Author Archives: James Daily

Wolfram & Hart and…Legal Ethics?

Our latest monthly column at Subculture for the Cultured has just been published.  It answers the following question sent in by Arthur:

On Joss Whedon’s show Angel, the law firm Wolfram and Hart hire Angel as CEO. As far as I know, if you incorporate a law firm, it can only be owned by lawyers. Does any rule like this apply to officer positions as well? Would there be any legal ramifications of having Angel as their CEO without any business or legal experience?

The answer might just surprise you!

Hi Superman, I’m A Lawyer

While we work on our next post, we thought you might enjoy this excellent (and exhaustive) law review article by William A. Hilyerd: Hi Superman, I’m A Lawyer:  A Guide To Attorneys (and Other Legal Professionals) Portrayed In American Comic Books, 15 Widener L. Rev. 159 (2009).  While there are a lot of law review articles discussing legal issues surrounding the comic book business (e.g. the ownership of characters such as Superman), there are very few law review articles that consider the actual content of comic books.

We should also take this opportunity to thank Prof. Hilyerd; his article pointed us to the Fordham Intellectual Property, Media, and Entertainment Law Journal’s citation format for comics (published as Britton Payne, Comic Book Legal Citation Format, 16 Fordham Intell. Prop. Media & Ent. L.J. 1017 (2006)), which we have used in our upcoming book.

PS238: Superheroes and Tax Deductions

PS238 is a long-running comic series by Aaron Williams that is available online and in print.  The comic is set at the titular public school, which is a special school for children with superpowers, called metaprodigies.  Earlier this month we got an email from Sean asking us to take a look at PS238, and there are legal issues aplenty.  We’re going to start with a bit of tax.  Very minor spoilers below.

(Since we’re talking about tax, we should reiterate our disclaimer: this is a discussion of a fictional scenario, not legal advice, and does not constitute the formation of an attorney-client relationship.  If you need tax advice, hire a lawyer or an accountant.)

I. The Setup

One of the students at PS238, Tyler Marlocke, doesn’t have superpowers, but he’s enrolled there because his superpowered parents are certain that he’ll develop superpowers any day now.  To give him a fighting chance against the other children (particularly in gym class), the school assigns him a mentor: The Revenant, a gadget-based superhero.  During one of his training sessions he goes to the Revenant’s home, which is located above a high-end gym for people with superpowers.  The Revanant explains the unusual location thus:

Keeping a bunch of exercise equipment at home just clutters the place and since “vigilante detective” isn’t covered under the tax code, keeping my “office” at home isn’t deductible.

The naturally raises the question: would a superhero’s headquarters be tax deductible, and if not, why not?

II. Superhero Tax Deductions

What the Revenant is referring to is the fact that many (but not all!) business expenses are tax deductible.  Home offices (i.e. a proportional share of the rent or mortgage payment) can also be tax deductible, but it’s tricky to get right and can possibly increase the risk of an audit.  The situation gets even more complicated when considering “mixed purpose expenditures” that are both profit-oriented and personal (e.g. traveling for business but also to visit friends or relatives).  In the Revenant’s case, an important question is whether his vigilante detective activities are for-profit or are merely a hobby. The general rule is given by 26 U.S.C. § 183(a):

In the case of an activity engaged in by an individual or an S corporation, if such activity is not engaged in for profit, no deduction attributable to such activity shall be allowed under this chapter except as provided in this section.

§ 183(b)(1) expands on the general rule slightly, allowing “the deductions which would be allowable under this chapter for the taxable year without regard to whether or not such activity is engaged in for profit.”  This includes deductions for real property tax payments, mortgage interest payments, casualty losses, theft losses, and personal items such as charitable contributions and medical expenses.  It does not, however, include business expenses or a home office.

Going a little further, § 183(b)(2) states that certain deductions for not-for-profit activities are allowed to the extent that income from the activity exceeds the deductions available under § 183(b)(1).  Since most superheroes don’t make any money from their heroics, however, that effectively means no additional deductions.

“For profit” means more than just wishing for a profit.  The case law speaks in terms of “a bona fide expectation of economic gain,” having the “primary purpose … to make a profit” or the “dominant hope and intent of realizing a profit” or a “reasonable potential for profit.”  Estate of Baron v. C.I.R., 798 F.2d 65, 72 (2d Cir. 1986).  Anything else is usually called a hobby, although it doesn’t  have to be done for pleasure.  See, e.g., Krause v. C.I.R., 99 T.C. 132 (1992).

