University of Alberta Faculty of Law Blog

SCC says: no more common law fundamental breach of contract

Or, you can't get there from here that way any more, but if you go this way, you can: Tercon v British Columbia (Transportation and Highways) 2010 SCC 4

Addendum - I've added some excerpts from the reasons.

Lawyers beware

A lawyer apparently assisted his client to engage in what is now turning out to be mortgage fraud. His excuse that he didn't think what he was doing wasn't criminal didn't help him either.  Those who followed the Conrad Black trial should recall that one of the four convicted was Hollinger's lawyer who simply prepared the documents that later led to Black's conviction. This trend of convicting lawyers is on the rise in the US, so don't be shocked if we start seeing more of these up here.

Lord Black Appeals

Conrad Black and his co-defendants have appealed to the United States Supreme Court. First, they must convince the court to hear the case, so they have filed a petition for the writ of certiori. Their lawyer is the very capable and able Miguel Estrada who had been nominated to the DC Circuit by Bush but was blocked by the Democrats before he withdrew his name. (h/t Bashman) The brief is immaculately written, so there is nothing more than can be done other than waiting.

Black Appeal Denied

I haven't read the court order, but this story suggests that the 7th Circuit denied a rehearing by the original panel and an en banc rehearing also. That would mean, as the story points out, that the only avenue left is an appeal to the Supreme Court of the United States. The odds of that happening are very slim, but we won't know for sure till the cert denied is issued.

Also: The NY Post story referred to is here.

BCE go ahead

The Supreme Court of Canada overturned the Quebec Court of Appeal's blocking of the BCE takeover deal. No reasons have been given yet. I suspect that the unanimous decision was informed by their decision in People's, which the Quebec Cour misunderstood. The Quebec Court of Appeal is slowly becoming the Ninth Circuit of Canada, at least with respect to business law.

In our paper (with my former LLM student Remus Valsan now pursuing his PhD at McGill), we argue that maximing shareholder value is the functional equivalent of maximizing the value of the firm. Bondholders are contractually protected, that is why they took less risk and hence less return. I await the reasons, but it seems to me here the right result was achieved.

Black Appeal

My colleague James Muir linked to the Globe and Mail story about Conrad Black's perceptions on his appellate hearing. To see why Lord Black may have had his perceptions, you can hear the audio of the oral hearing here (HT Bashman). Unfortunately, the American appellate courts do not give public access to the briefs anymore persuant to a new rule that was passed last year - so I can't link to them. It is hard to say what the hearings mean - superficially (and this is what Black seemed to pick up on), the Judges were not buying the appellant's arguments one bit. The judges, Posner, Sykes, and Kanne, are all three Republican appointees. My impression of the judges' questions is that they held the lawyers to the high standard of review on appeal: i.e. error of law or blatant error in the finding of facts. There were persistent questions on whether the lawyers had objected below at the right time. The legal issue of "deprivation of honest services" that Black noticed the judges did not understand is one that has become so muddled in American law, that I didn't expect the Seventh Circuit to use this case to clarify it.

That being said, sometimes the judges play devil's advocate and so they may have been hiding their hand.

One thing I did notice is that the lawyers had not worked out a proper theory of the case. This may be because the facts are so complicated; but when Judge Posner started posing hypotehticals, sometimes the lawyers were not able to give a statisfactory answer. There were many questions about proposed jury instructions, but again when the lawyers were pressed about the correctness of their proposed instructions, the lawyers did not have a good response. In fairness, however, when you have four co-defendants with four teams of lawyers, it is very hard to have a coordinated legal strategy that is internally consistent. Again, had I been able to access the briefs, I may have a different view on this.

I would invite Canadian lawyers who are familiar with appellate practice to listen to the audio and submit their views on how Canadian courts would treat the similar procedural questions on appeal.

Update: I hope the link is working now.

My latest on Sarbanes Oxley

Here is my latest article (with George Mason's Craig Lerner) on Sarbanes Oxley.

A Proxy fight

Micorsoft threatens to pursue a good old-fashioned proxy fight in its takeover bid for Yahoo! Wow - a proxy fight. I haven't been so excited about a proxy fight since Gordon Gekko's "Greed is Good" speech in Wall Street. Somehow, though, I can't see Bill Gates giving that speech. Also, please don't confuse Gekko with Geico's Gecko.

But of course, my favorite proxy fight speech is Larry the Liquidator's speech in Other People's Money:

12 angry jurors?

In 12 Angry Men, Henry Fonda does the job the defendant's lawyer should have done and reconstructs the evidence to show that the boy was really innocent.

It seems that Conrad Black had a similar fate.

My latest piece

My latest article on corporate governance in the United States with my co-author Craig Lerner is now in the current issue of Cato's Regulation.

This is a shorter version of our longer piece which is forthcoming in the American Crim. L. Rev.

