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February 2006 Archives

Offit, "The Cutter Incident"

In the mail: "The Cutter Incident: How America's First Polio Vaccine Led to the Growing Vaccine Crisis" by Paul A. Offit, M.D., chief of the division of infectious diseases at the Children's Hospital of Philadelphia and professor of pediatrics at the University of Pennsylvania School of Medicine. Dr. Offit spoke before a Manhattan Institute audience last month and was interviewed in U.S. News last fall; his December WSJ piece on vaccines and liability is reprinted here. According to the blurb from the publisher, Yale University Press:

Vaccines have saved more lives than any other single medical advance. Yet today only four companies make vaccines, and there is a growing crisis in vaccine availability. Why has this happened? This remarkable book recounts for the first time a devastating episode in 1955 at Cutter Laboratories in Berkeley, California, thathas led many pharmaceutical companies to abandon vaccine manufacture.

Drawing on interviews with public health officials, pharmaceutical company executives, attorneys, Cutter employees, and victims of the vaccine, as well as on previously unavailable archives, Dr. Paul Offit offers a full account of the Cutter disaster. He describes the nation�s relief when the polio vaccine was developed by Jonas Salk in 1955, the production of the vaccine at industrial facilities such as the one operated by Cutter, and the tragedy that occurred when 200,000 people were inadvertently injected with live virulent polio virus: 70,000 became ill, 200 were permanently paralyzed, and 10 died. Dr. Offit also explores how, as a consequence of the tragedy, one jury�s verdict set in motion events that eventually suppressed the production of vaccines already licensed and deterred the development of new vaccines that hold the promise of preventing other fatal diseases.

More: New England Journal of Medicine abstract, Pittsburgh Post-Gazette, San Francisco Chronicle. For a sampling of polemics aimed against Dr. Offit's work, see, e.g., Wade Rankin.

Milberg Weiss's bipartisanship

With federal prosecutors signaling that giant class-action firm Milberg Weiss may soon face indictment, New York Republicans are turning up the heat on AG and gubernatorial candidate Eliot Spitzer, who's taken at least $83,000 in donations from Milberg and its attorneys over the years. State GOP chairman Stephen Minarik says Spitzer should give back the money. Complicating his message, however: "A [New York] Post review of campaign filings also showed that the firm and its lawyers gave to a number of Republicans in 2002, including Gov. Pataki, the state Senate Republican Campaign Committee, and then-Assembly Minority Leader John Faso, who is seeking the GOP nod for governor this year."

That's the question Delaware Vice Chancellor Strine faced in a recent case.

As distasteful as it may sound, sometimes the parties should be able to keep even lying out of the grasp of error-prone courts. That�s particularly so when you have two very sophisticated parties (here, private equity funds), both subject to reputational constraints in their industry, and a carefully drawn, thoroughly negotiated contract. Here�s a discussion of the court's thoroughly reasoned decision on this issue that, mistakenly I think, refuses to enforce the agreement.

An insurer develops an innovative technique to separate good risks from bad.  Consumer groups become outraged, race gets mentioned, lawsuits commence and legislators start threatening to change the law -- and in some cases they do. This is the pattern behind the insurance industry's attempt to use the insurance credit score to discriminate between high and low risk drivers.  It is also the pattern behind the uproar in California as the industry uses zip codes to distinguish between drivers who live in high and low risk areas.  Now, GEICO has entered the New Jersey market with another rating innovation--educational attainment. (AP 2/27) Better educated people seem to have lower risk of accidents and GEICO wants to pass this savings along to the good drivers.  A lawyer, under the GEICO plan, would pay about $1,000 less than a janitor would presumably because the lawyer is a lower risk given a similar car and driving record.

Consumer advocates seem to miss the point about risk based pricing arguing that if it is not related to driving, then it should not be employed as a rating factor.  However, if education is correlated with a person’s ability or incentive to take care, why not use this information?  The correct answer for the consumer advocate is never because one should pay more for one’s poor driving habits or for one’s costly choice of locale.  The consumer advocates seem to always put what they consider fairness, but is really simple minded egalitarianism, ahead of efficiency.  How is this "fair" if good drivers pay more than they should?

Our newest Featured Discussion has begun, on the subject of what (if anything) is an appropriate regulatory response to the phenomenon of plaintiffs', their lawyers', or their confederates' selling short the stock of companies against whom they soon plan to file securities actions. Do the intended plaintiffs or their lawyers possess a sort of inside information about their own intention to file suit, which ought not to serve as a basis for profitable trading? Or is there some other ethical breach going on -- and if so, who if anyone is the proper authority to correct it? Moin Yahya of the University of Alberta leads off, and Larry Ribstein of the University of Illinois will be responding.

Thanks to Ted Frank and Walter Olson for inviting me to do some posting over here on corporate governance matters.
I just caught up with this draft report by the SEC�s Advisory Committee on Smaller Public Companies. It�s got a lot of interesting stuff in it, including a proposal to exempt the smallest firms from mandatory compliance with SOX�s internal controls provision. I'm skeptical whether this goes far enough. SOX is bad for all firms -- it's not just about small firms. Also, there's only so much the SEC can do about SOX -- Congress needs to act. Here's some thoughts and suggestions.

Blogosphere on NEJM and Vioxx

Derek Lowe on the co-authors' response to the NEJM editorial on Vioxx:

Looking at everything together, I'm still coming down on the side of Merck and their academic collaborators in this part of the fight. The post-launch cardiovascular data on Vioxx and its advertising and promotion are worth debating separately, but as for the VIGOR study, I think the NEJM is overreaching. Still, from Merck's viewpoint, I think the damage has already been done. . .

Update: Y'know, it occurs to me that there are a few people who aren't as upset about all this editorial wrangling: the editors of JAMA and the other top-ranked medical journals. They'll be getting some manuscripts that otherwise would have gone to NEJM.

Commenter tgibbs: "I lean toward the explanation that the editors of NEJM are simply statistically illiterate." Also out there: Jim Hu, Janet Stemwedel, and Kevin MD.

See Point of Law Feb. 22 and links therein.

From Reuters:

A Nigerian court said on Friday Royal Dutch Shell should pay $1.5 billion (861 million pounds) in damages for pollution in oil-producing Bayelsa state, the latest instalment in a long-running case....

Communities often accuse Shell of allowing its oil to spill into the rivers and swamps of the Niger Delta, spoiling crops and driving fish away.

