Sharing, With a Safety Net

Now California legislators are trying to solve the problem with the first measure in the country to give minors the legal right to scrub away their online indiscretions. The legislation puts the state in the middle of a turbulent debate over how best to protect children and their privacy on the Internet, and whether states should even be trying to tame the Web.

The governor, Jerry Brown, has taken no position on the bill. He has until mid-October to sign it, after which, without his signature, the legislation becomes law.

California is often in the vanguard when it comes to digital privacy. It was the first state to require companies to report data breaches, and it requires Web sites and mobile apps to post privacy policies that explain how personal information is used. A recently passed law requires Web sites to tell users whether they honor browsers’ do-not-track signals.

The right-to-delete, or eraser, provision is part of a broader bill that prohibits Web sites, which have “actual knowledge” that a minor is using the site based on a profile and activity on the site, from running ads for a range of products — including alcohol, spray paint, tattoos, tanning beds and e-cigarettes. The eraser section compels online sites to let users under 18 delete rants, tweets, pictures, status updates and other material.

Although many companies, including Facebook and Twitter, already offer this option to their users, the California bill would make it a right across the Internet for children who live in that state.

“Kids and teenagers often self-reveal before they self-reflect,” said James Steyer, chief executive of Common Sense Media, a San Francisco-based advocacy group that pushed for the law. “It’s a very important milestone.”

The rash revelations by a Texas teenager, Justin Carter, on Facebook last February — a threatened school shooting his family insists was sarcastic, made in the heat of playing a video game — landed him in a Texas jail on a felony terrorism charge for nearly six months. His father, Jack, favors the California legislation, but wonders if it would go far enough.

“They should be allowed to delete it, but then again is it really deleted?” Mr. Carter, 39, of San Antonio, said in an interview this week.

Also, Mr. Carter said, if his son had deleted the conversation that someone reported to the authorities, would the deletion be seen as destroying evidence?

His son, now 19, is out on a bond, pending trial. Any law trying to tame the Internet, he said, is likely to run into turbulence.

“It’s a whole new territory, it grew faster than the laws did,” Mr. Carter said. “We’re trying to come up with things to make it all neat. There’s collateral damage — my son being one of them.”

Critics of an eraser law see pitfalls. They warn that in trying to protect children, the law could unwittingly put them at risk by digging deeper into their personal lives. To comply with the law, for example, companies would have to collect more information about their customers, including whether they are under 18 and whether they are in California.

There are also practical concerns. If other states pass similar laws, companies would be forced to devise multiple policies for the underage residents of different states — confusing consumers and creating unwieldy requirements for Web businesses that are essentially stateless, except for issues like collecting sales tax. The Internet, opponents of the law say, should be regulated by a uniform set of rules, not piecemeal by the states.

“This is well-meaning legislation but there are concerns about it,” said Stephen Balkam, president of the Family Online Safety Institute, which advises companies like Facebook and Microsoft on online safety issues.

Mr. Balkam said he favored Congressional oversight in issues like children’s online privacy and, if necessary, regulation by the Federal Trade Commission. “Where California leads, others follow,” he said. “I think it will be a mess.”

Some supporters of the bill say Internet companies got off easy. The eraser bill does not, for example, require companies to remove the deleted data from its servers altogether, nor does it offer any way to delete material that has been shared by others; a sensational picture that has gone viral, in other words, can’t be purged from the Internet.

And it is nothing like the right-to-be-forgotten measure that legislators in Europe have been pressing for. That proposal would, at its core, allow all Europeans, not just children, to delete their online personal information; several amendments to the plan address freedom of expression concerns.

“It’s an important first step, but there’s more to be done,” Mr. Steyer said.

Mr. Steyer’s organization, which participated in a safety advisory group with Facebook but soon left after disagreements with the company’s approach, has been pushing for more aggressive legislation. Those efforts in 2011 led members of Congress to propose a measure that would have allowed parents to scrub material posted by their children. Criticized by free speech advocates, the bill went nowhere, though Senator Edward J. Markey, Democrat of Massachusetts, who was a co-sponsor, plans to introduce it again later this year.

Short of federal privacy laws in general, states have been passing laws on a host of privacy matters, in many cases following California’s lead.

“Often you need to comply with the most restrictive state as a practical matter because the Internet doesn’t really have state boundaries,” said Mali Friedman, a lawyer in the San Francisco office of Covington & Burling, a national law firm.

