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Vonage Gets Another Black Eye
Business Law Info | 2007/09/26 16:00

For Vonage, things have gone from bad to worse. On Sept. 25, a jury found that Vonage infringed on Sprint Nextel's patents. It asked Vonage to pay $69.5 million in damages and a 5% royalty rate for future use of the patented technology. Sprint may also seek an injunction against Vonage; Vonage say it will appeal. So, what does this mean for Vonage? Basically, Vonage will need to find its way to break even faster now, as its cash has taken a major hit, and it can't afford to lose money for much longer.

Here're some back-of-the-envelope calculations. Vonage will have to pay some $69.5 billion in damages to Sprint. In addition, since spring, it's placed into escrow or issued a bond for some $90 million related to a patent-infringement case it lost to Verizon (a decision on an appeal is expected any day now). That adds up to $159.5 million. Plus, Vonage is obviously paying lots of legal fees. And Vonage is still losing money: It lost $34 million in the second quarter alone.

So, let's look at Vonage's cash. At the end of the second quarter, the company's cash and equivalents totaled $344 million, which included $66 million of restricted cash used as collateral for the Verizon bond. If we subtract from that the various royalty payments and jury awards/restructed cash, Vonage has about $184.5 million in cash and equivalents to work with.

Assuming Vonage continues to lose money at the current rate of $34 million per quarter, the company can last for a little over five more quarters.

This is a very rough estimate, of course: Vonage's expenses will rise as it starts making royalty payments to Sprint. The outcome of the Verizon case can tip the scales one way or another. Thanks to recent staff cuts, overall expenses may fall. But one thing is clear: Vonage will have less financial flexibility now, after the Sprint loss.



Court to hear Craig guilty plea appeal
Court Feed News | 2007/09/26 15:01
A Minnesota judge will be hearing Sen. Larry Craig's petition to overturn his guilty plea on a disorderly conduct charge in Minneapolis on Wednesday. The Idaho Republican was arrested June 11 during a police sting in an airport men's room for allegedly making sexual overtures to an undercover male police officer. He entered a written guilty plea to the disorderly conduct charge in August. Craig has said he would resign from the Senate if he cannot get the guilty plea overturned by September 30.

Craig on Tuesday said he won't resign until "legal determinations" are made. A political source involved in discussions about the case said Craig has made it clear he wants to find a way to stay in office.

A court ruling on Craig's appeal could take longer than the four days before September 30.

In his petition to vacate the plea, Craig's attorney maintained the senator's "panic" over the possibility that the allegations would be made public drove him to accept a guilty plea without seeking legal advice and that he had been assured by the arresting officer that the matter would remain private.

The petition also claims that because Craig submitted his guilty plea by mail, he did not have the benefit of a judge explaining the exact consequences of the plea before accepting it.



Class Action Lawsuit Against LCA-Vision Inc.
Class Action News | 2007/09/26 08:09

Law offices of Brodsky & Smith, LLC announces that a securities class action lawsuit has been filed on behalf of shareholders who purchased the common stock of LCA-Vision Inc. ("LCA" or the "Company") (NASDAQ: LCAV) between February 12, 2007 and July 30, 2007 (the "Class Period"). The class action lawsuit was filed in the United States District Court for the Southern District of Ohio. The Complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market, thereby artificially inflating the price of LCA.

No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased this stock during the above referenced class period you have certain rights. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice.



Fla.: Property tax amendment rejected
Lawyer News | 2007/09/26 05:54

A tax-slashing amendment is off the Jan. 29 presidential primary ballot -- at least temporarily -- after a judge Monday ruled an accompanying explanation for voters is unconstitutionally misleading and inaccurate. The ballot summary says the amendment would preserve existing property tax breaks although it actually would phase them out, wrote Circuit Judge Charles A. Francis of Tallahassee.

Francis, though, upheld a separate law the Legislature passed as a part of a two-pronged effort to cut property taxes.

The law, which does not need voter approval, requires cities and counties, but not school districts, to roll back and cap taxes for all types of property.

The proposed amendment was touted as offering even greater tax reductions -- almost entirely to homeowners -- through a "super exemption," and would have affected all local governments including school districts.

Gov. Charlie Crist and legislative leaders issued statements saying their efforts to cut taxes are not over. No decision, though, yet has been made on whether the ruling will be appealed, said Jill Chamberlin, spokeswoman for House Speaker Marco Rubio.

Besides appealing, the options include rewriting the ballot summary to meet the judge's objections or deferring the issue to the constitutional Taxation and Budget Reform Commission.

A suburban South Florida mayor who challenged both measures said he hoped lawmakers will leave it to the commission, which can make recommendations to the Legislature and put amendments directly on the November 2008 ballot.

"I'm hoping that they will look at this as an opportunity to fix something," said Weston Mayor Eric Hersh. "Hopefully that's the tactic they will take instead of looking at this as a defeat."

Hersh said he has not yet decided whether to appeal the tax rollback decision. He said he would be more inclined to do so, though, if the state appeals the amendment ruling.

"Not only was it misleading, but it was terrible legislation," Hersh said.

The Republican-controlled Legislature approved both tax-cutting measures during as special session in June. The law passed with bipartisan support, but Democrats opposed the amendment.

That proposal is designed to eventually get rid of the existing Save Our Homes Amendment, which limits assessment increases on primary homes, known as homesteads, to no more than 3 percent a year.

While it protected existing homesteaders, it shifted tax burden to new buyers and owners of other properties including second homes and businesses. Rapidly rising real estate values in recent years made the discrepancy even greater leading to an outcry for tax cuts.

