Section Connection

Business Torts
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New Section Members, Welcome!

Where Resources Come Together
Vol. 12, No. 1, Fall 2007

A Publication of the American Association for Justice formerly Association of Trial Lawyers of America (ATLA®)



We Can Level the Playing Field in NASD Arbitrations


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AAJ Exchange Litigation Packet Preview

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Missing a Must-Read Article from Last Year’s Newsletters?

or the Business Torts Section, 2007-2008 will be a year of consolidating successes of years past and moving on with new initiatives. Taking the gavel from Immediate Past Chairman Kirk Reasonover, I begin my term with a call to action from all of our members to follow up on an important project that Kirk began: to get AAJ members to enroll as arbitrators for the National Association of Securities Dealers. As you know, anyone with a dispute against a stockbroker is bound by the provisions of the NASD mandatory arbitration

clause. The current reality f or individual investors is that no hope exists for a jury trial. In practical application, the lack of a jury trial has generally resulted in exactly the kind of tribunal from which the Founding Fathers were trying to protect this country. These arbitrator panels are composed primarily of brokers and dealers, not ordinary people who might identify with the claimant, but industry insiders who empathize only with the respondent. There can be little doubt that in many, many of these cases, justice has been a victim. Imagine trying a malpractice case to a jury of

Matthew A. Cartwright
orthopedic surgeons. It does not have to be this

continued on Page 2

Internet-Related Business Torts: The Rights of Privacy and Publicity
By Gregory Rutchik, San Francisco, Calif.

Back Issues of Business Torts Section newsletters can be found on our Web site at sections/businesstorts.


ost lawyers have little time to spend on the Internet, and fewer have thought of potential claims and claimants as coming from the Internet – and I’m not talking about advertising your practice here. I’m speaking of business torts related to the right of privacy and publicity.

Even if the tort of false light is far from your practice, as the Internet becomes even more prolific these tips should help you when an Internet-related business tort client comes knocking. In the end, you will be able to identify the difference between a right of privacy claim and a right of publicity

claim and avoid missing a potential case and maybe even summary judgment if you attempt to plead one. The individual’s right to be left alone – the right of privacy – is a constitutional right deriving from the U.S. continued on Page 3

A Publication of the American Association for Justice

Page 2 From the Chair cont. from Page 1
It is merely to start leveling the playing field at these arbitrations. Now the task is to promote our goal. First, as a Section member, you should make it your business to enroll as a NASD arbitration panel member this year. The enrollment process is straightforward. For more information, contact AAJ Sections at Once you become a NASD arbitrator, you can explain to other AAJ members how important and easy it is. AAJ has given us the green light on this important project. Let’s go!

Vol. 12, No. 1, Fall 2007

Chair Matthew A. Cartwright Munley Munley & Cartwright, PC 672 N. River St., Ste. 310 Wilkes-Barre, PA 18705-1036 Phone: 570/824-5599 E-mail: Chair-Elect Colleen Duffy Smith McManis Faulkner & Morgan 50 W. San Fernando St., #1000 San Jose, CA 95113-2415 Phone: 408/279-8700 E-mail: Vice Chair Debra G. Speyer 2 Penn Ctr. #200 Philadelphia, PA 19102-1721 Phone: 215/238-1980 E-mail: Secretary-Treasurer/Newsletter Editor Gregory Alan Rutchik the arts and technology law group 3 Embarcadero Center, 6th Floor San Francisco, CA 94111 Phone: 415/399-9440 E-mail: Immediate Past Chair Kirk Reasonover Reasonover Law Firm 400 Poydras St., Ste. 1980 New Orleans, LA 70130 Phone: 504-587-1440 E-mail: AAJ Sections Staff
Anne-Marie L. Burton Director Elliott Brown Publications Coordinator Edward Chester Administrative Assistant
© 2007, American Association for Justice formerly Association of Trial Lawyers of America (ATLA®) All rights reserved

way. Any AAJ member, not just a Business Torts Section member, can become an NASD arbitrator. Through Kirk’s efforts and the good offices of a number of important AAJ Governors, AAJ, notwithstanding its worthy and longstanding opposition to arbitration as a format, gave approval for its members to become NASD arbitrators. It was an important first step. Certainly, our goal is not to appoint arbitrators who will vote in lockstep for claimants.

