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JurEcon, Inc.
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Note: This page is currently under construction. A sampling of both current and archival material will be included. |
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Engaged by the SEC on various cases Jerry Arnold, PhD, CPA, JurEcon's most senior accounting expert since 1987, provided expert testimony recently for the Securities and Exchange Commission on several different matters. In each case the Defendants were senior officers of a company. Dr. Jerry Arnold's testimony included the following issues: Definition of assets under GAAP; Valuation of assets; Role of financial statements in interim filings; Role of officers and directors in assuring compliance with GAAP; Violations of Section 13b-2 of the Exchange Act regarding internal controls. July 2004. In several other cases for the SEC which settled, Dr. Jerry Arnold opined about additional accounting/auditing topics including: Recording fictitious sales at quarter and year-end; Premature revenue recognition; Role of financial statements in interim filings; Valuation of receivables and establishment of appropriate reserves; Related-party sale of business and improper recognition of a gain on sale; Violations of Section 13b-2 of the Exchange Act regarding internal controls and lying to auditors. In a Pending Case against senior officers of a Fortune 500 Company, additional issues about which Dr. Arnold is opining include: Earnings management; Revenue recognition policies; Reserves for loan losses, warranties, legal liabilities; Treatment of sale/leaseback; Required disclosures in MD&A; Violations of Section 13b-2 of the Exchange Act regarding internal controls and lying to auditors. August 2004. Engaged by U.S. Attorney on Three Matters Dr. Jerry Arnold, CPA and Professsor of Accounting has been engaged by the U.S. Attorney for the Central District of California within the Department of Justice three times in the last several years, and has testified in two cases. The issues upon which he opined included: 1. Nature and role of GAAP and GAAS; 2. Revenue recognition policies; 3. Role of officers and directors in assuring compliance with GAAP; 4. Necessary disclosures in MD&A; 5. Asset valuation, including accounts receivable and inventory. Wells Submission for a national law firm and Fortune 500 company Dr. Jerry Arnold of JurEcon Inc. was engaged by a national law firm representing a Fortune 500 Company and its senior financial executives to prepare an extensive declaration in support of a Wells submission. The issues upon which he opined were: the propriety of the treatment of restructuring and related reserves in connection with a major acquisition. 2004.
Employment Law Experiment Helps Kill Proposed Legislation! At the request of Paul Grossman, Esq. of Paul, Hastings, Janofsky & Walker, JurEcon undertook a unique study for the California Employment Law Council and the California Legislature on the practicality of comparable worth. Paul Grossman had wondered if a real world experiment could be conducted to test the feasibility of comparable worth quite apart from its theoretical complaints. He asked E. Jane Arnault, PhD if she might be able to design and run such an experiment. Jane found a large company with complex job classifications and several commercial job evaluation firms which were willing to participate anonymously and test the feasibility of comparable worth and accuracy of measurements of jobs' comparable worth. Economics and complicated statistics were involved. Some of the results appeared as "An Experimental Study of Job Evaluation and Comparable Worth" in Industrial & Labor Relations Review, July 2001. Paul Grossman said: "We feel the work of Jane Arnault and her JurEcon team had a significant impact on debunking the idea that laws could be passed to force the valuing of jobs outside of the market. As result, California politicians stopped trying to legislate comparable worth, and we have not heard about it in over a decade. Jane and JurEcon were responsive, excellent and creative." February 2003
Telecommunication Industry: Big Dollar Dispute David Eisen, Esq. of Arnold & Porter, Los Angeles, was the lead attorney in a large dollar dispute (originally about a billion dollars) among providors of electronic and telecommunications products and services at the cutting edge of their industry. Eisen, an Arnold & Porter partner, specializes in complex business litigation, intellectual property litigation, and the representation of law firms in partnership disputes and malpractice actions. JurEcon's Dr. Jerry Arnold, an extraordinarily skilled professor of accounting, led a JurEcon team in designing and implementing a broad-based damages analysis. The issues involved assessing profits lost by the defendant from numerous breaches of contract by the sole provider of products and services. JurEcon's analysis addressed the profits that would have been generated in the absence of each breach. The JurEcon team defined, isolated, and modeled the