Federal Judiciary

Burn v. Neiman Marcus (Cal. Ct. App. - April 28, 2009)

By Shaun Martin

Gambling debts? Drug problems?

Sure. I've seen all the above.

But here's a new one. Someone who embezzled -- to the tune of $1,000,000 -- and spent nearly all of it shopping at Neiman Marcus.

I gotta say that's a new one to me.

Mind you, I think I can one-up this. I was once at a law firm where the bookkeeper, who was a 60-ish year old woman, embezzled around the same amount and spent a fair chunk of it on twenty-something boy toys.

I guess it's all about what you happen to really, really like.

P.S. - On the merits, I actually think that Justice Pollak's dissent makes a darn good point. The majority holds that retailers have no duty whatsoever to ensure that they aren't paid with stolen or forged checks, regardless of the number of red flags. I understand the reasoning, but think that the better view might be to the contrary. Let me give a hypothetical -- or, at least, I'll call it a hypothetical. Imagine that someone brings a small claims action against AT&T because it accepted multiple abnormally large ACH transfers (e.g., "pay-by-phone", where you just give your account and routing numbers on the check) from a dude who took those numbers off a third party's check. AT&T accepts the money (over $1000 worth) but, due to the suspicious nature of the transfers, cancels the subscriber's cell phone account. But keeps the money, and never tells the third party (i.e., the person whose account numbers were stolen) that it actively suspects fraud. The thief subsequently is caught and sent to jail for his crimes, AT&T is up $1000+ for services it never had provided, and the victim loses another $500 (in addition to the $1000+) during the period between when AT&T discovered the fraud (but did not tell him about it) and when the victim discovered it. The majority here says there's "no duty" at all, so presumably the victim recovers nothing. Whereas I think that the victim should clearly recover the $1000+, and potentially the $500 as well. [To avoid speculation, no, this didn't happen to me, nor to anyone I know personally.] For this reason, I'm not sure that I wouldn't take this case up if I was on the California Supreme Court. The categorical rule established here seems overly harsh, and creates a fair amount of mischief.

Full post as published by California Appellate Report on April 30, 2009 (boomark / email).