120 Yen-per-US Dollar – however badly we devalued the dollar under the reigns of Bush (weak dollar policy to boost exports) and Obama (“quantitative easing”).  This use of the Yen and other stable, low-interest currencies to make other, high-gain investments –  which is a stretch when discussing higher education – is referred to as a “carry trade” in financial circles.

Well it’s a damn good thing that I couldn’t make this work in 2007, or this would be a personal financial armageddon as well as an ecological one.  Becuase of massive repatriation of Yen, the US Dollar is only worth around 75 Yen.  Check out this pronounced decline.  If I a) had actually done this, b) was in finance, c) lived in 1930’s New York City, and d) had any sense of shame, I’d throw myself out a window for essentially increasing my debt 50% overnight.  At least if I did that through reckless spending, I’d have a fun car or sweet vacation or show for it.

So, law students, don’t think you’re smart with money just because you day trade or own a few shares of GOOG.  Not to impugn your intelligence, but this stuff can seriously ruin your life in ways you cannot foresee, protect against, or get out of on your own.  Right now, the smart move seems to be using GradPLUS and using IBR to push off payments until the whole system inevitably collapses – probably sooner than anyone thinks.


Rational Christmas Gift Appreciation

December 24, 2010

By J. DeVoy

H/T: D. Waite


The Dutch try to pare welfare rolls

June 18, 2010

By J. DeVoy

…by pairing needy women with rich men.  The catalyst?  A state-sponsored makeover to enhance their appearance.

The local social service departments are paying for the women to have a make-over in the hope they can hook up with a rich husband to support them, the paper says. If 70 women find a new husband, the council can save €400,000 on welfare payments.

The councils are putting €1,400 into each woman to have her hair done and get help with her image. They will also get their wardrobe updated and tips on social skills and presentation.

Once the transformation process has been completed, the women will be registered at a local marriage bureau Mens en Relatie in Oentsjerk, the paper says.

No mention of personal trainers, though maybe that would be unnecessary: The Netherlands ranks in the top 10 countries for beautiful women.


California Bar President pwns law schools in lengthy screed

May 27, 2010

By J. DeVoy

Howard B. Miller, President of the State Bar of California, had harsh words for California’s law schools in May 2010’s California Bar Journal.  Acknowledging the bleak outcomes for graduates in the classes of 2008, 2009 and 2010, Miller calls the economic cocktail of few jobs, high competition and massive debt “devastating.”

The exact numbers at the margins are not as clear as we would like, because so much involves small firms and personal circumstance, and many of the changes are too recent for complete accuracy. The average debt of law graduates now approaches or exceeds $100,000, and because of recent increases in tuition, especially at public institutions which historically have been more affordable, debt burdens will be even greater in a couple of years.

Based on outcomes alone, Miller’s commentary doesn’t seem addressed to Stanford, UC-Berkeley, USC or UCLA.  At least he acknowledges what has been common knowledge for many years, though: The picture is not as rosy at California’s 16 other ABA-accredited law schools.  The ABA-accredited distinction is important because there are 18 California-accredited and six unaccredited law schools within the state, the graduates of which may sit for the state bar exam.  There’s not much by way of economy, either:  The California-accredited San Francisco Law School charges $16,700/year, a number the school leaves potential students to discover on their own.  Bay Area neighbors UC-Hastings and Stanford are also pricey at $43,693 (non-resident) and $42,420 annually, respectively.  None of these numbers reflect living expenses, which can easily be 50% of tuition — especially in San Francisco, Palo Alto and surrounding areas.

There is notoriously unreliable self-reporting by law schools and their graduates of employment statistics. They are unreliable in only one direction, since the self-reporting by law schools of “employment” of graduates at graduation and then nine months after graduation are, together, a significant factor in the U.S. News rankings — which are obsessed over, despite denials, by law schools and their constituencies.

This is a valid sentiment, considering that events as low-rent and mundane as each number drawing of the New York Lotto are audited and monitored by Big 4 accounting firm KPMG.  Miller acutely notes the considerable value U.S. News rankings have for prospective law students and law schools, yet the the data reported to the magazine is unmonitored.  Nearly every year some school, however good, makes the untenable claim of 100% employment 9 months after graduation; past offenders include the University of Pennsylvania, UC-Berkeley and, most recently, Duke University.  Such a claim is almost laughable in this economy, especially considering how many students cling to their job offers with only the most tenuous of grips.  If anyone stood to lose from objectivism in this context, it would not be prospective students.

 A recent survey by the Kaplan organization showed that though 52 percent of pre-law students are “very confident” of finding a legal job after graduating from law school, only 16 percent of those students are “very confident” their classmates will have similar success.

A shocking revelation to lawyers and law students, but not surprising as a feature of human psychology.  As Richard Posner pointed out in A Failure of Capitalism, nobody listens to Cassandras.  In this age of participation trophies and good grades for merely showing up, prospective law students fancy themselves the scions of the legal field and shimmering guardians to the Eastern European refugees whose human rights they’ll never protect. LOL “international law”; moreover, LOL “human rights.”

Part of this distortion may be the source.  Within the law admissions community, Kaplan is regarded as inferior to TestMasters/Blueprint, and therefore attracts a less sophisticated student base.  This only considers people who pay for formal LSAT prep, too.  It’s unclear whether Kaplan students are more deluded than everyone else or actually representative of prospective law students, but there are problems with the sample Miller cites.

Miller then veers off onto a discussion of practical lawyering and its importance in bar admissions.  This idea has taken root some places, as the entire third year of law school at Washington & Lee is now an extensive clinical program.  The measure of practical ability is also measured by the National Conference of Bar Examiners’  Multistate Performance Test, which is included in the California bar exam.  There are merits to a practical apprenticeship-based approach versus traditional legal education, much like the differences between a D.O. and M.D. degree — either one confers the ability to practice medicine, but the D.O. develops an emphasis on holistic and preventative medicine while a M.D. places greater emphasis on diagnosis by symptoms and prescription of medication.

Eventually, Miller brings the piece back home:

Finally, we need to be transparent with potential lawyers about the cost and benefits of studying law. All law schools need to gather, verify and report, in consistent and specified ways, the employment record of their graduates, as well report on those who may have started, paid tuition, but never graduated. A good place to start is with our own California-accredited and registered law schools, over which the State Bar and the Committee of Bar Examiners have jurisdiction.

For a state with 44 law schools, that would be an excellent start.


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