weekly roundup – January 8th

I started my week by reading an article in Bloomberg about Disney’s princess business switching from Mattel to Hasbro. Mattel had a series of missteps with its treatment of Disney princess products, and Disney finally took its business elsewhere. Last year, two-thirds of the Mattel senior staff resigned or was fired (Mattel lost the Disney princesses in late 2014). Hasbro has reworked the princesses to be more true to their animated characters, including painting on faces, making the waistlines (very slightly) different, and taking the dresses back to what they were meant to be. A couple things stood out to me in this article. First, it’s very important to know your market. Disney didn’t understand that kids (and their parents) wanted princess stuff until an executive went to a Disney on Ice show and saw little girls in handmade princess dresses. Second, it’s important to pay attention to your client and make them feel heard and valued. The article is full of cringing moments where I found myself wishing that Mattel had done anything else. Excellent read.

Speaking of Disney and Hasbro, the #WheresRey debacle has been fascinating. Hasbro may be doing right by princesses, but their treatment of the female protagonist in Star Wars is just terrible, and their excuses feeble and hollow. This post discusses how Rey is a role model as much for boys as she is for girls.

Something else Disney is doing is building a Star Wars franchise to last the ages. Wired wrote about how the last Star Wars movie won’t come in our lifetime. Star Wars is following the comic book style of universe-building, with lots of options for side stories and having characters develop independently and together. (Also, I learned a new word – paracosm – so that’s exciting.) It’s the same thing that the big studios are doing with Marvel and DC, intertwining stories and building franchises to explore characters and ages and lands. It’s an exciting thing, but at the same time, I like being able to just ingest single stories or movies without needing to know a lot of external information. On a side note, I may get more into Star Wars. Carl certainly wants me to, and he has a list of books for me to read if I’m interested. So there’s that.

Getting away from Disney entirely, I also read about environmental activists that went after a ship that was egregiously and illegally fishing. The article was a fascinating look into a world of very determined people (on both sides). The environmentalists pursued the fishing boat for over 100 days and 10,000 nautical miles. I care about the environment, but their level of caring is so beyond what I can comprehend.

Games! This week, I played Bang the dice game, Aton, Roll for the Galaxy, and Five Tribes solo:

  • Bang (the dice game): I love Bang with cards, and I was skeptical about the dice, but it turned out to be surprisingly fun. Seeing what people chose to keep or not gave away stuff about their roll that might not be readily apparent in the card game. Good party game.
  • Aton: 2-player game, players place markers in temples to try to score points. Simple concept, easy to learn, and it’s a good mix of luck (drawing cards) and strategy.
  • Roll for the Galaxy: I played Race for the Galaxy a couple years ago with a friend, and I was excited to try the dice version. With my strategy, I ended up basically not needing to roll dice at all, which was kind of strange. The friend I played with said he thinks there’s actually less luck in the dice game than in the card game. I enjoyed the game and want to try it again.
  • Five Tribes (solo game): Days of Wonder released rules for a solo version of Five Tribes! It pits you against the sultan (controlled by a pair of dice). The sultan racks up a lot of tiles, and it ends up altering the game strategy. There are four levels of winning (and multiple ways to lose), and I won but didn’t excel. I enjoyed the game, though one of the reasons I play games is to play them with other people, so I’ll keep this for when I’m absolutely dying for a game and can’t convince Carl to oblige.

I’ll start posting these earlier in the day on Friday instead of after business hours. As it stands now, I’m sure they get lost among the weekend posts.

protecting the innocent… corporations?

I didn’t realize the significance of this case until I read a blurb about it in the Economist this week. The US Supreme Court came down recently with the decision in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., — S. Ct. —, 2008 WL 123801 (2008). Kennedy wrote the opinion, joined by all the conservatives, and Stevens wrote a dissenting opinion, joined by Souter and Ginsburg. Breyer recused himself from the beginning because of stock he owns. Roberts initially did, but I guess he sold his stock so he could be part of the opinion. On to the opinion itself:

Investors (led by Stoneridge Investment Partners) sued a cable company (Charter Communications, Inc.), its executives, its independent auditor (Arthur Andersen, poor souls), and the company’s vendors and customers. The investors said the company made sham transactions that inflated its reported revenues and cash flow. The investors wanted the customers and suppliers to be liable for the sham transactions they agreed to. Scientific-Atlanta and Motorola were suppliers and then customers of Charter.

The Court assumed that Arthur Andersen had been misled, though it made no controlling decision on that point. Id. at *3. That’s good for Arthur Andersen, at least. Charter entered into a deal with both Scientific-Atlanta and Motorola to pay more for digital cable converters that it purchased from them, and they would then buy advertising (at higher prices) from Charter. Id. Charter drafted documents to mislead Arthur Andersen in its transactions with Motorola and Scientific-Atlanta and make it appear that the transactions were unrelated by backdating the purchase agreements to a month before the advertising agreements. Id. Charter showed an increase in revenue and cash flow of $17 million, which it reported to the SEC and the public. Id. The investors said Scientific-Atlanta and Motorola had a duty to disclose the transactions. Id. at *4.

The Court had previously held that, when suing for deceptive practices in the selling of securities, liability does not extend to aiders and abettors. Id. at *5 (citing Central Bank v. First Interstate Bank, 511 U.S. 164, 177 (1994)). The idea was that a company had to make statements or actions that the plaintiff directly relied upon before there could be any liability. Id. The Court decided in this case that, because “[n]o member of the investing public had knowledge, either actual or presumed, of [Scientific-Atlanta’s or Motorola’s] deceptive acts during the relevant times,” the investors “cannot show reliance upon any of [those] actions except in an indirect chain . . . too remote for liability.” Id. at *6. The Court did point out that secondary actors (including aiders and abettors) can be subject to criminal penalties and civil enforcement by the SEC, but that there is not always a private right of action against those secondary actors. Id. at *11.

In the dissent, the liberals were rather vehement about the majority being incorrect. Stevens wrote that the actions of Scientific-Atlanta and Motorola “had the foreseeable effect of causing [the investors] to engage in the relevant securities transactions.” Id. at *13. The majority, in stark contrast to this, requires an action that makes it “necessary or inevitable” for the issuer to deceive as it did. Id. at *7. This is the really interesting point of contention to me.

Should we hold people and companies to a high standard of morality in business practices? Every action has a foreseeable effect, usually many foreseeable effects, but being foreseeable does not make an effect inevitable. I’ve been analogizing a lot of situations to raising children lately, although I have no experience with that, so here’s another one: If your child asked for $10 to buy a birthday present for a friend, and you knew that what your child wanted to buy really cost $5, and you suspected your child wanted the $10 to spend the extra money on something you disapproved of, would you be at fault by giving your child $10? Giving a child more money than you suspect is necessary may have the foreseeable effect of your child spending it on something you disapprove of, but it’s not an inevitable effect. If children can choose what to do with their money, shouldn’t corporations be able to choose as well? We cannot be responsible for the bad things other people do unless we are directly involved. That may not apply to criminal law very well, but I do think that in this time where independence is valued more than most other things, we cannot treat people, or companies, as a community that is collectively responsible for the faults of one when it is convenient.