Andrew Sullivan graciously linked to Walter's posting on the Catholic church's parish assets--including real property--being forfeit in settling abuse claims. Those interested in the topic should be sure to check out Martin Grace's analysis of the Catholic church's legal strategy, posted earlier today, and Walter's earlier posts on suits against the church (Mar. 10; Sept. 29, '04).
August 2005 Archives
While the title of the post is somewhat incendiary and the Church’s lawyers did not cause the Church's liability problems, I wonder if their lawyers have added to the woes. A bankruptcy judge in Spokane held that the property of local Catholic parishes belong to the Bishop and could thus be attached to satisfy judgments against the Bishop. (See Walter’s note and Amy Welborn’s note.) The contrasting opinion is that the churches (plus buildings, schools, and cemeteries) belong to the local parishes which raised the money to build them, or alternatively the bishop is a mere trustee for the parishes and does not actually own the property. Why was the legal focus on putting the title in the bishops’ names rather than the local parishes? It is not as if the bishops have a great fear of parishes bolting to another sect of Christianity. Good risk management would suggest putting the corporation at the level of the parish.
Meanwhile back at the ranch, the Roman Catholic Diocese of Fargo is being sued by a former employee because of apparent discriminatory treatment between men and women. (See Amy Welborn and comments) A woman was fired for having an inappropriate relationship, but priests in similar situations allegedly were not. The legal distinction is that while the woman was an employee, the priest is an independent contractor. One of many parts of the common law test for whether a person is an employee is based upon the amount of control the principal has over the person in question. Any one who makes a vow of obedience is a strong candidate for agencyhood (if not sainthood!). It is hard to claim that priests have complete control over their jobs as the bishops assign them to the various parishes and give them jobs at those parishes. The agent-priests may have some discretion over certain aspects of their job, but the bishop technically has tremendous authority over them and how they do their jobs. The fact that the church routinely calls its priests independent contractors seems to have a tax purpose and this label can not necessarily be employed for liability purposes. One would think that this is the kind of advice that would be given by the Church’s lawyers.
Next we have the Archbishop of San Francisco, in legal documents (it is not clear whether he saw them), claiming that his former diocese should not be responsible for a woman’s pregnancy by a seminarian because the woman engaged in unprotected sex. (Mercury News) A number of good legal reasons exist to avoid liability here which do not undermine the Church’s teaching are available. Why do we see the silly one?
Finally, Canon law is often brought into these arguments and seems to confuse the issue, but this really shouldn’t be a problem one way or the other as courts routinely overlook private arrangements regarding liability to others for injuries or harms as the injured party was not part of the contract. (See Walter’s other note here). Finally, for those intrepid souls that are not tired of church property disputes, here is one more involving a conservative episcopal parish in Newport Beach fighting to keep its assets from the Episcopal Diocese of L.A. (via Mirror of Justice)
As Walter noted last week, we'll be adding and updating to the topical overviews offered for each category on the site (to the left). See, for instance, asbestos, procedure, or loser pays. These write-ups may seem very simple to those of you well versed in the area, but they will hopefully be illuminating to those with less experience in this field, and those who just want a quick overview of an area of tort law or legal reform. Needless to say, these primers are not intended to be comprehensive, we're very amenable to feedback, and we intend to update them from time to time.
Today's new edition: our editor's brief look at regulation through litigation. Those who want a more comprehensive treatment of this issue may want to explore the transcripts of two Manhattan Institute conferences on the subject (1999, 2000), or Walter's newest book, The Rule of Lawyers.
I wanted to call to our readers' attention the recent exchanges between professors Epstein and Presser on the Roberts nomination. Over the last couple of days, there's been more back-and-forth, this time largely concerning how worried we should be over the "smear attacks" of People for the American Way and other activists intent on derailing the nomination.
I generally tend to agree with Professor Epstein that Roberts's nomination looks to be in good shape, and that he doesn't present the avenues for attack that were available against Judge Bork. That having been said, there is some evidence to support Professor Presser's concern about the extreme levels of vitriol--and, indeed, deception--that some interested parties are willing to embrace to further their political ends.
I was most taken aback when I saw today's column in USA Today by DeWayne Wickham. For Wickham, everything is racial, and I rarely find his analysis insightful, but today's column sinks to new lows. Wickham compares the willingness of Democrats in the "Gang of 14" to compromise and not engage in filibusters of judicial nominees absent "extraordinary circumstances" to the "Compromise of 1877." As students of presidential history will recall, the 1876 Hayes-Tilden election made Bush-Gore look simple in comparison. Tilden had won the popular vote but four states' returns were contested. Ultimately, an ad hoc commission ruled for Hayes, on a one-vote partisan split, but Senate Democrats threatened to filibuster until Republicans promised a deal: end Reconstruction, and pull federal troops out of the South. The sorry consequence of that compromise was another 90 years' de jure discrimination against the very class of persons that hundreds of thousands of Americans had lost their lives to free.
But what does this have to do with Roberts? Well, Wickham claims that Roberts' ascension to the Court would end the "Second Reconstruction," which began with the Civil Rights Act 41 years ago. Sound far fetched? Well, it does to me, too. But Wickham goes on even further with his analogy and makes one wonder if he places any value on truth whatsoever.
On September 7, the AEI Liability Project will be hosting a panel on the recent Ernst v. Merck case (Aug. 22, Aug. 19 and links therein) and its implications for pharmaceutical regulation and the justice system. I'll be speaking, along with Jack Calfee of AEI; Dan Troy, former chief counsel of the FDA and currently at Sidley & Austin; and Evan Schaeffer, who, along with co-counsel from other firms, has a plaintiffs-side docket of Vioxx cases from his Madison County base.
Does the Wisconsin Supreme Court's recent decision striking down limits on medical malpractice lawsuit reflect the views of the state's voters? It sure doesn't look that way, to judge from a public opinion poll commissioned by the state medical association and hospital society. "68 percent of the respondents said they would be more likely to vote for a candidate for the state legislature who supported a cap." Owen of Boots and Sabers says it's "nice to see that the vast majority of Wisconsin citizens get this issue. They understand the gravity of what the Supreme Court did and how it can directly affect how much they pay for health care."
"You're a bully, Mr. Lanier, and you're not going to get away with it now." On the Larry Kudlow show, the two get into a heated debate on the merits of Ernst v. Merck (via the U. Chicago Law front page, which also kindly links Prof. Epstein's article on the Vioxx verdict at this site)(& welcome Kirkendall visitors).
Missouri's 2005 tort reform bill took effect today, but its impending effect brought a flood of new lawsuits over the past few weeks as plaintiffs attorneys raced to get cases filed before the change in law.
"Greene County Circuit Clerk Michael Carr said his office was "inundated" this month with at least 478 civil cases. A daily average of 50 to 60 cases was filed last week, including 110 submitted Wednesday and about 100 on Thursday, Carr said. . . . . The office typically files about five to six cases daily."
Missouri's reform bill (H.B. 393) eliminated a number of venue-shopping provisions under prior law and tightened limits on punitive damages.
Prior Missouri reforms had required that 50% of any punitive damages award be paid to a state fund. (Out of Balance, p. 167). The 2005 reform bill imposes an additional cap on punitive awards that may not exceed the greater of $500,000 or five times the "net judgment" awarded to the plaintiff in the case.
John Roberts' opinion in the arroyo toad case continues to exercise New York Times editorial writer Adam Cohen, provoking an impatient Ann Althouse to retort that Cohen is guilty of "either a deliberate distortion of the recent Commerce Clause cases or an embarrassingly incompetent misreading", to say nothing of a truly lemon-sucking lack of humor. More: Jonathan Adler comments here and here.
Michael Kinsley shows a lot more common sense than one normally sees on the editorial page:
You may be under the impression that Merck did something terribly wrong in putting Vioxx on the market. But the Vioxx cases don't generally claim that. Instead, they are based on the last refuge of the tort lawyer: the "duty to warn." Any product carries some risk. If you slice up a beach ball, saut� it, and eat it, the consequences could be dire. But even the world's greatest lawyer would hesitate to argue that this is the fault of the beach ball manufacturer. That doesn't mean the lawyer won't take your case. He or she will take it and argue that the manufacturer should have warned purchasers that beach balls are not edible, cooked or raw.
