What killed the Twinkie?

That should be the legal and financial question we ask as we assess the most recent bankruptcy filings of Hostess, the maker of the cream-filled confection.

Hostess Twinkie

The Hostess Twinkie: Will it survive?

Last week, a new, cholesterol-laden version of Black Friday occurred, when distraught shoppers besieged stores seeking anything made by the company. They feared that the bankruptcy meant Twinkie’s, Ding Dongs, Wonder Bread and more would now be unavailable forever.

I was personally “along for the ride” as a friend went through his mournful exercise of seeking Hostess products. In a Phoenix Fry’s store, he eventually opted for what was left—a chocolate cream-filled Twinkie, which seems a bit like bastardizing a bastard product. But that’s just me, a former East Coaster, who prefers Drake’s Cakes (go ahead, Google it.)

The Twinkie eulogy (which may be premature, as this news story says) was written pretty well by Wall Street Journal reporters Rachel Feintzeig, Mike Spector and Julie Jargon:

“The seemingly imperishable Twinkie finally may have an expiration date.”

“Hostess Brands Inc., the 85-year-old maker of iconic treats such as Twinkies, Ding Dongs and pantry staples like Wonder Bread, on Friday said it would go out of business after failing to reach agreement on wage and pension cuts with its bakers’ union.”

OK, as far as it goes. The newspaper was able to get the dreaded “U” word (“union”) right up top in the story, parroting Hostess’s management’s view of its demise. Later in the story, the reporter showed at least a little critical-thinking in that regard. But it’s not until you get to the story 12th paragraph—roughly halfway through the story—that we learn there may be players other than the dreaded union in Hostess’ untimely demise:

“The company’s burdensome debt traces back to Hostess’s first trip through bankruptcy in 2004. Missteps by a private-equity firm, hedge funds and managers since burdened the company, despite its more than $2 billion in annual sales.”

“‘I think there’s blame to go around everywhere,’ said Chief Executive Gregory Rayburn, a turnaround expert hired this year.”

“Increased costs for ingredients and fuel, a failure to adjust to demands for healthier foods, and the U.S. recession combined to weaken Hostess.”

The story goes on to explain that, following its second bankruptcy in 2009, Hostess “was owned by private-equity firm Ripplewood Holdings LLC and saddled with more than $700 million in debt that crimped investment. Ripplewood and lenders, including hedge-funds Silver Point Capital LP and Monarch Alternative Capital LP, hired new management that failed to keep pace with shifting consumer tastes to healthier foods and pursued marketing promotions that backfired.”

No Bain Capital to be seen, but you get the picture. I do enjoy the WSJ world, where $700 million may “crimp” investment.

Sounds a little like the Twinkie defense.

You can read the entire article here.


The clearly superior Drake’s Devil Dog

Judge Alex Kozinski

In the April issue of Arizona Attorney (currently on the newsstands, or the coffee table, or wherever you keep it), our back-page news story describes a visit to Arizona by the Chief Judge of the U.S. Court of Appeals for the Ninth Circuit.

For the brief story, I interviewed some lawyers who organized the event, as well as some rank-and-file attendees. And what was one thing that was oft repeated by the lawyers about Judge Kozinski?

“He’s a straight shooter,” a number of people reported. He’s candid and honest, said others. People enjoy reading his opinions.

Joe Palazzolo

Or even his dissents, as it turns out.

Recently, the Wall Street Journal Law Blog noted a Kozinski dissent in a gun-show case. As writer Joe Palazzolo describes, the Ninth Circuit’s “11-judge panel considered a long-running dispute over a ban on gun shows at the Alameda County fairgrounds in California.” That ban had been in place since 1998, when 16 people were injured in a shooting.

And since 1999, the case has wound its way through the courts. Opponents, not surprisingly, want the ban expunged.

