I'll be on vacation next week. Our editor and other bloggers should still be around, but if parts of the site aren't updated (e.g., Legal News), don't worry, they will be soon.
July 2004 Archives
In yesterday's New York Times, our editor had the following to say on the Democratic National Convention: "[T]he party spent $2.4 million on liability insurance for its four-day convention of about 5,000 delegates.... That works out to about $120 per day per delegate spent just on insuring against being sued -- and imagine if they were doing something physically riskier than just waving placards around.... So maybe Edwards's acceptance speech should include the line: I'm worth it."
Even more startling than the liability insurance rates Walter uncovered were the mind-boggling comments of Fred Baron, the Texas asbestos lawyer who is the former head of the American Trial Lawyers Association and co-chairman of Kerry-Edwards Victory '04: "The pharmaceutical industry, the insurance industry and the chemical industry have spent over $200 million over the last five years in ad campaigns that make trial lawyers look like villains.... I could spend $200 million and make most people believe that dog food tastes good."
Is that true? Mr. Baron, can you back that up? The businesses he lists certainly spend a lot on advertising, but $200 million to "make trial lawyers look like villains"?
No one I've spoken to can point to a single advertisement by these industries vilifying trial lawyers. If Mr. Baron can back up his assertion, fine. Until then, I'll be skeptical, especially given Baron's history with truthfulness. As our editor noted in The Wall Street Journal earlier this month, Mr. Baron's firm, Baron & Budd, infamously produced a "memorandum" for its asbestos clients to "prepare" them for depositions, which told them, among other things:
"It is important to maintain that you NEVER saw any labels on asbestos products that said WARNING or DANGER" (presumably, even if, in fact, they had); and
"Do NOT say you saw more of one brand than another, or that one brand was more commonly used than another. . . . You NEVER want to give specific quantities or percentages of any product names. . . . Be CONFIDENT that you saw just as much of one brand as all the others." (presumably, even if, in fact, they had seen more of one brand than another)
Until I see evidence to the contrary -- and I'm not holding my breath -- forgive me if I don't take Mr. Baron at his word.
Back in June -- before our site was launched to the public -- I wrote about the Third Circuit's disqualification of Senior District Judge Alfred M. Wolin from presiding over 3 of 5 consolidated asbestos bankruptcy proceedings, for Owens Corning, W.R. Grace, and USG Corp. As I noted then:
"A writ of mandamus to disqualify a judge is an extraordinary remedy, only granted when the reviewing court finds 'clear and indisputable evidence' that a 'reasonable person' would conclude that a judge's impartiality is in question.
"In this case, the court determined that Judge Wolin abused his discretion by relying on a five-member 'Council of Advisors' with whom he consulted about the case. The court ruled that two of the five advisors had a clear conflict of interest in that they also served as class counsel for asbestos plaintiffs on parallel but unrelated asbestos bankruptcy proceedings."
Judge Wolin subsequently retired from the bench.
This Wednesday, in a disheartening but hardly shocking turn of events, the retired judge announced that he would join the Newark law firm Saiber Schlesinger Satz & Goldstein, where his son also works. The firm was one of the "advisors" Judge Wolin brought in to help him with the asbestos bankruptcy cases. Readers are left to form their own conclusions...
That new Health Grades Inc. report is the subject of discussion on MedPundit and HealthDay/Forbes. One problem pointed out by Dr. Lucian Leape of Harvard School of Public Health, who is one of the authors of a previous widely cited report on medical errors, is that the new report treats as medical error so-called "failure to rescue" which, in HealthDay's words, "is not normally used in calculating deaths from medical errors; it's not an accepted standard." For problems with the earlier literature on medical errors, see these Overlawyered posts, this Manhattan Institute commentary on the Harvard Medical Practice Study, and this Peter Huber column.
The key issue, of course, is whether perfection (the absence of errors) is the definition of non-negligent behavior. If it is not (as I believe), then there should be liability only if a non-customary type or number of errors is committed. To admit this overtly, of course, is to admit that doctors are as fallible as other humans. Studies like this one will be trotted out en masse by the John Edwardses of this world, and it is to be hoped that courageous judges will see that they are irrelevant to a med-mal case.
A new study estimates that the number of patients who died from medical errors is more than double the findings in a 1999 report that itself sparked major concern.
The study by Health Grades Inc., a consulting firm in Colorado, used data from Medicare patients over age 65. The data was then adjusted to compensate for age. Researchers found that:
O Medical errors contributed to almost 600,000 patient deaths over the past three years, or about 195,000 per year.
O An earlier Institute of Medicine report estimated that 44,000 to 98,000 preventable deaths occurred each year due to medical errors.
O The costs associated with treating Medicare patients who were victims of medical errors is about $2.9 billion a year.
The majority of patients who died in the Health Grades study were taken from a medical coding called "failure to rescue," which refers to errors in diagnosing or treating illness that occurs after an operation. Other major causes of preventable errors include bed sores that lead to infection, postoperative infection, and postoperative respiratory failure.
If hospital errors were reported by the Centers for Disease Control as a cause of death, they would rank sixth, ahead of diabetes, influenza, pneumonia and Alzheimer's disease, according to researchers.
Source: Paul Davies, "Fatal Medical Errors Said to Be More Widespread," Wall Street Journal, July 27, 2004.
For the WSJ text (subscription required): click here .
One post describes a lawsuit in which a plaintiff alleged that her deceased husband had been "improperly diagnosed" with small cell lung cancer due to a "contaminated" tissue sample. The defendant hospital noted that such a theory would have required that "someone would have had to actually have lung tissue containing the cancer cells on his fingertips while when he handled the sample," a likelihood of "1 in 1.09 quintillion." As MedPundit notes, "The jury ruled in favor of the hospital, but the case took four years and several hundreds of thousands of dollars to defend. That's OK with Mrs. Brown, because now she knows 'the truth.'" Would she have felt that way if she'd had to foot the defense's legal bills? Sounds like a compelling argument for loser pays to me...
Also buttressing the case for loser pays reforms is MedPundit's example of doctors being added to suits without any due diligence on the part of plaintiffs' attorneys to the alleged misconduct: in her anecdote, the doctor in question hadn't even been at the hospital for one and a half years at the time the alleged incident occurred.
Does such madness have costs? You bet it does. MedPundit cites the 2003 American College of Obstetricians and Gynecologists Survey on Medical Liability, which shows that "12.5 percent of OB/GYNs in Pennsylvania have stopped practicing OB and 57.5 percent have made some change in their practice because of issues with affordability or availability of liability coverage, including relocating, retiring, dropping OB, reducing number of deliveries, reducing amount of high-risk OB care, or reducing gynecological surgical procedures."
And despite the claims of some defenders of the status quo, the nonpartisan Congressional Budget Office finds that noneconomic damage caps do indeed help contain medical care costs without compromising patient care.
Interesting stuff, all. Keep tuned to overlawyered all week for more on medicine and the law.
Canada's med-mal system is not nearly so threatened as ours is, in part because health care is "free" and thus its cost is not sought by alleged victims of malpractice, and in part because the lack of juries (see the two postings immediately prior to this one) changes the dynamics of the tort system. Having spent over half my life in that country (and being the only person ever simultaneously a member of the Virginia State Bar and the Barreau du Qu�bec...), I am struck by these differences almost every day.
Let's not forget, though, that that country's health care delivery system is bankrupt (morally and economically). It's important to remember this at a time when Canada's health care is defended by certain American politicians. Perhaps that's because politicians in Canada (like politicians in Cuba, and formerly in Soviet Russia) learn how to get a bit more health care than the rationed care "equally" doled out to the saps who actually believe in the system.