The duty to warn is one of the law's great celebrations of hindsight. When something actually has gone wrong, it is hard to argue (especially to a jury) that this development is too unlikely to worry about. And it is nearly impossible to argue that consumers shouldn't be given information to decide for themselves. Speaking for myself, I set aside one day a month exclusively for reading all the warning labels on products I have bought, such as beach balls. Then I assess whether the risk I am undertaking exceeds the benefit I hope to achieve. But I wonder how many of my fellow citizens are so scrupulous.
I wonder, in particular, how likely it is that Carol Ernst's husband would even have noticed such a warning, on the side of the box or bottle or speed-mumbled during one of those eerily atmospheric TV commercials for prescription drugs. Or, if he noticed it, would he have acted? It might have saved his life, but only in the way that deciding to take a later flight has saved your life when the earlier plane crashes. There is no actual connection.
An upcoming Georgetown Law Review article, previewed in the NY Times, examines political contributions by law professors at prestigious law schools and concludes that law faculties lean to the left:
The study, to be published this fall in The Georgetown Law Journal, analyzes 11 years of records reflecting federal campaign contributions by professors at the top 21 law schools as ranked by U.S. News & World Report. Almost a third of these law professors contribute to campaigns, but of them, the study finds, 81 percent who contributed $200 or more gave wholly or mostly to Democrats; 15 percent gave wholly or mostly to Republicans.
The percentages of professors contributing to Democrats were even more lopsided at some of the most prestigious schools: 91 percent at Harvard, 92 at Yale, 94 at Stanford. At the University of Virginia, on the other hand, contributions were about evenly divided between the parties. The sample sizes at some schools may be too small to allow for comparisons, though it bears noting that by this measure the University of Chicago is slightly more liberal than Berkeley.
If the liberal law professors mean to indoctrinate students, though, they have failed spectacularly in some notable cases. The United States Supreme Court's two most conservative members, Justices Antonin Scalia and Clarence Thomas, are products of Harvard and Yale, respectively. And if John G. Roberts Jr., another conservative, is confirmed this fall, another conservative graduate of Harvard Law will be added to the court.
Whatever may be said about particular schools and students, professors and deans of all political persuasions agreed that the study's general findings are undeniable.
"Academics tend to be more to the left side of the continuum," said David E. Van Zandt, dean of Northwestern's law school, where the contribution rate to Democrats was 71 percent. "It's a little worse in law school. In other disciplines, there are more objective standards for quality of work. Law schools are sort of organized in a club structure, where current members of the club pick future members of the club."
Northwestern Law professor James Lindgren, writing at Volokh, claims that his studies show how self-identification as "liberal" or "conservative" is a salient predictor of other viewpoints:
The fall-out from the multi-billion fen-phen attorney fraud (e.g., Mar. 1) has produced a federal indictment—but only of a Mississippi paralegal who's charged with six counts of mail fraud. One hopes that bigger fish will be landed.
The indictment listed a $5,000 check Foster and others tried to deposit in a bank account that was derived from the illegal activity.
"It was part of the conspiracy that Foster and others, known and unknown to the grand jury, in order to qualify as plaintiffs in the Fen-Phen II settlement, fraudulently represented to the court-appointed special master and others that they had received prescriptions for, purchased, and used Redux or Pondimin, when in fact they had not received prescriptions for, purchased, or used the named diet drug," the indictment says.
Assistant U.S. Attorney Cindy Eldridge said Foster was unsuccessful in getting money for herself but is believed to have helped countless others with false claims.
(Jimmie E. Gates, "Former law firm paralegal indicted in Fen-Phen case", Clarion-Ledger, Aug. 25).
Frustrating the likelihood that such misconduct will be brought to light, a federal judge ruled last month (per New York Law Journal) that attorneys Joseph Rice and Perry Weitz won't have to testify in depositions about various allegations of misconduct that G-1 Holdings, successor to the old GAF roofing supplies maker, has leveled against leading asbestos plaintiff's firms. The judge said such inquiries would violate attorney-client privilege. As Ted noted Jul. 20, news reports indicate that federal prosecutors may be taking an interest in some of the G-1 allegations. For more, see Overlawyered, Feb. 12-13, 2001 and Dec. 10, 2001 (scroll down)
As Ted pointed out in his Monday post, post-trial interviews indicate that among the factors explaining juror anger at Merck in last week's Vioxx verdict was the fact that no senior executives of the drug company attended the trial. Quoting the Wall Street Journal: "The big guys didn't show up," said [juror John] Ostrom. "That didn't sit well with me. Most definitely an admission of guilt."
Ted interprets this as irrational on the grounds that:
There are several thousand Merck lawsuits. Not even every senior Merck attorney can attend every single Merck trial. Is the company supposed to shut down so the executives can spend all their time as a full-time courtroom audience?
Megan McArdle takes the same view.
I must say my reaction was entirely different. The Ernst case was the first to go to trial, and aside from the large direct sums at stake, Merck executives surely knew that it was expected by both sides to set a tone and establish a momentum that would carry over to all subsequent litigation and press coverage. Just in case the New Jersey-based execs had somehow been inattentive to the trial's significance, the New York Times had given prominent play to articles by its reporter narrating key events in the Ernst trial and giving a rock-star-like buildup to plaintiff's attorney Mark Lanier. And the result of the Angleton verdict, quite predictably, has been to call forth a flood of new claimants. On a reasonable calculation, counting all future repercussions, Merck's bad result at trial last week is likely to have cost it billions. And its CEO was not there because he found it more important to be doing...what, exactly?
No, my assumption was that high Merck execs were absent not through inclination but on advice of counsel: had their lawyers considered it advantageous for them to make an appearance, they would have done so. The objection that an exec wouldn't have time to attend hundreds or thousands of trials strikes me as beside the point: future trials won't have anywhere near the influence of this one, so there's nothing inconsistent with planning to attend the first trial but not the nineteenth, provided that it helps to attend.
Why wouldn't trial strategists have considered it advantageous for execs to attend? Juror Ostrom's view that their non-attendance was "definitely an admission of guilt" seems absurd on any number of levels. (For starters, who said guilty parties don't find advantage in attending their trials? They profit even more than the innocent from the chance to make eye contact with jurors, establish a human connection, etc.) Moreover -- again, as Merck's lawyers must have known well -- it has long been a standard tactic for plaintiff's lawyers to incite the indignation of small-town jurors by pointing to an empty chair as evidence that the deep-pocket out-of-town defendant is cold and uncaring and needs the jury to "send them a message".
I can offer only speculation as to why the execs would purposely be absent. Maybe they figured that attendance would confirm the impression that this was a big case with the whole world watching, etc. -- ordinarily an impression that works in favor of high punitive demands -- or maybe they thought the company was better represented by scientists lower down in the hierarchy than by financial types. Readers are welcome to send in their own possible explanations, or react to mine.
Experienced readers of Point of Law know that many of our topical subpages, such as those for asbestos and attorneys' fees and ethics, are headed up with an overview of the topic, sometimes adapted from the earlier writings of PoL contributors, sometimes newly written from scratch. (Examples: class actions, comparative law). We periodically post new overview essays and intend eventually to have one up for each subtopic. The latest, posted yesterday, is one I've written on procedure and its reform.
It should be noted that unless stated otherwise the overviews are works in progress and that we look forward to revising them to correct errors and omissions and to take into account changes in the legal scene. Readers are invited to send feedback to the authors, especially if you spot any errors.
In today’s WSJ ($), Betsy McCaughey argues the frequency of verdicts like that in the recent Texas Vioxx case could be reduced if there was a specialist medical court available. Reformers have been proposing this reform for ages and Wyoming had a bill introduced this year that would set one up. (It never made it out of the Wyoming Senate Minerals Committee — see here and scroll to SF 153))
The World Bank sponsored a paper by Edward Cazalet (a UK attorney and Judge) on this subject in 2001. He noted some costs and benefits of specialist courts. The benefits he describes are quicker and more effective process; consistency in decisions; creation of a cadre of advocate specialists; and a reduced case load. Of the costs he mentions, only two seem important in a typical state. These essentially relate to judicial economies—are there enough cases to justify a medical court in every state’s current local jurisdictions or do we need fewer courts. If courts were underutilized and we had to increase the geographic jurisdiction, then this could impose traveling costs on both plaintiffs and defendants. Further, if the courts are under used, then the state has to fund a relatively expensive infrastructure. However, at least at first blush, these seem to be relatively minor costs relative to the potential costs of mistakes. We already employ a plethora of specialist courts in various areas (small claims, drugs, domestic violence, bankruptcy, tax, probate, and corporations (in Delaware as pointed out by Professor Bainbridge). Why not one more to cover med mal? Finally, as Ms. McCaughey notes, a specialized court still provides a constitutionally guaranteed jury trial. This reform propsoal is a less radical reform than damage caps (especially on non-pecuniary damages) which bother many for their potential for injustice for those who truly suffer catastrophic injuries.
