Appeal - Thoro-Graph v James Lauffer (http://www.thorograph.com/hold/brief.pdf)
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That Don Brauer is some stand-up guy.
HP
Post should be titled \"Lauffer Curve.\"
Very much enjoyed reading the brief! Good Luck!! That guy seems like a real bad guy. I agree with the brief\'s point that if this guy gets away with only paying $25k then everybody in the world (or at least Kentucky) would start cheating service providers just to get a special court ordered discount. If $25k is supposed to be reasonable value because that is what other people normally charge, then the lower court judge is actually aiding and abetting the theft of services that he found occurred.
Imagine if somebody did not pay Wachtel Lipton for legal services rendered? Does anybody think that the reasonable value of Wachtel Lipton\'s time is the rates that Jacoby & Meyers and the rest of the firms in the yellow pages charge? Of course not. Nobody should be able to go to the best service provider and then say they should only have to pay what average service providers charge. It is ludicrous and the brief is right that it will only encourage people to try to steal services from the best so they can later get a discount from the judge. (If this were the law of the land, all clients would actually benefit from trying to steal from their lawyers).
To find that Thorograph was cheated out of payment for its services and then decide that the just payment for the stolen services is an unprecedented enormous discount is just the height of capriciousness -- it is giving convicted thieves a huge discount on something they stole while law abiding customers have no way to get the same discount for the same product (short of turning criminal). Sheesh.
HP Wrote:
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> That Don Brauer is some stand-up guy.
>
> HP
I agree
That\'s the public policy argument, all right. I actually used the same analogy about legal fees in making the case to my lawyers originally.
You would think Kentucky courts would want to protect the thousands of people in the thoroughbred industry who would get screwed regularly if this becomes precedent. We\'ll see.
\"The kill of the pack is the meat of the pack. Ye must eat where it lies;
And no one may carry away of that meat to his lair, or he dies.\"The Law for the Wolves
by Rudyard Kipling
mankind has twisted justice.lauffer is lucky he\'s not on all fours.
Flighted-- you got me where I live this time, big Kipling fan.
Great movie called Lakeboat. It\'s actually based on early David Mamet play. Awesome cast. This stanza from a Kipling war poem figured in the movie.
The Mine-Sweepers --By Rudyard Kipling
DAWN off the Foreland—the young flood making
Jumbled and short and steep—
Black in the hollows and bright where it's breaking—
Awkward water to sweep.
"Mines reported in the fairway,
Warn all traffic and detain.
Sent up Unity, Claribel, Assyrian, Stormcock, and Golden Gain."
Leamas
This is the final word (unless it ends up going to the Kentucky Supreme Court). I\'m not going to post their cross appeal and I\'m not going to characterize that bunch of _____ because I might get in trouble. We answered everything they said in this brief.
Pardon my ignorance if I missed something -- but weren\'t we expecting a decision on appeal about 4 or 5 months ago?
Yeah. They give out decisions on Fridays at 10:00 A.M., the past 4 months of Thursday nights have been tough. We did find out they sent the trial record back in late September, so presumably someone is writing the decision.
Go to the Kentucky Court Of Appeals \"Minutes\" section. They handle some UNBELIEVABLE cases, incredibly entertaining. In the last two weeks they\'ve had a white supremicist case (you don\'t hear too much about Grand Cyclops\' around here) and a case featuring an atheist group against the Dept. of Homeland Security. About a month ago there was a case where Footnote One said (paraphrasing) \"His daughter was apparently killed in an unrelated incident where she tried to take another woman\'s unborn child\".
I thought my case was really interesting until I read that stuff...
TGJB Wrote:
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> Yeah. They give out decisions on Fridays at 10:00
> A.M., the past 4 months of Thursday nights have
> been tough. We did find out they sent the trial
> record back in late September, so presumably
> someone is writing the decision.
