Comedians at Law Podcast

And now for a different kind of legal comic: the Comedians at Law interviewed me for their podcast this week. Check it out!

Superman’s Diamonds Revisited

Just over two years ago I discussed Superman’s (lack of) tax liability for crushing coal into diamonds and (actual) gift tax liability if he gave those diamonds to another person.  In the comments to that post I mentioned that Superman could theoretically avoid gift tax liability by performing the gratuitous service of crushing coal into diamonds rather than giving a finished diamond.  In this post I’d like to expand on that topic briefly.

I. Form Over Substance

Although it is true that gratuitous services are not taxed, it is also true that the IRS and the courts frown on tax avoidance schemes that attempt to exalt form over substance.  Gregory v. Helvering, 293 U.S. 465 (1935).  So a scheme by which Superman handed someone a piece of coal, fully intending to turn it into a diamond, then did so, would be tantamount to simply giving them a diamond.  The IRS would focus on the substance of the transaction, not the form, and consider it a taxable gift of property.

But if, for example, Superman were at someone’s house for a barbecue and decided to thank them for dinner by crushing a lump of their own charcoal into a diamond, that would be different.  In that case Superman really would be performing a gratuitous service.

This may seem like a fine distinction, but think of it in terms of a famous baseball player.  If the baseball player hands someone a baseball (retail value $3) and then signs it (market value $500), that’s not really a gratuitous service.  They’re really just giving the person a signed baseball.  But if the baseball player signs a baseball that the recipient already owns, then that is more clearly a service rather than a gift of property.

II. Engagement Rings

Superman has crushed coal into diamonds for various reasons, but one of the best known was his gift of a ring to Lana Lang in Superman III.  This raises an interesting question: is an engagement ring subject to gift tax?  There is, subject to certain qualifications, an unlimited marital deduction for gifts between spouses, but what about an engagement ring, which is given in anticipation of marriage?

The law surrounding engagement rings and other pre-nuptial gifts has a long and complex history, dating back to at least the Romans.  Most of the law has to do with who owns such gifts, particularly if the marriage is called off.  But it turns out that none of that matters for tax purposes.  If the donor and donee aren’t married at the time of the gift, then the marital deduction doesn’t apply.  26 U.S.C. § 2523(a).  So an engagement ring is subject to gift tax, even if the donor and donee get married later that same year.  In practice I suspect that few people actually report such gifts, even in the rare case where it would make a difference in their ultimate tax liability, but maybe Superman would actually be moral enough to do so.

III. Conclusion

Crushing coal into diamonds still doesn’t create tax liability for Superman, and he still has some ways to avoid liability if he crushes coal into diamonds for other people, but he has to be careful about it.  And strictly speaking he probably should have reported that ring he gave to Lana.

Powers: Little Deaths

The third major story in Powers is entitled “Little Deaths.” It has to do with the investigation into the death of a superhero known as “Olympia,” discovered dead, and completely naked, in a crappy apartment in a seedy part of town. This story lends itself to a discussion on the issue of superheroes and privacy rights. James wrote a four-part series on privacy rights (1, 2, 3, 4) in December 2010, and we had a pair of guest posts on the related right of publicity (1, 2) in late 2011, but I don’t think either of us have come across another story that touches on these issues so directly.

Definite spoilers within, and almost right away. Like most of the Powers stories, this is a murder mystery, but it’s hard to talk about some of the legal issues without giving it away. If you haven’t read it and want to preserve the sense of surprise, go read it and check back. You have been warned.

Also: This story is a little on the racy side. We’re a family blog, but this post is basically a legal analysis of the public disclosure of allegedly private facts, specifically details of superheroes’ sexual histories. If that isn’t something you want to read about, maybe skip this one. Continue reading

ABA Litigation Section Roundtable

On Tuesday, March 19th I will be speaking at an ABA Section of Litigation Roundtable, presented by the Business Torts Committee and co-sponsored by the Young Advocates Committee.  The Roundtable will be available via teleconference from 12pm-12:50pm Central / 1pm-1:50pm Eastern and also live here in St. Louis at the St. Louis University Law School, room 303.  Click here to register for the teleconference.  If you would like to attend in person, please RSVP to laura.mclaughlin@logan.edu.

The roundtable topic will be superhero attorney ethics, but since this is not a CLE presentation, the conversation will not necessarily be limited to that subject.  I hope you can attend!

