#5 Spring 1990

    Caller I.D.

#5 Spring 1990 page 1


(Continued from the Winter 1989 Issue of the Newsletter)

In the previous issue of the Newsletter, TAFOL published the first installment of a draft of its position paper in opposition to mandatory pro bono. In recent years a movement has been underway to force lawyers to provide their services to indigents free of charge (that is, to provide their services "pro bono publico" from the Latin "for the public good"). In its position paper TAFOL makes clear its opposition to this movement, stating that mandatory pro bono is immoral as an infringement on a lawyer's absolute right to choose the work he wishes to undertake and that mandatory pro bono is unconstitutional. In the following continuation of the position paper, TAFOL raises objections to mandatory pro bono on practical grounds.

C. Mandatory Pro Bono Is Impracticable.

Many practical objections to mandatory pro bono have been raised. Certain of those objections, and additional practical objections, are summarized below. The practical problems are serious, self-perpetuating and self-expanding. They flow directly from the fact that mandatory pro bono is a system of forced labor by unwilling lawyers on unchosen matters.

1. The implementation of mandatory pro bono will necessitate the creation of a complex bureaucracy. Bar associations will have to gear up to make sure that every lawyer serves his time. They will have to develop guidelines for mandatory pro bono, such as when a lawyer may be excused from serving (and who has the power to excuse him) as well as punishments for lawyers who refuse or fail to serve adequately. Bar associations, if they wish to make sure that the supposed "unmet legal needs" of the poor are indeed met and that lawyers do not attempt merely to offer their services to causes in which they believe, will have to establish elaborate systems for registering the "needs" of indigent individuals and matching them with the conscripted attorneys.

2. There will undoubtedly be difficulty in matching particular legal problems with available lawyers who have appropriate expertise. The legal problems likely to be presented are not those with which all lawyers are familiar. Not every lawyer is knowledgeable in the areas of landlord-tenant law, civil rights, or welfare entitlements.

3. The legal services provided will not be of high quality. They will be sloppy because they will be provided by lawyers without any expertise in the relevant area of the law, because lawyers will not be working for themselves, because they will not, in many cases, believe in their client's cause, because they will be resentful. The point is proved by one glance at the goods produced in any totalitarian state, where the workers do not work for themselves, cannot keep the product of their labor, and are not free to direct their own careers or lives.

4. The substantive law will be immensely complicated by mandatory pro bono, and there will be much litigation on the new issues. For example: What are the standards of care for lawyers rendering mandatory pro bono service? If a lawyer is not in control of the matters on which he works, can he be held responsible for ignorance of the relevant area of law? (If he is not responsible, it is easy to imagine what level of service will be rendered.) One would expect an increase in malpractice suits by mandatory pro bono clients---for which more pro bono attorneys will be needed.

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5. Who will determine what is or is not pro bono, and by what standard? Will every demand of an indigent person for legal aid be fulfilled? Will there be a screening process by which legal demands are evaluated for colorable merit or "need"? And if so, who will perform the evaluation? What happens when a lawyer has a moral objection, a conscientious objection, to a particular matter, such as the pursuit of welfare benefits? Will lawyers not only be forced to work without pay but also for causes or clients they feel deeply are immoral? If conscientious objection is permitted, what proof of his convictions will the objector be required to adduce? Who will judge the bona fides of the conscientious objection?

6. The "unmet legal needs" of the indigent will explode, in large part because substantive law issues will expand but also simply because legal services will be free. Persons who never dreamed of instituting legal proceedings will do so because they will see no reason not to do so, and the demand for free legal services will skyrocket. Just such a situation has occurred as a result of Medicare, where there has been a skyrocketing demand for medical services (and a proportional increase in medical costs). At the same time, voluntary pro bono service will decline. Lawyers have only so much time, and mandatory pro bono will consume a significant amount of the time that would otherwise have been spent in volunteer work---work which would have been enthusiastically chosen, which would have expressed the lawyer's convictions and which the lawyer would have felt qualified to perform.