Shell says most spills are caused by saboteurs trying to steal the oil for sale by international criminal syndicates on the world market.

"Trial Lawyers Inc. -- Health Care"

Last Tuesday the Manhattan Institute assembled a panel discussion in New York to call attention to the new report "Trial Lawyers Inc. -- Health Care". On hand were Jim Copland, who coordinates the Trial Lawyers Inc. project; Michael Krauss, law professor at George Mason and (like Jim) a contributor to this site; and Dan Troy, a former FDA general counsel now with Sidley & Austin. Deroy Murdock devotes his latest Scripps Howard News Service syndicated column to the report, and Elizabeth Peek files an account of the panel discussion at the New York Sun.

AG Darrell McGraw slush fund

West Virginia AG Darrell McGraw has taken a $40 million settlement from Purdue Pharma, and decided that he doesn't need to turn it over to the state treasury, and has been doling out the dollars himself. Legislators aren't happy with this apparent violation of the West Virginia constitution. I'm quoted in a West Virginia Record story about the controversy, though the reporter or his editor seems to think I said "sludge fund." (Chris Dickerson, "Questions arise over McGraw's methods of handling settlement funds," Feb. 24).

New Jersey Vioxx docket

If you're curious, this 116-page PDF has a list of each of the 4,609 Vioxx cases pending in New Jersey as of January 17. The list is growing about eight pages a month.

A mild disagreement with Michael

I hate to use the bully pulpit of the blog to pick nits, but I have to disagree with the conclusions Michael Krauss draws from the good news about cancer mortality.

"How Progressives Rewrote the Constitution"

The Cato Institute's February 15 event introducing Richard Epstein's new book will be on C-SPAN2's BookTV Saturday at 9:40 a.m. ET and Sunday at 11:00 p.m. ET, 8:00 p.m. PT.

Consider this summary of a WSJ article (link to the article is provided below the summary: for subscribers only). Health risks are dropping in America: we are living longer than ever here, thanks to advancements in medicine and in pharmaceuticals. As I indicated at the Manhattan Institute Forum this week in New York, this is truly G-d's work. This should manifest itself in lower liability insurance premiums, unless carelessness is increasing, which seems so totally unlikely as to be ridiculous.

The number of Americans dying from cancer fell for the first time in decades, according the National Center for Health Statistics. The Wall Street Journal calls this achievement the medical equivalent of putting a man on the moon.

Consider the great news:

o For women, two of the most deadly forms of the disease -- lung and breast cancer -- are being successfully treated; for men, death from 11 of the 15 most common forms of cancer are on the decline, including prostate, colon, kidney, lung and leukemia.

o Childhood cancer showed some of the largest improvement in survival rates over the past 20 years, according to the National Institutes of Health.

o Cancer deaths have fallen one percent per year since 1991; if the trend continues, our children will face a 25 percent lower risk of dying from cancer (at any age) than we do today.

Why is cancer death falling? One reason has been from a decline in smoking. Other factors include early detection and better treatment, both the result of medical innovation. But most importantly, new drug therapies that are less punishing and invasive than surgery or chemotherapy have been developed thanks to the incentives of a private medical marketplace.

This is in marked contrast to the anti-cancer record of government-run health systems elsewhere in the world, say the WSJ, where the systems can be as cruel to cancer patients as the cancer itself:

o Only about one in five American men with prostate cancer will die from it, but about 57 percent of British men and nearly half of French and German men will do so.

o In Britain, only 40 percent of cancer patients are even permitted to see an oncologist to treat the disease.

o Two-thirds of Canadian provinces report sending their colon cancer patients to the United States for treatment.

Source: Editorial, "Cancer Prognosis," Wall Street Journal,
February 23, 2006.

For text:


Another thought on the Alito hirings

Another thought about the controversy. There has been ideological screening of clerks for at least twenty years. We just somehow never hear about the justices on the left who have been subjecting their clerk applicants to stringent ideological litmus tests. At least Scalia hires a liberal once every two or three years, but a Federalist Society member has no chance at a Stevens clerkship—the only reason to apply for one in recent years was because O'Connor was rumored to insist that all her applicants apply to all of the justices.

I strongly suspect the Rehnquist Court's bias towards cases divining minor nuances of criminal procedure while disregarding tremendously important business and civil procedure cases stems from the fact that cert petitions have been reviewed by only two or three clerks from the entire Court, the vast majority of whom have had next to no experience in real-life litigation. Having clerks that have sullied their hands doing document production or dealing with real clients' real legal issues can only benefit the nation's laws.

Disclosure: I practiced with Adam Ciongoli for a year after his first clerkship at Kirkland & Ellis, and think he deserves a Supreme Court clerkship as much as anyone.

Heather Won Tesorio does some source-greasing, but, unlike many other journalists, gets the other side of the story when Lanier promises to introduce a new smoking gun that turns out not to be so smoking.

One fact that doesn't make it into the story: Lanier's client, Thomas Cona's medical records don't support his contention that he was a long-term user of Vioxx, notwithstanding the repeated references in the press to his alleged two-year use. Cona, a 59-year-old will have his trial at the same time in front of the same jury as 76-year-old John McDarby in a consolidated case, despite the fact the two men took Vioxx at different times when Merck had different knowledge, had different risk factors for heart disease, had different doctors, who used different information to prescribe Vioxx. According to the AP, Judge Higbee overruled Merck's objection to the consolidation of the trials.

New York Sun readers got two Point of Law posters for the price of one in a Feb. 23 Josh Gerstein piece on a United Seniors suit seeking qui tam reimbursement of Medicare expenses by tobacco companies, quoting both me and Walter. If you think this suit sounds dreadfully similar to a lawsuit the Clinton administration already lost in 2000, you'd be right, and the relevant portion of the statute hasn't changed any, notwithstanding claims to the contrary by the plaintiffs.

(To wit: under 42 U.S.C. �1395y(b)(2)(A) & (3)(A) a private party or the government can seek reimbursement on behalf of Medicare from a primary or self-insured "plan," which, under 42 C.F.R. �411.21, is an "arrangement" for health insurance. Needless to say, a smoker cannot go to Philip Morris and make an arrangement for health insurance, which is why every court to study the issue has thrown out these claims as not substituting for the tort system. See U.S. v. Philip Morris USA, 116 F.Supp.2d 131, 145 (D.D.C.2000). The Grassley amendment discussed in the article is Section 301 of P.L. 108-173, which didn't change the definition of "plan," which is the stumbling block for these lawsuits.)