As Ted noted yesterday, AEI's Liability Project has released Alex Tabarrok and Eric Helland's monograph advancing an economics-based defense of lawyers' contingency fees. I yield to few as an admirer of Tabarrok and Helland's work as a general matter, but longtime readers will be aware that my view of the contingency fee differs greatly from theirs. I also very much doubt that further empirical investigation will bear out their claim that contingency fees "do not cause higher awards" or that "contingent-fee limits are unlikely to reduce lawyers' income very much, since they will simply switch to hourly fees". In fact, I feel confident that most contingency-fee lawyers themselves, seeing their practice from the inside, would part company from Tabarrok and Helland on key points in this analysis. In Florida and other states, for example, is the organized bar just wasting its effort by furiously resisting contingency-fee limits in med-mal cases, since after all it could just switch to hourly rates and preserve its anticipated income?
Republican lawmakers in Georgia are musing publicly on the possibility of amending the tort reform legislation they passed just a few months ago.
According to reporting in The Fulton County Daily Report (not available online) Republican Wendell Willard of Atlanta has criticized the language -- though not the concept -- of S.B. 3's offer of judgment rule as being "too confusing as it's written now". The article cites UGA law professor Thomas Eaton as calling Georgia's offer of judgment rule "a drafting nightmare."
While the Republican Chair of the Senate Judiciary Committee, Preston W. Smith, has agreed to take a look at improvements, he cautions against making too many changes to Georgia's Rule 68 and warns against the motives of some lawyers who are advocating for change. "[Rule 68] encourages the settlement of claims and that interferes with their ability to make more money" he said.
The FCDR article mentions two other possible amendments to the 2005 reform legislation: revising a venue provision to circumvent a recent ruling that questioned the constitutionality of the 2005 reform and restrictions on lawyers' ability to earn contingent fees.
Justice Stevens gave a speech to the Clark County Bar Association noting the important principle that a judge's preferences don't always coincide with a judge's obligations to decide a case. This seems to surprise Linda Greenhouse, who then decides it's a form of wisdom, and then cites opinions by Justice Kennedy and Justice O'Connor expressing the same principle. This is perhaps ironic, since they could well be the two justices on the Court today who are least guided by it. The Times commends Stevens for being "the only member of the court to have addressed the issue in a speech," which would be an astonishing surprise to those who have heard Justice Scalia speak (or even read this year's New Yorker profile of Scalia that quotes one of his speeches) on this very point. But I suppose one can hardly expect the Times to acknowledge that Justice Scalia has reasonable views, or that Judge Roberts has already expressed this view in the famed french-fry case, or that Justice Thomas has expressed the same view in such cases as his dissent in Lawrence v. Texas.
Alex Tabarrok of GMU (also seen on the must-read Marginal Revolution blog) and Eric Helland of Claremont McKenna have released a new monograph through the AEI Liability Project entitled "Two Cheers For Contingent Fees". The study, the first of its kind on contingent-fee limits, finds that capping contingent fees for plaintiffs' attorneys is not only a limit on the contractual rights of plaintiffs, but may have counterproductive results vis-a-vis the intent of the litigation reform movement.
If America is a "lawsuit hell," then contingent-fee lawyers are often considered its devils. Contingent fees have been called unwarranted and the lawyers who accept them have been denounced as unethical and uncivilized. Furthermore, in the midst of increased filings and escalating awards, it is difficult not to notice that some plaintiffs' lawyers have become very rich. As a result, tort reformers have called for limits on contingent fees and many states have obliged. But limits have been enacted without any evidence that contingent fees were either responsible for the liability crisis or that limiting them would produce benefits.
This study, one of the first empirical examinations of contingent-fee limits, finds that contingent fees benefit plaintiffs and do not cause higher awards. Furthermore, contingent-fee limits are unlikely to reduce lawyers' income very much, since they will simply switch to hourly fees. Since hourly fee lawyers are willing to take more cases to court than contingent-fee lawyers, contingent-fee limits can increase the number of low-value "junk suits."
Tort reform is an important goal, but limiting the contractual rights of plaintiffs and their lawyers is an unattractive and likely ineffective method of achieving that goal.
Wikipedia, the open source encyclopedia, has an article on the subject of tort reform. For those unfamiliar with the concept, a wiki is a collective work generated according to a set of rules that permit readers unilaterally to create new output and edit each others' output; the Wikipedia is an online, continually evolving encyclopedia generated according to this method with the help of anyone who wishes to participate, around the world.
The theory is that wiki entries that are incorrect, incomplete or biased can be corrected by other readers who will propose alterations and additions. There is a dispute resolution process and a widely shared ethos that entries should develop toward a "neutral point of view". (Dave Hoffman interestingly discusses the process at Prawfsblog.) The "Tort Reform" entry, so far as I can tell, has tended to evolve in recent months in the direction of being more balanced and useful, in line with the encyclopedia's intent. Newcomers who would like to participate in the process -- and this site reaches many readers who would be well qualified to do so -- should be cautioned that it is wise to get well up to speed about the wiki format and culture before starting to tinker with entries.
Heather Mac Donald, the Manhattan Institute senior fellow and attorney who's famed for her groundbreaking pieces on topics from crime and urban policy to education and homeland security, dropped us this note:
I have not been subjecting myself to the New York Times's search for Roberts's every last conservative peccadillo, but my eye happened to catch Sunday's remarkable quote from Prof. Morton Horwitz about the tragedy of students coming to Harvard with "conservative prejudices" and leaving with those prejudices intact. Horwitz is of course eminently qualified to comment on Roberts, having never taught him. Better yet is Horwitz's own self-description as a "liberal," which the Times happily parrots. That would be the same Horwitz, prominent in the far-left Critical Legal Studies movement, whom a sympathetic reviewer called a "once self-proclaimed 'vulgar Marxist.'" Horwitz's sleight-of-hand is kind of like: "Torquemada, a self-described law-and-order proponent".
It must be nice to be so utterly un-self-conscious about one's ideological correctness. I will not wait for the day when the Times seeks out conservative faculty to comment on the bizarre behavior of liberal students who somehow manage to evade the educational mission of their schools. One might add that anyone who holds on to his conservative principles after a Harvard education has shown precisely the sort of intellectual independence that we should seek in our judges.
Econbrowser's James Hamilton takes a detailed statistical look at the Graham et al. Lancet Vioxx study that was the subject of the now infamous cross-examination of Merck's CEO, where Mark Lanier argued (apparently successfully) that the concept of "statistical sigificance" is mere argle bargle (via Kirkendall). Economist Craig Newmark also has some interesting remarks. Economist/athlete Arthur de Vany, meanwhile, has some insight into the repeated mentions of Robert Ernst as a marathoner.
An editorial chimes in ($) on the auto-parts class action. Some highlights:
Courts in other states had heard cases raising similar claims and refused to certify a class on the grounds that there were too many individual differences among the plaintiffs. But the trial lawyers kept on forum shopping until they hit the Illinois jackpot....
Avery is also a classic example of regulation through litigation. That is, activist judges can bypass elected lawmakers to impose their own policy choices on people -- even, as in Avery, outside the judge's own jurisdiction.
In this case, most state insurance regulations permit the use of non-OEM parts and at least two require it. But the lower court ruling made new law for Illinois -- no non-OEM parts -- and effectively required insurance policies from the 47 other states covered in the class to be written in accordance with the Illinois regulation.
Perhaps someone had the right to petition a court to declare "J.G." of New York incapacitated and appoint a guardian over him, lest his erratic behavior jeopardize his pending personal injury suit. But if so, the person with that right was not the attorney who was prosecuting the injury suit on his behalf, since that attorney faced a fatal conflict of interest in the matter, ruled Judge Alexander W. Hunter, Jr. of the Bronx. "The judge, who is not handling the personal injury action, also found that the attorney's testimony in support of the petition violated attorney-client privilege," reports the New York Law Journal. Had the judge ruled the other way, we might worry about the possibilities that could unfold when some future jittery client announced that he wanted to back out of a suit: "Whassa matter, you crazy?" the lawyer might retort -- and pick up the phone.