AAJ Litigation Groups
. . . in the truest spirit of professional cooperation.

Gregory Alan Rutchik’s contact information was incorrectly stated in the Summer 2007 edition. The correct information is: the arts and technology law group, 3 Embarcadero Center, 6th Floor, San Francisco, CA 94111, T: 415-3999440, F: 415-399-9444,

Contacting AAJ
AAJ General Numbers 800/424-2725 or 202/965-3500 Sections, ext. 290 E-mail: Membership, ext. 611 E-mail: Litigation Groups, ext. 306 E-mail: Meetings & Conventions, ext. 613 E-mail: AAJ Education, ext. 612 E-mail: AAJ Exchange, ext. 615 E-mail:

Stuart Banashek Manager

This Section Newsletter is intended to be a forum of opinion and information pertaining to the interest of Section members. Unless specifically stated otherwise, its contents reflect the views of authors only, and should not be interpreted as a statement of the position or policies of AAJ or the Section itself. Published material remains the property of AAJ. No material may be reproduced or used out of context without prior approval of, and proper credit to, this Section Newsletter.

A Publication of the American Association for Justice

Business Torts Section

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Privacy and Publicity cont. from Page 1


Constitution’s 4th and 14th Amendments1 and the state constitutions’ application of those fundamental amendments. Seeking compensation against an individual or business that invades your client’s privacy, however, requires you to go much further. As you probably know, torts against your client by an individual are not dictated by the U.S. Constitution. The constitutional privacy rights – and the claims against a government which are not covered here – are not the same as the tort law of privacy.2 To seek recovery against an individual’s act against your client which results in an invasion of privacy or the exploitation of your client, we must look to common law.

Gregory Rutchik
additional copyright claims indicate an inherent weakness in the privacy claims. Clearly the strategy of adding the copyright claims worked to protect certain rights of Hilton, and may have played a significant role in obtaining first, a temporary restraining order, and then a preliminary injunction. Others besides celebrities may also establish a copyright claim. A major take away from Hilton’s experience is for private citizens to consider copyright claims as an additional weapon in their arsenal for protecting broad personal rights. Individuals have a right to be left alone. We’re talking about the right to be left alone from intrusion by other individuals and not about the government’s intrusion. State laws generally recognize that an individual may protect his or her interest in being left alone from others intruding on their privacy.3 Rights of privacy have a long history in California courts and elsewhere. While four recognizable causes of action exist, the trials and tribulations of Paris Hilton demonstrate that in the Internet age, stopping the proliferation of one’s private information is extremely difficult and costly. A noncelebrity can learn from the difficulties that Hilton, a well-heeled litigant, faces.

Common law in most states supports the individual’s right to be left alone from other’s intrusions. We need not look any further than the infamous Paris Hilton to understand the claim, “false light invasion of privacy.”2 Yup, we look to Paris Hilton. Whether or not you are a fan of the celebrity, pay close attention to the difficulty she has in preventing others from using stolen photos, credit cards, stories, songs, video, and her other personal possessions. While it is true that she obtained a preliminary injunction against one defendant in Paris Hilton v. Bardia Persa, Hilton was forced to file an amended complaint against six new defendants in an attempt to remove her property off the Web. As of this time, one Web site,, the subject of the preliminary injunction is offline but another,, not the focus of the current claim, is live. Hilton’s approach raises a theme in these types of actions. She filed her claim in federal court and coupled privacy claims with infringement claims based on newly registered copyrights. It raises the question of whether the

