Leveling the Playing Field in Debt Collection Lawsuits

This past Wednesday I spent two hours being trained on how to assist pro se defendants who are being sued for allegedly not paying consumer debt. It was an interesting and enlightening session that gives an idea of the odds pro se defendants are up against in small claims and district courts.

The Volunteer Lawyers Project of the Boston Bar Association is doing great work in attempting to educate pro se defendants in consumer debt cases, and is attempting to soon be able to act as attorneys-for-a-day to these pro se defendants so that they need not have to go through it alone.

While uneven levels of representation exist in the judicial system, few levels of relative representation are as unequal as debt collectors vs pro se defendants. If a pro se defendant misses a hearing date, a default judgment is almost always entered for the debt collector, whereas if the attorney for the debt collector does not appear, the judge will get another attorney to appear for the debt collector and will allow the prosecution of the case to continue despite the appearing attorney's lack of information.

The Boston Globe Spotlight Series did a series of articles on the inequality rampant in Small Claims Court against defendants, particularly pro se defendants. Judges were complicit in the inequality, going much harder on pro se defendants than they ever did on debt collector attorneys. The Spotlight series highlighted that debt collectors got continuances when none should have been granted, that debt collectors lied on complaints and many other abuses. The SJC, starting in October 2009, required Small Claims Courts to, among other things, have Clerk-Magistrates review settlement arrangements and required debt collectors to provide some evidence of debt to obtain a judgment. These requirements are unremarkable and were already encompassed in the previous rules, but had to be specified because of the abuses of the debt collectors.

Despite what the SJC has enacted, the need for pro se assistance is still great and the playing field between pro se defendant and debt collectors is still unequal. Hopefully I am able to provide some assistance to those are in need. While many of the pro se defendants may owe the amounts being sued over, they still are entitled to have court procedures followed and to be treated with respect. The Volunteer Lawyers Project is starting to turn the tide against debt collectors having the run of District and Small Claims Courts.

Tax Dodgers Are Blind

You need to be a bit creative to honestly deny the ability of the US Government to impose an income tax, considering it was implemented during the Civil War and enacted as an amendment to the Constitution. Tax deniers claim that the 16th Amendment was improperly enacted by some of the states, so it never really was legal. They claim it violates freedom of speech (by requiring you to report income) and taking of property without due process, among other spurious arguments.

Joseph Stack was not so much a tax denier as much as a tax protester, but his suicide letter made many references to the idea that the income tax was unconstitutional.

However, Peter Pappas, a Florida tax attorney and author of The Tax Lawyer's Blog, has gone through Stack's suicide letter and refuted every inaccuracy stated. Among his points:

Stack:

We carefully studied the law (with the help of some of the “best”, high-paid, experienced tax lawyers in the business), and then began to do exactly what the “big boys” were doing (except that we weren’t steeling (sic) from our congregation or lying to the government about our massive profits in the name of God).

Pappas:

Again, Stack is upset that he couldn’t get away with what he alleges the Catholic Church got away with: Namely, tax fraud.

All in all, Pappas makes Stack's IRS diatribe look incredibly foolish and makes Stack look like a selfish person who just did not follow tax laws very well. While Stack's letter makes him on the surface to be harassed by the IRS, Pappas shows that most of what Stack said is pure smoke, and he was a rebel without a clue.

Need $50K? Flip Off a Cop

Getting arrested for flipping the middle finger at a police officer is apparently quite the profitable endeavor.

David Hackbart did such a thing at another motorist, and then a police officer in Pittsburgh. After flipping off the motorist, the police officer warned Hackbart not to do it. Hackbart then had the reasonable response of flipping the police officer off for telling him not to flip the motorist off. The police officer then arrested Hackbart for disorderly conduct, despite the act of flipping someone off being protected First Amendment speech and not obscene. In other words, even in the catch-all unconstitutionalness of most disorderly conduct statutes, flipping the bird is not included.

So Hackbart did the normal American thing; he sued the Pittsburgh Police under 42 U.S.C. 1983, citing violations of his First, Fourth and Fourteenth Amendment rights. Hackbart won at summary judgment against the police officer, with the judge finding that Hackbart was clearly pulled over because he flipped off the police officer in a retaliatory measure. Pittsburgh, realizing it was facing a substantial judgment, then settled the case for $50,000 and agreeing to inform police officers on the need not to pull motorists over for flipping them off.