impact of many variables, including: the projected demand for the products and services, the prices and direct costs, the allocation of indirect costs, and appropriate sharing between the parties of cost savings and rebates received from customers and vendors. The issues were sufficiently broad and complex that the Arnold & Porter legal team consisted of several partners and associates, each focusing on specific aspects of the case. The case and our involvement extended continuously over a three year period ending in 2004. Lost Profits Testimony Greatly Appreciated Ronald S. Rosen, Esquire of Troy & Gould and colleagues prevailed in defending dick clark productions, inc. and MCA Television LTD. against a number of claims asserted by the plaintiff in this litigation brought by Lip Sinc International. At the time trial commenced, the claims remaining were breach of contract, unjust enrichment and quantum meruit. At the conclusion of the plaintiff’s case, the defendants were granted a directed verdict on the unjust enrichment and quantum meruit claims. JurEcon's economic expert Dr. Richard Eastin was retained to render expert advice and to testify regarding the $5,000,000 damages for lost profits which plaintiff claimed it would have realized, but for the alleged breach of the defendants. Mr. Rosen argued that given the plaintiffs past history, the claimed damages were speculative. Mr. Rosen said, "In my opinion Dr. Rich Eastin made a significant contribution to the overall atmosphere of credibility and probity we sought to convey to the Jury. The graphs and bar charts he prepared were excellent and numerically summarized the history of the plaintiffs business operations. Though we did not reach the question of damages in view of the jury's findings that the parties did not enter into a contract with the terms and provisions plaintiff claimed, the Eastin testimony had telling impact on the jury, because he illustrated how speculative the plaintiffs theories were." - June 23, 1989
Trial Strategy, Jury Selection & Witness Preparation Serge Tomassian, Esq. of Throckmorton, Beckstrom & Tomassian in Irvine, California has used Dr. Leo Snowiss in five cases involving major damage to highly valued residential properties caused by construction defects, landslides, or defective drainage. In his most recent case Rozbicka, et. al. v. Estralla Properties #791529 decided December 12, 2002, Mr. Tomassian won a $1.5 million jury verdict in an inverse condemnation, negligence, nuisance case versus the City of San Juan Capistrano. The issue was the role of the City in the planning, construction and operation of a roadway that triggered a 9 acres landslide which substantially damaged his clients' properties. The case was difficult because Mr. Tomassian had to prove the liability of a public entity on behalf of clients who owned expensive properties in an exclusive residential development. Mr. Tomassian said, "We prevailed with a $1.5 million verdict due to our hard work and detailed preparation of the case as well as the team work that made this very difficult case a success for our clients. The City of San Juan Capistrano will also be liable for attorney fees and investigative costs which could raise the verdict to in excess of $2 Million. Dr. Leo Snowiss through JurEcon Inc. was an integral part of the winning team. His insight into trial presentation of the evidence as well as witness testimony were important components our success. His assistance in voir dire was also critical in selecting a fair and balanced jury panel. We wish to thank both JurEcon and Dr. Leo Snowiss for working with us as a team to achieve this positive result for our clients. Dr. Snowiss has an excellent sense about people and is very perceptive
about themes and overall strategy. He can see the overall theme
and structure of a case. It is always a pleasure to work with him."
- January 2003
Computer-Related litigation This case involved a computer programmer who worked on a program for one firm and then left to join another firm. This second firm then offered a similar, computer software product within months. The question: Was a significant portion of the "source code" for the original product copied onto the new product? The question was complicated by the fact that many programmers have built up "tool kits” of commonly used subroutines and procedures that they use for much of their programming, and they tend to program similar functions in similar manners (from habit, experience, and memory). JurEcon's computer expert, Dr. Robert Anderson (Harvard, Ph.D. in Mathematics and Computer Science), compared thousands of lines of source code from each program to form an expert judgment regarding whether copying took place. Kindel & Anderson attorney Manuel Klausner, Esq. said, "Bob Anderson is one of the most impressive experts I have ever seen. He is a quick study and has a flair for discussing technical subjects in plain words. His deposition and testimony and written report are models of clarity." Mr. Klausner is now with the Law Offices of Manuel S. Klausner in Los Angeles.