>
> Go to the Kentucky Court Of Appeals \"Minutes\"
> section. They handle some UNBELIEVABLE cases,
> incredibly entertaining. In the last two weeks
> they\'ve had a white supremicist case (you don\'t
> hear too much about Grand Cyclops\' around here)
> and a case featuring an atheist group against the
> Dept. of Homeland Security. About a month ago
> there was a case where Footnote One said
> (paraphrasing) \"His daughter was apparently killed
> in an unrelated incident where she tried to take
> another woman\'s unborn child\".
>
> I thought my case was really interesting until I
> read that stuff...
Apologies if I have missed anything (am currently in Mongolia).....Any word on this case? Isn\'t it highly unusual how long this case is taking? Any reason to think there is anything going on behind the scenes? Are all the judges the same? has there been any changes on the bench?
SoCalMan wrote:
\"am currently in Mongolia\"
Who isn\'t?
Inner or Outer?
Rich Curtis Wrote:
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> SoCalMan wrote:
>
> \"am currently in Mongolia\"
>
> Who isn\'t?
>
> Inner or Outer?
Outer....Ulaan Baatar....staying at the Ramada.....Election Day today....city quiet.
Ah, Ulaan Batar, a little taste of the old Soviet Union in the middle of nowhere...
(never been there)
Been to visit world class horseman Ghengis Khan\'s digs in Karakorum?
18 months, no decision, no activity. Record for that court is 26, as far as we know.
Absolutely, completely absurd that they can\'t resolve this in a more timely manner.
http://opinions.kycourts.net/coa/2010-ca-000891.pdf
The Appeals Court upheld the lower court ruling.
Though I completely disagree with the ruling as to how much I am owed for my work, I am glad there is finally a clear record of what transpired. As the Court said, in the summer of 2008 I was approached by a joint venture consisting of three people, one of them Mike Lauffer, asking me to recommend a filly to purchase and to race. The joint venture asked me to send my commission rates in writing that August, which I did. Three months later I sent an email containing my data and a recommendation they purchase Rachel Alexandra, who at that point had run five times and never won a stake. Mike Lauffer then called me to discuss my reasoning. I said based on my data and analysis she was already comparable to top 2yo filly Stardom Bound, and had a brighter future. At the end of that conversation we discussed my rates, the same ones I had sent, and Lauffer indicated they would be an issue.
After that conversation, as the court said, Lauffer twice called the bloodstock agent in the deal, Don Brauer, to see whether he could avoid paying my commissions. Brauer told him that would not be ethical. Then Lauffer called me again to try to get me to reduce my rates, which I refused to do. He then called Brauer and told him the joint venture was no longer interested in purchasing Rachel. Four days later Lauffer, acting on his own, bought a half interest in her for $500,000. Six months later, after she won the Oaks, he sold his interest, netting a profit of $4.5 million. He paid me nothing.
There are several things wrong with the decision, some matters of law (as opposed to fact), which may make it reviewable by the highest state court, if they\'re willing to take it-- we\'re going to try. One of the issues is blatant-- more on that later.
Really stunning.
Imagine if somebody got legal services from Wachtell Lipton and didn\'t pay the bill because they said the bill was too high. Law suit follows -- court sees that Jacoby and Myers, Joel Hyatt, and a bunch of other random lawfirms charge 10% of what Wachtell charges for the same service so they rule that is what the bill should have been even though the customer got Wachtell as a lawyer not Joel Hyatt. It is one of the most irrational things I have ever seen in 23 years of practicing law (9 of them as a litigator).
If this case is the law of Kentucky, why wouldn\'t anybody in Kentucky just go to the best service provider in the particular area, get the services, and then just object to the bill saying the charge should be what joe blow charges for the same services? How on earth is this justice? Why should Lauffers\' behavior be rewarded and used to incentivize the populace to plainly engage in wrongful conduct?
With legal reasoning like this, it is hard to believe this is the United States of America. Our country looks more and more like a banana republic each day.
Among other things, they also completely ignored the issue of imputed knowledge. They stated outright (page 7) that it was a joint venture and that I had informed them of my rates in advance-- but still said Lauffer did not know my rates, and hung the decision on that. By Kentucky law, any knowledge gained by one member of a joint venture is imputed to all.