Fair Game: For Dell Investors, a Safety Valve

Investors who think that the price is inadequate have surely been disappointed that a higher bid never emerged. One big Dell investor, Southeastern Asset Management, has estimated that the company is worth almost $24 a share.

But many shareholders may not realize that they have an intriguing alternative that could generate more money than Mr. Dell is offering: requesting that a court appraise the company’s long-term value.

Because Dell is incorporated in Delaware, such an appraisal process would go through that state’s Court of Chancery. Upon the case’s conclusion, Delaware law would require Mr. Dell to pay the shareholders bringing the litigation whatever value the court determined was fair.

Going the appraisal route has its risks. One big one is that the court could award shareholders less than the $13.65 a share that Mr. Dell is offering. The cases also take time, during which investors’ stock is tied up.

But in the Dell case, an innovative trust has been set up by an outside group allowing Dell shareholders to pursue appraisal-rights litigation while also allowing them to sell their shares. More on that later.

Shareholders making legal challenges to buyouts typically base them on a supposed breach of duty by company directors overseeing the process. No such breach is required in appraisal litigation. Investors simply agree to disagree on the proposed purchase price and ask a court to assess the company’s value.Nevertheless, because of procedural complexities, appraisal litigation in takeovers is not that common.

Often purchasers limit shareholder participation in appraisals to minimize their financial exposure should a judge rule that a higher price is in order. But Mr. Dell’s offer did not limit how many shareholders could mount an appraisal case.

In the Dell transaction, said Lawrence A. Hamermesh, a professor of corporate and business law at Widener Law School in Wilmington, Del., appraisal litigation could be “a safety valve on doubts about whether a valuation process worked appropriately.”

“No matter how effective you think special committees are, some people genuinely believe the result isn’t fair,” he said. “So this is a way of giving people access to a court to make that determination.”

For appraisal litigation to proceed in the Dell case, a majority of the company’s shareholders — not counting Mr. Dell — must first approve his offer. Only then can investors who chose not to tender their shares bring an appraisal case.

“What makes this an interesting case for appraisal is you rarely see going-private deals of this size,” said Jeffrey Gordon, a professor at Columbia Law School. “If you’re a 3 percent or 5 percent owner, the litigation cost of an appraisal case for Dell is a tiny fraction of the potential upside.”

The outcomes in past appraisal cases suggest that such litigation can pay off handsomely. Some 40 appraisal cases from 1984 through 2004 that culminated in court decisions were cited in an unpublished paper by Charles Korsmo, assistant professor at the Case Western Reserve School of Law, and Minor Myers, associate professor at Brooklyn Law School.

The professors found that in the 40 cases where both the merger premium and the court’s finding were disclosed, appraisal litigation generated a median award of 50.2 percent over the buyout price. Mr. Myers noted in an interview, however, that some of the cases involved small, private companies where a large premium did not amount to all that much in dollars.

Eric M. Andersen, a lawyer specializing in appraisal litigation at the law firm of Mark Andersen in Wilmington, Del., has also studied cases that went to trial. His analysis identified 46 since 1985; among those, the court assigned a lower price in only seven of them. The median premium paid in cases analyzed by Mr. Andersen was approximately 72 percent.

Another benefit to joining an appraisal case, lawyers say, is that Delaware law gives participating shareholders 60 days after a shareholder vote to change their minds and tender their shares. So why haven’t there been more appraisal cases in recent years? Operational hurdles and costs have made it hard for both institutional and individual investors to participate in such litigation.

But some of the main hurdles are being eliminated in the Dell case by the Shareholder Forum, an independent creator of programs devised to provide the kind of information investors need to make astute decisions.

NFL Players Association — Crappy Replacement Refs Are Putting Player Safety at RISK

NFL Players Association
Crappy Refs Are Putting
Player Safety at RISK

 
NFL players are in danger of seriously injuring themselves -- thanks to replacement refs like the ones who blew last night's game -- this according to a source at the players' union.

While everyone is, rightfully, up in arms over the refs awarding the Seahawks a bogus game-winning TD -- a source at the NFL Players Association tells TMZ ... "Health and safety is number one."

The source added ... "The owners imposed a lockout on a group [of referees] with 1500 years of combined NFL experience."

According to the source, the new refs don't have the chops to make the calls that prevent player injuries -- "We didn't make the call to put these guys in there, risking the integrity of the game, player safety, and all that stuff."

We're told the NFLPA has serious concerns its players  are risking their careers with such inexperienced refs on the field.

"They are high school and D-3 refs and don't have the experience. They aren't used to the size, strength, and speed of the players."