Arizona Bankruptcy Attorney Blog

Remember my "it's better to be lucky than smart" comments?

Yeah. Neither do I.

But when I read this article about a poor woman with a disabled husband who finally got a job during a depression, it made me very, very sad.

It also made me very, very angry.

I haven't decided what I'm going to do about it, but for starters I want everybody to know about the company that has no heart whatsoever.

And in a world where facebook exists, it's probably a good ideal to avoid doing things that make a lot of people angry.

After all, Old Spice unexpectedly went viral after some funny commercials.

Bad publicity spreads, just like good publicity.

So here's the article that made me cranky; read it, and if it makes you cranky too, ask yourself what you can do about it.

Me, I'm still thinking. But while I'm thinking about it, I'm talking about it, too! Here's the article by Laurie Roberts (and thanks for picking this up, Laurie!):

Laurie Roberts' Columns & Blog

Laurie Roberts is a columnist for The Arizona Republic.

Towing the line on the right to work (or not)

To look at her, Angela Dominguez doesn't appear much of a threat. She's a wife, the mother of four kids. A woman who hit the jackpot this summer, landing a $13-an-hour customer-service job for a local towing company.

Her husband is disabled and can't work, so getting the job at All City Towing was a hallelujah moment -- one that'll allow this formerly homeless family to pay the electric bill without city assistance, one that'll leave them with a little money left over for luxuries. Like school uniforms.

Or maybe not.

The nation's largest towing company -- Dominguez's former employer and the company that holds a city of Phoenix contract worth millions -- is demanding that she quit her new job or be fired. If not, both she and her new employer may be sued.

It seems she must hold the secret Coca-Cola recipe or whatever is the equivalent in the towing business. United Road Towing claims she signed an agreement not to work for the competition for a year.

The Illinois-based company's Arizona lawyer, Robert Mackenzie, sent Dominguez a certified letter on Aug. 25, demanding that she leave her job. Or else.

The "or else" includes threats of injunctions, lawsuits and damages, essentially a promise to cripple her financially "even if URT has not yet suffered any damages as a result of your violation of the Employee Non-Competition and Confidentiality Agreement."

Now, I understand the occasional need for non-compete clauses. They are generally required of people in positions of authority, executives and such who have actual information about a company that could be used by their competitors. But since when are $10-an-hour employees let in on the company secrets?

Dominguez, 36, who says she never signed such an agreement, went to work for URT in 2008. The family had been homeless the previous year, after her former employer closed its Arizona operation. Struggling to rebound, she was happy to get the $10-an-hour job as a call taker. For three years, she worked for URT, the last two as an administrative assistant.

Making it on $10 an hour was tough, she says, but she scraped by, with help from the city's utility assistance program, food stamps and an understanding landlord who never tacked on late fees. Still, after three years, the promised raises never materialized so she started looking for another job, which, in America, is generally allowed.

In June, she went to work for All City Towing, earning $13 an hour as a customer service agent. The extra $500 a month was a godsend, allowing her to meet her bills and even set aside enough for school uniforms for her 12-, 10-, 8- and 7-year-old children.

Well, you can imagine her reaction upon getting URT's letter demanding that she quit: Shock, bewilderment, fear - the 3 a.m. wide-awake-and-wondering-what-to-do kind of fear.
Not even $13 an hour leaves enough left over to hire a good attorney, after all.

Dominguez says All City's managers have never asked her about URT. Even if they had, she says she doesn't know anything confidential.

URT, which operates in Arizona as Shamrock Towing, Fast Towing and All Valley Impound, declined to explain what a $10-an-hour employee might know that would put the company at risk. Or why it's fair to close off options for low-level employees who apparently have no way of earning a decent living unless they leave. But the company did provide this statement:

"Arizona law recognizes and enforces these agreements and they are typical in industries where sensitive sales and marketing information is provided to employees such as Angela," Edward Arensdorf, senior vice president for URT's West Region Operations, wrote.