What he said.
Jerry - If you accepted their offer of a 5% commission - saving the money and time spent for Lawyers- you would have been way ahead.
Also a 5-5-5 commission structure on that type of high-powered deal is absurd - Your taking no risk and want to be a partner on future earnings.
The 5-5-5 deal for a small purchase works - but not for large ones. IMO
Am not sure how relevant the imputed knowledge is. The concept, I think, is he got very valuable services for free. It is not right to take something of great value and not pay for it, so he needs to pay the price that matches the services he got (i.e. the price the services merited). Haven\'t looked at this in over 20 years, but I think that is the way the concept works.
To me, what is far more relevant than the price is he knew what services he was getting for free.
He knew he was getting a highly specialized company in NY with very good reputation. He was not getting a dime a dozen guy that could be found in the lexington yellow pages. The services he was trying to get for free obviously go for a higher price than the same services in the lexington yellow pages go for. But, the court somehow thinks it is just to let a guy search the world for the best possible services, but then only pay the price you pay for a random joe from the lexington yellow pages.
Look at it from this perspective...say instead of a horse, the thing being bought was a company. You could look for some local financial firm in Lexington to value the company you are looking at or you can hire Goldman Sachs. Even if you do not know the prices of either service, you know that there is no way the cost of the local lexington firm is going to be in the same ballpark as the cost of Goldman Sachs. It is ludicrous to even contemplate that. Now, a person could say that Goldman Sach\'s services are overpriced, but that is not relevant. the price is the price the market will bear.
If this is really the law of the land, it seems to me that you just go to the best service provider you can find and then complain the bill is too high and then say you should only pay the price charged by the average guy. Maybe I am missing something here, but this just seems to me to be a complete sham/mockery of justice
high roller Wrote:
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> Jerry - If you accepted their offer of a 5%
> commission - saving the money and time spent for
> Lawyers- you would have been way ahead.
>
> Also a 5-5-5 commission structure on that type of
> high-powered deal is absurd - Your taking no risk
> and want to be a partner on future earnings.
>
> The 5-5-5 deal for a small purchase works - but
> not for large ones. IMO
The marketplace disagrees with you -- other clients pay the prices you call absurd. Maybe you and they disagree, but who is to say what is reasonable and what is absurd? I think Per Se is an overpriced restaurant; does that mean the people who dine at Per Se are absurd? I wouldn\'t dine there, but I wouldn\'t say the people who do are absurd. Would it be fair for you to walk into Per Se and just order the specials the waiter recites without asking for the prices and then when the bill comes complain that the prices are absurd and you should only pay what you pay at 3 guys diner down the block?
Your risk analysis is also suspect. Clearly, Jerry views his services as more valuable than 5% of the purchase value of the horse, but he puts part of his fee at performance risk. Jerry could say....my services are worth 15% of the purchase price...you can either pay 15% upfront or you can pay 5% up front and the other 5 and 5 based on performance not purchase price. I suspect most customers would prefer the 5-5-5 to a straight 15%. In cases like Rachel Alexandra, it is much more expensive for the client (but I call that a nice problem to have). However, there are plenty of cases where he ends up getting less than 15% of the purchase price. You do not see Jerry as taking risk in his pricing formula because you do not think his services are any more valuable than the first 5%. However, if you think his services are more valuable than 5% of the purchase price (which most of his customers do), then you can see he is putting his fee at risk.
In terms of what Jerry should have accepted or not accepted -- is it okay to just let a customer cheat you? I do not know the answer to that. What about the dinner at Per Se? If you go in and order and then balk at paying the bill, should they sue you or should they just accept the 3 guys diner prices? What do the other diners at Per Se think seeing an a$$hole getting rewarded for being an a$$hole? If my clients paid the way Lauffer does, I would go out of business fast. Maybe bending over and taking it is a good strategy in the way your business works, but man that would make my business almost impossible.
Also, what about common decency? Does that have any role here? Why should somebody be rewarded for flouting common decency?
Were these \"replacement\" judges?
Seattle beat San Francisco on a better call than this.