The IRS has developed nine factors used to determine whether an activity is for-profit:

(1) Manner in which the taxpayer carries on the activity.
(2) The expertise of the taxpayer or his advisors.
(3) The time and effort expended by the taxpayer in carrying on the activity.
(4) Expectation that assets used in activity may appreciate in value.
(5) The success of the taxpayer in carrying on other similar or dissimilar activities.
(6) The taxpayer’s history of income or losses with respect to the activity.
(7) The amount of occasional profits, if any, which are earned.
(8) The financial status of the taxpayer.
(9) Elements of personal pleasure or recreation.

T.R. § 1.183-2(b).  Several of these factors weigh against the Revenant (and indeed most superheroes), and it seems likely that his activities would be considered a hobby rather than an activity carried on for-profit.  What’s more, a home office must be used for a trade or business, which requires more than just a  for-profit activity.

III. Conclusion

The practical upshot of all of this is that the Revenant should hire an accountant.  Certain deductions may be made despite the non-profit nature of his crime fighting activities (e.g. real property tax on his office, casualty losses from destruction of equipment).  But he’s probably correct that the IRS would not consider his “vigilante detective” activity to be a business, and his office probably could not qualify as a home office if it were part of his house.  The same is true of many other superheroes, including, most obviously, Batman.

New York Comic Con

You may have heard about a little event in San Diego this week, but the real news is that we’re attending this year’s New York Comic Con!  We will be promoting our book, which will be released on the first day of the con, and we have also pitched some panel appearances.  We also have something special planned for anyone in a comic book character costume: a free “legal consultation” for your character!  We will have more information for you as we get closer to the event, and we hope to see you there!

Death and Taxes and Zombies in the NYT

The New York Times has published a great story about Adam Chodorow’s article on Death and Taxes and Zombies, previously featured here on Law and the Multiverse.  The same reporter also interviewed us back in 2010.

The Amazing Spider-Man: Warrants and Assault

As we discussed in our background post, most of the issues in The Amazing Spider-Man aren’t new, but there are two stand-outs.  There are some  minor spoilers ahead for anyone who hasn’t seen the trailers, and a couple of very minor spoilers for anyone who hasn’t seen the film.

Continue reading

Recent Coverage Roundup

While many of our posts are tweeted and blogged about, our recent post on Nick Fury and Illegal Orders has attracted more attention than usual, so we thought we’d give a shout out to people and sites that have written about us recently.  The illegal orders post was republished in its entirety on io9, and linked on Whedonesque, Dr. Sputnik’s Society Pages (a blog related to nndb.com), Nodwick (you can expect a post on related comic PS238 soon), and Diane Duane‘s tumblr.

Our other Avengers-related posts were also written about at blogs like The Mary Sue, A Very Nice Website, the Administrative Law Prof Blog, Wired’s Geek Dad blog, and Alyssa Rosenberg’s blog at Thinkprogress.

Adam Chodorow’s guest post about Death and Taxes and Zombies (and the related full-length article) naturally caught the attention of the internet with write-ups and discussion at io9, MetaFilter, and Neatorama.

Our most recent Subculture for the Cultured column, Daredevil and International Law, received praise from Christopher Borgen, a professor and associate dean at St. John’s University School of Law and co-founder of Opinio Juris, an international law blog.

Daredevil and International Law

(Note from May 8, 2020: Subculture for the Cultured is no longer online, so the links in this post have been changed to use the Internet Archive Wayback Machine.)

Our latest monthly column at Subculture for the Cultured has just been published.  We’re covering the latest issue of Daredevil, so check it out!

Cerebro and Privacy Laws

The X-Men movies feature Professor X’s Cerebro device, which amplifies the power of telepathic mutants, allowing them to find other mutants anywhere in the world.  In X-Men: First Class, Professor X and Magneto collaborate with the US government to assemble a team of mutants.  Although the movie is set in the early 1960s, Cerebro (nowadays called Cerebra) is also used in stories set in the modern day.  What’s more, it’s used to collect information on mutants around the world.  This caught the attention of Law and the Multiverse reader Mathias Ullrich, who wrote a great guest post on the subject using First Class as an example:

A data-protection consideration of Prof. Xavier’s recruiting methods according to German law

When reading the article about the responsibility of Prof. Xavier as the principal of a full time school some weeks ago, I started wondering about Prof. Xavier’s way of recruiting. As a data protection officer in Germany, my attention turns to data protection concerns.