Recall that in the Great White North one is not allowed to purchase health care -- one must take (for "free") the services the state offers. Doctors may not make contracts with consenting adults. Zero pricing obviously results in queueing and humongous, life-threatening delays for operations and tests -- but at least everyone's equally treated, right? Gee, it turns out that sometimes politicians find a way to jump the queue. Here is a typical story -- contacts in Canada tell me this happens every day, if you have the right connections.
Walter is exactly right -- Canadian pain and suffering awards are capped. They have been capped for over 20 years.
This is a product of two phenomena:
1. Canada has a unitary court system: all judges of significance are named by the federal government (even if they are in provincial courts), and all provincial court decisions may be appealed to the Canadian Supreme Court.
2. There are no juries, for all intents and purposes, in Canadian tort trials.
As a result of these two phenomena, judges, not juries, set tort damage awards. Appeals courts may revise these damage awards for uniformity. In the 1970's, Canada's Supreme Court peremptorily announced that it would no longer tolerate huge differences in non-economic damages awards (aka "pain and suffering") from one province to the next, and from one judge to the next. It announced that it would reduce all non-economic damage awards to $100,000 CDN (since adjusted for inflation, of course).
Our jury system, and our dual court system, make it impossible to replicate the Canadian experience.
A February 16 Business Insurance survey of liability controversies in other countries ("Tort reform efforts not confined to United States") reports that in Canada "pain-and-suffering awards are capped at about $280,000 Canadian ($210,000)". Assuming this information is accurate, this is the first time I can recall reading about it in the U.S. press. Even the most obvious difference between Canadian and American litigation procedure -- the operation of a loser-pays rule there but not here -- is little explored in our press. Wouldn't it be helpful if American publications occasionally assigned a reporter to visit Toronto, Calgary or Vancouver and perhaps determine whether ordinary persons caught up in legal disputes in those cities are terrified by what American lawyers might believe to be the harshness of these rules, what the effects may be on dispute resolution and on liability insurance rates, and so on?
Jonathan Adler of Case Western has a longer and more detailed argument against the state attorneys general's carbon dioxide suit up now at TechCentralStation (see Jul. 21). Forbes and Energy Central also cover the story, as do the editorialists of the Cincinnati Post ("this is reaching way beyond enforcement of the law. This would put the courts and a handful of state legal beagles in the business of writing ad-hoc -- and enormously expensive -- environmental regulations that would apply to one slice of one industry.")
Last month the Congressional Budget Office released a paper which "reviews the major studies that evaluate the effects of state-level tort reforms and assesses the relevance of that research to similar federal proposals." ("The Effects of Tort Reform: Evidence from the States", Jun.). Although the studies cited in the survey point in a variety of directions, the paper is useful to keep on hand if only to refute some of the more extreme claims that sometimes emanate from the Litigation Lobby, such as the claim that limits on damages have not been found to reduce liability insurance premiums. The paper is described as a companion to a CBO study from October 2003, "The Economics of U.S. Tort Liability: A Primer". More: Martin Grace comments.
From today's New York Law Journal: "A cigarette industry bill that would cap appeal bonds in tobacco cases at $100 million has passed the New York state Senate and has some backing among the Democratic majority in the Assembly.... New York lawmakers, concerned over the state's share of a $200 billion settlement between tobacco companies and states, are looking to quietly help the industry, observers said."
Of course, opponents of the measure wondered about a justification that "means that the State of New York has an economic interest in the continued financial health of an industry that has lied to policymakers for years, violated New York laws and deceived millions into a life of addiction and early death." Well, yes, the states all now have an economic interest in protecting tobacco manufacturers. Don't say we didn't warn you.
Here's to hoping that, in lieu of this special-industry protection, New York lawmakers adopt a sensible, broader appeal bond reform. I'm not holding my breath...
As our editor alerted us, John Stossel had a 20/20 "Gimme A Break" segment Friday on trial lawyers entitled Lawyers and the Little Guy: How Helpful Were V.P. Hopeful Edwards� Courtroom Triumphs." Those who missed it missed a treat; the written version doesn't do the television segment justice.
The piece was a comprehensive look at vice presidential contender John Edwards (see also here, here, here, here, here, here, here, here, and here), at the legal profession he unflaggingly supports, and the "unintended consequences of what they do, and how the lawsuits they pursue impact our lives." Stossel spent extensive time focusing on the impact of lawsuits, such as Edwards's cerebral palsy cases, on medical care (see generally here). John spent a lot of time interviewing Dickie Scruggs, the chief negotiator of the tobacco master settlement agreement (John met Dickie through a Manhattan Institute panel and luncheon on "Trial Lawyers, Inc.," in which both participated), and he included must-see looks at Scruggs's massive yacht, one of his mansions, and one of his planes.
Both the New York Times (on 7/25) and the Wall St. Journal (on 7/26) are covering the brouhaha surrounding the Bush Administration's push to get federal courts to recognize that FDA approved labels pre-empt state product liability "failure to warn" suits.
The WSJ article requires a subscription, so I can't reproduce it here. For those who subscribe to the Journal online, here is the URL. As for the NYT, here is a non-subscription based copy of their article.
The issue is an important one, that has been raised by Walter Olson on the Overlawyered site. If I claim that drug X "caused" a victim to commit suicide, and that the fact sheet accompanying drug X should have mentioned this risk, but FDA deliberately declined to specify such a risk on the approved fact sheet (on the grounds that, say, more suicides would be "caused" by failure to take drug X than by taking drug X), then should a jury be allowed to find the drug defective in the absence of such a warning? Courts have divided on such issues, and as we tort professors know, the United States Supreme Court's "pre-emption" caselaw is extremely muddled.
Whether or not these warning labels should be specified by a federal regulatory agency is not an issue for this posting. But if they are specified by a federal agency, then I believe the soundest interpretation of the "Supremacy Clause" of the constitution has them pre-empt any incompatible "failure to warn" products liability suit under state law. The Administration has it right therefore, I think, and the complaint by Dem. Rep. Hinchey (discussed in the Times and Journal articles) is unwarranted.
Under Illinois law, medical malpractice plaintiffs must line up a doctor in the relevant specialty to certify that their case has merit before proceeding, so as to weed out unfounded cases. The twist is that the doctor can remain anonymous. I discussed the issue Jan. 23 on Overlawyered, and a letters exchange has now ensued with Peter Nordberg of Daubert on the Web.
Our July featured discussion between Michael Krauss and Walter Olson is now wrapped up! As Professor Krauss put it, the discussion touches on "so many iceberg tips � from the nature of the judicial function, to the nature of the Common Law, to the grounding of the Second Amendment." I encourage anyone interested on any of these topics to take a look.
I know I've been enlightened by both contributors. As someone who is devoted to helping fix the tort law that, in Michael's words, "is in serious need of fixes in America today," as well as a sometime gun nut and former competitive shotgun shooter, I took special interest in this discussion. I have lots of thoughts -- and lots of questions -- which I'll formulate at a later time.
The ever-thoughtful Stephen Bainbridge, a UCLA law professor from whom we look forward to hearing here when we have occasion to discuss corporate governance issues, has a very interesting post on his popular weblog, ProfessorBainbridge.com.
Professor Bainbridge notes that the General Assembly of the Presbyterian Church is divesting its funds from companies that do business in Israel. Glenn Reynolds calls the move antisemitic, and points out that the Presbyterian Church's website is named, ironically, pcusa.org.
Like Professor Reynolds (and formerly Professor Bainbridge), I'm a member of the Presbyterian Church USA, so I took considerable interest in this posting. I'm saddened, angered, and dismayed by the church's decision.