TGJB-
I hope Lauffer has to pay your legal fees on top of the 5%.
SoCal-- the court made imputed knowledge of the rates the big appealable issue by hanging most of their decision on the idea Lauffer did not know the rates until after I gave him the advice. I agree it should not be relevant (we argued that in the brief) since regardless, he knew them before he acted on the advice (bought the horse). But aside from that:
a) The August email (three months before the purchase) was a reply to my query of one member of the joint venture as to whether Lauffer and the third guy knew my rates. The return email from him, in evidence and discussed during the trial with three witnesses, states \"I have told them your commission (and other) rates, but it would \'seal the deal\' if you sent them to me by email reply, so that we have it clearly documented\". There is clear evidence Lauffer knew my rates, not just as a matter of law but fact. Both the trial and appeals court chose to characterize the email in their decisions, rather than quote it, leaving out the part where it says he was informed.
b) I responded with my rates, as both the trial and appeals courts acknowledged. By law, at that point knowledge of the rates is imputed to Lauffer, whether he knew them or not, simply by any member of the joint venture having them.
High Roller-- At the trial, Chris Young (Overbrook Farm), Ro Parra (Millenium), Rich Decker (Prestonwood Farm manager) and Eliot Walden (Prestonwood trainer, Win Star General Manager) all testified to their outfits using me to advise them and PAYING MY RATES. They also testified as to how that had worked out, and as a group, their outfits had spent high seven figures on horses I recommended, and turned a very substantial profit-- in an industry where expenses are $2 billion a year, purses $1 billion, and that\'s before the cost of the horses. As far as I know almost nobody shows a profit in this business over a large sample size, except my guys and some of Baffert\'s.
J.B. - My point is a confidential settlement with this guy would have saved you a fortune -they did an end around and got away with it
Yep, at least so far.
The latest.
Motion for Discretionary Review (http://www.thorograph.com/images/Motion_for_Discretionary_Review.pdf)
Thanks for keeping us updated.
As a lawyer, I understand why you guys need to put all the stuff in there you put in there, but, to me, the real story is so simple and so egregious -- it should be the whole ballgame. The top court judges need to understand that this result is so absurd, the state of Kentucky should be embarrassed if it is allowed to stand.
Somebody stole something from you. This much is not in dispute. The only open question is what you should be paid for what was stolen from you. In the land of Kentucky, the judges so far seem to think it is reasonable for you to be paid 10 cents on the dollar for what was stolen from you. In the rest of the sentient world, that is ludicrous. Everybody should become a thief if the consequences of getting caught are that you can buy what you stole for 90% off. I may go to Peter Lugers and walk out without paying. Let them take me to court, and I will only pay 10% of the bill since that is what a meat and potatoes dinner costs at McDonalds? Yeah, that makes a lot of sense!
As much fun as Miff makes of the clueless clowns, if the current disposition of the case is not changed, the Kentucky Kourts can give the Keystone Kops and the Klueless Klowns a run for their money. All the other stuff in the case is not relevant and is a subterfuge to fool people about what is really going on.
As it happens, the McDonald\'s analogy is the same one I used with the lawyers. It took us until recently to realize the lawyer on the other side had simply invented \"industry standard\"-- there is no such thing in Quantum Meruit law. We had been focused on proving that the \"industry standard\" was for another industry, not pointing out that it doesn\'t exist.
The Appeals Court actually did us a favor by so clearly going against existing law, making it more likely the Supreme Court will take the case (they don\'t have to). If they do we like our chances.
Couldnt agree more SCM2.
Its seems that the crux of this case is the idea that Jerry\'s services would be \'lumped in\' with other standard 5% services. There\'s only one TG out there and its a company and service that is one of the unique and elite services in horse racing, the idea that its being lumped in with all the other \'5 percenters\' is outrageous.
Another ridiculous thing is that a person can just form a \'group\', get advice and then disband the group and say that since the group no longer exists, i\'m back to \'square one\'. Another absurd theory.