Charles Jarvis shows charming naivete in the New York Sun when he suggests that his request for a federal district court to open the floodgates of Medicare-reimbursement litigation would be limited to the specific circumstances of tobacco companies. If United Seniors were to prevail on their theory of interpretation, plaintiffs' lawyers would have no hesitation in expanding litigation from Big Tobacco to Big Food, Big Auto, Big Chemical, Big Energy, and Big Pharma.

I'll be debating Jarvis on Fox News' Your World with Neil Cavuto, Tuesday, February 28; the five days between now and then will give me time to think of a sound bite better than "Your lawsuit contradicts 42 C.F.R. �411.21's interpretation of �1395y(b)(3)(A)!"

The constitutionality of Sarbanes-Oxley

Larry Ribstein and Steve Bainbridge take on Broc Romanek on the question raised by the Free Enterprise Fund lawsuit, which we discussed Feb. 9. Professor Bainbridge also commented on the suit on TCS Daily.

Professor Ribstein, along with Henry Butler, will also be arguing that Sarbanes-Oxley is also just plain bad when they present their paper at AEI March 13.

"Derailing the scam"

Rocky Mountain News columnist Vincent Carroll refers to this site and Lester Brickman's column in his Feb. 3 column on asbestos litigation.

Goulden's Lerach profile

Joseph Goulden's new book, The Money Lawyers (published by Truman Talley Books/St. Martin's Press, which has also published my own work) is built around profiles of some of the nation's most successful trial lawyers. Bruce Carton's Securities Litigation Watch has just reprinted two excerpts (first, second) from Goulden's profile of famed class-actioneer Bill Lerach. For more on The Money Lawyers, see my Jan. 24 Overlawyered post.

Jonathan Kozol's savage exaggerations

Marcus A. Winters of the Manhattan Institute critically evaluates the work of Jonathan Kozol, the prolific and ever-indignant bard of school finance equalization (more).

Welcome readers

Ted's post on the AP's coverage of Justice Scalia's speech has drawn attention from InstaPundit, Howard Bashman, Michelle Malkin, Eugene Volokh and many others. Welcome!

VIGOR authors respond to NEJM

Both the non-Merck and Merck authors of VIGOR defend their study to the NEJM. (See also Dec. 15 Merck press release.) As previously discussed here, (1) the cardiovascular events were excluded from the publication because of a predetermined cut-off date, and were submitted to the FDA and doctors; and (2) the omission of the three cardiovascular events changes none of the conclusions of the study. Most interestingly is the revelation that (3) the "deleted" table was not deleted at all, but revised to be presented as part of the text, with no loss of information in the article. This last fact is especially damning, as it shows that NEJM's allegations of wrongdoing (which highlighted the deletion as evidence of sinister intent) are especially disingenuous. It's encouraging that plaintiffs' first attempt to use the NEJM editorial as a weapon didn't unfairly prejudice Merck in the Plunkett Vioxx trial. Previous coverage: Feb. 14; Jan. 8; Dec. 16; Dec. 10; Dec. 8.

Let grownups clerk

Prof. Bainbridge wonders why inexperience should be considered a sine qua non for some of the most influential positions in the judicial system. Paul Horwitz at Prawfsblawg has more here and here.

A note on the bar exam

Kathleen Sullivan is licensed to practice law in New York and Massachusetts; and has taught at two of the top three law schools in America; and has argued three cases before the United States Supreme Court. In terms of a market test, a sophisticated business client was willing to hire her to be on the brief of the appeal of a $500 million judgment. The fact that she is not a member of the California bar yet speaks to the fact that the California bar exam is meant as a barrier to entry to a cartel rather than to any "consumer protection." Sullivan didn't spend enough time studying for the exam in August and flunked the three-day test, and is taking the test for a second time today. (Maura Dolan, "A High Bar for Lawyers", LA Times, Feb. 21). Sullivan's client isn't especially prejudiced; she'll likely still work on the brief, though unable to argue it or formally put her name on the pleadings.

Washington state malpractice reform

Having fought each other to a draw last year in the epic Battle of the Ballot Propositions, doctors and trial lawyers in Washington state have agreed on a relatively modest legislative package of reforms to the state's medical liability system, which Gov. Christine Gregoire is expected to sign. Among the changes, the bill would provide for voluntary binding arbitration; protect apologies by doctors; "require lawyers to certify cases as non-frivolous, subject to fines; and leave the use of expert witnesses unlimited."

Media coverage of Scalia speech

Justice Scalia spoke at AEI today. In a speech of about 40 minutes (the web-cast should be available later this week), he laid out when it was and wasn't appropriate to use foreign law in American jurisprudence, and pointed out the contradictions and selective use of foreign law in recent Supreme Court opinions. He then took questions from the audience of over 100. The second person to pose a question seized the microphone, and went on a lengthy rant about Vice President Cheney, and refused to ask a question after multiple prompts to do so; on the last one, he started "That...," Scalia said "A question doesn't begin with the word 'That,'" and moved on. The questioner (a Google search shows that he's a member of LaRouche Youth) continued to interrupt proceedings, and was eventually removed. There continued to be a mix of intelligent questions (Tom Goldstein and Michael Greve engaged the justice) and provocateurs wanting to make a splash on C-SPAN. Scalia answered questions about his speech, and passed on other questions, but, as if a glutton for punishment (or at least confrontation), he continued to select scruffy leftists/LaRouche Youth who raised their hands (including a German woman who went on a rant about Leibniz), though it would have been easy to bypass them.

Naturally, the only AP coverage of the speech focused on the LaRouche heckler, and (without mentioning his affiliation) made him out to be a censored hero rather than a cult member who�s pulled similar stunts at Kerry and Nader events. This is sure to make the Supreme Court all the more welcoming of tv cameras. (AP link via Bashman)

Update: Link to C-SPAN Real Media coverage.

Press coverage of Vioxx litigation

CNNMoney.com reporter Aaron Smith provides a fascinating example of the press allowing itself to be manipulated: the story quotes four plaintiffs' lawyers' spin uncritically, and cites one neutral expert who gives a theory how the plaintiffs can win future cases (using a strategy that the federal MDL jury rejected). The story quotes multiple attacks on the two defense verdicts, but lionizes Mark Lanier, with no hint that his one verdict is at risk on appeal.