But for the purposes of this website discussion, I want to focus on the points Professor Bainbridge made about the inefficacy of divestiture campaigns. Professor Bainbridge cites to two studies, based on the South Africa boycotts, that show (a) that the divestment campaigns had no financial effect, and (b) that they on average hurt the "socially responsible" portfolios that divested.
Financial theory would suggest as much. Unlike a boycott in a traditional goods market, the sale of a stock or bond in a financial market in sufficient volume to affect its price makes it more attractive to a buyer who doesn't care about the divester's social cause. These buyers will bid the price back up to its equilibrium level, the risk-adjusted net present value of expected free cash flows from the instrument. So whereas a goods boycott can be effective under certain conditions, a stock divestiture never can unless there is insufficient liquidity on the other side, a highly dubious condition in our financial market. The Presbyterian Church may have $7 billion in financial assets, but that's hardly a sufficient sum to control financial market pricing.
As we consider shareholder governance issues, it's important to remember that investors in financial instruments aren't buying for consumption value in the manner of purchasers of food, clothing, or entertainment; they're buying solely to make money. One would have to discount market efficiency entirely to think that divestiture campaigns have a meaningful effect on share price.
Instead of playing Pontius Pilate, the Presbyterians would be better off holding their stock and offering those annoying shareholder resolutions that companies today must typically face. Or they could organize actual boycotts of the goods and services produced by Israeli companies.
Or, better yet, they could just keep their mouths shut.
What happens to people of no previous great wealth when they suddenly hit a big lottery jackpot? According to the July 10 Boston Globe, "sudden wealth syndrome" is often the result, leading to "impulse spending and social isolation". Dr. Steven J. Danish, professor of psychology at Virginia Commonwealth University in Richmond, "has counseled lottery winners for more than 12 years, and almost all his patients have had serious problems after collecting their winnings" -- though of course the ones who reach his counseling desk are unlikely to be a random sample of all winners.
Jim Leitzel, who happens to be guest blogging this week at Overlawyered, a few weeks ago tried to track down at his Vice Squad blog a rumor that one-third of lottery winners end up bankrupt; it doesn't seem to be very well authenticated. A Google Answers thread pulls together many other bits of information on how extensive the problem may be.
Researchers interested in sudden wealth syndrome "have also looked at dot-com multimillionaires whose financial lives changed dramatically during the boom years of high technology", reports the Boston Globe piece, but Dr. Stephen Goldbart, codirector of the Money, Meaning, and Choices Institute, "said that lottery winners are particularly prone to impulse buying because they have no previous ties to the money they have won, as opposed to those who gain large sums though salaries". The application of all this information to the American system of civil litigation damages is left for the reader to work out as an exercise.
Those interested in my earlier posting on the Alien Tort Claims Act should also check out the recent study by O'Melveny & Myers' John Beisner, prepared for the U.S. Chamber of Commerce's Institute for Legal Reform. Entitled "The Teeming Shore: Plaintiffs Around the Globe Use U.S. Courts to Target Business," the study documents many of the international law suits under the ATCA as well as antitrust and product liability cases brought in U.S. courts by foreign plaintiffs.
NRO's Jonathan Adler, also a professor at Case Western Reserve University School of Law, posted a good piece online yesterday discussing the Supreme Court's holding last month in Sosa v. Alvarez-Machain. The case had addressed the recent application of the 1789 Alient Tort Claims Act to a variety of "international injustices."
As Adler explains: "The first such suits in federal courts were brought by foreign citizens against foreign officials alleging severe human-rights abuses overseas, such as torture and mass atrocities. More recently, human-rights and environmental activists have brought suits on behalf of foreign nationals against multinational corporations for their alleged complicity in the rights abuses of foreign regimes. In one suit, for example, U.S. plaintiffs' attorneys are suing corporations that did business with South Africa's Apartheid government, alleging these companies were complicit in the regime's human rights abuses - and that only a whopping tort settlement in a U.S. court can right the wrong."
My take on these suits? As I expressed in an interview this spring, before the case was decided, the suits are largely driven by "cowboy law professors who want to hijack U.S. human-rights laws. They exploit U.S. courts to get their preferred policies implemented without having to worry about the State Department or Congress." While the latter class of cases -- those against the multinationals -- are the more typical fee-driven sort, many of these cases are also driven by "a feeling of 'I want to be the secretary of state' among these lawyers."
The 1789 Act granted U.S. courts original jurisdiction over "any civil action by an alien for a tort only, committed in violation of the law of nations . . ." The Court held, unanimously and quite sensibly, that the law in 1789 could only have been meant to include those "violations of the law of nations" acknowledged in 1789, i.e., "violating safe conduct, infringing the rights of ambassadors, and piracy."
But even then, the Court's majority opinion was sufficiently squishy that I expect we haven't heard the end of this tale. Justice Souter's majority opinion noted only that "a decision to create a private right of action is one better left to legislative judgment in the great majority of cases," it specifically left the door "ajar" to suits based on "international norms" that are "accepted by the civilized world and defined with a specificity comparable" to the original actions contemplated by the 1789 Act. Thus, the Supremes hardly stopped abuse of our courts based on this arcane law but rather trusted in the "vigilant doorkeeping" of our federal courts.
Adler quoted Hofstra law professor Julian Ku, my law school classmate and housemate, as stating that the opinion "makes all the right noises about the dangers of unrestrained federal court international lawmaking, but it didn't take that final step that would have restricted it in any meaningful way." Julian is a specialist in international law (see some of his academic writing here, and on Westlaw see some of his earlier writings, "Customary International Law in State Courts," 42 Va. J. Int'l L. 265 (2001), and "The Delegation of Federal Power to International Organizations: New Problems with Old Solutions," 85 Minn. L. Rev. 71 (2000)); he tells me that his bretheren among the international law faculty who were involved in this suit view the Supreme Court opinion as a victory, giving them a green light to pursue their international law-based claims against businesses.
Suits have already been filed against companies that made significant investments in Iraq. The tendency for such litigation to obstruct the executive branch's foreign policy powers is obvious. But trampling on the separation of powers and assuming all power for itself is what the rule of lawyers seems to be all about.
Blogger Jonathan Cobb at The Soapbox (Jul. 9) has some observations concerning this site's coverage (Jul. 8, Jul. 2, Jun. 29) of the decision to certify a class action of all women employees in the Wal-Mart case. And it's fair to say that columnist/commentators Wendy McElroy and Thomas Sowell don't like the court's decision at all. Plus: More from Sowell. Even more: Sally Pipes, Pacific Research Institute.
Today, Point of Law contributor and Cardozo Law School professor Lester Brickman testified before the House Judiciary Committee Subcommittee on Commercial and Administrative Law on asbestos bankruptcy reorganizations. His written testimony, "Administration and Large Bankruptcy Reorganizations: Has Competition for Big Cases Corrupted the Bankruptcy System?" can be found in its entirety here.
The short answer to his titular question? Yes. Those desiring a more thorough summary of the asbestos litigation scams should consult Professor Brickman's more recent law review article on the subject, On the Theory Class's Theories of Asbestos Litigation: The Disconnect Between Scholarship and Reality.
Round 2 of our featured discussion between our editor Walter Olson and GMU professor Michael Krauss is now up. Check it out here.
A recap so far as I see it:
Walter argues that (a) the gun lawsuits against manufacturers for non-defective guns are unsound; (b) Congressional legislation to stop such lawsuits is consistent with federalist principles since state courts are intruding on other states' policy choices by suing manufacturers for guns sold legally in other states; and (c) although largely unsuccessful to date, the gun lawsuits are already significantly reducing gun owners' constitutional rights to bear arms.