As I’m not so familiar with the X-Men, I’ll stick to the movie X-Men: First Class. To analyze the whole process, I divide it into the different relevant steps:

1) data acquisition by telepathy

2) merging the data with another database (e.g. the CIA database) in order to get real addresses

3) offering specific services

4) deletion / blocking of the personal data

Some basics about the German data protection law: The German implementation of the European Data Protection Directive (“Directive 95/46/EC”) is one of the strictest implementations in Europe and is probably the strictest data protection law in the world. It’s called the “Bundesdatenschutzgesetz” or BDSG in short. In general it says that data processing of personal data is forbidden, unless there is an authorization of it in either the BDSG or other laws. So every data acquisition and processing needs an authorization.

Is German law applicable?

The first question we need to answer is if German law applies, when somebody in the world is acquiring customer data. The answer is quite simple: if there is an acquisition of personal data from German citizens, then German law can be used. This is similar to the discussions regarding Google Analytics or Facebook.

What kind of organization are the X-Men?

As stated in a recent blog post, Xavier’s School is a private school.

Step 1: the acquisition

When Professor Xavier searches for mutants, he is gathering data about the health status and some other information about potential students. Health status is one of the so-called “special kinds” or sensitive kinds of personal data according to §3 Abs. 9 BDSG, alongside racial and ethnic origin, political or religious belief and some more.

Acquiring and processing these kinds of personal data has some special rules. As said before, the German data protection law forbids unauthorized data processing, so we need to find permission.

From the reaction of the mutants visited by Magneto and Professor X, I assume none of them gave permission for acquiring the data. So I would also say that Professor X did not inform the people concerned about the concrete use of the data. This is mandatory. It is illegal to acquire data without the knowledge of the person concerned (§33 Abs. 1 BDSG).

Let’s go back to the acquisition. In §28 Abs. 6f and 9 BDSG we find the exceptions.

It’s possible to acquire these data without an explicit permission, if

– it is vital to the person concerned and he / she is not able to give the permission (§28 Abs 6, Nr. 1 BDSG)

– the data is has been made public by the person concerned (§28 Abs 6, Nr. 2 BDSG)

– the data is necessary for a legal transaction (§28 Abs 6, Nr. 3 BDSG)

– the data is necessary for medical research, if this research cannot be done without (§28 Abs 6, Nr. 4 BDSG)

– the data is necessary for medical care, if the acquisition is made by a doctor or somebody else with an obligationtoconfidentiality (§28 Abs 7 BDSG)

– the acquisition is made by a political, philosophic or religious organization without financial interest, but only for their members or associated people.

I do not think any of these exceptions apply. That means that the acquisition of the health status of the possible new students is illegal according to German law.

Step 2: the merging

After acquiring the data, I assume Professor X needs to get information about the new students, he wants to visit. Therefore, he merges the data with some database, according to the movie, it might be a CIA database. Here we have the exact same circumstance as in step 1. With just one exception more.

§28 Abs. 8 BDSG says, that the proceeding or transmitting sensitive data is allowed, if it is needed for defense of public safety.

Of course, thinking about maniacs who try to take over the world, the merging sounds legit, but the merging did not fight a concrete danger. It is more a “long term” investment. Unfortunately the acquisition of the data is still illegal and where did the CIA get data about European citizens? But that is another question, which will not be answered here 😉

So, the merging might be legal, because of the exception for defense of public safety.

Quick note: §28 Abs. 8 BDSG only allows the processing or transmitting of data, not its acquisition.

Step 3: the offering

The last step is the personal visit to the possible new student in order to offer a personal service, in this case a place in Professor X’s private school.

As this is just again data processing, the same legislation applies as in step 2. So, maybe it’s legal because of the defense exception, but that need be discussed.

Step 4: blocking and / or deletion of data?

 In German data protection law, no data should be stored forever. As soon as the purpose of the data has expired, the data needs to be deleted (§35 Abs. 2 BDSG) or at least blocked.

When looking at the reaction by Wolverine, visited by Magneto and Professor X, one can assume that the purpose is expired, as Wolverine seems not to be interested in the offer. As we know, since Wolverine joins the X-Men later, the data may be blocked and not deleted.

Let’s check the terms for blocking instead of deleting, which are stated in §35 Abs 3 BDSG. Blocking data is allowed,

– if there are any laws or other legal issues that prohibit the deletion

– if it can be assumed that a deletion would affect the interests of the person concerned

– if the deletion is not possible or only possible with high effort because of the special way of storing the data

Again I do not think any of the exceptions apply. The data must be deleted, not blocked, at least as far as we are talking about a real database (e.g. the CIA one). If Professor X keeps the information in his mind, this is not affected by German data protection law.

