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Week In Review

By Chris Helsel

Sony Drops "The Interview" Following North Korean Hack; U.S. Vows To Respond

In late November, anonymous hackers calling themselves the Guardians of Peace conducted a massive cyberattack on Sony's computers, resulting in the release of thousands of private email exchanges and Social Security numbers, and crippling the studio's computer systems. The hacking was a direct response to the Sony's comedy "The Interview," which depicts the assassination of North Korean leader Kim Jong-Un by two bumbling American journalists.

Following the hacking, Sony Pictures Entertainment received a terror threat from the hackers, who vowed to strike at "the very times and places" where the film would be shown in theaters. The threat also called upon Sony to "Remember the 11th of September 2001." The nation's four largest theater chains soon dropped the film, leaving Sony virtually no choice but to cancel its release.

Earlier today, the FBI officially linked the hacking to the North Korean government. Despite the isolated nation's history of making false threats against the U.S., Sony decided to play it safe and pull the $44 million film. Sony, as well as the cinema chains, feared that they would be liable in the event that an attack took place during a showing of the film. One major cinema chain, Cinemark, has defended lawsuits stemming from the 2012 Aurora, Co. shootings by arguing that the incident was unforeseeable - an argument that clearly would fail in this case, following the public release of the explicit terrorist threats.

A new email sent by the hackers to Sony executives last night credited the studio for its "wise decision" to pull the film, and vowed to cease the cyberattack if Sony prevents the movie from ever being released in any form - including online, DVD, or video. The hackers further demanded that Sony somehow remove the full movie or any trailers from any website hosting them immediately. Essentially, the North Koreans have taken Sony's data security hostage in exchange for erasing any evidence that "The Interview" ever existed.

President Obama responded to the crisis today, declaring, "We cannot have a society in which some dictator someplace can start imposing censorship here." He said that he thinks Sony "made a mistake" in pulling the film, and vowed that the U.S. will respond to the North Koreans "in a place and manner and time that we choose."


FIFA Chief Ethics Investigator Resigns in Protest

Michael J. Garcia, an American attorney responsible for a recently concluded two-year investigation into alleged corruption in the bidding process for the 2018 and 2022 World Cups, has resigned from his post as chief ethics investigator for soccer's world governing body, FIFA.

In 2010, the FIFA Executive Committee awarded the 2018 and 2022 World Cup tournaments to Russia and Qatar, respectively, amid considerable controversy. Almost immediately, allegations of bribery and vote trading surfaced, and numerous FIFA dignitaries resigned or were forced out of office in shame. In 2012, FIFA president Sepp Blatter initiated broad anti-corruption reforms, including the appointment of Mr. Garcia as chairman of the investigative branch of the FIFA Ethics Committee.

Over the next two years, Mr. Garcia traveled to all bidding countries (with the exception of Russia, which refused him entry due to his part in prosecuting a Russian arms smuggler) and conducted a thorough investigation of the World Cup bidding process. Mr. Garcia, a former U.S. Attorney for the Southern District of N.Y., sent his 450-page report to FIFA in September, but FIFA Ethics Committee adjudication chamber Chairman Hans-Joachim Eckert announced that the FIFA rules prohibited the report from being released publicly. Instead, Mr. Eckert prepared a 42-page summary that, according to Mr. Garcia, contained "numerous materially incomplete and erroneous representations of the facts and conclusions."

Members of the FIFA Executive Committee, which will ultimately decide whether Russia and Qatar retain their rights to host the upcoming World Cups, have only read Mr. Eckert's summary. This summary concluded that although Russian officials had destroyed their computer systems, and multiple FIFA Executive Committee members had been accused of accepting bribes from Qatari officials, both Russia and Qatar were cleared of any wrongdoing during the World Cup bidding process.

Mr. Garcia filed an internal appeal to rebut Mr. Eckert's claim that any rules violations by World Cup bidding countries were "very limited in scope," but the appeal was denied on Monday. Mr. Garcia, along with numerous Executive Committee members and observers around the world, has called for the public release of the full report. The Executive Committee meets in Morocco this week, and could amend FIFA's ethics code to make part of the report public - this measure is not expected to pass, however.