Taking a break from his extensive blogging here, the University of Chicago's Richard Epstein has written a trenchant critique of the jury's anti-Vioxx verdict in Ernst v. Merck. Professor Epstein's piece ran in this morning's Wall Street Journal, and he and the Journal have been kind enough to allow us to reprint it here in full. I encourage all our readers to check it out; if you read Professor Epstein's piece, and Ted's posting here, you'll have quite an extensive understanding of what's at issue in this case and why the verdict is so disturbing and problematic.
Howard Bashman rounds up many newspaper links. Evan Schaeffer at Legal Underground has a podcast on the topic of Merck's financial future; he thinks suggestions of bankruptcy are overblown. Gordon Smith at Conglomerate says the jury was being invited to attempt an ad hoc fix of deeper social problems relating to drug marketing, and also says a video shows Merck's team getting out-lawyered by Lanier. On a related topic, Rethink(IP) discusses Lanier's use of PowerPoint. Bill Dyer offers some in-state perspective, and warns against hasty second-guessing of Merck's trial counsel.
Prof. Bainbridge says that "nothing since the OJ criminal verdict has shaken my faith in juries as much as the details coming out of the recent verdict against Merck in the first Vioxx suit"; in particular, "if the WSJ($)'s reporting is to be believed, the jurors basically didn't understand -- and, indeed, didn't even try to understand -- the science". Larry Ribstein recalls the demagogy of the plaintiff's case, its "resentment-mongering against executive pay and corporate profits, and exploitation of the average lay jury's innumeracy"; in a second post, he remarks on the "Oprah juror" and the speed with which the jury deliberations swept past issues of causation. Reason "Hit and Run" bats around the case here. And at Overlawyered, I've got a roundup about Vioxx users who like the drug and wish they could go on using it (some links via Blawg Review #20, hosted this week by MommyBlawg).
[bumped, updated, and expanded from original August 20 post]
1. You might've thought that you needed to marry a billionaire to get $24 million from a one-year marriage, but we now know that that a one-year marriage to a 59-year-old Wal-Mart produce manager with arteriosclerosis is worth $24 million in compensatory damages. Mrs. Ernst is apparently very lucky that her new husband died from a sudden arrhythmia rather than from a brain tumor or lightning strike, because I'll bet a year's salary that she didn't have a $24 million life insurance policy on him to compensate her in the event of a sudden death.
Compensatory damages are supposed to be compensatory and leave the plaintiff in the same position as if the tort never happened. Awards like this demonstrate the problem with uncapped non-economic damages, which, with no rational basis for computation, are determined solely by the self-serving testimony of the plaintiff and friends, and the whim of the jury. If Mrs. Ernst were less grandmotherly looking, or of a different race than the jurors, or had a hideously grating speaking voice, or if the jury decided to value more her testimony that she didn't even know the children of the husband she told the jury was a great family man she mourned so much, the award is completely different.
With a $250,000 cap on non-economic damages, and Texas's punitive damages cap, the jury's award would still have been a healthy and over-compensating $2.3 million, surely more than whatever insurance policy the Ernsts bought—and Ernst might not even have been able to obtain insurance if his arteriosclerosis had been known.
Legal Affairs takes a look at Dickie Scruggs's effort to pin legal blame on industrial suppliers over Parkinson's-like symptoms in welders; the connection if any of the symptoms to the inhalation of welding fumes is much disputed. A 6,000-suit consolidated action, led by a Mississippi plaintiff, is expected to reach trial this summer. Although the relevant source of the fumes is the manganese contained in welding rods, Scruggs is also attempting to tag with liability a variety of other deep-pocket entities related to the welding business at one distance or another, including members of its trade association, who he claims are guilty of conspiracy. Key passage:
During a pretrial motion in [Judge Kathleen] O'Malley's courtroom, George Ruttinger of Crowell & Moring in Washington, D.C., struggled to extricate the $30 billion company Caterpillar from the fight. He argued that the plaintiffs hadn't specified what role, if any, his client had played in the alleged conspiracy. "Caterpillar doesn't make these," he said, holding up a welding rod. "Caterpillar makes these." The lawyer unwrapped a toy version of an earthmover. Caterpillar and its fellow defendants, Ruttinger continued, were being penalized for joining the trade association -� which was "probably inconsistent" with the First Amendment right to association.
But O'Malley wouldn't let Caterpillar off so easily. While noting that the plaintiffs would have to prove that collusion took place, she said the defendants might have had plausible motives for conspiring to hide the ill effects of manganese �- the desire to keep products cheap. "This is bad public policy," Ruttinger grumbled. "The idea that someone can undertake a duty just by joining a trade association is untenable."
Drugwonks.com, a new site/blog on pharmaceutical issues, is sponsored by the Pacific Research Institute through its newly founded Center for Medicines in the Public Interest and features the writing of such familiar names as Sally Pipes, Ben Zycher and Henry Miller (via MedPundit). Michael Fumento, whose outspoken journalism on risk, science, health and military affairs is probably familiar to most of our readers, has now blog-ified his existing website at Fumento.com. And the New York Sun, a newspaper with plenty to offer even non-New-York readers, has launched a weblog at ItShinesForAll.com.
You can tell that contemporary legal feminists are now somewhat embarrassed by "comparable worth," because the Roberts stories (in WaPo and the NYT) actually play down its salience. But the feminists should be embarrassed, because even if it's dead (and I'm not sure of that) "comparable worth" shows what can happen -- what did happen -- when you set up an intellectual conveyor belt that sends the latest and brightest ideas of liberal litigators and professors and their law students straight to liberal judges and their law clerks (often those same law students a year later) for quick approval. If nothing else, the madeleine-like memory of this once-celebrated "women's rights" idea should remind everyone why it's valuable to have stubborn non-progressive doubters like Roberts around.
As Jim noted earlier, the jury in Ernst v. Merck issued $229 million in punitive damages, on top of compensatory damages of approximately $24.4 million.
Press accounts so far have not distinguished between the plaintiff's economic and non-economic damages, but that distinction will be important when the court applies Texas' statutory cap on punitive damages to the award.
The Texas statute provides:
LIMITATION ON AMOUNT OF RECOVERY. (a) In an action in which a claimant seeks recovery of damages, the trier of fact shall determine the amount of economic damages separately from the amount of other compensatory damages. (b) Exemplary damages awarded against a defendant may not exceed an amount equal to the greater of:(1)(A) two times the amount of economic damages; plus (B) an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or (2) $200,000. (Texas Civil Practice & Remedies Code � 41.008)
So, for example, if the economic damages were $1 million and the non-economic damages were $23.4 million, the punitive damages should be capped at $2.75 million (i.e. two times economic damages plus non-economic damages up to $750,000).
On the other extreme, if the economic damages were $23.4 million and the non-economic damages were only $1 million, the punitive damages should be capped at $47,550,000.
Just in: the Texas jury handling the nation's first Vioxx products liability case, previously discussed at length on this site, issued a verdict holding the drug's manufacturer, Merck, liable for $229 million in Robert Ernst's 2001 death. How did they reach that figure? Just a guess:
Carol Ernst's lawyer, Mark Lanier, asked jurors to award her at least $40 million in damages. He suggested during closing arguments that her mental anguish and loss of companionship damages could reach $229 million or more. Mr. Lanier said Merck reaped that amount from Vioxx sales in the four months leading to the February 2002 addition of cardiovascular warnings on the drug's label. The U.S. Food and Drug Administration suggested the changes in October 2001 in light of a 2000 study that showed Vioxx users suffered five times as many heart attacks as those who took the older painkiller, naproxen.
So, in essence, the jury expropriated Merck's Vioxx sales from Oct. 2001 through Feb. 2002. Though the verdict seems not to have been structured as a punitive award (Texas has a strict limitation on punitives at twice economic damages and $750,000 above noneconomic awards), it sure sounds like one.
And thousands of other Vioxx suits are pending--for which this expropriative penalty won't have any preclusive effect.
So, even as Ted yesterday brought us the good news from Avery, we have yet more evidence that in the wild world of torts, the good guys far too often lose...
The Washington Post has reported on a DOJ study that shows that the number of tort cases going to trial in federal court has declined over the past several decades.
The articles notes that there were 768 tort trials in federal court in 2003 down from 3,604 in 1985. The article does not comment on the number of cases filed, noting only that the average was 44,770 per year over the 33 years in the study and that there were 49,166 cases filed in 2003.
Unfortunately, these statistics really do little to describe the state of play in federal tort litigation.
The 2003 statistics indicate that, of the 49,166 cases filed, there were 768 trials, amounting to a 98.5% rate at which cases are disposed of before trial. Using the 1985 trials number (3,604) in comparison to the average number of cases filed over the period (44,770) yields a disposition rate of 92%.