Mandatory pro bono would violate the rights of lawyers. It would subvert basic principles of rights in general, and for everyone. Ultimately, it would not help the indigent with their legal problems. For these reasons, The Association for Objective Law opposes mandatory pro bono and urges that all proposals for mandatory pro bono be rejected.


TAFOL plans to distribute its position paper on mandatory pro bono to bar association committees and other bodies considering the adoption of mandatory pro bono programs. TAFOL also plans to distribute the position paper to a variety of professional and general interest publications. We encourage TAFOL members to alert us to the existence of bar committees and other bodies which might be suitable recipients of the position paper, and invite suggestions for publications to be placed on the distribution list.

We are enclosing with this issue of the TAFOL Newsletter a separately printed copy of the position paper. Feel free to make copies of the position paper and distribute them as you think appropriate.


In the Summer 1989 issue of the Newsletter, a short article reported on a case involving products liability law. The article explained that a plaintiff can win a products liability suit without proving any negligence on the part of the defendant. The plaintiff does need to show that the product had some type of "defect," and that the defect caused the plaintiff’s injury. In order to convince the jury on these points, the plaintiff often relies heavily on a so-called expert, who may testify, for example, on the effects of radiation on those living near Three Mile Island, or on "emerging" scientific evidence of something or other.

Rubanick v. Witco Chemical Corp., 225 N.J. Super. 485, 542 A.2d 975 (1988), was a typical case. The plaintiff was the wife of Ronald Rubanick, who had died of colon cancer. Mrs. Rubanick claimed that her husband's cancer was caused by exposure to chemicals containing polychlorinated biphenyls (PCBs) manufactured by Monsanto Chemical Corporation and sold to Witco, where Rubanick had worked. Mrs. Rubanick sued Witco and Monsanto, among others. Her only evidence that Rubanick's exposure to PCBs at Witco was the cause of his cancer was to be expert testimony by Earl Balis, a cancer researcher.

What type of evidence would Dr. Balis offer? Dr. Balis planned to testify to the following: (1) a higher-than-expected incidence of cancer at Witco; (2) animal studies involving PCB ingestion; (3) one study in a journal of industrial medicine, and (4) the variance of cancer types in a PCB-exposed population. One can only imagine the quality of the statistical evidence offered. (This is an age when findings of human carcinogenicity are made on the basis of feeding to mice grotesquely massive amounts of chemicals no human or mouse normally ingests at all.) On this basis, Dr. Balis proposed to testify that, in his opinion, Rubanick died as a result of exposure to PCBs at Witco.

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The defense produced expert testimony rebutting the charges that such PCB exposure causes cancer, evidence that Rubanick's slow-growing cancer must have been contracted before Rubanick was allegedly exposed to PCBs, evidence that Witco employees had normal blood
levels of PCBs and (as far as can be determined from the court's opinion) evidence that Rubanick's only exposure to any chemical containing PCBs consisted of rolling 45 drums of other substances through a "contaminated" area.

In the area of products liability, the forces of change in substantive law, anti-business premises and breakdowns in scientific standards have often resulted in the admission of testimony every bit as baseless as that offered by the plaintiff in the Rubanick case. In such cases, each side puts an "expert" on the stand; both experts present their opinions; the lawyers attempt to show the shortcomings of the other side's experts; and the confused jury, having been instructed that fault is not at issue, having watched an impressive-sounding expert expound on "emerging" evidence, believing in their heart of hearts that business cares nothing for the ordinary guy or that the party with more money should pay, may find against a defendant who is innocent even given debased substantive standards. Indeed, in a case such as the Rubanick case, the harm extends much further. Once Monsanto loses a case in which it is found that PCB exposure causes cancer, Monsanto may be precluded by principles of collateral estoppel from disputing this in subsequent cases brought by other plaintiffs.

There is some good news. The wheel is turning a bit, and some courts have refused to admit expert evidence which does not meet minimum standards. In the Rubanick case, the judge rejected the plaintiff’s expert witness on Monsanto's motion. The court found that the proffered testimony had insufficient scientific basis, and that the expert had brought little to court other than his credentials and his subjective opinion.