Yesterday, following his unsuccessful appeal, Mr. Garcia resigned. He declared that Mr. Eckert's limited and inaccurate summary caused him to "lose confidence in the independence" of Mr. Eckert. Mr. Garcia's resignation statement further charged that his investigation had uncovered "serious and wide-ranging issues" regarding the bidding and selection process for the upcoming World Cups that were omitted from Mr. Eckert's summary. Mr. Garcia also took special care to criticize FIFA's "lack of leadership," and posit that the scandal-plagued organization was incapable of reforming itself from within.


Apple Wins iTunes Software Update Antitrust Suit

A California federal jury determined this week that Apple iTunes software updates issued between 2006 and 2009 were in fact used to improve aging products and offer enhanced security from hackers - and not to secure a monopoly over the digital music market. The class action plaintiffs alleged that the updates were actually intended to block any songs downloaded from Apple's competitors by utilizing a copyright management system to force consumers to purchase iPods, rather than less expensive music players, in violation of antitrust law.

Apple argued, successfully, that the blocking of competitors' songs was merely a side effect of the necessary safety precautions. These security enhancements were necessary, argued the late Steve Jobs and other Apple executives, to protect iTunes music from hackers, which ensured that Apple did not violate its contracts with music labels by allowing the labels' music to be illegally accessed.

Additionally, Apple's attorneys repeatedly reminded the jury that the plaintiffs could not produce any actual iPod customers claiming they were harmed; and in an embarrassing moment, two named plaintiffs were dropped on the eve of trial after it was discovered neither of them had purchased an iPod in the relevant time period.


Fighters File Antitrust Suit Against UFC, Seek Class Certification

Mixed martial arts (MMA) fighters have brought a federal antitrust action against Ultimate Fighting Championship (UFC), alleging monopolistic behavior and wage suppression. According to the suit, the UFC has achieved a monopoly in the MMA arena by buying up rival circuits and including unlawfully restrictive language in its contracts with fighters, promoters and venues. This anticompetitive behavior, the suit alleges, has allowed the UFC to control 90% of "all revenue generated by MMA events" in the U.S. and abroad. The plaintiffs contend that UFC fighters "are paid a fraction of what they would earn in a competitive marketplace" and the company holds the exclusive rights to fighters' names and likenesses in perpetuity, even beyond a fighter's death.

The suit, which seeks class action status to include all fighters who have ever fought in or had their identities used to publicize a UFC-promoted bout, was filed in San Jose by fighters Nate Quarry, Cung Le, and Jon Fitch against UFC and its parent company, Zuffa LLC. At a news conference, attorneys for the plaintiffs did not reveal the damages sought or what changes they would make to the current system.


Eight Years After His Death, James Brown's Estate Still in Dispute

Legendary singer James Brown, the "Godfather of Soul," died in 2006 at age 73. Mr. Brown's will called for the creation of a trust to provide scholarships for needy children in South Carolina and Georgia. Nearly eight years later, due to a highly contentious probate battle, the trust has not yet distributed a cent.

Mr. Brown signed his will in 2000 and explained the scholarship fund's purpose on an audiotape recorded contemporaneously. The will left $2 million in scholarships for his seven grandchildren, and divided his personal property, worth another $2 million or so, between his six recognized children. The bulk of the estate was left to the scholarship trust. The will also called for the disinheritance of any heir who challenged it.

That no-contest clause did not stop numerous heirs from challenging the will, however. Following his death, several of Mr. Brown's children filed suit, alleging that the singer had been improperly influenced by lawyers and managers who stood to gain from the creation of the charitable trust. They allege that Mr. Brown, who had a history of drug problems, was in diminished mental state and therefore did not create a valid will.