While it's clear that very few cases go to trial, and the article speculates this is because so many cases "settle", the statistics do not necessarily support that conclusion or tell us anything about the settlements. We can't tell, from the article at least, whether the trial rate is affected by the settlement rate or by the number of cases dismissed on summary judgment or preliminary motions.
Even more important, however, is the fact that federal tort litigation amounts to less than 10% of all tort litigation country-wide. More than 90% of all these cases get filed in state courts.
The reason these statistics are important is because some media outlets (and some disingenuous advocacy groups) often try to draw conclusions from them. I would not be surprised, for example, to see an article or newspaper editorial in the next few days suggesting that the decline in cases going to trial suggests a decline in frivolous litigation or the lack of a need for tort reform.
A Washington Post article seeks to position Roberts as someone who opposes equal rights for women. Walter already addressed the substance of the article, but one new detail is worth noting. Roberts wrote in a memo, "Some might question whether encouraging homemakers to become lawyers contributes to the common good, but I suppose that is for the judges to decide." Feminist groups are trying to portray this as a "Neanderthal idea" about women's place in society when it's just plainly obvious that Roberts is simply making a lawyer joke. To its credit, the Post does note this explanation from the White House, but there was no reason to give Kim Gandy of the National Organization for Women the platform to release a self-parodying statement unfairly attacking Roberts, much less to spin the entire article as "Roberts Resisted Women's Rights" when there isn't a single recognized women's "right" identified in the article that Roberts resisted.
I have been patiently waiting for Avery to be decided. This morning the Illinois Supreme Court made my day and likely made State Farm and its policy holders happier. Its been a long wait for all as the Illinois Court of Appeals upheld the trial court’s determination in the plaintiff’s favor way back in April of 2001. While Ted Frank has given us the bottom line, let’s look at some of the nuggets contained in the single spaced 72 page opinion (including concurrences and dissents).
*The trial court certified a class action based on different contracts in different states.
*The trial court certified a class action based on potentially radically different damages as each car’s loss would be different. In fact, one of the named plaintiffs arguably suffered no loss as he sold his truck (after the accident) to a brother-in-law for almost its Blue Book value. (I wish I could do that!)
*The trial court applied Illinois law to contracts with no connection to Illinois and didn’t seem to care whether the trial court’s interpretation could, in fact, conflict with other state’s insurance law and regulation.
*The plaintiffs never proved (nor did they attempt) to prove that any of the replacement parts were defective. This would have increased their burden (and costs) dramatically, so they just tried to convince the court that replacement parts are per se categorically inferior to OEM parts.
This is the best one:
*The plaintiff’s damage expert (a Dr. Iqbal Mathur) admitted on the stand that his damage theory made no economic sense. One would think that there would have been some judicial notice of this particular fact by the trial court.
What is interesting is that this case really wasn’t about defective parts (at least according to the majority opinion). If, in fact, the parts are not up to par then there is still room for a proper lawsuit on that issue. However, the jurisdictional over reaching and lack of comity is what is most bothersome about this case. Further, while insurers, are supposed to be regulated by the states, one state (whether Illinois or New York) should not be able to impose its regulation to other states.
This morning, the Illinois Supreme Court threw out a $1.2 billion damages award and decertified an improperly certified class in the case of Avery v. State Farm (Feb. 20). The decertification of the class and criticism of the vague finding of consumer fraud means that the $10 billion verdict in the improperly certified Madison County consumer fraud class in the Philip Morris case will likely be thrown out, also, and the stock market has responded accordingly. "The most striking deficiency in DeFrank's claim that State Farm violated the Consumer Fraud Act is his lack of actual damage." This is a deficiency common to many Madison County class actions, and is a promising sign for the law and for American consumers. Michael Greve criticized this aspect of the lower court decisions in Avery in his monograph Harm-Less Lawsuits? Other posters are sure to have more details later in the day.
Emergency physicians who have the greatest fear of malpractice suits are more likely than their colleagues to admit and order tests for patients with chest pain or other heart symptoms, even if those patients are at low risk for actual problems, according to a study led by a University of Iowa researcher.
These findings were based on surveys of 33 emergency doctors who participated in a prospective study of 1,134 patients at two teaching hospitals. The results appear in the July 13 online issue of the Annals of Emergency Medicine.
As students of tort law know, New Zealand is the home of perhaps the most ambitious attempt made in any advanced country to develop a systematic administrative alternative to tort litigation. Its government-backed Accident Compensation Commission provides no-fault compensation for accidents not only on the highway but generally, and its payments serve as a substitute for conventional tort litigation, which is disallowed in a wide range of circumstances where it would be available in more or less every other advanced country. Tyler Cowen has been visiting New Zealand and rounds up various useful links on the ACC, its origins and operations, and the scholarly assessments that have been made of its record.
But he was a whole lot gentler about it than the late Clarence Pendleton Jr., chairman of the U.S. Civil Rights Commission, who called the scheme of centralized wage-setting "the looniest idea since Looney Tunes came on the screen". The premise of "comparable worth" is that government agencies, union negotiators or courts should be invited to compare firefighters' jobs with librarians', landscapers' with cooks', paralegals' with assistant engineers', and guess which pairings have outputs of "comparable" value, independent of actual supply and demand conditions for those particular jobs in the labor market (see OL here and here). A wacky enough idea that it's been losing steam for two decades now, it still apparently passes for conventional wisdom in the newsrooms at Newsday and USA Today. Steve Bainbridge and Mark in Mexico comment, and Josh Gerstein of the New York Sun quotes a spokesman for the office of Rep. Nancy Johnson (R-Ct.) who, like some headline writers, appears to confuse it with the quite different legal concept of equal pay for equal work.
Charles Upton Sahm of the Manhattan Institute, writing on the Campaign for Fiscal Equity's New York school-finance suit, says Gov. George Pataki
should do everything he can to stop New York from traveling down the futile court-directed education-financing path that other states have followed. To date, the top courts in over half the states in the nation have declared urban schools in those states "inequitable" or "inadequate." But instead of giving poor minority kids an immediate remedy, such as a voucher, enabling them to take advantage of some of the same educational options that wealthier children enjoy, courts have ordered up boatloads more money to pour into dysfunctional urban systems. (Michael Rebell, the attorney who first launched the CFE and has since served as its co-counsel and executive director, has just announced that he will be joining Columbia Teachers College this fall to start a Campaign for Educational Equity, funded initially with $12 million, to export the CFE model �- that is, getting courts to order more money for the teachers' unions -� to still more states.)
New Yorkers need only look across the Hudson River to see the folly of this approach. New Jersey was a pioneer in the educational equity movement. Three decades of litigation have pushed the courts deeper and deeper into education-policy decision making, resulting in huge court-mandated increases in per-pupil spending, paid for with massive state and property tax hikes. Yet the targeted urban districts have seen little in the way of improved education results. Meanwhile, the tax increases have spurred a tax revolt among fed-up voters across the state.
More on school-finance suits: Jul. 22, etc.
"Why should I do something that Congress and the president have decided they don't want to do as a matter of policy?" U.S. District Judge Loretta Preska of the Southern District of New York asked lawyers for states who filed a lawsuit demanding that large power companies reduce pollutants linked to global warming faster than the federal government would otherwise require them to do (more, more).
Per AP, a big reaction is developing among business and elected officials against the recent actions of the Wisconsin Supreme Court, which imperiously struck down medical malpractice reform, became the first state to open wide the door for lead paint suits against manufacturers, and liberalized the availability of punitive damages. A particular target may be Justice Patrick Crooks, sometimes described as a member of the court's conservative wing, "who ruled with the majority in all three cases" and "has announced he will seek another 10-year term."
Paul Rubin and Joanna Shepherd of Emory Law School have an interesting paper on SSRN which looks at the effect of tort reform on accidental deaths. One of the goals of tort law is deterrence. Thus, we normally think that if one has a higher penalty function, then the penalty will deter more “bad” actions and will increase safety. This is because actors will internalize the costs of their potential harm and increase their level of care.
However, what if the assumptions underlying this model are violated? For example, normally we assume that damages are pecuniary, injurers and victims are strangers, there are zero transactions and litigation costs, and the actions of potential tortfeasors are harmful —not protective. If we think about med mal we have large amounts of non-pecuniary damages, a contractual relationship between the doctor and patient, significant costs of operating the liability system, and many defendants in liability lawsuits are actual trying to help the victim.