Jury Selection for Paul, Hastings, Janofsky & Walker JurEcon assisted Paul, Hastings, Janofsky & Walker attorneys Geoffrey L. Thomas and Ronald M. Oster in a complex insurance matter. Said Geoffrey Thomas: "One of the most valuable things we did in a multi-million dollar insurance coverage case was to consult JurEcon and Dr. Jim Press. Specifically, we wanted to identify (1) the types of jurors who would be most responsive to our asbestos manufacturing client, and (2) which handful of arguments among scores of possible arguments would appeal most to those jurors. We followed Jim's advice very closely on what kind of jurors to challenge and what kind to accept, which arguments to eliminate and which to emphasize, and how to deal with the detrimental aspects of this case, that is, how to put our best foot forward. "I found the interest and input from Jim Press and JurEcon to be exceptionally helpful. They significantly shaped the presentation we made in a five month trial, by refining, clarifying and enhancing the presentation of complex issues into concepts which lay jurors could relate and believe." December 1988 Geoffrey Thomas added, "While much of what we learned was particular to the specific location and time, other things we learned had a lot of value in subsequent cases involving the same kind of subject matter." January 21, 2003
JurEcon Aids UC Regents in Discrimination Case JurEcon’s expert labor economist provided testimony for the University of California in a suit alleging ethnic discrimination in the promotion of Hispanic faculty. The University of California prevailed on the ethnic discrimination claim and cited the testimony of JurEcon’s expert witness Dr. Mark Killingsworth as central to its decision. The key issue, the judge said, was whether or not there was a statistical disparity between UCSB’s tenure-track faculty and the qualified labor market. The judge wrote in her decision: “Defendants have demonstrated that … representation of Hispanics in faculty positions at UCSB was substantially greater than what would have been expected given their representation in the qualified labor market… “Plaintiff has failed to produce sufficient evidence to rebut Professor Killingsworth’s findings.” Referring to the Supreme Court decision in Wards Cove, the trial court reiterated the principle that in a discrimination case plaintiff “does not make out a case of disparate impact simply by showing that ‘at the bottom line’ there is a racial imbalance in the work force.” JurEcon’s analysis and testimony thus was at the foundation of the case on which the defendant prevailed. “We were pleased with the professionalism and responsiveness of JurEcon’s Prof. Killingsworth and with the accuracy of his analysis. We were so pleased that we retained JurEcon's expert on another matter as well,” said Ian Fellerman, Esq. of Corbett & Kane (1997). Mr. Fellerman is now with Reed Smith Crosby Heafey in Oakland (2003).
JurEcon Consults with Attorney General
on the $5.4 Billion Marriage of the JurEcon, Inc. was asked to provide an opinion as to whether the Southern Pacific Rail Corporation (“SPR”) would continue to be a “viable” railroad if it were unable to merge with Union Pacific. For purposes of this report, “viability” was defined as the ability of SPR to continually access capital on acceptable terms to meet its minimum cash needs in order to continue its business as a major western railroad in the markets it presently serves. JurEcon’s financial expert Professor Lloyd Levitin, JD, MBA, CPA, analyzed the financial condition of SPR’s rail operations and SPR’s access to capital. He also reviewed the testimony and exhibits submitted by various parties to the case. Lloyd’s opinion was that SPR would continue to generate negative net cash from operating activities for the foreseeable future. Therefore SPR would have to continue to rely on asset sales, borrowings and equity issuance to finance its cash deficit. Lloyd believed that it would be unlikely that SPR would be able to obtain the cash required, when required, and on acceptable terms. Therefore, he did not expect that SPR on a stand-alone basis would remain a viable major western railroad. The California Attorney General’s office and the US Department of Justice accepted their reasons and the merger was approved.