Michael's rejoinder is essentially that (a) the Second Amendment right to bear arms is not in "clear and present danger" because of the gun suits, and should not be invoked to authorize Congressional action until it is; (b) the Constitution does not forbid bad policy outcomes but rather permits them, and the federalist constitutional design specifically contemplates competing policies among the state and federal governments; and (c) a better approach to reform, which would leave competing state tort regimes intact, would be to adopt federal procedural changes (e.g., eliminating the "complete" diversity requirement and instituting federal choice of law and long-arm jurisdiction rules) that would prevent one state's courts from taxing out-of-state defendants through its own "dirty bathwater" tort system.
If my characterizations of either argument are off-base, apologies. I encourage all readers to check out the entries, in their entireties, for themselves.
Our initial featured discussion between Manhattan Institute Senior Fellow and PointofLaw.com editor Walter Olson and George Mason University Professor of Law Michael Krauss is now live. Walter has now begun the discussion, with Professor Krauss responding, and they will be exchanging ideas throughout the week. The debate centers on the pros and cons of federal legislation to limit suits filed against gun manufacturers over wrongful death or injury when there is no gun malfunction, but rather when the gun is used to shoot someone in an accidental or criminal act.
The Journal's editorial this morning also references its report yesterday (subscription required) that 30 states have established appeal bond caps -- largely in response to fears that large tobacco verdicts might jeopardize the cash flowing from cigarette manufacturers. One such scenario was realized last spring in the infamous magic jurisdiction of Madison County, Illinois, after a jury there issued a $10 billion verdict against Philip Morris for allegedly marketing its "light" cigarettes as "safer" alternatives. The AGs fought to lower appeal bond requirements, much as they had done earlier after Florida's Engle verdict. The events were chronicled at the time on overlawyered.com:
"Once again the business end of an otherwise outlandish mega-verdict turns out to be the requirement that a defendant post a bond before it can appeal: Philip Morris says it is unable to put up the requisite $12 billion needed to appeal the recent Madison County, Ill, verdict against it (see Mar. 24). Officials of the fifty states are running around in near-hysteria: they're bothered not by the possible injustice or community-and-investor disruption involved in bankrupting the giant company, whose holdings include Kraft Foods and Oscar Mayer, but instead by the prospect that an insolvency will jeopardize the flow of billions of dollars into their own coffers under the tobacco settlement. So the AGs, supposedly second to none in their loathing of the tobacco companies, are making noises about intervening to try to get the appeals bond requirement lowered. This is the second time around (at least) for this issue: state governments also mobilized after the Engle tobacco case in Florida threatened bonding requirements high enough to destroy the industry."
Indeed, according to the Journal's report yesterday, eleven of the state's appeal bond reductions apply only to cigarette manufacturers -- showing just how much the tobacco industry's and states' interests have become enmeshed in the wake of the multistate tobacco settlement.
That special-interest legislation aside, there is a compelling case overall for more general appeal bond reforms. When posting a bond prior to an appeal is such a sizable outlay that it effectively denies a defendant a right to appeal, it violates fundamental due process. The purpose of an appeal bond -- to ensure that money is set aside for the victorious plaintiffs -- can be met more fairly by providing alternative procedural safeguards against the diversion or sale of corporate resources.
The American Legislative Exchange Council has proposed model legislation called the Appeal Bond Waiver Act, which would permit waiver of any appeal bond exceeding $1 million ($100,000 for a small business) while retaining such procedural protections against hiding or dissolving assets. In summary, the Act would:
"combat the recent advent of multi-million and �billion dollar verdicts against defendants, by requiring that the necessary appeal bond not exceed $1,000,000 if the defendant found liable seeks a stay of enforcement of the judgement. The waiver would not exceed $100,000 if the party seeking the appeal is a small business. To protect the plaintiff against purposeful dissipation or diversion of assets by defendant, this legislation calls for the complete reinstatement of the full bond requirement if a preponderance of evidence shows that dissipation or diversion is taking place. The intent of this legislation is to restore the right to appeal a verdict, to defendants who are finding themselves more and more financially unable to do so, while still providing assurance that the defendant�s funds will be available to satisfy the judgment after appeal."
The Wall Street Journal's lead editorial today (subscription required) takes on Congress's "Marlboro Men," i.e., the tobacco bill that passed the Senate last week, which "gives federal regulators long-sought authority over the cigarette industry in exchange for a $13 billion buyout of tobacco farmers." The column notes that Philip Morris, America's biggest tobacco manufacturer, has supported the deal -- presumably because it would "lock into place competitive advantages for the cigarette industry's biggest company and give government a rooting interest in its long-term survival."
The editorial continues, "One reason some of us opposed the 1998 settlement between Big Tobacco and the states was that it would make the government a de facto partner with these so-called merchants of death. " One such was our editor, Walter Olson, who reported on the details of the deal on overlawyered.com back in 1999: "'"There'll be adjustments each year based on inflation," said Brett DeLange, head of the Idaho attorney general's consumer protection unit. Plus, "If cigarette volume goes down, our payments will go down. If volume goes up, our payments will go up even more."' Why, it's like Christmas come early! Of course DeLange denies that this arrangement will in any way dampen the state's enthusiasm for reducing tobacco use."
The Florida Supreme Court has certified four initiatives for the November ballot: a doctor-sponsored measure that would "limit lawyers' contingency fees to 30 percent of the first $250,000 in all medical malpractice damage awards and 10 percent of all damages above $250,000," and three lawyer-sponsored "revenge initiatives" aimed at making life tougher for doctors in various ways. The lawyers offered to withdraw their ballot measures if the doctors would withdraw theirs, but the docs said no go. (Alisa Ulferts, "Medical malpractice war gives voters the ammo", St. Petersburg Times, Jul. 17). See Overlawyered, Mar. 1.
For those of you who've been waiting in anticipation for our featured discussion series to begin (and for those who haven't!), we'll begin tomorrow when PointOfLaw editor Walter Olson and George Mason University professor of law Michael Krauss discuss the pros and cons of federal legislation to limit suits filed against gun manufacturers (over wrongful death or injury when there is no gun malfunction but rather the gun is used to shoot someone in an accidental or criminal act). Our editor will begin the discussion, Professor Krauss will respond, and they will exchange ideas throughout the week.
For those who want a little background on the issue, and our authors' positions, see Walter's testimony last year before the House Judiciary Committee Subcommittee on Commercial and Administrative Law, in which he speaks in favor of legislation; and Professor Krauss's Cato Policy Analysis co-authored this spring with Cato Institute Senior Fellow Robert Levy, in which he argues that Congress should not intervene in gun litigation for federalist reasons.
MOVED FORWARD 3:14 pm.
Those who haven't seen it should check out the front page of Section B of today's Wall Street Journal, which contains an article (subscription required) on Ohio State University professor Douglas Berman's weblog, Sentencing Law and Policy. Although we at Point Of Law deal with civil justice rather than criminal issues, the article does suggest that bLAWgs do in fact have the potential for influence. The blog has been getting particular attention in the wake of the Supreme Court's decision in Blakely v. Washington, which threw into question the constitutionality of the U.S. Sentencing Guidelines: "Last week, the blog was cited in testimony before the Senate Judiciary Committee, which held hearings to consider a short-term fix to quell some of the chaos resulting from the Supreme Court ruling's effect on the 20-year-old federal sentencing guidelines. Also last week, New York's Second Circuit Court of Appeals cited the blog in a unanimous opinion of the court's 13 active judges, which beseeched the Supreme Court to decide the guidelines' constitutionality quickly. Judge Paul G. Cassell of Utah, the first federal judge to declare the guidelines unconstitutional, cited the blog in his groundbreaking opinion."