As reported in the Summer 1989 issue of this Newsletter, Proposition 103 was adopted by the voters of California on November 8, 1988, in order to force insurance companies to provide automobile insurance on terms the companies would not accept voluntarily. One part of the Proposition provided that an insurance policy could be cancelled only for nonpayment of premium, fraud or material misrepresentation, or a substantial increase in the hazard insured against. In Calfarm Insurance Co. v. Deukmejian, 48 Cal. 3d 805, 771 P.2d 1247, 258 Cal. Rptr. 161 (1989) the insurance industry attacked the provision as unconstitutional because it impaired the obligation of contracts. The California Supreme Court rejected the attack largely because an insurance company could avoid renewing its contracts by discontinuing its business in California.

An insurance company seeking to withdraw from California must comply with Insurance Code Sections 1070-1076. Section 1071.5 requires the withdrawing company to "discharge its liabilities to residents of [California] . . . [and] cause the primary liabilities under [policies in force] to be reinsured and assumed by another admitted insurer." California's Commissioner of Insurance is required to examine the books of the withdrawing company to make sure Section 1071.5 is followed.

The day before the election at which voters adopted Proposition 103, five related insurance companies sent the California Department of Insurance their applications to withdraw as insurers in California. These applications were contingent on the passage of Proposition 103. The companies also notified the Department of their intention not to renew any private passenger automobile insurance policies. The day after the election, the companies began issuing notices of nonrenewal to their policy holders.

The Department resisted the companies' applications. After extensive negotiations and an administrative hearing, the Commissioner determined that the companies had violated Proposition 103 by issuing the blanket notices of nonrenewal. She ordered the companies to renew all automobile policies not exempted by the terms of Proposition 103. She also imposed a penalty of $10,000 for each day the companies failed to comply.

The Commissioner took the position that an insurance company could refuse to renew a policy only after it received permission to withdraw from California, following a process she characterized as "lengthy and detailed." Under Section 1071.5, the company would first have to find another company willing to assume each of its policies. Of course, the second company would be required to renew them ad infinitum unless it withdrew and found another taker.

The companies sought relief in the California Supreme Court. A bare majority (4-3) of the court in Travelers Indemnity Co. v. Gillespie, 50 Cal. 3d 82, 785 P.2d 500, 266 Cal. Rptr. 117 (1990), refused to accept the Commissioner's argument:

     If the Commissioner's understanding were accurate, it is difficult to see how an
     insurer with automobile policies in force could ever leave the state. Notices of
     nonrenewal issued before cancellation of the insurer's certificate would

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     be ineffective under the mandatory renewal provision, but an insurer could not
     withdraw with automobile policies in force because any action taken to service
     those policies after withdrawal, including presumably the sending of nonrenewal
     notices, would constitute the illegal transaction of business by the nonadmitted insurer.

The court ruled that "once the withdrawal process has been properly commenced . . . the applicant has the particular status of a withdrawing insurer and may terminate its outstanding automobile policies by nonrenewal."

Three dissenters adopted the Commissioner's argument. They argued that the language of Proposition 103 was clear. As long as an insurance company does business in California, it cannot refuse to renew policies. And until the Commissioner issues a certificate of withdrawal, the company is doing business in California. (No one addressed the question of how the state could force the companies to renew even one contract without impairing the obligation of the contract.)

The dissenters expressed great concern that, since "[m]arket assistance plans and joint underwriting authorities require advance planning," the time between the application to withdraw and the time when the application would be granted was necessary to allow the Commissioner to find alternate coverage for the customers. No such concern was expressed for the insurance companies.

An interesting and important point arose during the hearing process. After the evidence was taken at the administrative hearing, the hearing officer took the matter under submission. The parties then submitted briefs outlining their respective positions. The Commissioner announced that she had read all briefs and the decision of the hearing officer and then announced her decision. Afterwards, the companies requested that she disclose the decision of the hearing officer, and she refused. This refusal was approved by the California Supreme Court.