Today, the estate remains mired in lawsuits with no end in sight. Mr. Brown's appointed executors have all resigned, replaced by two South Carolina estate lawyers by order of the state district court. The state attorney general stepped in in 2008, proposing a settlement with the family and seeking to include Mr. Brown's most recent wife, whom he left out of the will. The settlement called for the removal of the court-appointed executors, one of whom has been accused of grossly overstating the estate's value in order to earn a higher fee.

The settlement never materialized, though, as it was tossed out by the South Carolina Supreme Court last year. The court found no evidence that Mr. Brown had been unduly influenced and chastised the attorney general's attempts to "dismember" the carefully-crafted estate plan and resurrect it "in a form that grossly distorts his intent." The court ordered the district court to appoint a new panel to oversee the estate. Eighteen months later, that panel does not yet exist.

Proponents of the proposed settlement argued that it represented a win-win scenario that resolved the "labyrinth created by the entangling lawsuits filed by everybody against everybody." On the other hand, critics contend that Mr. Brown's intentions were clear, and simply disregarding a testator's wishes would set a dangerous precedent.


NFL Lineman Released Following Sexual Assault Accusation, After Receiving Team Support Following Earlier Domestic Abuse Arrest

The San Francisco 49ers released starting defensive end Ray McDonald from his contract on Wednesday after learning of his involvement in an alleged sexual assault.

Earlier this year, McDonald had been arrested on suspicion of domestic violence against his fiancée. At the time, amid the NFL domestic violence scandal (Ray Rice, Adrian Peterson, Greg Hardy, etc.), the 49ers stood behind McDonald and allowed him to remain on the active roster as the legal process played itself out. Last month, the Santa Clara Country district attorney's office announced that it lacked sufficient evidence to charge McDonald, and the player remained with the team.

Now, however, the 49ers have cut ties with McDonald before he has even been arrested, let alone charged. On Tuesday morning, a woman - who was not McDonald's fiancée - arrived at a Santa Clara hospital and reported a possible sexual assault from the previous night. A preliminary investigation found McDonald to be the main suspect, and the 49ers announced his release on Wednesday. The differences in how the club handled McDonald's two brushes with the law - and the fact that the 49ers were eliminated from playoff contention this past weekend - has struck some observers as dubious.

McDonald and a teammate also broke up a fight at a bar this month. 49ers General Manager Trent Baalke addressed the team's decision, stating, "While this organization has a strong belief in due process and has demonstrated that over time, Ray has demonstrated a pattern of poor decision-making that has led to multiple distractions for the organization and this football team that really can no longer be tolerated."

The obvious question, then, is whether the club truly believed McDonald was innocent of the earlier domestic violence accusation - otherwise, what constitutes a "pattern of poor decision-making"?

"All of it adds up...I'll leave it at that," said Baalke.


NCAA Women's Hockey Coach Fired for Making Too Much Money, Mulls Title IX Lawsuit

University of Minnesota-Duluth women's hockey coach Shannon Miller, who has won five national championships in her 16 years at the school, has been informed that she and her assistant coaches will not be returning next season. Ms. Miller earns $207,000 per year, making her the highest-paid women's hockey coach in the country. The next-highest paid coach earns $164,000.

The school points to its $6 million budget deficit, and the fact that women's hockey - unlike men's hockey - is a financial burden on the public institution. The men's coach at the school earns $265,000, which is about average for Division I men's hockey coaches, and the university spent $533,322 on the men's team last year, compared to $259,590 on the women's team. However, the university justifies this discrepancy by pointing out that the men's hockey program "pays for itself," while the women's squad costs the school (and therefore the state) money every year.

While she has not officially announced that she will bring a legal action, Ms. Miller said that she and her staff plan to finish out the season and that she has retained an attorney who specializes in Title IX and gender-equity cases.

Ms. Miller says that she was open to discussing a pay cut in light of the school's budget challenges, but was shocked to learn that she was being let go. School officials suggested that she retire, and she refused. She informed her team - who is in the midst of a successful season, winning 12 of their previous 13 games and ranking #6 nationally - of the school's decision last Friday, just before the commencement of final exams.


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