Last year the Colorado legislature enacted a law which endeavors to curb burgeoning litigation over construction defects by: 1) giving builders an opportunity to repair flaws before being taken to court; 2) restricting the availability of triple damages; and 3) making it harder for complaints to allege that a defect is present in all units of a multi-unit complex when evidence of defectiveness has been found for only a few units. Now trial lawyers have struck back with a ballot initiative, Amendment 34, which the Secretary of State has certified for the fall ballot. Intended to overturn last year's law, it would create sweeping new rights under the state constitution to sue over building defects. So sweeping would the new rights be, in fact, that homeowners could be exposed to permanently wider liability to later purchasers of their homes over alleged defects in decks, additions and other improvements. ("Fall ballot issue invites lawsuits" (editorial), Rocky Mountain News, Jul. 3). Political strategist Rick Reiter, who represents a coalition of builders and business interests fighting the initiative, "said that the reason the amendment is on the ballot in the first place is because two law firms -- Vanatta Sullan Sandgrund & Sullan and McKenzie Rhody & Hearn -- each wrote checks totalling at least $117,500 to the campaign." (Leia Baez, "Building-suit battle brews", Denver Post, Jun. 29).
There's an excellent column in today's Wall Street Journal on John Edwards's history of trying infant cerebral palsy cases. The piece is written by David Robinson, not the former NBA MVP (who was given a Simon Award for public service this year by the Manhattan Institute, my employer and this site's sponsor), but a 2004 Rhodes Scholar, who just happens to have cerebral palsy. Notes Robinson, "I have cerebral palsy, and it's not my doctor's fault."
Robinson writes, "John Edwards built his career suing doctors and hospitals, claiming that maternity-ward missteps caused newborns to develop cerebral palsy. The theory that doctor error is a common cause of CP was dubious when Mr. Edwards used it to win his cases, from the 1980s to the mid-1990s, and is universally rejected by experts today. . . . What is more, attacks on alleged negligence in the maternity ward may actually have hurt the quality of patient care. Many CP lawsuits, including one that Mr. Edwards describes in his book, turned on the theory that doctors could have prevented CP by ordering a cesarian section. Such suits put nonmedical pressure on doctors and hospitals to choose c-sections. In the past 30 years, the proportion of births by c-section has gone up fivefold. But a 2003 study in the American Journal of Obstetrics and Gynecology found that the rate of CP remains constant." (For a fuller discussion of the cerebral palsy cases, see our editor's Wall Street Journal column from last year, my NRO column from this winter, and back postings on overlawyered.com.)
Robinson's broader point is that Edwards's philosophy is fundamentally misshaped by his trial lawyer background, because he sees the world in terms of "victims" and "villains," i.e., that everyone in society who suffers from misfortune must have had that misfortune caused by some nefarious actor: "The real error of Mr. Edwards's approach goes beyond costs and benefits. In his world, there is an alluring symmetry between victims and villains. He writes of wanting to represent people who 'had the scales tipped' against them--and presumes, without saying so outright, that someone involved in his clients' care must have done the tipping. For a self-described religious man, he seems to allow remarkably little room for the notion that some human misfortunes are not in human power to prevent."
That, in a nutshell, describes Edwards's "two Americas" message. Having made a livelihood out of redistributing wealth in a (very inefficient) zero-sum game (and enriching himself in the process), he's utterly incapable of comprehending positive-sum games from free exchange and commerce. Thus, free trade is bad, rich people are bad, corporations are bad -- and trial lawyers are good, because they help the "victims" and punish the "villains." Such stuff may make for good Grisham novels, but it's a scary thought that this mindset could be a heartbeat away from the presidency.
John Edwards's Southern charms are said to add "balance" to the Democratic ticket, and even put into play some Southern states, at least forcing the Bush campaign to devote some time and resources to the region. But George Bush's home state of Texas?
Of course, this isn't 1960, and Edwards won't deliver the Lone Star State. But he can add value there. Quipped Texas Governor Rick Perry, "Senator Edwards only comes to Texas to raise personal injury trial lawyer money." And that, I'm afraid, he can deliver in spades. Two of the main "men behind the man," Fred Baron and John O'Quinn, are Texas attorneys (for more depth on these two, see our editor's recent column in the Wall Street Journal).
The tally from Edwards's most recent Texas visit? Over $500,000.
Jeff Blumenthal at the Legal Intelligencer has an article this morning covering John Kerry's fundraising activities while in Philadelphia to speak to the NAACP. "Though event organizers played down the role of trial lawyers, they did say that more than half of the funds raised for the event -- an hour-long meet-and-greet session for contributors held at Philadelphia International Airport Thursday afternoon -- came from trial lawyers. . . . With Edwards now entrenched on team Kerry, so is his trial lawyer fund-raising apparatus. [Trial lawyer and fundraiser Mark] Alderman said adding the senator from North Carolina to the ticket has made his job a little easier. 'I can't imagine any of the other choices generating as much immediate fund-raising excitement,' Alderman said." Alderman goes on: "But I don't think it's just because he's a trial lawyer. Edwards has a tremendous populist appeal that really strikes a chord with people, including trial lawyers."
And if you believe that Edwards's fundraising appeal among trial lawyers is just because he "strikes a chord with people," I've got some beautiful beachfront property in Antarctica you may be interested in...
So which Eliot Spitzer are we supposed to listen to: the Spitzer who brought suit against former New York Stock Exchange Chairman Richard Grasso for accepting too high a salary in a not-for-profit enterprise, or the Spitzer who went to court to defend private lawyers' right to charge billions for their representation of the states in the tobacco deal? (Hans Bader, "Spitzer Strains out Grasso While Swallowing Camels", Competitive Enterprise Institute, Jul. 9)(via AtlanticBlog).
The Project on Medical Liability in Pennsylvania, which is funded by the Pew Foundation and whose orientation can perhaps best be described as establishmentarian, has released a new report on dissatisfaction among physicians in that crisis-ridden state. Not surprisingly, it finds high levels of anxiety in the most besieged specialties. The survey sampled 1,333 specialists in high-risk fields and drew 824 responses: "148 emergency medicine physicians, 155 general surgeons, 52 neurosurgeons, 187 obstetrician/gynecologists, 127 orthopedic surgeons, and 155 radiologists". "Eighty-six percent of specialists had been named in a malpractice suit at least once during their careers, and 47 percent had been sued in the three years prior to the survey." The "high rate of suit among physicians in our sample suggests that these physicians� fear of lawsuits may be well-founded." (Michelle M. Mello, David M. Studdert, Catherine M. DesRoches, Jordon Peugh, Kinga Zapert, Troyen A. Brennan, and William M. Sage, "Caring For Patients In A Malpractice Crisis: Physician Satisfaction And Quality Of Care", Health Affairs, Jul./Aug. (PDF)).
Ramesh Ponnuru, senior editor of National Review, has a good column today discussing Fred Baron, the Texas asbestos lawyer and former president of the American Trial Lawyers Associate who is the man behind John Edwards and co-chairman of Kerry-Edwards Victory '04. Ponnuru picks up where our editor left off in his Wall Street Journal column Monday, "Edwards & Co.," and what I alluded to in my NRO column last week, "Kerry-Edwards & Co.: Trial Lawyers, Inc. Run for President." Ponnuru's column also borrows heavily from the recent article by PointOfLaw contributor Lester Brickman, which details extensively the asbestos scams that have plagued our legal systems. Ponnuru goes so far as to suggest a RICO investigation into Baron & Budd, Baron's firm.