WonderCon 2013

We are excited to announce that Ryan and I will be giving a presentation at WonderCon 2013 with the forensic psychiatrists from Broadcast Thought.  Although the programming schedule for WonderCon isn’t online yet, our panel has been confirmed for Friday, March 29th from 6:30pm – 8:00pm.  WonderCon badges are now available for purchase, so buy yours today!

For those who are not familiar with them: Broadcast Thought is a group of three forensic psychiatrists (Eric Bender, Praveen Kambam, and Vasilis Pozios), who provide a unique perspective on popular culture and mental health.  They have previously written about Batman’s villains for Wired and the New York Times, but our WonderCon presentation will be about an entirely different topic: zombies!

Look for more information about our panel as WonderCon draws closer!

Powers: “Role-Play”

The second chapter of Powers is called “Ride-Along,” and comprises just one issue. It involves a fictional Warren Ellis, the author of an in-universe comic book called Powers, essentially a meta-version of the real Powers book, going along with Walker for a ride-along. Which is interesting enough, particularly for the meta-textual entertainment value, but neither that nor anything else that happens in that issue is of any particular legal interest.

So we’ll move straight into chapter three, “Role-Play”. We’ll be talking about two more legal issues this time: the expanding discussion of the state of superhero regulation and the interesting possibility of being a conspirator in one’s own homicide. As always, spoilers within. Continue reading

Firestorm on Trial, Part 5

Finally we come to the actual trial, in Fury of Firestorm #48.  I’m afraid it’s a bit of an anti-climax, but it’s written in a television courtroom-drama kind of way.  Given that the writer (Gerry Conway) went on to write and produce for several police procedurals, that’s not too surprising, but it’s interesting to compare Conway’s courtroom writing style to, say, Mark Waid’s in Daredevil.  Once we get to Smoak’s lawyer’s speech I think you’ll see what I mean.

I. The Setup and the Speech

Just before the trial we learn that Smoak apparently didn’t remember being knocked out by Ronald before he transformed into Firestorm.  We also learn that Firestorm will be representing himself.  The plaintiff’s attorney makes the first opening statement, which is the usual order.  His theory of the case is very emotionally charged, which makes the parties’ joint decision to waive their right to a jury trial a little weird to me.  Anyway, here’s his speech:

Your Honor, we live in a complex world.  Every day the average citizen encounters danger from a hundred, a thousand different directions. Poisoned cheese…faulty breaks in a new car…industrial pollution…medical incompetence…bankrupt financial institutions…The threats to our well-being are manifold, and common to all of these threats is a contemptuous disregard for the safety of the American citizen.

Where can the citizen turn for protection against those who would harm by their negligent disregard for his basic human right to life, liberty, and the pursuit of happiness? Only here, your Honor, to the courts.

Here, the defenseless citizen is given armor against those who would crush him without a thought.  Here, redress is made, however inadequate, for the injuries caused by uncaring, incompetent, cynical betrayers of society’s trust.

Your Honor, the concept of professional malpractice is well established in law and legal tradition.  The doctor, lawyer, or other professional whose negligence or incompetence brings injury to a client can be sued for damages.  Malpractice is usually associated with the exchange of a fee for services … and there are those who might argue that the defendant, a self-styled “super-hero,” performs his services gratis, without recompense.  But how do we define recompense for a so-called “heroic act”?  What “payment” does the “super-hero” receive for his deed

The answer, I submit, is obvious.  For his services, the “super-hero” receives a princely fee…public adulation.  The “super-hero” is indeed well paid in a coin most of us never see.  The public is the “super-hero’s” clientele; the fee simply is fame.

What ego!  What arrogance!  Self-anointed “heroes” endangering the lives of innocent citizens, destroying property without qualm or consideration, unlicensed and uncontrolled grandstanding for the reward of a two-minute feature on the evening news!

And who pays for the damage these “super-heroes” cause then their deeds go awry? We do, your Honor!  The citizens of the Republic.  We pay, every man, woman, and child in the country.  I say, enough!

Let those who cause the damage pay for their contemptuous incompetence!  Let us judge them by the same standards we use to judge ourselves!  This man, your Honor, the defendant known only by the alias Firestorm, destroyed my client’s established business by a reckless misuse of power.  He must pay, your Honor, in our common coin.  We ask one million dollars in damages and punitive payment.  And he will pay, if there is any justice left in this sorry world.  Thank you.