Conclusion

Of course, there are a lot of unanswered questions, which make a final analysis quite difficult. Is telepathy acquisition of personal data and does German law apply here at all? Where is the data stored and how?

Besides that, the conclusion is quite simple. The acquisition was not legal, so every step beyond the first one, such as the uses the data from step 1, was illegal as well. According to §43, Abs. 2 Nr. 1 this is an administrative offense, with a penalty of up to 300,000 Euro in each case.

Translation guide

 Using §1 BDSG as an example:

– ‘§’ or Paragraf means paragraph in English, in this context it is translated to ‘section’.

– ‘Abs.’ is the abbreviation for ‘Absatz’. In this context it is ‘subsection’. In the example an ‘Absatz’ is marked by the brackets.

– The next one is Nr. (‘Nummer’), which means number. It is the next subsection, and in the example it is marked by the normal ‘1.’

– ‘Satz’ means sentence, if referring to a concrete sentence of the text, one uses ‘Satz’.

 

The Avengers and Illegal Orders

We have one more Avengers post for you.  Be warned: there are spoilers!  Today’s post was inspired by a question from John, who writes:

I was interested in the bit near the end where Fury first disobeys a direct order (to nuke Manhattan) and then shoots down one of his own planes (his team building skills must be great because nobody seems all that upset) to prevent someone else from carrying out orders.

1) under what circumstances is an order illegal?
2) when are you expected to simply refuse to co-operate and when do you take active steps to attack your own side?
3) what are those around him supposed to do about this?

And there is an additional question of whether or not military law (i.e. the UCMJ) applies at all.

Here at Law and the Multiverse we often deal with subjects that we aren’t experts in.  In fact, given that our day jobs involve insurance and intellectual property, that’s usually the case.  So in order to write posts we first do research, usually beginning with higher-level secondary sources (e.g. legal encyclopedias, treatises, law review articles) and then moving on to primary sources (e.g. cases, statutes).  With a military law question like this, however, we were a bit stuck, so we turned to our readers for help, and you came through in spades.  We received offers of assistance from multiple current or former military lawyers, and we’re excited to put them together here.

Before we get to that, though, first a disclaimer:  These lawyers are speaking only for themselves; they are not speaking for the military or the Department of Defense.  This is not legal advice, nor does it constitute the formation of an attorney-client relationship.  With that out of the way, on to the show!

I. The Military Law Approach

Nick, a military lawyer, responds:

“So, obviously UCMJ jurisdiction (as you pointed out) is questionable, but perusing the wikipedia article on SHIELD, it appears it might be military (Nick Fury was once identified as a Colonel, plus they have that flying aircraft carrier, so we’ll go with that).

(1) I pulled the Military Judge’s benchbook, which says: “A command is lawful if reasonably necessary to safeguard and protect the morale, discipline, and usefulness of the members of a command and is directly connected with the maintenance of good order in the service” (which is interestingly enough a question of law, not of fact). It’s an accepted proposition that a order to commit a war crime would be illegal.

Now the question is was Fury ordered to commit a war crime? This isn’t clear. The basic Law of Armed Conflict rules are proportionality, discrimination, and military necessity. Now, the law of armed conflict hasn’t really been tested by alien armies, but I think we can easily dispatch with military necessity and discrimination. But proportionality? Fury gets a little closer here, but I still think he fails. Proportionality looks at whether the military objective is proportional to the civilian damage caused. Here we’re looking at the destruction of New York (by seemingly two nuclear bombs, unless Fury blew up the guy taking their mail to shore), with a huge loss of civilian life. However, even when you balance this against the alien army that is setting out to conquer the earth, you probably get there on that point (and I’m not just saying that because I’m a Red Sox fan).

The other piece of analysis would be whether there is a less destructive way to accomplish the military goals. This is probably where Fury could get to “war crime.” His argument would be that the Avengers were the less destructive way to end the threat, and could probably get there.

(2) What is Fury’s duty? This is interesting. He seems to believe that the order is illegal. There isn’t a lot of case law on this that I’m aware of, but some secondary sources (the Medina court martial, primarily) suggest that a commander who has knowledge of one of his own people committing a war crime has a duty to act to stop it. Current regulations that I pulled today only reference a duty to report war crimes, so I think we would call this a customary duty. Under this idea, and under a ‘defense of others’ type defense, it seems like Fury would both have a duty and a legal defense to shooting down his guys.