Here’s Rubin & Shepherd’s punch line…
Because injurers and victims are in a contractual relationship, victims will pay for potential damage payments ex ante in the form of higher prices. The ex antepayments must cover not only pecuniary damages, but also non-pecuniary damages (which are damages for events that do not raise the marginal utility of wealth and which do not create a demand for insurance) and administrative costs. As prices increase, consumers become less willing to pay for the goods and services covered by tort law. Suppliers may decide to stop supplying the goods and services altogether. And because many of these goods and services would reduce accident risk, increasing tort liability may actually lead to increased, not reduced, accident risk. Similarly, tort reforms that decrease tort liability and make risk-reducing products more available and affordable may reduce accident risk.
They find that caps on punitive and non-economic damages, a higher evidence standard for punitive damages, and pre-judgment interest reform are associated with a decrease in accidental death rates. In contrast, reform of the collateral source rule generates increases in accidental death rates. In sum, state tort reforms have saved a net of 14,222 lives.
This is an important paper in the sense that it goes to the heart of the trial bar's argument that we are worse off after tort reform as we have lost “our right to be compensated.” In fact, using Rubin and Shepherd's conclusions we have traded some reduction in compensation for some 14 thousand lives.
Cooperation is a big factor in lowering otherwise draconian sentences, which leads Ellen Podger at White Collar Crime Prof Blog to ask:
...3. What happens to the individual who is last to be indicted when there is no one left to talk against and no way to provide cooperation? What happens when the the accused has nothing to offer in cooperation because they did not see or hear anything? Are we punishing these individuals with heavier sentences merely because they have nothing to offer the government? Should we be afraid that they will invent something to tell the government just to obtain a reduced sentence?
4. The Bill of Rights provides everyone accused of a crime with the right to a jury trial. Are we punishing individuals who avail themselves of this right?
And don't miss Tom Kirkendall's further development of the question, which quotes John Langbein's work on plea bargaining.
London's Telegraph reports that amid a rising level of payouts to successful litigants, Britain's National Health Service "has set aside nearly �8 billion [$14.5 billion] over the next 10 years to cover an expected rise in compensation claims and legal bills for medical negligence cases," that number being based on "worst-case" scenarios. "Last year, the NHS Litigation Authority paid out �503 million [$914 million] in claims." A spokesman for the Liberal Democrats, one of the opposition parties, called the figures "shocking". As a point of comparison, as was reported this spring, the 182 general hospitals in litigious Pennsylvania, serving a population of 12.3 million, spent $636 million on medical malpractice last year, or roughly $50/resident, while last year's NHS outlays, divided among a British population of 60 million, amount to $15/resident.
No harm, no damages, no lawsuit, rules federal judge Carol Bagley Amon in New York of the much-hyped case. However, the frequent difficulty of proving consumer damages has not deterred various eager class action lawyers from jumping into the privacy-suit field, reports Justin Scheck of Law.com: "Each new case we do, we share information," said Todd Schneider of Schneider & Wallace. "We share intelligence. A bar is growing."
In the mail: Timothy Lytton of Albany Law School (who was a generous host when I debated Carl Bogus there a year or two back) has edited a new volume entitled Suing the Gun Industry: A Battle at the Crossroads of Gun Control and Mass Torts. Looks promising, with a blurb from James B. Jacobs, for example: "Highly readable, comprehensive, well-balanced. It contains everything you need to know, and on all sides, about the wave of lawsuits against U.S. gun manufacturers." While Prof. Lytton is much more favorably disposed toward gun litigation than I am, the contributors are drawn from a wide range of viewpoints, and contributors include Peter Schuck of Yale Law, Stephen Sugarman of Boalt Hall (Berkeley), civil liberties lawyer Don Kates, and Brannon Denning of Cumberland/Samford.
Some critics have assailed John Roberts for the majority opinion he wrote in Taucher v. Brown-Hruska, a case decided by a D.C. Circuit panel in January. The Taucher case pitted the Commodity Futures Trading Commission against publishers of commodities newsletters which sought to resist, on First Amendment grounds, CFTC's contention that they were obliged by statute to register as investment advisors and undertake various other regulatory burdens. A judge eventually agreed with the publishers' First Amendment argument and the CFTC appealed, but the case was mooted when the commission dropped its attempt to regulate the newsletters. The question then arose whether the publishers were entitled to recover attorneys' fees from the commission under the Equal Access to Justice Act (EAJA), which provides that certain litigants can recover fees from the government when the position it has taken in litigation is not reasonably based in law or fact. Reversing the trial court, Roberts ruled that the government's position had not been unreasonable because the relevant law had been unsettled, and that the publishers therefore could not recover fees. Judge Karen LeCraft Henderson concurred, while Judge Harry Edwards dissented.
Why should anyone take alarm at this ruling? Well, according to the self-proclaimed People for the American Way (PfAW), it's a question of "access to justice": EAJA "is important in opening access to the courts to persons who might otherwise not be able to challenge unlawful or unconstitutional government action." The enviro-left legal strike force EarthJustice (EJ) likewise claims the ruling (PDF) raises "concerns about his philosophy on access to courts". Both PfAW and EJ mention that the newsletter publishers were represented by a "public interest law firm". The implication, one supposes, is that Roberts is the kind of judge who would take crumbs (in this case $182,425.55) from the mouths of public interest lawyers, who need to eat too if they are to go on filing their publicly interested lawsuits. (Ironically, the next entry in PfAW's sidebar list of anti-Roberts categories is entitled "Defending the Treasury"; its sole entry at present is a case in which Roberts was allegedly not sympathetic enough to qui tam whistleblower complaints).
Both PfAW and EJ coyly refrain from informing readers exactly which "public interest law firm" was representing the newsletters, but a glance at the opinion shows that the attorneys were none other than Scott Bullock and William ("Chip") Mellor of the Institute for Justice (IJ), the very widely known conservative/libertarian law firm that frequently goes to bat (as in Kelo v. New London, the eminent-domain case) for property owners and businesses faced with excessive government regulation. Not only is IJ immensely popular on the Right, but the cause in which it was acting in this case -- protecting the free-speech rights of investment newsletters -- is a long-time favorite in conservative/libertarian circles. In other words, the case is one in which Judge Roberts ruled against the side that probably commanded his sympathies (assuming he's much of a conservative) and in favor of an intrusive regulatory agency as well as, incidentally, the taxpayers. Is there any real doubt that, had he come down on the other side, the case would turn up on some list of his rulings supposedly proving that he sides with business against government regulation?
There remains, of course, the central issue in the case, namely whether the particular dispute fell within the legislated bounds of EAJA's fee entitlement (since EAJA is not a general fee-shifting statute but rather one whose application is triggered only by certain situations). After reading the case, I can only say -- as someone whose instinctive sympathies on the underlying merits are 100% with the newsletter publishers and 0% with the CFTC's -- that I find it hard to argue with Roberts's conclusion that the state of the law on the relevant matters was indeed unsettled, precluding EAJA's application. To reiterate, then: by all appearances, Roberts set aside his likely sympathies as to the parties in the case and ruled according to his honest view of the statute's reasonable application. No wonder they want to fry him!
Incidentally, Baseball Crank covered the original decision at the time, concentrating on an important (if secondary) side issue it raised, namely whether agencies are duty bound to defend the constitutionality of their statutes under any circumstances (Judge Roberts wisely thought not). And Edward Whelan discussed the case in a post on NRO's "Bench Memos" (& welcome Jonathan Adler, Stephen Bainbridge readers).
The W$J editorializes on the disastrous pair of decisions handed down by the Wisconsin Supreme Court the other week, the one striking down the state's duly enacted law limiting malpractice recoveries as having no "rational basis", and the other creating a new and unprecedented opening for the filing of lawsuits against companies that long ago manufactured lead pigments for paint:
The dual rulings pose a challenge to Wisconsin's politicians, who have essentially been overruled by a four-person judicial legislature. GOP Congressman Mark Green is already making this part of his campaign for Governor, while Democratic Governor Jim Doyle has yet to make a firm public statement. The implications for Wisconsin's economy, which depends both on health care and manufacturing, are enormous. The last thing Wisconsin needs is a reputation as a cold-weather Alabama.