Continuing its protests of abusive criminal prosecutions under the Racketeer Influenced and Corrupt Practices Act ('RICO"), The Wall Street Journal recently shone a particularly bright spotlight on this dangerous law. RICO, a federal statute passed in 1970, was intended to aid in the fight against organized crime which infiltrated and corrupted legitimate businesses. But RICO is so broad that prosecutors have been able to use it as the basis for bringing crushing, criminal proceedings against purely legitimate businesses.

The statute makes it unlawful for any person, through a "pattern of racketeering," to acquire or maintain any interest in or control over an enterprise engaged in or affecting interstate commerce or to invest income received from a pattern of racketeering in such an enterprise. The statute defines "racketeering activity" to include such crimes as murder, arson and robbery, but also mail fraud and wire fraud (basically, fraud effected by any use of the mail or by wire, radio or television) and securities fraud. A "pattern of racketeering" is simply two or more acts of racketeering activity.

A criminal RICO charge is no laughing matter. Aside from the possibility of imprisonment and the forfeiture of the proceeds of the racketeering activity and any interest in the legitimate "enterprise" obtained through racketeering activity, a RICO defendant is subject to an unusual provision. RICO provides for the sweeping pretrial (even pre-indictment, in some cases) restraints on the assets of the legitimate enterprise. (There is, incidentally, a civil cause of action under RICO for any person injured by a violation of the Act. To encourage the assertion of claims, winning plaintiffs in civil RICO actions are awarded treble damages and costs, including attorney fees.)

RICO's language is broad, and it has often been broadly interpreted by the courts. Moreover, certain of its predicate crimes (mail fraud, wire fraud and securities fraud) are, as described by The Wall Street Journal, "notoriously open-ended." The consequence? Not only may a business or an individual be charged with a securities law violation, for example, that should not be illegal to begin with, but if the "crime" is a predicate crime under RICO, the defendant may be subject to pretrial restraints and penalties that could cow even the most determined resisting---and innocent---defendant into plea bargaining and settling. It is RICO that is widely blamed for the demise of Princeton/Newport Partners, an investment firm forced into dissolution before a trial of the (primarily tax-related) charges against it. Indeed, many believe that RICO charges and the threat of pretrial restraints against Drexel Burnham Lambert, resulting in a $650 million settlement, were a significant factor in that firm's demise.

The Wall Street Journal article focused on an excerpt from a transcript of an FBI wiretap of Boston mob leader Gennaro Angiulo and his deputy, Ilario

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Zannino, that shows how RICO has been turned on its head to attack legitimate businesses more often than the mob (who, by the way, are making most of their money doing things that should not be illegal either!):
Zannino: We're a shylock [loan shark].
Angiulo: We're a shylock.
Zannino: Yeah.
Angiulo: We're a [expletive] bookmaker.
Zannino: Bookmaker.
Angiulo: We're selling marijuana.
Zannino: We're not infiltrating.
Angiulo: We're illegal here, illegal there . . .
arsonists. We're every [expletive] thing.
Zannino: Pimps.
Angiulo: So what?
Zannino: Prostitutes.
Angiulo: The law does not cover us, is that right?
Zannino: We're not infiltrating legitimate businesses.
Angiulo: I wouldn't be in a legitimate business for all the[expletive] money in the world.


Caller I.D.

Telephone companies around the nation are beginning to offer "Caller ID" to their subscribers. Caller ID is an optional service that allows you, when your phone rings, to display the number of the phone from which the incoming call is being placed. The number appears on the electronic display of a small box that the subscriber buys for less than $100. The service itself costs less than $10 per month.

The phone company can also supply subscribers with a dial-in code that will block the display of their own number when they are placing outgoing calls. If such codes were made universally available, however, they would obviously defeat the effectiveness of Caller ID.
The first people to apply for the blocking codes would be the crank callers and obscene callers against whom Caller ID is so effective.