BREAKING: No indictment of Lerach

The Wall Street Journal is reporting that neither Lerach nor Weiss will face indictment over the Seymour Lazar scandal, though the Milberg Weiss firm itself (along with two senior partners) will. If so, according to the New York Times, it "could put [the firm] out of business, throw its case work in disarray and land its 120 lawyers on the street." (via Lattman) We've been reporting on the case in detail.

"Moving Toward the Fully Informed Jury"

The Georgetown Journal of Law and Public Policy last year published an article thus titled by Steven Hantler of DaimlerChrysler and Victor E. Schwartz, Cary Silverman and Emily Laird of Shook Hardy & Bacon. According to the American Justice Partnership, which has reprinted the piece, the article addresses five judge-made rules which "blindfold a jury from knowing about highly relevant and material evidence. When such rules were formulated, they had a strong and reasonable rationale, but in each case that basis has diminished in importance." To quote Victor Schwartz's summary, the article criticizes the following exclusions of evidence:

Where a jury does not know that a plaintiff has already received compensation for an injury (i.e., the collateral source rule);

Where a jury does not know if a plaintiff was wearing a seatbelt;

Where a jury does not know that a driver of a vehicle was under the influence of alcohol or drugs, speeding, or asleep at the wheel (this can be extended to other situations where a plaintiff's wrongful conduct is not known by the jury);

Where a jury does not know that if it finds a defendant even 5% or 10% liable, that the defendant may end up paying 100% of the damages (i.e., the joint and several liability rule); and

Where a jury does not know that a plaintiff was exposed to asbestos from sources other than the defendant.

As Michael Krauss noted last month, trial lawyers around the country have been pushing the idea that because small-time operators often purchase common over-the-counter drugs such as decongestants as ingredients which they they process into methamphetamine, major drug companies should be held financially liable for the economic costs of meth abuse. It hasn't taken long to get the first state attorney general to jump in on their side: according to the AP, Minnesota's Mike Hatch has just proposed "going after big pharmaceutical manufacturers to recover the government's costs for meth-related problems".

Hatch said he's working on a lawsuit against about six large companies that make products containing pseudoephedrine or ephedrine -- active ingredients in cold medicines like Sudafed that are broken down by meth cooks....

Hatch is also pitching legislation to hold pseudoephedrine makers liable for damages caused by meth labs. The bill would be modeled on a 1994 landfill cleanup law that allowed the state to sue polluters' insurance companies to recover its costs.

The law firm was simultaneously representing the bankrupt Congoleum and numerous asbestos plaintiffs who had sued it. (Henry Gottlieb, "Conflicts Cost Firm in Congoleum Case $13 Million in Fees", New Jersey Law Journal, Feb. 21). Lester Brickman testified to Congress about these conflicts, and we covered the Third Circuit opinion Oct. 18, with lots of links therein to similar conflicts, where courts have been more willing to treat bankrupt companies as asbestos plaintiff attorneys' piggy-banks.

(My former firm, O'Melveny & Myers LLP, represented insurers who successfully objected to Gilbert Heintz's role. I had no role in the case.)

Last May 16 a special committee of the New Jersey Supreme Court submitted a report (PDF) exploring at length the process of peremptory challenges and jury voir dire in the state, and calling for reform -- in particular, recommending a reduction in the number of peremptories allowed to four per side in civil two-party trials (and somewhat higher numbers to be available in criminal and multi-party civil trials).

Modest limits of this sort on lawyers' use of peremptories are a step seen as long overdue by many critics of the trial process. Those critics, however, would appear to have little sway within the ranks of organized trial counsel in the Garden State. "Rarely have litigators in New Jersey been so united" as in opposing the proposal, the National Law Journal reported Nov. 21 (not online). "[By] the time the comment period closed on Nov. 1, every major litigators' group other than prosecutors had weighed in against it, including the New Jersey State Bar Association and the Association of Trial Lawyer of America-New Jersey."

Merck wins Plunkett retrial

Andy Birchfield, the plaintiffs' attorney, is discussing an appeal with his clients. (Bloomberg, Feb. 17). "Plaintiffs' attorneys in this case had shifted strategies for this trial, dropping the long scientific explanations that failed them in Houston and instead arguing that Merck scientists and executives ignored early warning signs that Vioxx was unsafe as they heavily marketed it to an unsuspecting public." (Heather Won Tesorio, "Merck Wins Vioxx Decision In Vital Second Court Victory", Wall Street Journal, Feb. 18). "The jury was out for 3 hours and 40 minutes, the shortest deliberation of any of the four Vioxx-related cases." (Janet McConnaughey, AP/Houston Chronicle, Feb. 18.) While the case was another short-term usage case, with the real test of long-term usage cases remaining, it was the first trial where the plaintiffs made use of a hit-piece editorial in the New England Journal of Medicine, as well as the first federal trial under Judge Fallon, who has a docket of several thousand cases consolidated for pretrial procedure. (The parties have apparently agreed to try some test cases in front of Fallon, rather than ask him to remand to the original federal district court where they were filed or removed to.)

Medical criteria bill alive again?

John Cornyn's amendment to replace the Specter-Leahy trust fund with a medical criteria bill was defeated 70-27, but now that the trust fund is (at least temporarily) off the table, the Coalition for Asbestos Reform (an insurer-funded group that opposed the trust-fund approach) has called for the Senate to revive the idea, which parallels a bill proposed in the House. Senator Leahy opposes the approach, but other Democrats have expressed an openness to the idea. Ray Lehmann has been doing the best reporting on the political machinations; his latest is here.

Jury deliberating in RI lead paint retrial

A verdict or other culminating event in the much-watched retrial could come at any moment, according to Jane Genova, who's been liveblogging the proceedings. According to Genova:

* the jury wanted to declare itself hung, but has been talked into continuing;

* the public nuisance count seems to be what the jurors can't agree on;

* jurors asked the judge to clarify the concept of "unreasonable interference with the right common to the general public", part of the public nuisance definition.

More: Nov. 7, etc.

Safety standards and federal pre-emption

Now it's the Consumer Product Safety Commission getting into the act (via Lattman, Childs). See our coverage of pre-emption initiatives at NHTSA and the FDA.

Asbestos bill opinions

The WSJ's editorial coming out against Specter-Leahy may be subscriber-only, but Kate O'Beirne of National Review has a free piece marshaling some of the same arguments. The New York Times's second recent editorial in support of the bill is here.