The amendment would have offered homesteaders the one-time choice of keeping their existing benefits or accepting the super exemption -- 75 percent off first $200,000 of a home's value and 15 percent off the next $300,000.

Save Our Homes benefits, though, cannot be transferred to new owners, so they eventually would disappear as those properties change hands.

The ballot summary, though, refers to "preserving application of Save Our Homes provision."

"The summary is just not correct," Francis wrote. Nowhere in the ballot summary is the voter alerted to the elimination of these constitutional protections on homestead assessments. They are simply led to believe that they are preserved or revised."



Ban on E-Verify program leads to lawsuit for state
Lawyer Blog News | 2007/09/25 17:09

The U.S. Department of Homeland Security is suing Illinois government in an attempt to block the state's ban on a program that verifies whether a job applicant is eligible to work in the country. In a complaint filed Monday in the U.S. District Court in Springfield, the Department of Homeland Security alleges federal law pre-empts an Aug. 13 amendment to the state's Right to Privacy in the Workplace Act that forbids employers from using the department's E-Verify program, also known as Basic Pilot.

"With the Illinois Act, the state ... is attempting to indirectly regulate the U.S. government by imposing state standards on a federal program that must be satisfied before Illinois employers are permitted to enroll," the 12-page complaint states. "Congress also made it clear its objective and purpose to encourage broad participation in the Basic Pilot Program by instructing DHS to expand the program to all 50 states."

The suit asks for the state law to be declared invalid and seeks an injunction on the ban. Employers using the program submit job applicants' identification information into Social Security Administration and Homeland Security databases on the Internet to confirm their work eligibility. In most cases, the check takes a few seconds, according to Homeland Security. If the program cannot confirm the work eligibility of an applicant, it issues a "tentative nonconfirmation" notice that can take days or weeks to resolve.

Supporters say the program helps employers keep illegal immigrants off employee rolls, but critics note it has an accuracy rate of between 80 percent and 95 percent, which they say marks it as too unreliable and results in some applicants being wrongly dismissed. The Illinois ban was to remain in effect until the program results were 99 percent accurate. The ban also exempts employers who undergo training in the program and receive "anti-discrimination notices" from the U.S. Department of Justice and Illinois Department of Human Rights. About 750 Illinois businesses used E-Verify before the ban took effect, according to the complaint.

The Illinois Coalition of Immigrant and Refugee Rights, a Chicago-based advocacy group, said they thought Homeland Security was wrong in considering the voluntary E-Verify program a federal mandate.

"The verification program is voluntary for nearly all private employers; they are not required to participate in these verification programs to begin with," the statement reads. "The law does not interfere with any federal obligation because for most employers no such obligation exists."

But the department's actions may already have had an effect, as some state lawmakers started backing away from the amendment after learning of the lawsuit.

"We should take a second look at that bill," said Rep. Ruth Munson, R-Elgin, who was one of 76 state House members who voted to pass the amendment in April. "If DHS thinks it's an important tool, the state ought to step back and look at what it does. Maybe the law needs to be repealed or changed."



Bush to toughen sanctions on Myanmar
Law & Politics | 2007/09/25 17:09

President Bush announced today that he planned to tighten sanctions against the military government in Myanmar and slap a visa ban on "those responsible for egregious human rights violations." In a speech at the United Nations, Bush focused on human rights, outlining new U.S. efforts to force the military rulers to accede to the demands of the democracy movement in the Southeast Asian nation once known as Burma. Calling on the U.N. to honor its human rights charter, Bush turned a spotlight on efforts to overcome dictatorships in Cuba, Zimbabwe and Sudan. He urged the organization to help control the spread of deadly diseases such as malaria, invest in education, particularly for women and girls, and to include poor countries in the global economy "with partnership, not paternalism."

He urged the U.N. to reform its Human Rights Council, which in the past has been chaired by Libya and other dictatorships, and said that the United States was open to an overhaul of the U.N. Security Council. The council is made up of the United States, Russia, China, Britain and France. Bush said he thought Japan was "well qualified" for membership.

The president began a three-day visit to New York on Monday for the 62rd meeting of the General Assembly. He met privately at the Waldorf-Astoria Hotel with Mahmoud Abbas, president of the Palestinian Authority, and Tony Blair, the former British prime minister who now represents the quartet -- the United States, Russia, the United Nations and the European Union -- seeking to bring about a broad peace agreement between the Palestinians and Israel.

The General Assembly speech today veered away from the themes of terrorism and war that were the foundation of Bush's first speeches at the U.N. Instead, he turned to elements of foreign policy that carry less of an edge while still encouraging the spread of democracy and the fight against tyranny.

The shift in tone comes at a time when Bush is struggling in a political world grown increasingly unfriendly, both at home and abroad.

It was at the U.N. last year that Venezuelan President Hugo Chavez -- never a friend of Bush -- likened the American president to a visitor from the underworld, saying, "The devil came here yesterday, and it smells of sulfur still today."

But even international allies are growing skittish. Britain, under new Prime Minister Gordon Brown, hopes to scale down its commitment of troops in Iraq. And at home, notwithstanding the Democrats' inability to force Bush's hand in Iraq, there are few signs that public opposition to the war is weakening.

The president's history of laying out a hard line and challenging the United Nations to join him frequently has left him searching for friends in an organization that has been described with scorn by the White House.

By contrast, the call for cooperation on a humanitarian agenda "certainly is a stronger message for a U.S. president than challenging the relevance of the United Nations," said P.J. Crowley, a senior fellow and the director for homeland security at the liberal Center for American Progress in Washington.



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