See what I mean?  A speech like that could have been delivered by Jack McCoy or (more appropriately, since this is a civil case) Alan Shore.  It’s a great example of a Hollywood opening statement and a terrible example of a real-world one.

In the real world, opening statements have a lot of statements like “we will show that the defendant knew that magnetism could affect computers” or “you’ll see that the defendant could have easily and safely subdued the criminals without endangering the plaintiff’s property” or “you’re going to hear from Ms. Smoak, who ran a successful computer software business that would still be operating today if it were not for Firestorm’s negligence.”

But we can look past the style.  What about the substance of the arguments?  And did you notice that somehow Smoak’s damages claim went from $8 million from the freight train incident alone to just $1 million in compensatory and punitive damages?

II. The Plaintiff’s Argument

Smoak’s lawyer’s theory of the case is sort of all over the map.  He’s sticking with malpractice, but his malpractice theory is a novel one to be sure.  He’s apparently assuming that superheroes are potential professionals and jumping straight to the question of whether they are paid.  As we discussed a few posts back, payment isn’t really the issue.  And even if it were, it would be a big leap from public adulation to a professional-client relationship with a particular rescuee.

The plaintiff’s attorney also freely mixes malpractice, negligence, and recklessness, all of which are different standards of liability.  It’s possible that he’s advancing all three theories, which is likely what would happen in a real case, but it comes across as confused.

The opening statement does touch on an interesting public policy argument, which is that, one way or another, superheroes need to be held liable for the collateral damage caused by their powers.  Since insurance apparently rarely covers such damage, there’s definitely an argument to be made about shifting those costs onto the superheroes themselves in order to encourage more responsible use of their powers.

III. The Outcome

Alas, we don’t get much more of the trial than this.  Firestorm makes a little speech of his own, basically conceding most of the plaintiff’s argument, but saying that he doesn’t help people for the attention or glory but rather because he has the power to do so and it’s the right thing to do.  In the end, Smoak voluntarily dismisses the lawsuit (which evidently was not a class action after all), and that’s pretty much the end of that.

IV. Conclusion

Overall, the trial of Firestorm raises some interesting questions about superhero liability and who should bear the cost of their mistakes, but it doesn’t give very satisfying answers.  The legal parts of the story could have been a little more accurate, but they were okay, especially allowing for some dramatic license.  All in all, about on par with an average episode of Law & Order, actually.

Firestorm on Trial, Part 4

We’re going to fast-forward several issues from #29 to #45-46.  Although not a whole lot developed in the lawsuit storyline in the intervening issues, a few important events occurred.  (Thanks to reader Methane for the highlights).

Smoak, now apparently out of the job as a result of the damage to computer company, has taken a new job with the same newspaper that employs Ronald Raymond’s father, Ed.  (Recall that Ronald Raymond is one half of the two people that combine to form Firestorm.).  Later, they start dating and become engaged.  Smoak manages to personally serve Firestorm with a complaint in the lawsuit.  And Ed meets Smoak’s lawyer, who points out that if Firestorm doesn’t show up to the trial, the court may issue a default judgment against him.

In issue #45 we get a classic awkward dinner scene: Ed and Felicity have dinner with Ronald and his girlfriend, Doreen.  Here we learn some important details about what happened when Firestorm rescued a freight train (destroying a shipment of computer disks in the process) and foiled some villains atop the WTC (wiping the computers in the building in the process).  First, a bit about default judgments.

I. Default Judgments

Smoak’s lawyer is right.  Since Firestorm was actually and personally served with process, a default judgment would likely be granted if he failed to appear.  N.Y. Civil Practice Law & Rules § 3215(a).  The trick would be enforcing the judgment, since Firestorm doesn’t have a known address or assets.  Smoak had to flag him down just to deliver the complaint.

II. The New Details

From the dinner conversation we learn that insurance policies do not cover “super-heroics” by default, and apparently most people don’t get such coverage.  As a result, the loss of the freight train cargo was not covered by insurance.  We also learn that the company kept backups at the central office in Manhattan.  Finally, we learn that when Firestorm magnetized the roof, not only did it wipe the memory of the computers in the office, it also rendered them nonfunctional (“useless, broken beyond repair”).