Jeff Dunn, general manager of Tempe-based All City Towing, says he has no intention of firing Dominguez - nor does he expect her to sign a non-compete clause.

"I don't know what knowledge she could possibly have that could threaten their business," he said. "If they're giving a $10-an-hour employee that knowledge, that's crazy."

That's also something for the Phoenix City Council to think about. URT's towing contract with the city expires on Nov. 30. Why on earth would the city -- meaning its taxpayers -- want to do business with a company that hires lawyers to stop its $10-an-hour employees from finding better jobs?

Dominguez says she liked working for URT, but the last straw came this spring, during a talk with her son.

"My middle son Roman told me, 'Mom, can you just get a job that you can take us to McDonalds once a month?' " she said. "I mean, it seems so little but for it to come out of my son's mouth. That's pretty sad, that I couldn't even provide them a Happy Meal."

The question these days isn't whether she can provide them a Happy Meal but whether she'll be able to provide them with any meal.

Once URT is done with her, that is.

(Column published Sept. 20, 2011, The Arizona Republic)

Remember the "better to be lucky than smart" approach to avoiding a bankruptcy?

I know. Neither do I.

But recently I've gotten to see a lot of hard luck bankruptcy cases.

The hard luck might be a repair crew on the entrance to the shopping center.

Or it might be a federal raid, as in Gibson Guitar (I sure hope they don't have to file a bankruptcy; they employ a lot of U.S. Workers, and make darn good guitars!).

Or your lease might just run out, as with the Scottsdale Six Drive-in Theater, after a good run for 34 years.

Now, you might think that it's just another drive-in theater that couldn't compete with new technology.

Wrong, Celluloid Breath!

The Scottsdale Six Drive-in Theater had been on track for its best year to date.

When I see a business that does everything right, with employees, that puts money into a local economy, and it gets to close its doors just because of bad luck, that makes me sad.

Oh, yeah.

The bad luck that the business experiences?

That gets doubled for the employees.

So does that mean more consumer bankruptcy cases get filed when businesses are unlucky?

Well, yeah.

Remember the "it's better to be lucky than smart bankruptcy avoidance rule"?

Yeah, me neither.

But I've written before about places that were unlucky enough to have a business in a shopping center where the street was being repaired.

For two years.

Not quite as common is the situation that arises when a manufacturing facility is raided based on an interpretation of a law in India.

And the implicit advice that Gibson Guitars was given was simple: use Indian Workers rather than U.S. Workers.

That makes me sad. Seems to me that if there was any question at all on any matter, all government agencies should ask themselves, "will this action take away jobs from U.S. Citizens?"

Now, Gibson Guitar has discussed its position on the raid, and understandably, Gibson is a little cranky about being put out of business, even if it's only temporary.

And the U.S. Workers who had been getting paychecks from Gibson? They're a little cranky, too.

Most Americans would prefer jobs to unemployment.

But here's the Gibson Guitar take on the issue; enjoy reading!

I've noticed that not many folks are talking about a double-dip recession these days.

I chalk it up to an inability to keep a straight face when saying goofy things.

For the United States to go into a double-dip recession, it would have had to have come out of a recession, right?

And the jobs report for August was abysmal.

Shaila Dewan at The New York Times has discussed the worst job showing in eleven months.

She pointed out that the unemployment rate is 9.1%, and admirably, also she also referenced the sky-high U-6 measure of inflation.

Now, is this a depression?

Well, global manufacturing is down, down, down. Emily Knapp, at Wall Street Cheat Sheet, gives us the numbers, and they awful.

So here's my answer to the question, is this a double-dip recession, or a depression?

It doesn't matter.

I just want it to stop.

Because as long as unemployment is sky-high, people will need to file bankruptcy cases.

Which are down slightly last month.

Go figure!

Consumer confidence is at its lowest ebb since the great recession's depths, according to a CNN story by Annalyn Censky.