If an individual intrudes on another’s right to be left alone, a claim of false light invasion of privacy may exist. This type of claim is well-established. A successful claim under false light invasion of privacy appeals to what is “highly offensive to a reasonable person.” Because these standards are different among the states, pleading this claim can be tricky. Paris Hilton’s invasion of privacy claim against the defendant in the case proved to be a strong factor in protecting her rights. The temporary restraining order issued in February 2007 enjoined disclosure of Hilton’s medical and health information, her social security number, phone number, addresses, bank and financial information and photos, videos, and writings depicting her in a sexual manner not previously exposed to public viewing - in a nod to the likelihood that Hilton would pursue an invasion of privacy claim. The preliminary injunction issued later that month went even further and enjoined the disclosure of more information without the caveat that it was not previously exposed to the public. Hilton’s efforts in establishing this claim are far from done. Her efforts are supported by precedent in this area and reveal that she still has a heavy rock to push up the hill. The seminal U.S. Supreme Court case on the tension between the invasion of privacy and the right of reporters to report “news” is seen in Cantrell v. Forest City Publishing Co., 419 U.S. 245 (1974). A mother and her minor children were ultimately – the Supreme Court found - successful in bringing their invasion of privacy claim and entitled to compensatory damages because the reporter knew the information was false and showed a reckless disregard for the truth. Truth, whether the item disclosed is true and its portrayal are not always the turning point. Rather, the ability to recover is often tied to the ability to show that the invasion itself is matericontinued on Page 4

A Publication of the American Association for Justice

Page 4 Privacy and Publicity cont. from Page 3 privileged or newsworthy should have fallen on the plaintiff’s shoulders. Musicians captured on video when their stage collapsed, and subsequently mocked on ABC’s “American Funniest Home Videos” were able, after obtaining a reversal of a lower court’s dismissal, to move forward on their “well-pleaded general allegation” that must be determined by the trier of fact.5 Ms. Hilton’s case is reminiscent of the Hustler Magazine v. Wood case and the Pamela Lee Anderson sex video case. See e.g. Wood v. Hustler Magazine, Inc., 744 F.2d 94 (1984). Hustler Mag., Inc. v. Wood, 469 U.S. 1107 (1985). Certiorii denied; Michaels et al. v. Internet Entertainment Group, 5 F. Supp. 2d 823 (C.D. Cal 1998). In Wood, the appellate court affirmed a jury verdict against Hustler after a neighbor submitted nude photos under a forged consent. While the Wood case speaks to the issue of an effective consent, it sends a clear message that negligent invasion of privacy

Vol. 12, No. 1, Fall 2007 is compensable. The Anderson case – resting in copyright – supported that a videotape depicting sexual intercourse was protectable and enforceable.

al. In Easter Seal Soc For Crippled Children and Adults of Louisiana, Inc. v. Playboy Enterprises, Inc., 530 So. 2d 643, 648 (La. Co. App. 4th Cir. 1988), the “mere appearance” of an individual captured in a crowd scene of an adult movie called “Candy the Stripper” that focused on sex and drugs was insufficient for that individual to establish a claim of false light. The plaintiff’s burden of proof is not easily met. A transsexual sued a newspaper for invasion of privacy for publishing a column that revealed her then-secret sex change operation. The trial court in Diaz v. Oakland Tribune, Inc., 139 Cal. App. 3d 188 (1983), returned an award for compensatory and punitive damages but the appellate court reversed. The appellate court found that the trial court held the newspaper to a high standard to show “newsworthiness” and found the burden of proof that the article was not

Although it is true that celebrities and non-celebrities alike can allege a claim of appropriation - the impermissible commercial use of one’s identity causing injury to dignity and selfesteem and resulting in emotional distress - it is a difficult claim for noncelebrities to pursue. In addition, celebrities who encourage their public exposure and wide circulation of their images, may have difficulty establishing damages to their dignity or hurt feelings. Thus, in California, injured parties must take a different tact. Like Hilton they are often advised to assert claims of “disclosure of private facts” – a common law cause of action. Because a major component is disclosure to the continued on Page 5

New Section Members, Welcome!
James Andrew McDonaugh Lindenhurst NY Alan Gabriel Bass El Reno, OK Mark C. Burgess Texarkana, TX Robert F. Dicello Mentor, OH Barry D. Estell Mission, KS Joseph Gjonola Los Angeles, CA Ryan W. Greene Dallas, TX Tim Herron The Woodlands, TX Jesse Hersch Kibort Plymouth, MN Thomas E. Knothe La Crosse, WI Christopher V. Langone Chicago, IL Stephen G. Lowry Savannah, GA Christopher J. Malone Darien, CT Steve M. Marks Baton Rouge, LA Steven H. Meyer Boca Raton, FL Alfred A. Olinde New Orleans, LA Paul B. Overhauser Greenfield, IN Terance P. Perry Missoula, MT Francis X. Rapprich Orlando, FL Seth J. Reidenberg Wilmington, DE Berton N. Ring Chicago, IL Jason J. Rudolph Santa Monica, CA John F. Salter Marietta, GA Joseph D. Satterley Louisville, KY Gilbert Kirk Squires Miami Beach, FL D. Shawn Stevens Dallas, TX Mohammad A. Syed Washington, DC Kristin Diane Wilkinson Houston, TX Alexander Williamson New Orleans, LA Roger C. Wilson Atlanta, GA