Playground design and liability

Proponents of litigation reform should stop using modern changes in playground design as a "horror story" example, contends University of Tennessee lawprof Benjamin Barton in this April 2006 Florida Law Review paper on SSRN (via Instapundit). In reality, he says, hardly anyone, including kids looking for fun, would be happy if we went back to the old style of playground equipment.

PSLRA at age 10 -- where next?

Kenneth M. Lehn, a former chief economist of the SEC, weighs in (WSJ sub) on the effects the Private Securities Litigation Reform Act (PSLRA) has had in the ten years since its passage, finding that it has been mildly helpful but not the hoped-for cure to shareholder-suit ills. His recommendations:

First, defendants are not currently allowed to appeal motions to dismiss federal class-action securities suits. Congress should pass legislation allowing them to do so.

� Second, damages should be calculated in terms of the per-share inflation of a company's stock price due to alleged fraud, not in terms of aggregate damages. Estimates of aggregate damages require estimates of the number of shares that were purchased during the class period at an allegedly inflated price and subsequently held or sold at a price after the alleged fraud is discovered. But there is no scientifically valid way of estimating the number of these shares. Instead of using untested models that often result in highly inflated aggregate damages, damages should be thought of in terms of per-share inflation, with investors required to come forward to prove their claims.

� Third, the current system of compensation in private securities litigation should take into account what investors receive from the relatively new Fair Funds, which are an outgrowth of Sarbanes-Oxley. Under Sarbox, the Securities and Exchange Commission is allowed to pool disgorgement and civil monetary penalties that defendants pay in settlements to it. The SEC then attempts to distribute the monies in the Fair Funds to investors who were harmed by the defendants' actions. If the total distributions made to harmed investors under the Fair Fund exceed the total damage investors incurred because of the alleged fraud, then investors should not be allowed to collect damages in private securities litigation.

Specter-Leahy bill (temporarily?) dead

In response to a procedural budgetary point of order by Sen. John Ensign (R-Nev.), the Senate vote to override it was only 58-41, short of the three-fifths majority needed to continue debate on the asbestos trust fund bill. Thus, there were early reports that the bill is dead.

Or is it? The vote was originally 59-40, but, at the last minute, Senator Frist changed his yes vote to no; only a negative vote can move to reconsider. The 100th senator, Daniel Inouye (D-Hawaii), was absent to tend to his sick wife, but Senator Specter says that Inouye would have been a yes vote. Specter and Leahy say the bill is not dead. (Shailagh Murray, "Senate Foes Block Proposed Trust Fund For Asbestos Victims", Washington Post, Feb. 15).

California zip-code auto insurance rating

Notwithstanding the irrational straitjacket imposed years ago by Proposition 103, it remains the current practice for auto insurers in California to base their rates on a driver's geographical location -- that is, to charge less to drivers who live in localities with low rates of theft, vandalism, accidents or litigation. This policy has never sat well with trial lawyers, who prefer that the costs of litigiousness, especially in counties and cities where they are accustomed to doing well, be disguised as much as possible rather than feeding back to drivers in a direct way that might mobilize political resistance. Since what passes for a consumer movement in California is closely allied with trial lawyers, it is not a complete surprise that most of these groups formally oppose "geographic rating", and now the state's Insurance Commissioner, Democrat John Garamendi, has proposed banning the practice, a step that would ensure sharp rate increases in low-claim parts of the state. George Wallace and Martin Grace discuss; a Feb. 24 hearing is scheduled in San Francisco.

"Controlling the 1-800-SUE-THEM lawyers"

The Washington Examiner applauds efforts in New York, Connecticut and elsewhere to crack down on aggressive marketing of injury law. It also gives a kind mention to the Manhattan Institute's "Trial Lawyers Inc." series.

Blogosphere on litigation financing

Professors Larry Ribstein and Christine Hurt comment on the litigation financing discussed in yesterday's post. Ribstein expands on the principal-agent problems discussed yesterday, while Hurt tries to explain why she approves of some forms of subprime lending but not others. Hurt marvels that "We could all become plaintiff's lawyers just by being investors!", but that opportunity has been available for decades through derivative investments on litigation-sensitive stocks.

AP, through reporter Janet McConnaughey, reports:

Monday, Dr. Gregory Curfman, executive editor of the New England Journal of Medicine, [testified that] there had been a connection between the first federal Vioxx trial in Houston and the timing of his journal's publication of an editorial critical of a study used as evidence in that trial, reversing earlier statements.

When I earlier suggested that the timing with the end of the Irvin trial was "fishy," plaintiffs' attorney Evan Schaeffer criticized that analysis.

Curfman was apparently more constrained to tell the truth when he was under oath; his earlier misstatements about the editorial's timing misled the press in its original coverage of the editorial. I think we can guess whether the restatement will get the same level of publicity. Elsewhere in Vioxx litigation:

  • Merck begins presenting is defense in the Irvin case in the MDL in New Orleans today.
  • In New Jersey, Merck filed a motion against the "Frankenstein's monster" of a consolidated trial of two plaintiffs whose Vioxx injury was seventeen months apart. (AP, Feb. 14).
  • In Starr County, the first witness in the Garza case (Jan. 26, Jan. 28) continues her testimony today after a two and a half week break in the trial. (Britney Booth, "Starr County Vioxx trial to continue Tuesday", The Monitor, Feb. 13).

"Democrats Warned on Asbestos Bill"

We missed it at the time, but last April the Washington, D.C. publication Roll Call ran quite a gripping article on the pressure that trial lawyers were bringing to bear on Senate Democrats not to support asbestos reform. The article has been making the rounds on the Hill again lately and is online; a few tidbits:

Trial lawyers are advising Democratic Senators that the current proposal to compensate victims of asbestos exposure not only shortchanges their clients, but could curtail future campaign contributions made by asbestos lawyers to Democrats.

...[Sen. Edward Kennedy (D-Mass.) acknowledged] Senators were aware of the rumors that some fundraisers might be postponed.

Another liberal Democratic Senator expressed outrage at the idea that some asbestos lawyers might link a Senators' policy decision to a campaign donation.

"The trial lawyers have reached a point where they think they run the place," said the Senator, who spoke on the condition of anonymity....