I think any logical person who read this entire case and had to make a guess as to what damages Lauffer was liable for, very few people would have said 25k. You would have gotten more \'full amounts\' than 25k\'s.
I think that Jerry is really allowed to charge whatever he wants to charge and if you dont like the prices, you dont use the service. Its almost if the ruling ruled with the idea that suggesting horses for purchase is just a random guess and that Jerry Brown is not much better than some guy picking horse names out of a hat.
plasticman Wrote:
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> Couldnt agree more SCM2.
>
> Its seems that the crux of this case is the idea
> that Jerry\'s services would be \'lumped in\' with
> other standard 5% services. There\'s only one TG
> out there and its a company and service that is
> one of the unique and elite services in horse
> racing, the idea that its being lumped in with all
> the other \'5 percenters\' is outrageous.
>
> Another ridiculous thing is that a person can just
> form a \'group\', get advice and then disband the
> group and say that since the group no longer
> exists, i\'m back to \'square one\'. Another absurd
> theory.
>
> I think any logical person who read this entire
> case and had to make a guess as to what damages
> Lauffer was liable for, very few people would have
> said 25k. You would have gotten more \'full
> amounts\' than 25k\'s.
>
> I think that Jerry is really allowed to charge
> whatever he wants to charge and if you dont like
> the prices, you dont use the service. Its almost
> if the ruling ruled with the idea that suggesting
> horses for purchase is just a random guess and
> that Jerry Brown is not much better than some guy
> picking horse names out of a hat.
Here is my take....yes, the laugher guy pulled a fast one with the -- watch this -- \"now I am in this group\" and \"now I am in this other group\"....but...all that is about is WHETHER he stole the goods. There is no question he stole the goods. Whether he stole them by accident, as a really bad actor, or somewhere in between, that is not really relevant to how the stolen goods should be valued. If you went into Peter Lugers and never saw a menu (which is often the case...I have never seen a menu at that restaurant -- although I haven\'t been there in 30 years) and then were honestly shocked that a steak could end up costing $100, does that mean Lugers should give you a discount? If you should get some good will discount, what would that be? 10%, 20%, maybe even 25%.......how on earth do you get off with a 90% discount. You say gosh I could have gotten that steak for $10 at Gristede\'s and cooked it myself? My view is that the guy took and used stolen goods. The goods are good stuff. Even trying to make the thief as accidental and innocent as possible, where do you get off with a 90% discount? I think the court in Kentucky has to realize that if they let this stand, they are going to look ludicrous if this gets into the hands of a true journalist as opposed to a senseless hack.
TGJB\'s point that the lower decisions had legal errors in the other points and that is how we get the top court\'s attention is right from a legalistic standpoint...but....the court needs to know that their entire state court system is on the precipice of looking like a banana republic if they do not catch the insane real world result the lower court decisions entail.
JB: What percentage of appeals do they take?
Ordinarily about a third, but our chances should be a lot better. They have two major issues tough to ignore-- the decision was a published case, and would set a precedent re partnership law that is contrary to all legal history, and they have two Appeals Court rulings in the last 18 months on UE/QM that exactly contradict each other. If they don\'t settle that last one it\'s sure to come up again, and would be a coin flip-- you get one Appeals Court panel you win, another you lose. They would have to take it at some point.
I love your Peter Luger analogy, very good one.
If JB was a medical doctor or lawyer who spent a bunch of money on medical/law school and Lauffer was his patient/client, somehow Jerry might have done better in the courts. But, because Jerry learned his expertise thru the school of hard knocks and has no \'formal schooling\' or an official \'license\' like a Doctor or lawyer has, somehow his information is worth \'less\' according to the courts.
JB experienced opportunity risk by not being able to present
the purchase of Rachel to another client because of the theft. There
is risk at every turn.
20kbrew Wrote:
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> JB experienced opportunity risk by not being able
> to present
> the purchase of Rachel to another client because
> of the theft. There
> is risk at every turn.
Wow! Never thought of that, but it is a good one. One more reason to point out why the result reached is so ludicrous.
The Kentucky Supreme Court decided not to hear our case, which pretty much ends things.