A Publication of the American Association for Justice

Business Torts Section

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Privacy and Publicity cont. from Page 4

public at large, disclosure via the Internet almost guarantees that this element can be met. Certain celebrities will face challenges when attempting to establish that the “facts are not already known to the public” and that the “disclosure is highly offensive to a reasonable person of ordinary sensibilities.” Hilton will have little trouble establishing that her personal information such as her medical information and her phone and bank numbers are unknown to the public. However, will certain celebrities face more difficulties convincing a jury that the disclosure of their information is highly offensive? Doesn’t the standard require the trier of fact to determine whether the disclosure is highly offensive from the plaintiff’s perspective? If it isn’t offensive to the plaintiff — and that might be a tact taken by defendants seeking to defeat this claim — how could it be offensive to a juror? Here are some scenarios that courts have found NOT to be highly offensive when disclosed: retirement, religious affiliation, buying of a new expensive house, finding and returning a large sum of money, receiving a certain salary, passing or failing a test, being the wealthiest person in town, kissing a certain rock musician in the stall of a woman’s toilet.6 On the other hand, here is a list of things that courts said ARE highly offensive to a reasonable person: 1) Unpermitted publication in a national magazine of a nude photograph of the person. 2) Disclosure by employer of a fellow employee that she had a hysterectomy or mastectomy. 3) Public disclosure of the plaintiff’s name on signs carried by protesters that plaintiff was about to undergo an abortion. 4) The showing of a surreptitiously made videotape of plaintiff engaged in sexual intercourse. 5) The distribution on the Internet of a video made by plaintiffs of them-

selves engaged in sexual conduct. Will Hilton be entitled to any less protection due to her history of publishing intimate details of herself? 4 Should she be?

As Paris Hilton’s case bears out, there is a likelihood of success in stopping another party from using one’s likeness, voice or image if in fact they are doing so to make money. In short, right of publicity is a property right. It is about getting compensated for another’s use of your likeness, voice or image for money. In fact, California and many other states have enumerated the right of publicity under the unfair competition laws in the Restatement of Unfair Competition §46 and the California Civil Code. While a claim for violation of one’s right to publicity makes sense for a celebrity or someone who could turn their likeness or voice into money, it is not clear that his claim meets the needs of a civilian on the street who is hurt by stolen nude photos. Of course, one could quickly see a claim for violation of right of publicity if a hereto now unknown becomes front page news on a paid porn site, but this is not the norm. Clearly, the court in Hilton’s case agreed with Hilton and preliminary enjoined the defendant from using her likeness, image, or other materials for commercial gain. The problem – as Hilton’s experience bears out – is that others are using her image as a result of the Internet and she will have to spend additional funds and time in an attempt to stop them. Even if she does enjoin some, the offshoring of content and activities makes it difficult to take down everything that was taken from Hilton and used to generate money. The average individual has as many quills in their arsenal to fight against invasions of their privacy as Hilton but at what cost and effect? It has taken Hilton more than six months and unquestionably tens or maybe hundreds of thousands of dollars in legal fees to stop one defendant. The complaint against two other defendants –