So if you're driving in Pittsburgh, use your middle finger at will, and maybe you can be $50,000 richer.

Thanks to On Point News for the article and scanning the briefs.

Great Video of North Korea

(I just like this photo very much)

CNN had a link to a story done by an internet media outfit called VBS.TV. It is a 14 part series on VBS.TV's trip into North Korea, including what they saw while they were there, the trouble they had getting in, and the surrealness of it all.

Particularly interesting are the visits to the Arirang Mass Games, where the reporter is one of 15 spectators with 100K Koreans participating, and the reporters' trip to the DMZ from both sides of the North-South Divide. The Southern side is much stricter with rules (like no pointing at anyone in the North) and checkpoints, and the Northern side uses the opportunity to taunt the South. Very interesting also is the extent to which the North Koreans go to try and give the impression of abundance to the reporters.

I've always been intrigued about North Korea. It is such an unknown place, where time seems to have forgotten all about it. Watching the video, it's staggering to see how much in the past the DPRK is. In the largest library in North Korea, the DPRK Guide is talking with pride about the library having Mariah Carey and the Beatles on a cassette tape.

Of course, when you consider what North Korea looks like to the universe after dark (the picture, obviously), it is easy to see how it could be so backwards.

If you have an hour to kill and are as intrigued about North Korea as I am, I suggest watching the 14 part series from VBS.TV.

Parts 1-3 are on CNN's website in this story. Click on the video.

Part 4 starts here on the VBS.TV website.

UMass Law Approved

The Mass Board of Education approved a UMass Law School. Apparently a $75,000 debt load at graduation will motivate lawyers to go into public service in a way that a $100,000 debt load will not.

The UMass system will regret it when the law school steals public funds from the rest of the university system after the law school goes on a politician hiring binge. It will cost tens of millions of dollars to recruit students to an unaccredited law school, where the whole hope is that tuition dollars from a larger student body will allow the school to increase facilities to the barest requirements the ABA has. But how will the rising student body deal with the substandard facilities currently in place?

Ten years from now, when Massachusetts inevitably faces another budget crisis, does anyone think the legislature will resist the urge to dramatically raise tuition for the UMass Law School, just as California has responded to its near-bankruptcy by making the U. Cal law schools among the highest tuition in the country and insanely high for out-of-state students.

But hey, a public law school and lots of jobs for former state reps made buying this unaccredited law school worth it, right?

The IRS Hates Air Travelers

The airline industry just got emboldened by the IRS last week. The IRS has decided that checked baggage fees are not taxable under federal air travel excise tax because of an exclusion that says fees for baggage transportation are not taxable. Of course, the IRS neglected to state, or just forgot, that prior to airlines charging checked baggage fees, the cost of baggage was incorporated in the fare, which was subject to excise tax.

This literal interpretation of the IRS Code could embolden the airlines to further unbundle the components of their airfare and charge for them separately, knowing they will not need to share the revenue with the government. Air travelers will be much less sensitive paying a rounded fee, such as $25, versus having to pay $25 plus the excise tax.

With the airlines not needing to worry about excise tax, they can unbundle other parts of the fare that were once subject to the excise tax. Eventually, airlines can charge a nominal fare, such as $10, and have separate specific charges for everything else, such as fuel, a seat, baggage, drinks, etc. Only the $10 fare will be subject to the excise tax, and the airline can keep all the other revenue for itself. For those who think this is unlikely, look at Ryanair, the deeply-discounted airline in Ireland. They do exactly this.

Normally I hate taxes and think companies should do everything in their power to avoid them. However, the airline industry is different. The airline industry relies on many different layers of government, local governments that apply fees on tickets to pay for airport renovations and the federal government for security (not the TSA, but other security), air traffic control and other administrative assistance. Most other industries can repay this government assistance through other means, like corporate taxes on profits or personal taxes through dividends, but the airline industry is almost always unprofitable and certainly does not give dividends to shareholders. Excise taxes are almost the only way the airline industry pays for the infrastructure that it uses.

Unbundling could undo the airline industry's only contribution to the government that subsidizes it so much. The IRS should have imposed the excise tax on baggage fees, telling the industry that it should rightly be considered part of the fare. Even if the IRS Code excludes the cost of transporting baggage, that was intended to apply solely to bags flying independent of passengers. Applying the rule literally will hurt the traveling public.