[Peter Kraus, a partner in the Dallas firm Waters and Kraus, said:]
"The people I need to go and raise money from for [Democrats] are the same people I go to raise money to help oppose this bill."

Kraus is a prolific contributor, personally giving more than $150,000 to Democrats in the 2004 election cycle, according to PoliticalMoneyLine. He also helps raise money from other people for the party.

But Kraus said if the bill is approved, then some of these donors will be unable to make future contributions because their livelihood would be greatly affected.

"There are a lot of people I raise money from who will not be making money in this litigation and will not be able to contribute, I am sure, to political campaigns," he said.

Also be sure to catch the great typo at the end of the article, in a quote from an unidentified Democratic Senator: "We provide substantial support for citizens' rights to get an attorney and seek regress through the courts and we will continue to do that." Love that "regress".

Schaeffer on litigation financing

Evan Schaeffer links to an American Lawyer piece on litigation financing by Alison Frankel—the practice of contingent loans that, though charging a high interest rate, are not recoverable if the attorney loses the litigation. (Ohio has outlawed the practice from the bench, though one-sidedly and retroactively. OL, Aug. 4, 2003; Oct. 25, 2003.) The paper quotes Professor Anthony Sebok giving the mysterious quote that such financing is a "safety valve for tort reform." While Sebok is correct that it is ironic that capitalists will effectively find it profitable to sell plaintiffs' attorneys the rope with which to hang themselves (a problem we've seen elsewhere with Wal-Mart, some IP litigation, and the AMA's support for questionable class action schemes against HMOs, among other places), it's hard to see any relationship between tort reform and litigation financing (other than that some of the authors of the site oppose it).

Evan's complaint that "It's a case of putting makeup on a pig" to use "anti-tort-reform sentiment to sell expensive loans to plaintiffs' lawyers" seems unfair on two levels. First, it doesn't appear that Professor Sebok is trying to sell the loans, rather than simply making a sloppy sound-bite. Second, a contingent nonrecourse loan with a three-year interest rate of 37% and an after-three-year interest rate of 0% (the one deal described at length in the article) is hardly "expensive." It's a plaintiffs' attorney hedging her risky portfolio of litigation by selling some of that risk to group with a larger portfolio, which is no different than plaintiffs' law firms trading pieces of cases to one another or what large plaintiffs' law firms do internally. But if Evan thinks such loans are expensive, there's clearly a profit opportunity for the plaintiffs' bar to provide the same financing for cheaper through conventional means that do not have the smack of champerty.

Republicans and Democrats Agree

Republicans and Democrats agree that the South Dakota Judicial Accountability proposal is a bad idea, as that state's House of Representatives has passed a concurrent resolution condemning the ballot initiative.

As previously reported, the J.A.I.L. initiative, would strip South Dakota judges of their immunity for official acts and subject them to lawsuits based upon decisions made as judges.

Although there are numerous theoretical problems with the initiative, one of the greatest is that it would subject judges to personal liability for "deliberate disregard of material facts". Because the presence of a genuine issue of material fact is at issue in nearly every motion for summary judgment, such a change in the law could subject every judge in that state to liability for every decision to grant (or deny) summary judgment in every case.

"Essentially, owning his own plaintiff"

According to Prof. Bainbridge (Feb. 8), securities lawyer Mel Lifshitz has come under scrutiny for that possible ethical misstep. Lifshitz and his firm have filed more than a dozen securities actions naming as plaintiff a Delaware limited partnership called Colbart Birnet. However, per an article in TheStreet.com, "in five filings with the Securities and Exchange Commission, Lifshitz is listed as a 'beneficial owner' of the Colbart Birnet partnership -- a circumstance Lifshitz says is plain wrong and attributes to 'human error.'" A charitable trust administered by Lifshitz's family, the Melly & Rochelle Lifshitz Charitable Trust has invested at least $227,655 in Colbart Birnet and a second charitable trust established by Lifshitz's New York-based firm, Bernstein Liebhard & Lifshitz, has invested a similar amount. Lifshitz says Hofstra lawprof and legal ethicist Roy Simon has given a clean bill of health to his firm's dealings with Colbart Birnet. "The National Law Journal recently named Bernstein Liebhard as one of the country's 'hot' plaintiffs' firms."

The Robert Wood Johnson Foundation contributes this report (PDF) by Michelle Mello of the Harvard School of Public Health, as part of its "Synthesis Project". P.S. Peter Nordberg has more.

"Patents and Loser Pays: Why Not?"

A new paper (PDF) by Solveig Singleton for the Progress and Freedom Foundation:

[This] paper explores the idea that adopting the "loser pays" rule in most patent litigation could help deter opportunistic behavior in prosecuting patents. The "loser pays" rule is not a popular one in the United States, but there are some good arguments that it ought to be. The paper first describes current fee shifting rules in U.S. patent suits, and explains how "loser pays" differs. It next considers arguments pro and con; most importantly, the loser pays rule has been said to give an unfair advantage to well-heeled litigants. The experience from countries where "loser pays" is the general rule, however, suggests that such effects are avoidable, while the benefits of the rule in deterring speculative suits are significant.

(via James DeLong)

No, it's probably not as simple as "large" versus "small", as the NYT would have it, but there's little doubt that some businesses would lose big (just as others would be saved from ruin) should the FAIR bill pass.

Professor Bainbridge asks:

Nearly three-fourths of respondents who have a spouse or children said that work cuts into family time ''somewhat more'' or ''far more'' than they'd like. More than half of all respondents -- about 54 percent -- said they would reduce the number of hours they work, with a corresponding cut in pay, if they had the option.

The survey showed that how much money a lawyer makes corresponds almost exactly with how much work reduces family time. In the open-ended responses, lawyers said over and over again that achieving a high level of success in the profession simply demands putting in long hours.

But if lawyers can (and do) make more money by working more, why isn't that equally true of other professions whose practitioners seem to be enjoying more leisure? And why hasn't the market made available options for lawyers who would be willing to take a cut in pay to work fewer hours? Very curious.

State of the Union -- health care

Our sister Manhattan Institute website Medical Progress Today, as part of a series of commissioned articles discussing President Bush's State of the Union health care proposals, has an article by our own Jim Copland on the case for federal medical malpractice legislation.