the ones who originally sold the Hilton materials was dismissed without prejudice. Even after months of litigating, the effect of her actions against the remaining defendants remains unsettled. In fact, the court ordered that another defendant be dismissed unless Ms. Hilton agrees to be deposed by September 17, 2007. The lesson for the rest of us to use: As private relationships fall apart in this time of the Internet, online dating and instant messaging, the courts will see many more cases under the claims of invasions of privacy rights. As you confront litigants and potential clients with Internet activities, these claims become very real. They play out in domestic relations claims and as part of more business tort practices. The issue will be difficult for courts to handle as defendants and Web content to proliferate over the Internet while plaintiffs bear a heavier and costlier burden in stopping it. Notes:
1. Lest we be incomplete, the First, Fourth, Fifth and Fourteen all provide some protection of privacy. Although in all cases the right is narrowly defined and limited to government intrusion. See e.g. Paul v. David, 424 U.S. 693, 713 (1976). 2. See e.g. Rosenberg v. Martin, 478 F.2d 520, 524 (2d Cir. 1973). 3. Paris Hilton v. Bardia Persa et al; CD. CA Los Angeles; 2:00-cv-08306-TJH-RZ; 4. Approximately 30 states recognize the tort of false light invasion of privacy. 5. See Sharrif v. American Broadcasting Company, 13 So. 2d 768 1993. 6. (See McCarthy, page 547). 7. See e.g. 1; “Hilton's suit does not mention that she became famous -- or infamous -- largely because of the release on the Internet of an explicit sex tape with her then-boyfriend, Rick Salomon, on the eve of the premiere of “Simple Life.” The video received a pornography industry award in 2005 for best selling title of the year.”

Gregory Rutchik is newsletter editor for the Business Torts Section. The arts and technology Law Group, 3 Embarcadero Center, 6th Fl., San Francisco, CA 94111, T: 415/399-9440,, Gregory is working on a book on litigating right of privacy and right of publicity claims.

A Publication of the American Association for Justice

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Vol. 12, No. 1, Fall 2007

Allstate Automobile Claims
An AAJ Exchange Litigation Packet Preview


llstate Insurance Company’s slogan is, “You’re in good hands with Allstate.” Unfortunately, many have found their experience with Allstate to be anything but good. In the course of an 18-month investigation into minor-impact-soft tissue injury crashes, CNN found that if you were injured in a minor accident, chances were high that Allstate1 would “challenge your medical claim, offering you barely a fraction of your expenses.”2 CNN also spoke to one of Allstate’s former attorneys who said that Allstate’s strategy is to make fighting the company “so expensive and so time-consuming that lawyers would start refusing to help clients.”3 Protecting one’s clients’ interests in an Allstate case necessitates a command of Allstate’s policies and procedures. A large part of Allstate’s strategy to increase profitability came when they installed a new claims handling system called Claims Core Process Redesign (CCPR) in 1995. The principles within CCPR were developed by McKinsey & Co. Allstate’s new approach focused on the shareholder rather than the policyholder. One major emphasis of CCPR was to pay less on claims by using rigid standardized methods such as Fast Track, Colossus, Minor Impact Soft Tissue (MIST) referrals, Special Investigative Unit (SIU) referrals and discouraging legal representation.4 The result of these and other Allstate procedures on plaintiff’s ability to receive fair compensation has been dramatic. An appreciation of Allstate discovery tactics is also essential in any Allstate case. Plaintiff attorneys are often faced with numerous objections to basic requests for production and frequent motions for protective orders by Allstate. AAJ members have successfully challenged these objections and even obtained sanctions against Allstate in some courts. The motions, oppositions, and orders contained in this Litigation Packet are intended to assist plaintiff

attorneys in obtaining meaningful discovery from Allstate. Whether the claim is based on the underlying automobile accident, a bad faith claim arising therefrom or some other contractual, common law, or statutory claim, a claim against Allstate presents plaintiff attorneys with challenges at every turn—investigation, case filing, discovery, and trial. This Litigation Packet provides plaintiff attorneys with an overview of Allstate, assists in important discovery disputes and helps plaintiff attorneys explore appropriate theories of liability, including: • Exploring issues of investigation, negotiation, discovery and theories of liability • Analysis of general claims handling of automobile bodily injury claims at Allstate including Claims Core Process Redesign (CCPR), MIST, Colossus, UM and UIM claims, Special Investigative Unit and Allstate’s incentives programs • Sample court documents: complaints; requests for production; motions, oppositions and orders regarding protective orders; motions for sanctions against Allstate; depositions of numerous Allstate employees • Exploring bad faith and other theories of liability • AAJ Education speaker papers The AAJ Exchange’s new Litigation Packet, Allstate Automobile Claims explores claims-handling procedures and policies at Allstate Insurance. The packet contains important guidance, court documents, and depositions provided by AAJ members with extensive Allstate claim and litigation experience—essential tools for anyone handling Allstate automobile cases.
Notes: 1. CNN also found the same to be true for State Farm. Drew Griffith & Kathleen Johnson, Feb. 9 2007, Auto Insurers Play Hardball in Minor-Crash Claims, http:/ 2. Id.