Bainbridge on Conrad Black

Professor Bainbridge (who politically is quite conservative) one of America's top corporate law scholars responds to Mark Steyn's take on the Conrad Black trial. (Hat tip: Point of Law) (Update Pith and Substance had already linked to it)

Hitchens on Black

Yikes! Christopher Hitchens is having schadenfreude over Black's fate.

Black free for now & Other Stuff

Lord Black has been granted bail pending sentencing.  At Point of Law, I discuss the reach of US law abroad plus the topic of lawsuits where the victims have not been injured.

More on Black

Over at Point of Law, I have posted two posts on some troubling aspects of the case: here and here.

Conrad Black III

A few comments were posted on my previous posting, so I thought Iwould briefly offer my thoughts:

1. In my view the obstruction charge is Black's best shot on appeal (given my limited exposure to what has been stated in the public media). The order was given by a Canadian judge for boxes in Toronto. Although there was an order by an American judge, if I were his lawyer, I would argue that the order exceeded the scope of their jurisdcition. Similarly, his violation of the Canadian judge's order was at best contempt of court in Canada, but not in the US. Will the 7th Circuit buy this argument? Probably not, but then again, it depends on the panel he gets. In terms of US Federal Circuits which would buy these creative arguments, the 7th is still the best.

2. Whether he spends a day in jail: At this stage, the odds are that he will spend some time. He has 3 fraud convictions and an obstruction. Even Martha Stewart spent some time. Whether he will be free after sentencing pending an appeal is a mixed bag too. Jeff Skilling of Enron was NOT free pending appeal (an issue he even appealed and was denied despite the appellate court stating that there were some frailities in his conviction), although Bernie Ebbers was allowed to stay free. It depends on whether the judge feels there could be a valid legal challenge to the jury instructions or other questions of law.

Related Posts

1. Conrad Gets the Ostrich.

2. Conrad Black: Lording it over the Jury.

3. Black in Hands of Jury.

4. Conrad Black Trial Update.

5. Conrad Black Verdict.

6. Conrad Black II.

Conrad Black II

As I reported earlier, Conrad Black was found guilty on 4 out of 13 counts.  Putting aside the obstruction of justice charge, this actually represents a pretty good job for the defense. Statistically speaking, the US Federal governement has had a pretty high conviction rate, but also a high yield rate, if I can define yield rate to mean the ratio of convictions to indictments.  What really did Lord Black in were boxes he was carrying on that tape. 

Who pays the costs for a split verdict? Given that he was acquitted on most of the charges, he has a good case that Hollinger (or its insurance) should pay. I have a feeling there will be some legal maneuvering on this behoind the scenes.

Are the verdicts inconsistent? I am not sure. They all relate to seperate events. The indictments relate to specific non-compete payments for various transactions.  It is possible that he had the proper authorization for one transaction and not for another. Also the indictments on the Tora Bora Bora trip is unrelated to the non-compete indictments.  All in all, I think the jury did a good job of sifting through the evidence, given what they had to deal with and the jury instructions they were issued. Don't forget the Ostrich instruction that allowed them to ask whether Lord Black ought to have known. The judge did caution them when taking into account David Radler's testimony.

At this stage, he will most likely be allowed to stay free pending sentencing. The real question will be whether he will be allowed to leave the Chicago area. The fact that the judge has given a week for a hearing on the matter suggests to me that she is inclined for bail but she needs to figure out for where.

Conrad Black Verdict

It should be in around 9:15 MST. I will link to the story when it comes out.

Update Guilty.  I will fill in some analysis later.

Partial Verdict

What happens if Conrad Black's jury is deadlocked on some but not other charges? A partial verdict may be issued. WSJ Blogs has details.

Black in Hands of Jury

The Conrad Black trial is now at the jury deliberation stage. Coverage here and here. Although the government's case was effictively disected by the defense in their closing, the state did make a good point about trailing the money. So all in all, at this stage, I am guessing the odds are 50-50.  The Feds do have a 90% win rate, something Greenspan (Black's lawyer) responded to with

Even Roger Clemens loses the odd ball game. ...This is a separate trial and a unique trial and it turns on its own set of facts and relies on its own witnesses, and so I'm hoping that the win rate goes down a bit.

Speaking of Roger Clemens, today will be a record day in baseball as seven pitchers over 40 will be starting today.  On another note, I was quite sad to heard of Rod Beck's death. He was a really talented picther in his prime and was always a joy to watch.

Telus Makes bid for BCE

So it looks like we may end up with one less telecommunication company. Ironically, it was last year when Telus announced that it would convert to an Income Trust form, prompting BCE to follow suit. The government then announced it would eliminate the tax treatment for Income Trusts.  Did that decision cause today's announcement? Who knows, but anytime a taxing authority mucks around with a business plan simply because the state can't stand the idea of losing revenue, don't expect the market to stay static. BCE's stock has been stagnant, and the Income Trust form may have been the shot in the arm that it needed. Instead, it looks like a takeover by a rival is the end result. The Competition Bureau which has been more free market oriented these days will most likely approve with some strings attached.