Pirate's Booty settlement struck

Overlawyered has the broad outlines, but the press coverage of the Pirate's Booty class action, if anything, has understated how outrageous the case and settlement was. This was not a case where lawyers uncovered the truth, and brought a recalcitrant defendant to justice. Rather, journalists discovered the error in fat-content in the product labels; Robert's immediately apologized for the error and corrected it; and then free-riding lawyers sued in four different states, with the New York class action being certified on a nationwide basis first, even though New York consumer fraud law (with its curious lack-of-reliance requirement) does not apply to consumers outside of the state, and other legal theories would require individualized reliance determinations.

Robert's, the defendant, was required to issue $3.5 million in 20% discount coupons over the course of about two and a half years—but the coupons were to be issued to the general public, rather than to the class. In other words, the plaintiffs sought to claim as a class benefit justifying the attorneys' fees the very marketing Robert's was likely doing anyway. The court noted the irony that injured class members "having sought a low-fat, low-calorie snack food...would be the least likely to purchase the Products again now that their higher fat and caloric content has been revealed [and] would be the least likely to reap any benefit from the distribution of discount coupons."

Precedent of interest to class-action specialists on both sides: an objecting class member who had opted out of the settlement was permitted to opt back in to make her objection, overruling the decision of the trial court to the contrary. The case is Klein v. Robert's American Gourmet Food, Inc., __ N.Y.S.2d __, 2006 WL 240592 (A.D. 2d Dept. Jan. 31, 2006).

The plaintiffs' attorney was Robert I. Lax. The Nassau County judge who approved the settlement was Ute Wolff Lally.

Cardozo lawprof (and adviser to this site) Lester Brickman, quoted by the N.Y. Sun's Josh Gerstein on the latest maneuver by Bill Lerach in a class action against Time Warner:

For most shareholders, class action litigation is a losing proposition because mostly it takes money from the shareholder's right pocket, transfers it to the shareholder's left pocket and charges the shareholder a commission of 30% or more for having had the assets transferred.

Asbestos: N.Y. Times pounds Harry Reid

I'm trying to keep an open mind on the asbestos bill myself -- there are certainly plenty of reasons to be skeptical about it -- but it's amusing to see the editors of New York Times, who ordinarily loathe litigation reform with a boundless passion, backing the Specter-Leahy measure so strongly that they would editorialize as follows:

... it's shocking to hear Mr. Reid threatening now to block a bipartisan bill that would finally bring justice and compensation to victims of asbestos-related diseases. We can't imagine what Mr. Reid is trying to achieve, other than showing fealty to the trial lawyers who have been so generous to his party.

Is the PCAOB constitutional? A Competitive Enterprise Institute paper by Hans Bader and John Berlau argues that this institution, established by Sarbanes-Oxley, and whose members are appointed by the SEC, violates the Appointments Clause. Donna Nagy identifies similar problems in the Notre Dame Law Review. And now the Free Enterprise Fund of the Competitive Enterprise Institute has filed a lawsuit, on behalf of an accounting firm aggrieved by PCAOB's onerous reporting requirements, arguing just that, with legal superstars Kenneth Starr, Michael Carvin, and Viet Dinh on the briefs. But because Sarbanes-Oxley has no severability provision, if the PCAOB is found unconstitutional, the whole law falls. (Kara Scannell and Brody Mullins, "Suit Seeks to Overturn Sarbanes-Oxley Law", Wall Street Journal, Feb. 8; Wall Street Journal op-ed, Feb. 8; Amy Borrus, "Who Watches Accounting's Watchdog?", Business Week, Feb. 8; complaint). Congress rejected these arguments when it drafted the law due to an analysis by Harvard Professor Elena Kagan, which does not appear to be on the web. Larry Ribstein comments, and Hans Bader himself debates the issue in the comments to this Volokh post.

Supreme Court clerks

If you miss the original Article III Groupie's detailed reports on Supreme Court clerks, Amber Taylor is doing a good impression in keeping the blogosphere updated.

On February 21, the American Enterprise Institute will host a symposium on �Outsourcing American Law� with a Keynote Address by Justice Scalia and three panels on the subjects of customary international law in American judicial decision-making after Sosa v. Alvarez-Machain, international law and laws of war, and the role of foreign law in Supreme Court adjudication. Panelists include Jack Goldsmith, John Yoo, Danielle Pletka, Morton Halperin, Andrew McCarthy, Stuart Taylor, Peter Berkowitz, and Tom Goldstein. Registration is available here.

Nonprofit organizations' legal risks

A new report on the subject is available here (via Insurance Journal). Employment cases are the single biggest source of lawsuits for nonprofits, it says, and antitrust, tax, fiduciary and defamation exposure all can pose hidden traps as well.

Asbestos bill debated

The conservative site TownHall has a point-counterpoint between Dana Joel Gattuso (critical of the FAIR bill) and Michael Baroody (supports it). And Bill Childs at TortsProf rounds up a number of other links on the legislation.

Senator Reid, counting noses, decided to withdraw his objection to debating the FAIR Act. (Jan. 31). However, many senators who voted in favor of allowing debate to proceed merely wanted to avoid the appearance of obstructionism, and one can expect many other attempts to kill the bill, including from conservatives who are concerned that the bill does not have sufficient safeguards to prevent the trust fund from becoming a drain on the public fisc. "Budget Committee Chairman Judd Gregg, R-N.H., is considering filing a procedural motion that would take 60 votes to overcome, on the grounds that that the bill would affect the budget in violation of the rules"; many senators who voted to allow debate to proceed will be willing to block the bill on these grounds. (Laurie Kellman, AP, Feb. 7). Another likely tactic will be the attempted use of poison-pill riders, which killed a gun-liability reform bill in 2004. The current bill has a scientifically-questionable loophole to benefit residents of Libby, Montana, to obtain the votes of the two Montana senators; Democrats are likely to try to expand those loopholes, which would eviscerate the bill. On the other hand, Republican efforts to tighten medical criteria for the bill or otherwise patch potential "leakiness" may peel away critical Democrat votes. A filibuster is almost certain. It's far from likely that there is a legislative compromise that can obtain fifty, much less sixty, votes. A Wall Street Journal article details some of the objections.

Influential in Arizona

From Arizona Capitol Times' list of 25 persons and organizations that "got the 'juice,' when it comes to Capitol influence":

Arizona Trial Lawyers Association

Described as one of the more powerful lobbies in the state, trial lawyers have pretty much locked up Democrats and Republican conservatives against limiting damages for personal injury and death.