3. Drew Griffith & Kathleen Johnson, Feb. 9 2007, Auto Insurers Play Hardball in Minor-Crash Claims, http:/ 4. Affidavit of Shannon L. Brady, former Allstate Claims Representative, March 10, 2003.

This article is an excerpt from an AAJ Exchange Litigation Packet. Working closely with AAJ members, the Exchange develops Litigation Packets, which contain comprehensive, practical material on “hot” litigation topics and trial advocacy issues. Allstate Automobile Claims, July 2007; 2,251 pages. For a detailed Table of Contents, log onto the Exchange at, click on “Litigation Packets,” select “Insurance Law,” and “View” the packet description. Or call the Exchange at (800) 344-3023.

A Publication of the American Association for Justice

Business Torts Section

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Missing A Must-Read Article From Last Year’s Newsletters?
The following articles were published in the 2006-2007 Business Torts Section Newsletters. Catch up on your reading. Just go to the Section’s Newsletter Archives on the Web: Or call 800-424-2725 or 202-965-3500, ext. 381 to find out how.

Vol. 11, No. 1, Fall 2006 The Chair’s Message - A “Business Torts” Winter in Miami Kirk Reasonover

Vol. 11, No. 4, Summer 2007 The Editor’s Message - Making Request for Admissions Your Friend Gregory Alan Rutchik The In Pari Delicto Defense in Bankruptcy Trustee Actions By Elizabeth Pipkin, San Jose, Calif. and James C. Ferrell, Houston, Texas Promissory Note Fraud By Debra G. Speyer, Philadelphia, Penn.


Pleading Fraud - Exposing the Gritty Details By Gregory Alan Rutchik, San Francisco, Calif An Intellectual Property Primer - Copyright and Trademark Guidelines for the Business Lawyer By Amy Burke, San Francisco, Calif. Vol. 11, No. 2, Winter 2007 The Chair’s Message - Joint Roundtable Tackles Cutting Edge Business Torts Topics Kirk Reasonover A Practical Path Towards Better Mediations By David Lichter, Aventura, Fla. Equity-Linked Notes: The Sophisticated Financial Product that may do more Harm than Good By Craig McCann, PhD, CFA, Fairfax, Va. Vol. 11, No. 3, Spring 2007 The Action Behind the Scenes of Fixed Insurance Products By Vincent Micciche CRCP., Rochester, N.Y. Seven Steps to Prepare Your Clients for a Catastrophic Computer Attack By Mauro M. Wolfe, New York, N.Y. Option Backdating: Important as to Corporate Integrity, but not Material as to Stock Valuation By Robert E. Conner, Summit, N.J.

A Publication of the American Association for Justice

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Vol. 12, No. 1, Fall 2007

AAJ LITIGATION GROUPS the truest spirit of collaboration
AAJ Litigation Groups are a critical tool for our members to level the playing field when forced to battle the overwhelming resources of corporate counsel. Litigation Groups are voluntary networks of AAJ members who share an interest in a particular type of case. These groups cover a wide and diverse array of cases including Vioxx/Bextra, Nursing Homes, Inadequate Security, Heart Devices, and Gastric Bypass, to name a few. By capitalizing on the experience of your colleagues who have prepared similar cases you can… • Save time and money by gaining access to knowledge and documents from cases similar to yours. • Avoid pitfalls by uncovering specific strategies from your colleagues. • Reduce the time it takes to prepare a case for trial. • Structure your discover strategies and arguments toward a favorable verdict or settlement. AAJ currently supports more than 80 Litigation Groups and new ones are constantly being added.

Examples of AAJ Litigation Groups:
• Abusive Tax Shelter • Financial Securities and Analysts • Telemarketers, Spam and Junk Faxes

formerly Association of Trial Lawyers of America (ATLA®)

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