Debates are raging in legislatures and living rooms throughout the nation as to whether Caller ID is a good idea. Opponents point out that to know a phone number is to know an address, thanks to widely available "criss cross" directories that list phone numbers in numerical order, with associated names and addresses. They note that many persons---victims of rape and others calling "hot lines" for help, police informants, battered spouses in hiding, "whistleblowers" reporting criminal activities---legitimately seek anonymity when making phone calls. In addition, they point to the adverse consequences of a system that would enable commercial enterprises to know exactly who is calling to ask whether certain items are in stock, or what their price is.

The advantages of Caller ID are obvious. Not only is it a convenient way to screen incoming phone calls, but it also permits the victims of obscene and harassing calls to turn the tables on their cowardly tormenters.

Of course, there is no "right" answer to whether Caller ID is good or bad. Different subscribers may prefer different options, each for perfectly legitimate reasons. It is this kind of problem that the institution of private property is so well designed to solve. If telephone companies were entirely private competing enterprises, they would be free to offer or not offer Caller ID according to what their market research revealed about their customer preferences. Some companies might offer it, and some might not. Eventually, the economic choices of the consumers, who are paying for the services, would decide the issue.

It is time for citizens to take back from government the authority that has been ceded to government over the years as to private economic matters. State

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legislatures have no more business holding hearings on Caller ID than on whether Crest toothpaste should come in a tube or a pump.


"IOLTA" stands for "interest on lawyer trust accounts." Lawyer trust accounts are the escrow accounts into which lawyers place clients' funds in order to avoid mixing those funds with the attorneys' funds. The interest on such accounts, while generally insignificant as to any given client' money, may in the aggregate amount to a meaningful sum. Of course, the exact dollar figures depend on each lawyer's practice.

Maryland's General Assembly, at the behest of pro bono activists, recently passed a law forcing banks to pay over, without consulting attorneys or their clients, the interest on small lawyer trust accounts (usually those yielding less than $50 in interest) to the Maryland Legal Services Corporation, an umbrella organization that funds various pro bono groups. This program is called "mandatory IOLTA." (California has had mandatory IOLTA for about eight years.)

Mandatory IOLTA is wrong because it improperly interferes with the contractual relations between attorney and client, who should be free to negotiate ownership of the interest.

Mandatory IOLTA is a particularly sneaky tax that has proven suited to its purpose in Maryland. In 1989, mandatory IOLTA yielded $3.5 million for pro bono groups in Maryland, compared with $1 million in 1988 when the IOLTA program was voluntary.

In the legislative session just concluded, certain legislators attempted to repeal the law, but for non-fundamental reasons. The objections raised were that (1) the money was used to fund suits by prisoners against the state, and (2) the program put a heavy compliance burden on banks relative to lawyers. Mandatory IOLTA is fundamentally wrong because it violates private, consensual relations between attorneys and clients. Attorneys must begin to stand up for their rights and stop apologizing for making money.


At its mid-year meeting in Los Angeles in February, 1990, the American Bar Association's policymaking House of Delegates voted to oppose legislation and any other governmental action that would interfere with a pregnant woman's constitutional right, in consultation with her physician, to terminate a pregnancy "at any time before the fetus is capable of independent life," or thereafter if necessary to protect the woman's life or health. The
debate over the abortion issue was heated, but the final vote indicated that the delegates favored the pro-abortion position by 238 to 106.

Several influential members of the ABA threatened to resign from membership if the delegates adopted a pro-abortion stance, and one of them, the ABA's treasurer, made good his threat and resigned his office and ABA membership almost immediately after the vote.

While the position adopted by the House of Delegates falls short of recognizing a woman's absolute right to terminate a pregnancy, it is significantly pro-abortion, and is therefore encouraging. It is also noteworthy that membership in the ABA, unlike membership in integrated state bars, is not mandatory, and that individuals such as the ABA's ex-treasurer who oppose a policy adopted by the House of Delegates are free to resign or forego membership without loss of licensure.

Copyright © 1990 The Association for Objective Law. All rights reserved. The Association for Objective Law is a Missouri non-profit corporation whose purpose is to advance Objectivism, the philosophy of Ayn Rand, as the basis of a proper legal system.