For some years it looked as if the major English-speaking countries would inevitably see their legal systems "Americanize" in the direction of ever-wider litigation, but the trend may now be reversing itself. Not only has Australia enacted significant reforms to curb litigation, and not only is a national debate along the same lines under way in Great Britain, but Ireland -- another country that had been thought to be headed down the American path -- recently adopted a far-ranging set of reforms in the area of damages which is expected to curb litigation substantially. It's the system sometimes known as "scheduled" damages: henceforth, the compensation value of a broken arm or leg (aside from lost wages and other economic damages) will be determined with reference to a schedule or table known as the "Quantum" which will serve as an indicated settlement figure in cases of uncontested liability and as a recommendation of appropriate damages to the courts in cases which are litigated. Quantum damages (which will retain some flexibility to account for the details of particular injuries and injured persons) are intended to be set at the same average level as the Irish courts are currently handing out for each variety of serious injury; the difference is that there will be no occasion (or at least less of an occasion) for dueling attorneys to argue damages afresh in each case in hopes of getting something higher or lower than the norm. The Quantum levels are being determined by a newly established Personal Injuries Assessment Board (PIAB). ("PIAB releases Book of Quantum", Politics.ie, Jun. 3; "PIAB activated by Tanaiste", RT� Business, May 31; "PIAB publishes Book of Quantum", Business World, Jun. 3; "ISME welcomes PIAB", Business World, May 31).
The concept of scheduled damages is widely employed in non-English-speaking countries of Europe; in the United States, it is familiar only through its use in workers' comp systems, while being assiduously avoided by courts hearing conventional liability suits. Among the results is that courts within a given state (let alone those of different states) dispense a wide range of different levels of compensation over a given injury.
Why isn't there more interest in scheduled damages here? Business defendants arguing for tort relief, of course, naturally tend to prefer caps; unlike caps, scheduled damages act as a floor and not just a ceiling, which means that they would act to raise damages levels in some situations (jurisdictions with "stingy" jury pools, some cases with unsympathetic plaintiffs). From the standpoint of society as a whole, on the other hand, there is every reason to believe that the gains in efficiency (less scope for litigation) and horizontal equity (the treating of like cases alike) would be significant, perhaps compelling advantages of a scheduled damages system.
Here's a welcome to a new site launched today which (like this one) is sponsored by the Manhattan Institute. It's called Medical Progress Today and bills itself as "a web magazine devoted to chronicling the connection between private sector investment and biomedical innovation, market friendly public policies, and medical progress". Among themes it will explore: "Medical Progress, Intellectual Property Rights & Innovation, Global Health & Bio-terrorism, Prescriptions for Policy". Robert Goldberg is the director and Paul Howard the managing editor.
Much coverage of the asbestos debacle has focused on the collapse of very large firms such as Owens-Corning, Babcock & Wilcox, Armstrong World Industries and so on. However, many small firms without particularly deep pockets get entangled too. In Gulfport, Miss., it was reported last year that 40-employee Phillips Building Supply "is a defendant in more than 39 lawsuits" over asbestos, silica and allegedly not-protective-enough face masks. "Bill Hough, president of Phillips, said trial lawyers sued his company along with [bigger] corporations simply to keep the cases in state courts, which have been more apt to award large monetary verdicts than federal courts." (Tom Wilemon, "Small businesses in lawsuit crossfire", Biloxi Sun-Herald, Jun. 17, 2003). Among not-so-big manufacturers affected has been Vermont's Rutland Fire Clay Company, maker of fireplace supplies and joint compound, driven to the bankruptcy courts in 1999 after 116 years in business.
Medical Economics magazine takes a look at proposals for "no-fault" compensation for iatrogenic (doctor-caused) injury, and the difficulty of keeping such arrangements from getting bogged down in factual disputes over injury causation (or ballooning into general schemes for the compensation of bad results in medicine generally, at untold expense). Includes a sidebar about how two very different systems of no-fault work in New Zealand and Sweden (Gail Garfinkel Weiss, "Malpractice: Can no-fault work?", Medical Economics, Jun. 4). Last year the same publication explored lessons from other countries' medical liability systems (Robert Lowes, "Malpractice: Do other countries hold the key?", Jul. 25, 2003).
Lest we get too focused on the Senate shenanigans that continually thwart any tort reform measures at the federal level, the American Tort Reform Association has just published its 2004 Tort Reform Record, which is a comprehensive look at civil justice reforms across the 50 states. Since our civil justice system is generally state common law, anyway, state level reforms are crucial (thought they don't solve the interstate forum-shopping problem that federal reforms like the Class Action Fairness Act are designed to fix).
Noteworthy in the past session was the comprehensive reform enacted in Mississippi, perennially one of the worst places to defend a tort claim. A short legal opinion letter from the Washington Legal Foundation lays out the basic tenets of the Mississippi reforms. The changes included a strong reform of joint and several liability (defendants can now only be held liable for their share of the damages, unless part of a common, concerted effort to commit a tortuous act); an "innocent sellers" provision, which should keep retailers from being added to product liability suits to establish jurisdiction (a famous example is the Bankston Drugstore in Jefferson County, which was a defendant in scores of pharmaceutical suits in that magnet court jurisdiction); and a provision encouraging jury service, along the lines of the American Legislative Exchange Council's model Jury Patriotism Act. The reform also includes high caps on noneconomic damages ($500,000 for medical malpractice, $1 million otherwise); a punitive damages reform I'm not too fond of (it indexes a punitives cap to a defendant's net worth); and venue reforms.
In addition to Mississippi, sixteen other states adopted reforms this year. Read ATRA's report for more information.
"California's medical malpractice law, cited as a model by President Bush, has reduced awards in malpractice trials by an average 30 percent, according to a study released Monday. But because the landmark law capped attorney fees as well as jury awards, the net recovery by injured patients and their families fell only 15 percent, the study said. Payments to plaintiffs' lawyers dropped 60 percent." (AP/Fox News, Jul. 12)(Nicholas M. Pace, Daniela Golinelli and Laura Zakaras, "Capping Non-Economic Awards in Medical Malpractice Trials" (PDF), Rand Corporation (overview) (press release) (summary in PDF format).
While yielding some interesting detail, that Times profile of Milberg Weiss and its descendant firms was also moistly uncritical, making little secret of its admiration for Messrs. Weiss and Lerach and doing little to explore the contentions of their critics, who are not exactly sparse on the ground. It skims very quickly over the ongoing investigation of the firm by the U.S. Attorney's office in Los Angeles, and as Larry Ribstein notes, doesn't even deign to mention the $50 million payout the firm made after it was exposed to a punitive damage claim arising from alleged abuse of process in the Lexecon/Fischel case.
Nor (or did I miss it?) does reporter Timothy L. O'Brien mention the firm's embarrassment earlier this year in the Terayon/Cardinal affair (written up by the San Francisco Chronicle's Ren Holding, by Lyle Roberts, and by Brenda Sandburg at Law.com), in which Judge Marilyn Hall Patel removed two lead plaintiffs in a securities case as class representatives after it came out in discovery that they had been massive short sellers of the stock of the company, a maker of cable modem equipment, and had engaged in a concerted effort to spread negative information about the firm to talk its stock price down -- not exactly a position representative of other shareholders.
None of which can be accounted surprising, exactly: the Sunday New York Times business section for some time has served pretty much as a bulletin board for the securities plaintiff's bar to vent its various themes and allegations. And Mr. Lerach, in particular, doesn't take kindly to unflattering press attention. I believe Mickey Kaus refers to this kind of story as a "beat sweetener".