This resolves several debates from the comments on prior posts.  Insurance didn’t apply, and there would have been significant damages regardless of the presence or absence of off-site backups.  In fact, the damages may have been significant enough to ruin the company.  Without insurance to cover the loss, there may not have been enough cash on hand to cover replacing the computers in the office fast enough to get the company up and running again (remember: this is the mid-1980s, when an ordinary business desktop cost $8700 in today’s money).  So the company’s bankruptcy and Smoak’s estimate of the damages all seem reasonable, even if her claim against Firestorm still rests on somewhat shaky legal and factual ground.

III.  A Tort and A Crime

Later, in Fury of Firestorm #46, Ed, Ronald, and Felicity are at a computer trade expo in Pittsburgh when suddenly a Lovecraftian horror appears and seizes several people, including Ed.  Rather than risk Felicity seeing him transform into Firestorm, Ronald punches her out cold and then deals with the monster.  The monster was actually an illusion created by some other villains, but let’s take a moment to consider this one.

Ronald’s stated justification for punching Felicity is that he needs to get her to safety (she appears to be reaching for Ed as the monster carries him away).  I don’t think the “I had to punch Felicity to save her” defense is going to fly.  He didn’t even seriously attempt to talk to her or even physically restrain her before assaulting her.  And in any case, while such restraint might be justified in the case of an attempted suicide, I don’t think it could be justified in the case of an attempted rescue of another person, however dangerous.

And Ronald’s actual justification is, of course, nonsense.  While Ronald certainly has a right to save his father and the other bystanders, and he may even have some limited right to keep his identity as Firestorm a secret.  But neither of those rights extend as far as proactively rendering people unconscious in order to protect his secret so that he can transform in a public place.  I didn’t pick up issue #47, but I’m curious to see if the writers addressed Felicity’s reaction after she came-to.

In sum: Ronald straight up committed the tort of battery and some sort of criminal assault.

IV. Conclusion

Smoak’s case is on somewhat firmer ground, and Ronald has further established himself as a grade-A jerk.  If you had much sympathy for Firestorm (or at least Ronald) going into this series, I suspect it has been severely diminished by now.  Stay-tuned for the next post, when we finally get to the big event: the trial!

Powers: Introduction

Powers is the ongoing police procedural comic written by Brian Michael Bendis and drawn by Michael Avon Oeming. It started in 2000 at Image Comics, one of the more significant “independent,” i.e., “non-Marvel/DC”, houses, before moving to Icon Comics, a Marvel imprint that focuses on creator-owned titles. Powers was its first title. Similar to Gotham Central, about which we’ve written before (1, 2, 3, 4), the series is divided into more-or-less discrete stories, forming the equivalent of episodes in an ongoing TV show. The stories are grouped together into “volumes” akin to seasons. Speaking of which, Powers is currently being adapted into a TV series for FX, but the network ordered a reshoot and retool after the initial 2011 pilot was finished, so while the project is still greenlit, there’s no word on an air date. This time we’re going to take care of some introductory matters and talk about the first chapter, “Who Killed Retro Girl?”, which is available in the first hardcover collection. Spoilers do follow, and will throughout this series. Continue reading

Firestorm on Trial, Part 3

In Fury of Firestorm # 29 we once again find Firestorm accused of a tort.  This time, however, there are a couple of twists.

I. The Scene

Firestorm foils an attack by minor villain Stratos and extremely minor villain Bazooka Joan atop one of the World Trade Center towers (this is the mid-1980s, remember).  He does so by turning the roof of the building into magnetic lodestone, causing the villains to be pinned to the roof.  After the authorities arrive he restores the roof.  At this point, who appears but Felicity Smoak!

In a stroke of bad luck for Firestorm it turns out her software company has offices there.  She informs him that “When you turned the roof to lodestone, you not only magnetized my software…but wiped out my business’ computer records! I’m finished. Bankrupt. Kaput. And it’s your fault.”  She continues “It’s going to cost you every penny! I’m organizing a class action suit against you! Me—and the other businesses in the building!”

Firestorm’s clever retort?  He turns Smoak’s clothes into soap suds, in front of at least 6 other people.

So we have three issues here.  First, does Smoak have a better case this time around?  Second, what’s this about a class action?  And third, clearly Firestorm is on the hook for the soap suds business, but for what, exactly?

II. Negligence, Recklessness, and Intentional Misconduct

Previously, Firestorm had erased some of Ms. Smoak’s company’s computer disks while rescuing a freight train using a giant magnet.  It was debatable whether this would qualify as negligence, for many reasons.  But now, at a minimum, Firestorm was on notice that using large-scale magnetism could have that effect.