(3) What should everyone else do? THIS is an interesting question. To a certain point, I guess it depends on how they see this. If they’re in agreement that he is trying to prevent a war crime, I suppose they don’t have to do anything. If they think he is committing murder and/or violating a lawful order, they obviously have a duty to report the crimes, and they most likely would have a duty to try to prevent him from killing people and stopping the mission, though my knowledge for this portion is admittedly a bit thin.”

Jason, Former Captain, U.S. Army JAG Corps, responded:

“Assuming that the S.H.I.E.L.D. members are subject to the UCMJ, the bottom line analysis revolves around [UCMJ] Article 92 – “Failure to obey a lawful order or regulation.”  The central question there revolves around the “lawful” nature of the order itself.  Here is an interesting short essay regarding Article 92 that I found online, while not credited to any one source, it appears to have been written from a military perspective.  There is a difference between a simple illegal order and a patently illegal order. An illegal order can be in violation of general legality, such as orders to commit hazing on troops, orders to abuse trainees, an order to go beyond the speed limit in a military vehicle. A patently or manifestly illegal order applies generally, but not exclusively to the protection of persons (civilians, prisoners, medical personnel and clergy), medical facilities, places of prayer, monuments, etc. The US distinguishes a patently illegal order as one which orders someone to commit a crime.

Some of the most famous cases dealing with someone who should have disobeyed an order because it was illegal are that of Lieutenant William Calley at the My Lai massacre in Vietnam (dramatically interpreted by the movie Platoon) and the case of United States v. Keenan, where the accused (Keenan) was found guilty of murder after he obeyed in order to shoot and kill an elderly Vietnamese citizen. The Court of Military Appeals held that “the justification for acts done pursuant to orders does not exist if the order was of such a nature that a man of ordinary sense and understanding would know it to be illegal.” (Interestingly, the soldier who gave Keenan the order, Corporal Luczko, was acquitted by reason of insanity).

However, soldiers have to be careful what orders they choose to disobey, lest they suffer the fate of Specialist Michael New – In 1995, Spec-4 Michael New was serving in Schweinfurt, Germany. When assigned as part of a multi-national peacekeeping mission about to be deployed to Macedonia, Specialist New and the other soldiers in his unit were ordered to wear United Nations (U.N.) Helmets and arm bands. New refused the order, contending that it was an illegal order. New’s superiors disagreed. Ultimately, so did the court-martial panel. New was found guilty of disobeying a lawful order and sentenced to a bad conduct discharge. The Army Court of Criminal Appeals upheld the conviction, as did the Court of Appeals of the Armed Forces.

My gut reaction in this situation would be that Nick Fury acted appropriately in disobeying the Council’s directive as his actions were taken to protect the millions of innocent civilians.  I hope this helps!”

So both of our guest authors concluded that, assuming the UCMJ applies, Fury was probably in the right when he acted to prevent the nuclear strike on Manhattan, despite the order being given from higher up.

II. Civilian Law

If the UCMJ didn’t apply, then the situation would probably fall under regular civilian law, and Fury could invoke a defense of others argument.  You might wonder how Fury could justify that, since in theory the Council was likewise acting in defense of others by ordering the strike in the first place.  The problem is the risk to innocent bystanders.  A person acting in self-defense (or defense of others) who accidentally injures or kills a third party is ordinarily not liable.  However, if the person acts recklessly then he or she would be liable.

Of course, the situation may be such that A ought not to shoot at B in self-defense, etc., because of the presence of bystanders like C whom A might hit instead. If there is a high degree of risk to people like C involved in A’s shooting at B, A’s killing of C will amount to manslaughter, Henwood v. People, 54 Colo. 188, 129 P. 1010 (1913); Annot., 18 A.L.R. 917, 928 (1922); if a substantial certainty, to murder.

Wayne R. LaFave & Austin W. Scott, Jr., Substantive Criminal Law § 3.12, at 402 n. 53 (1986); see also Reyes v. State, 783 So.2d 1129 (Fla. App. 2001).  An intentional killing of an innocent third person in order to save oneself (or, presumably, another) may negate the defense completely. State v. Soine, 348 N.W.2d 824 (Minn. App. 1984).

The Council could argue necessity, but necessity is a “lesser of two evils” defense, and letting the Avengers handle the situation was even less of an evil than the nuclear strike.  Although the Avengers were not certain to stop the Chitauri, neither was the nuclear strike (and indeed it would not have worked, as the bulk of the Chitauri forces had not even arrived yet).

Thus, under civilian law, there’s a strong argument that Fury was acting to defend innocent bystanders from the unjustified actions of the Council.

III. Conclusion

No matter how you slice it, Fury’s actions were probably justified.  Thanks again to Nick and Jason for their help with this post!