For those who missed it, the front page of yesterday's New York Times business section featured a comprehensive story entitled "Behind the Breakup of the Kings of Tort" (registration required), on the split of erstwhile law partners Mel Weiss of New York and Bill Lerach of San Diego. Their firm, Milberg, Weiss, Bershad, Hynes & Lerach, had been the dominant player in securities class actions, and the two firms after the split remain so.
I've got an op-ed in today's Wall Street Journal (subscribers only) taking a hard look at the small circle of superlatively successful tort lawyers whose backing brought John Edwards to where he is today. (It isn't pretty.) For more information on the four profiled lawyers, check my post at Overlawyered today and follow the links.
A Chicago lawyer has been enjoying surprising success with lawsuits accusing employers of violations of RICO, the federal civil racketeering law, because of their alleged hiring of illegal alien workers. Howard W. Foster's theories have gotten the green light from three federal appeals courts. Defendants in the suits include poultry giant Tyson Foods and rugmaker Mohawk Industries; the suits usually represent (or seek to represent) a class of lawful workers put at a disadvantage by the unlawful hiring, but in one case a business competitor was the plaintiff. Is there some reason, we wonder, by which such suits could not be extended down the economic ladder to individual homeowners who have engaged in a pattern or practice over the years of hiring undocumented landscapers or housekeepers? (Gary Young, "Forging a New Use for Civil RICO", National Law Journal, Jul. 9). See also Overlawyered, Dec. 13-14, 2001. Update Jul. 17, 2005: 11th Circuit allows suit to proceed; Overlawyered, Jan. 5, 2006, Supreme Court grants review.
The Class Action Fairness Act -- which we've discussed here, here, here, and here -- has once again failed to reach a vote on the Senate floor. Democrats opposed to the bill sought to tack on pet-issue, non-germane amendments, among them raising the minimum wage and addressing "global warming, mental health insurance and native Hawaiian rights." Although open to the minimum wage amendment proposal, Majority Leader Frist balked at the additional stream of proposed amendments, and the bill got only 44 votes -- well short of the requisite 60 -- on cloture, i.e., a motion to end debate and vote on the bill. In the fall, the bill had received 59 votes, but since that time three Democrats who had opposed the bill, Chris Dodd of Connecticut, Chuck Schumer of New York, and Mary Landrieu of Louisiana, had come out in support of the bill, with some modifications. But Trial Lawyers, Inc. appears to have won in the end, yet again preventing the majority of the Senate from taking action. So the wait goes on...
Rather devastating editorial in the Los Angeles Times -- could it be Kinsley's doing? "[A] lack of core beliefs could be a significant problem. The more frightening possibility, though, is that Edwards does have core beliefs, and that they are reflected in his demagogic us-versus-them arias to juries during his career as a plaintiff's trial lawyer, and in his opposition to free trade, among other issues." ("The Obvious Choice", Jun. 7). "[T]rial lawyers have long been big players inside the Democratic party, but now they are at the center. ... To be fair to Edwards, he's not just in it for himself; he's in it for other trial lawyers, too." (Jim Pinkerton, "John Edwards and the Strangest Mutation of Liberalism Yet", TechCentralStation, Jul. 7). "For someone who didn't care about the money, it's interesting that Edwards avoided cases in which the baby died during delivery." (Ann Coulter, "In Desperate Move, Kerry Adopts Puppy", syndicated/TownHall, Jul. 8).
Those who didn't catch it should check out today's Wall Street Journal, which contains a front-page article on trial lawyers' political influence (message: it's not just Democrats!), and a lead editorial supporting the Class Action Fairness Act (see below). Subscription is required (but here's an alternative nonsubscription link).
For those of you who are new to our site -- and new to the issue of civil justice reform -- I wanted to make you aware of two brief and easy-to-digest yet thorough backgrounders on the issue.
The first is a paper published last month by the Washington Legal Foundation , authored by Jim Wootton, a private attorney with Mayer, Brown, Rowe & Maw and formerly the president of the Institute for Legal Reform at the U.S. Chamber of Commerce. Entitled "How We Lost Our Way: The Road to Civil Justice Reform," the paper offers a good, concise history of the common law of tort and how it evolved into the civil justice system we have today. The paper covers the de-professionalization of law, the class action problem, the activities of state attorneys general, and magic jurisdictions. The paper concludes with Wootton's thoughts on reform.
The second paper I want to highlight is one that we at the Center for Legal Policy published in April, written by Steven Hantler, the Assistant General Counsel of DaimlerChrysler and a leading advocate for tort reform. Hantler's paper, "The Seven Myths of Highly Effective Plaintiffs' Lawyers," was expanded from a speech he had delivered the previous summer. The paper examines trial lawyer "myths," e.g., that the so-called “liability crisis” is an invention of corporations eager to limit their liability for wrongful conduct, that corporations settle lawsuits to cover up their wrongdoing, and that the trial lawyer is outgunned and outclassed by powerful and resourceful corporations. The paper is filled with wonderful, well-documented facts, and it makes a compelling case that our civil justice system is badly in need of reform.
On Tuesday, WalMart appealed from the district court decision granting class status to 1.6 million current and former employees claiming gender discrimination. Our editor discussed the case here, and I followed up here.
The appeal brings up an interesting point in light of this week's debate in the Senate over the Class Action Fairness Act. The WalMart case was filed in federal court, and thus would not be affected by the Act. But the class certification itself is immediately appealable in federal courts -- what in legal jargon is called "interlocutory appeal." In contrast, in many state courts, a defendant would have to litigate the entire case to a final judgment before it could appeal the class certification decision itself. The pressure to settle such a large case would be much higher in such state court jurisdictions. By permitting removal to federal court for large national class actions, the Class Action Fairness Act would ameliorate this problem.
For the record, I think that WalMart will win this appeal (though with the Ninth Circuit, you never know...). As I discussed in my earlier posting, this case exemplifies what shouldn't be a class action.
According to Alan Murray's Tues. WSJ piece (see Ted Frank's Overlawyered post) the Edwards camp is going to be getting to work right away to moderate the Senator's image as a business-basher. Most curious quote: "Mr. Edwards's aides already are pointing out that as a trial lawyer, he never brought the kind of controversial class-action lawsuits that drain millions from a company's coffers but provide only minimal benefits to each member of a large group of plaintiffs." (No, it's only some of Edwards's most prominent backers who specialize in that particular kind of lawsuit.)
Washington Post reporter Jonathan Weisman is apparently on board and spins valiantly for the new image-refurbishment -- we wonder how he happened to locate his "businessman on the street" quote-providers, all four of whom conveniently echo Edwards talking points. Steve Bainbridge takes a contrasting view, here, here, here and here. And Bainbridge's view of Edwards is positively enthusiastic compared with that of Bard Parker, of mediblog Cut to Cure (scroll to Jul. 6).
Every time the class action bill looks as if it may be nearing Congressional action, the Chicago Tribune publishes a well-reasoned editorial in favor of it -- here's the latest -- while the New York Times publishes a dyspeptic rant against. This time the editorialists at the Times fret that the ultimate effect of the bill will be "to dilute the impact of the strong consumer protection laws in many states". Martin Grace wonders what the paper is talking about, since the bill would in general instruct federal courts to apply the various state laws in question. He thinks he's figured out what upsets the Times: it would be harder for class action lawyers to arrange to get the laws of the most favorable states applied to other transactions which arose outside those states.
After a series of procedural delays spanning months, the Class Action Fairness Act , S. 2062, is finally scheduled to come up for debate this evening (registration required, see also Associated Press report), with a vote potentially as early as tomorrow. Predictably, Ralph Nader and Joan Claybrook's Public Citizen has squealed, as has the New York Times (registration required).