I appear to be the second person who has downloaded the final, published version of "Stability, Not Crisis" paper discussed here earlier (Mar. 10; Apr. 1). The final paper tones down the earlier drafts' claims. At the time it was released, the paper's authors published an op-ed in the New York Times:
Medical malpractice litigation reform is a high priority for President Bush, who contends that juries are running amok, multimillion-dollar settlements are on the rise and greedy trial lawyers are filing frivolous suits. The results, Mr. Bush and others argue, include skyrocketing insurance prices, abandoned medical practices, defensive medicine and a crisis of access to care. Their proposed solution: caps on jury awards to patients and on lawyers' contingent fees.
No one disputes that insurance premiums have risen significantly. [...] The medical malpractice system has many problems, but a crisis in claims, payouts and jury verdicts is not among them. Thus, the federal "solution" that Mr. Bush proposes is both overbroad and directed at the wrong problem.
ATLA crowed, quoting the paper: "[T]ort limits are 'unlikely to prevent future insurance crises.'" So it's worth noting a new paragraph in the final, published paper:
Texas adopted comprehensive tort reform, including caps on noneconomic damages, effective for claims filed after September 1, 2003. These changes postdate the period we study so we cannot assess how they will affect claim outcomes. On economic grounds, one would expect liability caps to reduce both the number of large paid claims and the average payout per claim. In the long run, this should lead to lower insurance premiums. [emphasis added]
It's doubtful that ATLA will correct its "fact sheet," even though the paper it's relying upon has retreated from that quote and corrected itself. And the actual publication of the paper will get none of the publicity of the considerably less modest working paper, press release and op-ed of five months ago.
Do they become valid if the client ratifies them? The Second Circuit has certified that question to the New York Court of Appeals in a case involving Edward King, a former member of the rock band Lynyrd Skynyrd, who's fighting with attorney Lawrence Fox over the proceeds of artists' royalties on which Fox once represented him.
Contractual jury waivers, which provide ahead of time that litigation over a future dispute will be heard by a judge, are legal in most states, but the California Supreme Court has just ruled them unenforceable. To be sure, the state legislature could still pass legislation giving force to them, but given trial lawyer domination in Sacramento that prospect must be accounted dim. (ruling (PDF) via Bashman)(Bob Egelko, "Jury waivers in contracts ruled not binding", San Francisco Chronicle, Aug. 5).
In this Cato Institute Policy Analysis from late June, Cato senior fellow Mark Moller, who is editor in chief of the Cato Supreme Court Review, argues that current class action procedures often deprive defendants of the due process to which they are constitutionally entitled under the Fifth and Fourteenth Amendments. In particular, he contends, the format deprives defendants of defenses they would ordinarily be entitled to assert and operates to coerce them into settlements not based on claims' underlying merit. His conclusion:
At a minimum, controlling unconstitutional class actions requires Congress to change federal class action rules. Necessary changes include (1) requirements that absent class members "opt in" before they are counted as part of the class and that courts assess the merits of legal claims before authorizing their litigation in the form of a class action and (2) a ban on class treatment of lawsuits in which key elements can be proven only on a case-by-case basis.
Regarding Saturday's letter from reader Stan Sipple warning that nonjury "health courts" might not be quite so supportive of physician defendants as they think, an attorney reader who asks to remain anonymous writes:
Your Nebraska reader is dead-bang on about the idea of bench trials as a cure for runaway juries. In judicial hellholes like Madison and St. Clair Counties in Illinois the juries, as bad as they sometimes are, are much better than the judges. My firm inherited a case from a Chicago firm that had forgotten to ask for a jury trial and we called plaintiff's counsel to ask if he would consent to a late request. His response: "Why should I take a chance with 12 people I don't know?"
In all fairness to the "health courts" idea, one of its fundamental premises is that qualified medical expertise would be enlisted in aid of court determinations, which means determinations of liability would hardly be left to judges' mere discretion. Even so, it is likely that across many jurisdictions and communities physicians who currently benefit from favorable jury esteem/sympathy would find a dispassionate expert tribunal less rather than more sympathetic to professional error.
Cross-posted from Volokh Conspiracy:
New Article Posted on SSRN: My article, Learning the Wrong Lessons from "An American Tragedy": A Critique of the Berger-Twerski Informed Choice Proposal, forthcoming in the Michigan Law Review, is now available for download from SSRN. Comments are welcome. Here is the abstract:
This paper is a critique of Margaret Berger and Aaron Twerski, "Uncertainty and Informed Choice: Unmasking Daubert," forthcoming in the Michigan Law Review. Berger and Twerski propose that courts recognize a cause of action that would allow plaintiffs who claim injury from pharmaceutical products, but who do not have sufficient evidence to prove causation, to recover damages for deprivation of informed choice. Berger and Twerski claim inspiration from the litigation over allegations that the morning sickness drug Bendectin caused birth defects.
Considering the criteria Berger and Twerski suggest for their proposed cause of action in the context of Bendectin, it appears that a pharmaceutical manufacturer could be held liable for failure to provide informed choice: (a) even when there was never any sound scientific evidence suggesting that the product caused the harm at issue, and there was an unbroken consensus among leading experts in the field that the product did not cause such harm; (b) when the product prevented serious harm to a significant number of patients, and prevented substantial discomfort to a much greater number, even when there were no available alternative products; (c) when a plaintiff claims that she would not have taken the product had she been informed of an incredibly remote and completely unproven risk; and (d) when the defendant is unable to prove a negative - that the product in question definitely did not cause the claimed injury.
No rational legal system would allow such a tort. Putting the Bendectin example aside, the informed choice proposal has the following additional weaknesses: (1) it invites reliance on unreliable junk science testimony; (2) it ignores the fact that juries are not competent to resolve subtle risk assessment issues; (3) it reflects an unwarranted belief in the ability of juries to both follow limiting instructions and ignore their emotions; (4) it ignores the problems inherent to multiple trials - even if defendants were to win most informed choice cases, safe products could still be driven off the market by a minority of contrary verdicts; (5) it ignores the inevitable costs to medical innovation as pharmaceutical companies scale back on researching product categories that would be particularly prone to litigation; (6) to preempt litigation, pharmaceutical companies would overwarn, rendering more significant warnings less useful; and (7) FDA labeling requirements would arguably preempt the proposed cause of action.
The W$J reports today:
Federal prosecutors have stepped up their criminal investigation of Milberg Weiss, the nation's largest class-action law firm, granting immunity to two former partners as they intensify their scrutiny of a third, prominent litigator William S. Lerach.
A grand jury in Los Angeles heard secret testimony three weeks ago from one of the former partners given immunity, Alan Schulman, lawyers close to the case said. Mr. Schulman's cooperation is a major development because he worked alongside Mr. Lerach, a former senior partner at Milberg Weiss and one of the nation's most prominent class-action lawyers....
Prosecutors have informed Mr. Lerach and two other former partners, David Bershad and Melvyn Weiss, that they could face indictment for conspiracy, according to lawyers close to the case. The government also is probing payments made by Milberg Weiss to a financial analyst who repeatedly served as an expert witness in the firm's cases [John B. Torkelsen of Princeton, N.J.], apparently taking the investigation in a new direction. Additionally, a new round of subpoenas has been sent to at least a half-dozen firms that were co-counsel with Milberg in securities class-action cases reaching back a decade or more.
Lerach and the Milberg firm deny all wrongdoing, and their defenders are likely to question the motives of Schulman, their former partner, by pointing out that he now works for the class-action firm of Bernstein Litowitz, which regularly competes with Milberg and Lerach for business. Tom Kirkendall also comments. Earlier coverage on this site; Overlawyered Jun. 27 and links from there, Jun. 28.
A rigorous standing doctrine, wrote John Roberts Jr. in a 1993 Duke Law Journal article discussing Justice Scalia's opinion for the Court in Lujan v. Defenders of Wildlife, is "an apolitical limitation on judicial power. It restricts the right of conservative public interest groups to challenge liberal agency action or inaction, just as it restricts the right of liberal public interest groups to challenge conservative agency action or inaction."
Lujan had attracted criticism as disrespectful of legislative power because the Court had ruled that even Congress's enactment of a statutory provision intended to confer standing on a group might fail in that effect if the group lacked any real stake in a controversy. "Far from an assault on other branches," Roberts countered, "this is an insistence that they are supreme within their respective spheres, protected from intrusion -- however welcomed or invited -- of the judiciary." (Hat tip: Lily Henning, Legal Times)(a little more on standing).
On the proposal for special expert courts to review medical liability claims, championed most prominently by author Phil Howard's Common Good (see here, here, here and here), reader Stan Sipple writes in to say: "Be careful what you wish for. Here in Nebraska, jury verdicts favorable to the plaintiff are few and far between. Speaking from experience and word of mouth, good PI attorneys have a much better chance in workers' comp court, which proceeds by way of bench trials."