These new facts are a lot more compelling for the plaintiff(s).  Rather than a freight train of possibly unknown contents, the fight is on top of an office building.  Office buildings, even in the mid-1980s, are well-known to contain computers.  And Firestorm is on notice that powerful magnetic fields and computers don’t mix.  This makes a much stronger case for negligence.

In fact, Smoak may be able to argue recklessness or even intentional misconduct (in this case, trespass to chattels aka trespass to property). Recklessness “requires evidence that ‘the actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow’ and has done so with conscious indifference to the outcome.” Saarinen v. Kerr, 84 N.Y.2d 494, 501 (1994).  “Under the principle of law that allows recovery for a trespass to chattels, it is necessary that the defendant have acted for the purpose of interfering with the chattel, or what is almost the same thing, that he have acted with knowledge that such would be the result of his conduct.”  Buckeye Pipeline Co. v. Congel-Hazard, 41 A.D.2d 590 (Sup. Ct. App. Div. 1973) (emphasis added).

In this case, the line between negligence, recklessness, and intentional misconduct is basically whether Firestorm a) merely acted unreasonably in subduing the villains, b) knew that it was highly probable that using the lodestone would cause harm to nearby computers but consciously disregarded that unreasonable risk, or c) knew that using the lodestone would cause harm to nearby computers and did it anyway.

Regardless of the theory that Smoak goes with (and she may go with all three), there are still lots of other issues.  For example, in the case of negligence, she would still have to prove that Firestorm acted unreasonably.  This would probably require showing that there was another, safer way for him to subdue the villains.  Since Firestorm’s power is so broad, that may not be too difficult.

Another advantage for Smoak in this case is that, at the point Firestorm turned the roof into lodestone, the villains were not threatening any bystanders.  This is different than in the freight train case, where there were people on the train whose lives were threatened.  Saving those lives potentially excuses a significant amount of property damage.

III. A Class Action

While the physics of lodestone (even a whole roof’s worth) wiping a building’s worth of computers is a little sketchy (somebody call Dr. Kakalios), let’s assume Smoak isn’t exaggerating.  The WTC had a lot of tenants.  Could they qualify as a class?

In New York, “One or more members of a class may sue or be sued as representative parties on behalf of all if:

1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;
2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members;
3. the claims or defenses of the representative parties are typical of the claims or defenses of the class;
4. the representative parties will fairly and adequately protect the interests of the class; and
5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

N.Y. CPLR § 901(a).

This is probably not a bad case for a class action.  Unlike most mass tort cases, this case arises out of a single action by the defendant that affected all of the plaintiffs in the same way.  The only issue that varies among the parties is the extent of damages, and different levels of damages among plaintiffs does not defeat class certification. Englade v. Harpercollins, 289 A.D.2d 159, 160 (Sup. Ct. App. Div. 2001).

The number of plaintiffs required for a class depends on the details of the case, but there have been cases of class actions involving fewer than 50 plaintiffs.  Usually classes are in the hundreds or thousands.  We haven’t counted the number of tenants in WTC One or Two, but it appears to have been in the low hundreds.

IV. The Soap Suds Incident

Smoak could accuse Firestorm of any number of torts here, including battery, trespass to chattels, invasion of privacy, and intentional infliction of emotional distress.  Note that the tort of battery doesn’t just apply to a person’s body; it also includes things closely associated with the person, such as clothing or something they are holding.  It’s a little bit of a stretch to claim that Firestorm made an “offensive contact” with Smoak’s clothing using his powers, but if a laser pointer can cause a contact (Adams v. Com., 534 S.E.2d 347 (Ct. App. Va. 2000)), then so can subatomic rearrangement.

And unlike some states, New York allows for recovery in intentional infliction of emotional distress cases even when there are no physical symptoms caused by the distress.  Battalla v. State, 10 N.Y.2d 237 (1961). There are four elements: “(i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct and injury; and (iv) severe emotional distress.” Howell v. NY Post, 81 N.Y.2d 115, 121 (1993).  It seems pretty likely that those were met here.

V. Conclusion

This is all setting the stage for the actual lawsuit, which we’ll get to next week.  But whether for causing collateral damage while saving the day or for humiliating a woman in public, Firestorm is definitely liable for something.