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Monday, March 28, 2011

Court Grants "Godfather Privileges" in a Stunning Gutting of the Federal Hobbs Act in March 25th, 2011 Rennell vs Rowe Ruling.


I believe that the Federal Hobbs Act may have just been gutted by a March 25th, 2011 ruling in Rennell v. Rowe.

In sum, extortion under the Hobbs Act can occur outside of the labor context when a person uses physical violence or the threat of violence to obtain property, whether or not the defendant has a claim to the property. If a defendant has no claim of right to property, the use of fear to obtain that property—including the fear of economic loss—may also amount to extortion.
In contrast, where the defendant has a claim of right to property and exerts economic pressure to obtain that property, that conduct is not extortion and no violation of the Hobbs Act has occurred. See United States v. Sturm, 870 F.2d 769, 773 (1st Cir. 1989);Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 523-24 (3d Cir. 1998). We consider Rennell's assertions against this backdrop.
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"...exerts economic pressure is no violation of the Hobbs Act"...??? Are you kidding me!!! Exerting economic pressure could mean ANYTHING.
"Exerting economic pressure" could be no different than being in a poker game in which the other player has more chips than you and you can't match their raise and lose by default.
THIS ISN'T POKER! Rowe and Rennell WERE BUSINESS PARTNERS. The court seems to have forgotten that mercenary actions against business partners would be no different than the bailiff plotting against the courtroom judge that they work with.
Quickly recapped, Rowe and Rennell were business partners running a successful business. Rowe decided to replace Rennell and gave Rennell 24 hours notice to either take a $300,000 dollar buyout, or get nothing. The acknowledged value of Rennell's role in the business was approximately TEN TIMES the $300,000 dollar offer.

If Rennell refused the offer, he would get nothing, and might have difficulty raising funds for a legal battle. Rennell agreed to the forced buyout, and was also forced to agree to not sue if he took the "buyout".

On appeal the judges have sided with ROWE and against Rennell!

What if Rennell had refused the 10 cents on the dollar settlement offer? Two possible outcomes could have been; Rennell is escorted by force from the locations where Rennell and Rowe conducted business together, or, Rowe could have simply stopped paying Rennell.

The first of those two outcomes would be a Hobbs Act violation because of the use of force needed to escort Rennell from the premises. The second of those two outcomes, suffocating Rennell economically, would appear to be a Hobbs Act Violation under the extortion clause as well.

Is it ethical for the courts to allow one party with a superior financial standing to starve out their business partner or force them to accept whatever offer is being given?
The court itself cited the situation as "an offer Rennell "couldn't refuse", a direct reference to the movie "The Godfather". Yet the court than grants "Godfather Privileges" to Rowe! Does the court even get the outrageousness of referring to a mafioso practice, then handing down a verdict that sanctions mafioso activity?
It appears that what the judges are saying is that if you extort someone vis a vie paper or currency, it is not considered a Hobbs ACT extortion because the "threat" was not physical in nature.

Simply withhold currency, and no Hobbs act violation has occurred, what a horrible court precedent to set.

I also found the fruit store, "dollar a peach" analogy flawed as well. The judges were implying that the storeowner does not have the right to refuse service to a customer, and therefore the storeowner was not acting in good faith. A store owner can refuse the right to serve anybody. But the scenario cited above involves a different set of circumstances since it involves a business owner versus a customer, rather than owner vs partner, or employer vs partner. Very odd of the judges to use such a non conforming analogy.

The bigger issue is that if this ruling stands, extortion by paper or currrency becomes the order of the day, and the Federal Hobbs Act will have been gutted, big time.


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