And why not?

Unemployment is huge, with the official number hovering at 9.1%.

But everyone who has boots on the ground and at least one friend knows perfectly well that the real unemployment numbers are higher (remember, the U-6 Official Measure of Unemployment is 16.8%, which is overwhelming).

And the real unemployment situation is far, far worse than that.

Because the unemployment figures don't reflect the fact that people who were earning a hundred and fifty thousand a year a few years ago are now earning $12 per hour, with no benefits.

And even though the official inflation numbers are quite restrained, if you go into a grocery store you'll figure out that those official numbers are officially...cooked, you know?

Now, I have a lot of respect for the opinions of ordinary people, because I are one.

And if consumer confidence is at the lowest point since the Great Recession, you know this for a fact: there was never a question about a double-dip recession.

It's never gone away.

How do I know?

I just count the people coming into my office, and look at the price of coffee, and then look at the price of a car in a 1975 magazine and compare it to the price today.

Things are bad, and I hope they get better fast.

But any attempt to fool consumers into spending money they don't have to bail out the economy when that's economic suicide for consumers isn't going to work.

Consumers are pretty smart.

So, you've figured it out, right?

You're never going to get to retire.

There are articles like this one by Rachel Louise Ensign in the Money Section of WSJ which suggest that some seniors may need to keep working.

My scientific analysis of this situation tells me that the actual number is going to be much, much closer to "all" than "some".

And that's because inflation is raging, and jobs are in short supply, which means there are more applicants than jobs, which in turn means that when you do find a job, you'll be working for peanuts.

Don't get me wrong; peanuts are nutritious, and even though they are actually a legume, they're nutritionally similar to tree nuts.

No kidding.

And I'm also not kidding about my entire generation having the privilege of continuing to work for a very long time.

Now, experts in retirement sometimes suggest that you enter into retirement debt-free.

How to do that?

Let's talk.

I like all my Arizona Bankruptcy Blogs, but one that I'm very fond of right now is my Bankruptcy Crossroads blog.

It has more topical discussions about news of the world, and municipal insolvency, and how "Sugar Babies" are finding "Sugar Daddies" to help out with non-dischargeable student loans.

I guess it was inevitable that an economic depression would have bad effects, but I was never creative enough to think that anybody would suggest online gambling to fix governmental insolvency, or that pretty young graduates would list themselves on "Seeking Arrangement" to find rich, old guys.

Between the gambling and drug use and what some would describe as prostitution, it seems to me that things are a little darker than I would have imagined a few years ago.

And I've read that Greece was extremely progressive in the area of online gambling.

But it was also addicted to spending, so that didn't, in the end, help either Greece or its citizens.

What do I hope for the rest of the year?

Well, I hope that news in bankruptcy is that we have many fewer consumer bankruptcy cases in Phoenix, and Scottsdale, and Mesa, and Glendale, and Chandler, and all over Arizona.

But I don't think I'm going to get my wish.

Now, you'd think that I'd be delighted with online gambling, because it will lead addicts directly into bankruptcy, and you'd think that I'd be delighted that Sugar Babies will file bankruptcy to discharge their credit card debts so that more of the Sugar goes to student loans, and you'd think that I'd be happy that governments are borrowing and spending at a rate that the next municipal bankruptcy cases will make Central Falls look like a piker.

Faithful readers know that you'd be wrong.

Student loans have overtaken credit card debt.

'Atsa one spicy meatball of debt!

And a big one.

The trillion dollar student loan bubble has experienced increasing default rates in the years available to review. If you look at 2005, the default rate on student loans was 4.6; if you look at latest year available for review, 2008, you see a default rate of 7%.

Does anybody want to bet that 2009 and 2010 will show horrifically higher default rates?

The Government has taken steps to limit the profits being made by private schools that have a high default rate; it will be interesting to see if it applies the same standards to public schools, which are working the same side of the street.