But earlier this month, the panel voted, 9 to 2, to send the case to mediation. However, Judge Kozinski would have none of it. In his dissent, he says:

“The parties have not asked for mediation; they have said nothing that suggests mediation would be fruitful; when asked about it in court, they displayed obvious distaste for the idea. We overstep our authority by forcing the parties to spend time and money engaging in a mediation charade. Our job is to decide the case, and do so promptly. This delay serves no useful purpose; it only makes us look foolish. I want no part of it.”

There is some of that candor lawyers and others enjoy—even when they may not agree with his position.

The order—and dissent—in Nordyke v. King is here.

In late February, UC-Irvine Law School Dean Erwin Chemerinsky came to Tempe to deliver the annual John Frank Lecture at Arizona State University. In that evening, he sought to give us some insight into our nation’s highest Court.

In advance of his Lecture, I published an interview I did with the Dean; it appeared in the February Arizona Attorney Magazine.

Erwin Chemerinsky apeaks at ASU, Feb. 20, 2012

His presentation was masterful—well written, well delivered, zero notes—and the questions that followed were well put.

However, as I sat in ASU’s Neeb Hall, I thought that some of the questions were pretty lawyerly. They involved intricate details of specific cases, and his prognosis of whether the Court might take up this or that historical remnant in order to decide a case.

Our Q&A opening, February 2012 Arizona Attorney

All of those things are fascinating, and Chemerinsky was able to speak amiably about each of them.

But I wondered—and then asked—about something different. He had spoken that evening about the Court’s likely approach in regard to the Affordable Care Act, a hot-button topic on both sides of the political aisle. However, Americans wondered whether all of the legal details would matter to the Court. It seemed to me that many people have come to see the Supreme Court as a largely partisan battleground. Therefore, even though most commentators, including Chemerinsky, believe the Court will ultimately uphold the law, many lay people—and even lawyers—don’t expect it will get a fair shake at SCOTUS.

As I recall, Dean Chemerinsky answered that it’s unfortunate that many people, especially since Bush v. Gore, hold the view that the Court is overly political. And then he took another question.


Well, in today’s Wall Street Journal Law Blog, the question is addressed head-on. In it, writer Sam Favate examines a recent poll that shows—yep—that most Americans believe that politics will influence the Court’s health care insurance ruling.

Although an ABA poll showed that 85 percent of lawyers, judges and legal journalists believe the law will be upheld, “Three-quarters of Americans say the Supreme Court will be influenced by politics when it rules on the constitutionality of the 2010 Affordable Care Act, according to a Bloomberg National Poll.”

That’s a huge number of people.

In a related matter, I came across this opinion piece in Politico last week titled “Scuttle SCOTUS’s Life Tenure.” The writer opens:

“Life tenure for Supreme Court justices does not belong in a democracy. It gives an unelected public official immense power for decades over the lives of hundreds of millions of people without any accountability. It should be abolished and replaced with a single, nonrenewable term of approximately 15 years.”

Such a thing may be unlikely. But given the discontent with a perceived political bent on the Supreme Court—more than a decade after Bush v. Gore—such positions may be stated more and more.

What do you think about the Court’s current approach, and about life tenure?

And I must give a hat tip to The Ohio State University’s Douglas Berman, who alerted me to the Politico story here.

An intriguing post was published today over at the Wall Street Journal Law Blog. (Haven’t bookmarked it yet? What are you waiting for?)

In it, reporter Joe Palazzolo examines a unique company structure and muses on the issue of “When a Company Sounds Suspiciously Like a Law Firm.” The companies are legal staffing firms.

As Palazzolo notes, many of these firms go so far as to tout the depth of experience and legal expertise available to customers (clients?). And if they do that, “And if they’re not law firms, then the question is this: What services can they provide without violating regulations that prohibit them from practicing law?”

The question is not a hypothetical one. He points out that a regulatory committee of the D.C. Court of Appeals—the District’s equivalent of a state high court—has drafted an opinion on the matter (“Applicability of Rule 49 to Discovery Services Companies”). You can read it here.

What do you think of the situation? Do you see similar activities in Arizona that give you pause?