The kicker is they unpublished the Appeals Court decision. Trial court decisions can\'t be used for precedent, those from Appeals and Supreme courts can. So they recognized the problems with the decision and didn\'t want anyone to be able to cite it, but declined to right the wrong.
I think that\'s the textbook definition of adding insult to injury.
Nice timing. 4th anniversary of her Woodward on Saturday. What\'s that they say about the wheels of justice?
I gave Mitchell some comments for Blood-Horse, TDN next.
Where is Kafka when you need him.
\"Where is Kafka when you need him\"?
Right here:
A man from the country seeks the law and wishes to gain entry to the law through an open doorway, but the doorkeeper tells the man that he cannot go through at the present time. The man asks if he can ever go through, and the doorkeeper says that it is possible. The man waits by the door for years, bribing the doorkeeper with everything he has. The doorkeeper accepts the bribes, but tells the man that he accepts them \"so that you do not think you have failed to do anything.\" The man does not attempt to murder or hurt the doorkeeper to gain the law, but waits at the door until he is about to die. Right before his death, he asks the doorkeeper why even though everyone seeks the law, no one else has come in all the years. The doorkeeper answers \"No one else could ever be admitted here, since this gate was made only for you. I am now going to shut it.\"
Downright shameful. I have worked in some screwed up legal systems (e.g. practiced law for 12 years in Putin\'s Russia), but it is possible that Kentucky\'s takes the cake (it makes banana republics look good). As far as I can see, the only possible explanations are -- (1) corruption or (2) prejudice. I would like to believe that it is not possible to buy the Kentucky Supreme Court, so I am just guessing it was more important to them to make sure the Yankee lost than it is to reveal themselves to be a collection of jackasses. What is truly mindblowing is that the undisputed record shows that a bad guy got away with a b*llsh*t scheme to con an innocent victim out of money. Even the jackasses do not disagree with that assessment. They just have the nerve to hide behind the theory that the stolen goods are not worth their market value but are rather worth some arbitrarily-arrived-at miniscule value. I do not think that Putin could steal from an oligarch better. The unpublishing of the lower court decision shows they know that they did something to be ashamed of.
Home cooking.
Having had more than a passive involvement in this litigation Moosepalm is likely spot on. The decision to unpublish the previous decision is likely the result of several of the Supreme Court justices who wanted to hear the appeal(Jerry needed 4)imposing that requirement. Present company excepted, Jerry was well represented throughout and the system simply failed him. As I know from 44 years of litigating in our civil judicial system, it usually, but not always gets it right. Jerry got screwed, plain and simple.
Haven\'t read Kafka for years, but in the intervening time I have concluded that he was a bright eyed optimist after all.
rezlegal Wrote:
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> Having had more than a passive involvement in this
> litigation Moosepalm is likely spot on. The
> decision to unpublish the previous decision is
> likely the result of several of the Supreme Court
> justices who wanted to hear the appeal(Jerry
> needed 4)imposing that requirement. Present
> company excepted, Jerry was well represented
> throughout and the system simply failed him. As I
> know from 44 years of litigating in our civil
> judicial system, it usually, but not always gets
> it right. Jerry got screwed, plain and simple.
Home cooking is one of the things I suspected. I am sure you guys did a great job, but it was (unfortunately) irrelevant. Actually, it was probably your good job that shamed them into unpublishing the lower court opinion.
I realize what I am about to say is way way way out there, but I wonder if it is possible that there is a commerce clause claim out there? I am far from a constitutional lawyer, so bear with me as I do not know what I am saying. But, basically, the rendering of services across state lines is interstate commerce. If different states could price services at prejudicially inconsistent rates, the whole federal commerce system would not work. If this Kentucky case is constitutional, then what stops somebody in Alabama from hiring a New York lawyer, then suing in Alabama to have Alabama legal rates apply to the services instead of New York rates? Apologies if this is just crazy, but it just seems this homecooking situation is fundamentally wrong and the constitution is supposed to forbid this sort of thing from interfering in interstate commerce (whiskey excepted, I think).