Now, I have a theory, and it goes like this: you can fool some of the people all of the time, and all of the people some of the time. But you can't fool all of the people all of the time.

Until recently, it looked like going back to school had little opportunity cost associated with it, because there were no jobs to take in any case.

But now, that proposition doesn't look quite so sweet.

Kids coming out of school are increasingly angry that they were sold a bill of goods, and rightly so; I note that law students are suing law schools for providing them with inaccurate data on hiring statistics and income statistics of graduates.

Once kids have a realistic understanding of the way the story ends (being garnished forever from your minimum wage job, and the standard for discharging student loans in bankruptcy out of reach), they may be less interested in the siren song of the expensive four-year university and the useless degree in Interdisciplinary Studies.

And while some commentators believe that a catastrophic (for universities) fall-off in student applications will happen in thirty years, I think information circulates a lot faster today than it did in the good old days (formerly known as "these trying times").

And I expect that we'll see universities closing right, left and sideways, because this is a depression, and kids aren't stupid.

I love an innovative solution to economic problems!

After all, if China is actually manufacturing products, then the Chinese will have money!

And then the Chinese can spend that money here in the United States!

But I don't think these innovators go far enough.

We have a lot of opportunities here in the United States to bring over Chinese Tourists.

We can build pole-dancing bars to attract Chinese businessmen!

There's a real opportunity here!

Oh, yeah. Why do we have a shortage of jobs in the United States?

Well, I discuss that issue here.

And then there's excessive government regulation here in the United States, but that's an issue for another day.

In June, a disappointing 18,000 private sector jobs were created in the United States.

In the entire United States.

More than half of those were created in Wisconsin.

So whatever they're doing in Wisconsin, other states need to start doing that.

Got the idea?

For all bibliophiles, the passing of an empire of books is a sad thing.

Borders was a great place to hang our and browse books and music, and the local Borders at 24th Street and Camelback in Phoenix, and it had a very nice staff.

And that staff, along with the other 10,700 remaining employees of Borders at the remaining 399 stores across the country will not get a storybook ending, and live happily every after. Because Borders will be liquidating; the Stalking Horse didn't stalk very well, apparently.

Those employees now get to look for a job in an economy where unemployment, by some measures, is 16%.

And those are lousy odds.

And you might think that a Phoenix Bankruptcy Lawyer would love to see unemployment rising and bankruptcy cases to the right and left.

You'd be wrong.

And even creditors are unhappy with the Borders Liquidation; they don't like the hurried and confusing quality of it.

I agree; I prefer orderly and leisurely liquidations myself!

I recently read a story about a good-citizen company closing its doors, and a lot of folks losing their jobs, leaving a cleanup for municipalities.

I'm always sad when I read this kind of story; and I'm reading it more and more often these days.

And what happens when a business closes? Well, the people who used to have jobs can't pay their debts, and can't go to local restaurants; and more businesses close.

Debt flows downhill.

Small businesses have always been "the engine of U.S. jobs growth".

But that engine is stalled on the tracks, and we can expect no relief there for the remarkably high rates of unemployment in the United States today, according to this article in Reuters by Partricia Zengerie, which discusses a poll taken of small businesses taken by the U.S. Chamber of Commerce.

And that is a very bad thing.

Because without more jobs, there will be no increases in spending by the citizens of the United States.

And without spending (and remember, they gotta have money to spend, right?), this recession has no end in sight.

And no matter that I'm an Arizona Bankruptcy Lawyer, that makes me sad.

p.s. the real jobless rate is far higher than the official jobless rate, as this article from MSN Money by Mary Engal explains.

And while the "U-6" measure of unemployment shows joblessness at 16.9%, the actual, factual number is still higher.

But you knew that, just by talking to your friends and relatives on Facebook, right? Oh, and if you "like" my facebook page, it makes my day.

So like it if you like, because that makes me happy!

And somebody ought to be happy, even if we have depression-level unemployment!