Our featured discussants on the future of the Supreme Court, Richard Epstein and Stephen Presser, are back this week (after taking a few days off) with a livelier discussion than ever, ranging from affirmative action to Justice O'Connor's record to the desirability of church-state separation -- the last-named of these topics striking particular sparks in the discussion. (& welcome Instapundit, Catallarchy readers)
Ever wonder why your newspaper seems to run so many letters to the editor robotically laying down the trial lawyer line? Here's one reason (scroll down to the two "samples" -- how many knock-offs of these will wind up being printed in papers around the country, one wonders?).
That aside, ATLA's advice on how to submit a letter that will get printed is actually pretty good.
One of the problems in the tort reform debate is the use of simplistic statistics. The identification of particular problems in assessing the existence of the need for tort reform or the effect of tort reform has generated a number of studies. Many of them conflicting. This is because they tend to be advocacy briefs rather than disinterested research. Robert Hunter, writing under the aegis of the Americans for Insurance Reform, is the latest into the fray. His report finds that doctors are being gouged by their insurers. He uses a pretty good data set of loss costs by state and he finds that the losses have not risen to reflect the crisis that is supposed to exist. Further, he finds that the growth in losses are not that much different in the last five years (so-called crisis years) from the previous five years. In fact the report claims that tort reform did not make a difference. While he does show statistics, he does no statistical tests. Not one.
Essentially what he does is look at states with a set of certain tort reform and states with fewer reforms. He then looks at the percentage loss cost growth and uses the eyeball (it looks close to me) test to say there are no differences. He also says that during the crisis years loss costs grew less in states with relatively few reforms and more in states with the most reforms. Now this is pretty interesting as one would expect the reverse at first glance. However, one might actually expect states under more pressure (higher increases in loss costs, higher premiums, etc.) are more likely to put in place new reforms. States without loss cost growth are not likely to put additional reforms in place. This failure to control for causation or at least control for the fact that the choice of reform is an endogenous choice is quite important.
I looked at the NAIC�s page 14 (state page data) and did some simple statistical tests for the years 1994-2004. (I looked at firms that wrote more than $200,000 in premiums in any given state and year. This excludes companies that are not really in the medmal business. I also didn't adjust for inflation as I was just doing this to avoid grading. I took the damage cap and non-economic damage cap information from the Appendix in Mr. Hunter's study.)
First, in Table 1 (click on Table to enlarge) I looked at the med loss ratio by state and regressed it against whether the state had a punitive damage cap limitation or a non-economic damage cap limitation. (I used a state and year fixed effect model) and found that there appears to be no statistical influence of the damage caps on the mean of the loss ratio. This result is not uncommon and it seems to lend support to the group complaining that tort reform is a sham. However, note that the standard deviation of the loss ratio is significant and positive. This implies that if in the previous year the loss ratio was more volatile, one saw a higher mean loss ratio this year. if we think about insurance pricing, price =expected losses + expense+ cost of risk. As cost of risk increases, prices go up. One can think of the standard deviation of the loss ratio as a proxy for the cost of risk. As the loss ratio becomes more "uncertain", a prudent insurer will have to hold more capital to support the risk.
The question then becomes, does the cost of risk depend upon tort reforms? In Table 2, I estimate a similar regression looking at the standard deviation of the loss ratio as the dependent variable against the dummy variables for the damage caps and the lag of last year's loss ratio. Note that the punitive damage cap seems to have a significant negative effect on the standard deviation �thus reducing the cost of risk.
The only point I want to make is that the the tort reform story is more complicated than some simple averages might lead one to believe. My regression models are also simplistic and if I had more time I'd do a better job before running off the the New York Times to make an authoritative claim. The standards for analysis in this debate are too low. Every group has their favorite whipping boy and their statistics to back it up. However, just looking at point estimates and saying this estimate is bigger than another to make a conclusion ... is so 1930s. I don't think these reports would even get an average grade as an undergraduate term paper. Shouldn't we expect more?[cross posted at RiskProf]
Doug Simpson, a Hartford lawyer whose specialties include insurance regulation, publishes Unintended Consequences, a "weblog of research on the collision of law, networks and disruptive technologies". He's posted a number of items worth reading on medical malpractice insurance, including this one from March on the origins of the med-mal crisis, and this one from last month chiding Connecticut AG Richard Blumenthal for siding with trial lawyer advocates on the issue.
Today in the Western District of Louisiana, the Competitive Enterprise Institute filed a lawsuit "on behalf of a distributor; two small tobacco manufacturers; a tobacco store; and an individual smoker" against Louisiana's attorney general, challenging the settlement as a violation of the "compact clause" of the U.S. Constitution, article I, section 10. The CEI press release explains:
The Compact Clause was meant to prevent states from collectively encroaching on federal power or ganging up on other states. The tobacco settlement set up a national government/tobacco cartel that harmed consumers and small businesses by increasing cigarette prices and restricting competition.
In a widely followed case (Jun. 29, Jun. 1), Britain's General Medical Council has struck off its rolls noted pediatrician Prof. Sir Roy Meadow because of his role in giving expert testimony which led to erroneous conviction in a crib death prosecution. The Guardian, Telegraph and BBC report, and the BBC mulls the impact the episode could have on the future of expert testimony in British courts. More: Peter Nordberg also comments.
Michael McCann of Sports Law Blog has a roundup of the nominee's record on legal disputes arising from the playing field. One highlight:
as a litigation partner at Hogan & Hartson, he successfully defended the National Collegiate Athletic Association ("NCAA") against a lawsuit by Renee Smith, a law school student who alleged that the NCAA, when it refused to allow her to participate in postgraduate intercollegiate volleyball, discriminated against her because of her sex.
Critics hoping to assail Roberts as a sexist troglodyte on the basis of this representation may not get very far, however, because the position he argued -- that the NCAA is not subject to Title IX at all, although federally supported colleges and universities happen to pay dues to it -- is so palpably reasonable that it won the votes of all nine Justices in an opinion written by Ruth Bader Ginsburg.
Like us, the new D.C. paper thinks the Lawsuit Abuse Reduction Act (OL Sept. 15, 2004) is a fine idea as it pertains to federal litigation, but should be shorn of its overreaching provisions which attempt to compel state courts to impose sanctions (see Overlawyered, Jun. 21, 2004, Jonathan Wilson, May 27, Point of Law Jul. 1, Oct. 4)(same piece at author David Thomasson's site).
The Washington Legal Foundation, which as Jim pointed out on Friday has lately published a number of papers of interest to legal reformers, also has a webcast series of hourlong programs on various topics. Just added is a session with Victor Schwartz and Skadden Arps's J. Russell Jackson on "The Next Wave of State Tort Litigation?: Liability Risks under Consumer Protection Laws and Public Nuisance Theories". Other topics of webcasts in the series include deferred prosecution agreements, expanding duties of corporate directors, the Arthur Andersen prosecution and the Class Action Fairness Act of 2005.
The nominee "could make a big difference" on the issue since his views differ sharply from O'Connor's and the Court is closely split, note MI senior fellow Abigail and Stephan Thernstrom. And here's Nathan Newman with a view from the left on the same issue.
Here's a request for readers of this site. Some well-placed folks are planning to take up the question of the unfairness of "one-way" fee shifting (plaintiffs collect if they prevail, but defendants don't, and the definition of what it means to prevail is often itself unfairly stacked). This unfairness might be addressable by turning one-way fee statutes into two-way; by reverting to a so-called "American" (neither side pays) rule; by working to fix lopsided definitions of what it means to prevail; or by some combination of these approaches. (More: May 31).
So here's the reader request: these folks are in a hurry to line up well documentable case histories of unfairness arising from current federal one-way fee-shifting statutes. Federal only, like this and this, please (not state statutes like this and this and this one). They need the examples within the next couple of days (yes, they should have planned ahead, but I just heard from them now). And, of course, the case histories need to be highly checkable and to exemplify unfairness even in the face of skeptical scrutiny. The best examples will probably already be the subject of existing court opinions or news coverage.
If you've got examples, send them along to editor [at] [this-domain-name]. [cross-posted at Overlawyered]
George Lenard has compiled this roundup of resources on the Roberts nomination; scroll to near the end for some links on Roberts' (relatively sparse) record on issues of employment law. The rest of the link collection makes a fine jumping-off point for keeping current on the nomination, and includes kind words about this site (" outstanding right-leaning blog").
Center for Legal Policy at the