Over the last few years, the Manhattan Institute, this site's sponsor, and its Center for Legal Policy, which I direct, have published extensively on the problems of class action litigation in America, from Richard Epstein's theoretical look; to Lester Brickman's case study on a class action in infamously plaintiff-friendly Madison County, Illinois; to the trio of studies written by John Beisner et al that assembled empirical data on magnet court jurisdictions. See also Beisner and Miller's new study looking specifically at the likely effects of the Class Action Fairness Act itself.
The leftish online magazine Slate's William Saletan waxes enthusiastic about the Edwards selection, and Andrew Sullivan, who like Saletan was enthusiastic about Edwards during the primaries, also applauds the Edwards-as-veep nod. Martin Grace, on the other hand, points us to a column this winter by Stephen Bainbridge, which explores how John Edwards' complaints about "lost jobs" rings hollow given his efforts to derail tort reform.
For a more comprehensive and scathing look at Edwards, see the American Tort Reform Association's EdwardsWatch.org, which includes interesting tidbits like the number of Edwards campaign jets supplied by plaintiffs' lawyers (4) and the percentage of his initial Senate campaign financed with trial lawyer cash (86).
PointOfLaw contributor Ted Frank on overlawyered.com points to Alan Murray's column in today's Wall Street Journal, which quotes U.S. Chamber of Commerce president Tom Donahue as saying that Edwards's selection would cause the Chamber to abandon its traditional neutrality and work to defeat the Democratic ticket. Murray quotes one Fortune 100 CEO as calling Edwards "the one we fear the most."
Is this shaping up as "the people vs. the powerful" part II? If so, I hope that voters realize that the tort bar is itself the powerful, too...
The big news of the day is that presidential contendor John Kerry has tapped fellow senator John Edwards of North Carolina to be his running mate. As most Americans are aware, Edwards grew up the son of a textile mill worker but rose to the ranks of multi-millionaire as a trial lawyer. Yet as I detailed in a column in National Review Online this January, Edwards's accumulation of wealth wasn't quite in sync with the Horatio Alger image he likes to portray: "Some of Edwards's biggest wins — including a jury verdict of $6.5 million (reduced to $2.75 million on appeal) and a settlement of a reported $5 million — came from cases suing doctors, hospitals, and insurance companies over infant cerebral palsy allegedly due to botched deliveries."
My column, and others on the topic, sparked much discussion on "what Edwards knew and when he knew it" -- i.e., was the asphyxiation-causes-cerebral palsy theory really discredited when Edwards argued it? And if the science were truly ambiguous, wouldn't Edwards have an ethical obligation to include it in arguing the best possible case for his clients? For a summary of the various debates, see our editor's entry on overlawyered.com on February 2. Those looking for more background should check out earlier entries at overlawyered.com, including those on January 20, September 16, and earlier (Ted Frank offers a complete list here).
See also the cogent comments of PointOfLaw contributor David Bernstein, who notes that most jurisdictions actually require that attorneys try to advance junk science, as a matter of "legal ethics." I tend to agree to a significant extent with David's reader, who opined that "I see no unfairness in begrudging Edwards (or anyone else) if you think they're doing (and profiting from) bad and destructive (albeit currently legal) things, or in demonizing them if you think they're doing really bad and destructive (though currently legal) things." John Edwards chose his career path -- and more importantly (yes, there are good and honorable plaintiffs' lawyers) -- he chose his cases. He, in other words, decided to take on heart-wrenching cases with big payoffs, even when such cases were highly dubious, at best.
On Tuesday, our editor posted about the decision last week by San Francisco U.S. District Judge Martin Jenkins to certify a class action gender discrimination claim against Walmart on behalf of all 1.6 million women who had worked for the retailer since December 26, 1998. That entry alluded to the Wall Street Journal column written by the Manhattan Institute's Steve Malanga, as well as to other stories and editorials shedding light on the case.
I wanted to point out that in addition to the employment law issues raised by the case, the Walmart discrimination suit exemplifies the problems inherent in modern class action litigation. As I note in my overview on the topic on this site, aggregating individual claims into class actions is in principle a useful vehicle when there are multiple similarly situated claims with damages that are relatively small when compared to the administrative costs of repeat adjudications. The problem, however, is that today's courts are prone to certify class actions even when claims are not similarly situated; i.e., they misapply the requirement of Federal Rule of Civil Procedure 23(b)(3), which permits class actions only when "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members." Cases such as securities derivative suits, or antitrust claims, in which the key variables are a common act of corporate wrongdoing and easily calculated damage claims, fit fairly well under the 23(b)(3) schema.
But an employment discrimination claim such as that in the Walmart case is singularly unsuited for the class action device. For any and each employee, the employer may have very good reasons for not promoting that worker (as Steve Malanga points out, that indeed appears to be so even for the name plaintiffs in this case). The only common threads linking the class members are that the plaintiffs are all women; that women on average earn and are promoted less than men; that hiring and promotion decisions are relatively decentralized; and that there is an asserted "culture" that inhibits women's participation. But such common threads could support a similar class claim for virtually any large corporate employer (which, doubtlessly, would not be unwelcome to the plaintiffs' bar or to anti-market forces in some circles).
Employment discrimination class actions are particularly prone to what John Beisner, Jessica Davidson Miller, and Matthew Shors call the "perfect plaintiff" problem, i.e., when "counsel are unfairly permitted to piece together evidence to show a 'perfect plaintiff'—one who, of course, does not exist in the real world—for presentation to the jury. That is, counsel may pick and choose among the facts presented by the many plaintiffs in attempting to establish all the various elements of the claim, and the jury is often left with the indelible impression that the collective evidence counsel offers satisfies each individual plaintiff’s particular burden of proof. For example, if one plaintiff had an allegedly misleading conversation with a defendant’s representative about the potential side-effects of a drug, that conversation will be repeatedly referenced to the jury, even though none of the other 1,000 plaintiffs in the action had such a conversation. As a result, the jury may come away with the patently false impression that all plaintiffs had such conversations and relied on them in electing to use the drug at issue."
I have little doubt that some women, somewhere, have been discriminated against by Walmart. But to permit every woman who's worked there to join a suit against the company, without letting Walmart address individual bias claims on their merits -- and defend itself when workers' documented performance and/or lifestyle preferences obviously explain compensation and promotion decisions -- is to deny the employer due process of the law. Such class actions are really no more than corporate shakedowns; even Walmart, well-known for litigating rather than settling claims, might settle rather than risk a wild jury verdict.
Via Howard Bashman: Josh Gerstein of the New York Sun reported yesterday that fifteen members of Congress, led by Texas Rep. Lamar Smith, wrote to Justice Stephen Breyer as Chairman of the Judicial Conduct and Disability Act Study Committee calling for an investigation into Judge Calabresi's comments comparing President Bush's election to those of Mussolini and Hitler. See my earlier discussions here and here. Their letter wrote, in part:
We strongly believe that Judge Calabresi’s remarks comparing President Bush to Hitler and Mussolini are inexcusable for a sitting federal judge. . . Any comparison or likening of a duly elected president of the United States to murderous tyrants and dictators does not uphold the integrity and independence of the code of conduct. It debases the code and seriously calls into question Judge Calabresi’s fitness to impartially serve on the federal bench.
Justice Breyer rejected the complaint, stating, "The committee has no authority — statutory or administrative — to investigate particular allegations of misconduct and impose sanctions." Representative Smith has stated an intention to refile the complaint with Chief Judge Walker of the Second Circuit.
There'll be little or no posting (from me, at least) until after the July 4 holiday. Be sure to check back then, however, because we'll have something new and exciting.
Center for Legal Policy at the