Canadian Pay Equity Dispute Favorably Resolved Thomas Brady, Esq. of Heenan Blaikie in Montreal, Canada and his partners in Toronto and Vancouver represented a territorial government in an equal pay dispute with a public employees union. Mr. Brady knew of E. Jane Arnault, Ph.D. and JurEcon Inc. from her labor law and economics work years earlier. He invited Jane to enlist several of her colleagues in labor economics and statistics to help the attorneys strategize and plan the approach to organizing the data and evidentiary arguments supporting the government's position. JurEcon also provided another group of top academics to prepare expert testimony in both economics and statistics should it be needed. The matter was settled favorably before the Canadian Human Rights Tribunal after the evidence was compiled but before the government's case began. Thomas Brady, Esq. said: "JurEcon was able to provide us with quick and efficient access to experts in several fields relevant to the issues in the case. They were highly qualified, worked easily with our lawyers and provided views and information which were very helpful to the ultimate favourable resolution of the case." - April 2003
Age Discrimination
Case for Munger, Tolles & Olson “You recommended Dr. S. James Press, who has an excellent background and who proved to be extremely responsive. Although the time remaining before the projected trial date was very short. Dr. Press dug into the figures and completed two regression analyses in record time. I was also impressed with the dedicated work of JurEcon’s research assistant, who reviewed many of our clients' files to insure that the information for the statistical analysis was accurate and reliable. "Ultimately, Dr. Press determined that there was no statistical correlation between applicants' ages and their rate of hiring by our client. His analysis of the company’s hiring pattern was very thorough and persuasive, notwithstanding the fact that he and his assistant had less than a month to gather the information, conduct the analysis and graph the results in a form which could he presented to a jury. JurEcon’s team was very professional in its approach to the problem presented. Their work contributed significantly to the overall trial preparation.” (1988) Mr. Edmundson is now with Howrey Simon Arnold & White in Los Angeles.
WALL STREET JOURNAL: MMI SETTLEMENT WILL REDUCE HEALTH CARE COSTS “In a move expected to ripple through the multibillion dollar medical equipment industry, General Electric quietly abandoned its long legal fight keep small California company from servicing its high-technology diagnostic machines. The battle against MMI Medical Inc. of Pomona, California was widely watched by hospitals, health-care agencies, and a burgeoning industry of third-party providers of diagnostic and maintenance services. Some of them described the settlement a “watershed” event. They predicted it would open up competition in the service business, which has accounted for about half of equipment makers profits and a large part of the cost of radiology departments operating budgets.” Wall Street Journal, 3/19/91. MMI’s Chief Executive Officer, Dudley A. Rauch, wrote: “The economic methodology and evaluation developed by JurEcon played a significant role in our preparation for the negotiation which resulted in our obtaining a favorable settlement. Of particular importance to us was your ability to successfully bring substantial resources to this situation on short notice. My thanks go to Jane Arnault and others of your staff who worked on this project.”
JurEcon on CBS Evening News Channel 2 Action News interviewed JurEcon’s Dr. Jane Arnault and Dr. Leo Snowiss about the usefulness and the benefits of jury research and trial strategy. The Rodney King Trial and the attitudes of potential jurors in Simi Valley was of particular interest. 1992
JurEcon in the Press The Los Angeles Times, Orange County Edition, called JurEcon in 1992 to discuss the effects a delay in a trial could possibly have in favor of one side. Dr. Jim Press began writing an article formally analyzing this topic. The article was published in Jurimetrics (Winter 1994) and presented a probability model which addressed the perennial dispute about whether a sudden interruption in a jury trial substantially affects the outcome. Dr. Press concludes that "as the length of trail interruption increases, the strength of a juror's belief about a 'guilty' verdict for the accused decreases..." Dr. Press argues that even if jurors' opinions about guilt or innocence remain unchanged during the hiatus, "their memories become less reliable...," making it more difficult for them to recall the facts and arguments that led them to support the conclusions they had previously reached. "...[T]he chances for a hung jury should increase...Furthermore, after a hiatus in the trial, it will take quite a bit more evidence to make the jurors feel confident about their decision. Lacking this confidence, they may feel 'reasonable doubt' about their beliefs. Delay appears to be on the side of the defendant..." The Los Angeles Business Journal interviewed JurEcon about developments in jury research, focus groups, and voir dire questioning. 1992 The Daily Journal carried an article on the increasing uses and roles of experts in litigation today. Much of the article was based on an interview with E. Jane Arnault, Ph.D., President of JurEcon, Inc. 1992
Pro-Bono Work for Central District Civil Justice Reform Committee JurEcon assisted the Central District Civil Justice Reform Committee last year when members sought assistance with structuring questionnaires to be administered to federal judges, magistrates, attorneys, and their clients. The results are now in, and JurEcon, led by Dr. Ben Enis, will continue to assist this Committee, headed by Don Smaltz, Esquire in quantifying the results and suggesting reforms. There is wide concern that our legal system become more efficient. 1992
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Copyright 2009 - JurEcon, Inc. - All Rights Reserved
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