Sen. Bill Brotherton, D-14, an attorney, says ATLA's influence in civil law is "substantial." Lawmakers bounce it [an idea for legislation dealing with liability and court procedure] off them before coming up with a bill," he said. "They are certainly listened to."

Recent changes in tort law came about only through compromises reached with ATLA, but major medical malpractice reform is a hill possibly to steep too climb for its proponents because of the trial association's political and financial clout.

It was one name mentioned more frequently than any other when it comes to non-lobbying organizations involved in state government.

"The Death of Mammography"

In the mail: "The Death of Mammography" by Rene Jackson and Alberto Righi. According to the publisher:

The best medical tool for detecting breast cancer is being driven to extinction by outrageous lawsuits, putting millions of women at risk. A practicing radiologist confronts the legislative and legal tangles strangling breast-cancer screening today and argues for reforms to our legal and healthcare systems.
Early detection of breast cancer can make the difference between life and death�and mammography is the best diagnostic tool available today. However, radiologists across the country, faced with the prospect of litigation and the high cost of malpractice insurance, now refuse to read mammograms. Radiology students are passing over specializing in breast imaging, and in the last few years over 700 mammography centers across the United States have closed their doors. Today, the number of women needing regular mammograms exceeds the capacity of the dwindling ranks of radiologists able and willing to read a mammogram.

More here, here and here.


The new point-counterpoint site from the folks at National Review has, as its premier offering, a debate pitting Point Of Law favorite Richard Epstein against David Rivkin of Baker & Hostetler on the subject of domestic eavesdropping.

Yahya, "Dumping and Suing"

The week before last, on Jan. 24, University of Alberta lawprof Moin Yahya addressed a Manhattan Institute lunch crowd in New York to discuss his paper diagnosing a problem with securities class litigation -- namely, cozy relations between class lawyers who sue over stock price drops, and short-sellers who profit from the drop in a stock's price when suit is announced -- along with possible remedies. (See coverage last May 5 on Overlawyered -- "First Sell Short, Then Sue".) On Saturday, Prof. Yahya published a shortened version as a WSJ "Rule of Law" op-ed (sub-only). As before, Larry Ribstein files a dissenting view and Tom Kirkendall joins in as well.

What the trial bar's up to

Plenty, according to Atlanta government affairs specialist Todd Young, writing at pro-reform American Justice Partnership:

* In nearly every state surveyed, the trial bar is actively recruiting and funding political candidates for Governor, Attorney General, the state legislature, and � importantly � the state courts, particularly the state Supreme Court. The trial bar has learned that effective legal reform legislation can be undone by a trial bar-friendly judiciary.

* In every state in which the trial bar is engaged in political campaigning, the trial lawyers are outspending the legal reform and business communities by wide margins � in many cases, 2-to-1 or 3-to-1.

* In the majority of states surveyed, the trial bar is hiring lobbyists with conservative, pro-business credentials to influence Republicans and pro-business Democrats who would otherwise support legal reform.

That's aside from the large sums sunk by trial lawyers into "messaging" and p.r. campaigns, and the networks intended to identify promising cases in certain judicial districts that might serve as a vehicle to overturn liability restrictions. One longstanding problem:

Corporate and professional association leaders... tend to view the legal reform effort as a "battle," requiring one solid push to legislatively enact legal reform. As a result, the "battle" is often mistaken for the "war." The trial lawyer industry does not make that mistake � and they continue to fight on multiple fronts.

"Overturning a legal precedent of more than 20 years, the U.K. Court of Appeal last week ruled that anxiety induced by the asbestos-related condition pleural plaques should not be compensable". The ruling could save insurers upwards of �1 billion; cases in which claimants display impairment or other symptoms of illness can still go forward. (Carolyn Aldred, Business Insurance, Jan. 30; Yorkshire Post; Daily Telegraph; Sunderland Echo). The subhed on a Nov. 14 BBC report curiously describes claimants as having been "struck down" by the asymptomatic condition.

Loser-pays bill introduced in Indiana

H.B. 1277 was introduced into the Indiana House last month by Rep. William E. Bright. It calls for attorneys' fees to be awarded to the prevailing party in civil litigation, but is silent on the question of what "prevailing" means, a flaw frequently observed in proposals to emulate the rest-of-the-world rule on fees (via the American Tort Reform Association's January 2006 Tort Reform Outlook).

General contractors in Connecticut

They're scrambling to respond after the state's high court ruled (PDF) that -- in contrast to the way most other states handle the issue -- they can face unlimited liability for injuries to subcontractors' employees. The ruling "turned some 150 pending plaintiff's cases from losers to winners," says the injured worker's lawyer. (Connecticut Law Tribune; Construction Law Blog; Jordan Barab; ABC).

I, for one, didn't know -- until I saw this Jeff Rosen article tipped by Ann Althouse -- that Supreme Court Justice William O. Douglas's memoirs contained many stories that Douglas appears simply to have made up for effect.

"A game, a joke, a racket"

People have to believe in our justice system. They have to trust that it is fair. When justice becomes a game, a joke, a racket, or a private preserve for the privileged few, the foundation for a just, fair, and orderly society begins to rot....

The plain truth is that our system of civil justice is out of control. It has been hijacked by a relatively small group of lawyers who have gamed the system for their own gain, often at the expense of their own clients. These lawyers have been enabled and encouraged by a growing and troubling public attitude that ducks personal responsibility, seeks profit from every misfortune, and creates scapegoats for every mistake. It is time to restore balance and common sense to our civil justice system. If we do not, California and America will be less competitive and less innovative, and we will see a spreading corrosive impact across our entire society.

-- from a speech delivered in California last year by civic leader, businessman and former gubernatorial candidate William E. Simon Jr., and reprinted by the Manhattan Institute's Center for Legal Policy as its Civil Justice Memo #43.

I'll be on the Jim Blasingame show (The Small Business Advocate), on various radio stations nationwide, Friday morning from 8:10 a.m. to 8:30 a.m. to discuss consumer fraud litigation. Interested readers, tune in!

The Oregon Supreme Court, in a 5-0 decision (with two recusals) has affirmed a $79.5 million punitive damages award against Philip Morris, notwithstanding the defendant's arguments that the 151:1 ratio exceeded by far the constitutional limits of BMW v. Gore and State Farm v. Campbell. (And of the $521,000 compensatory damages, only $21,000 were economic damages.) (Williams v. Philip Morris (Ore. Feb. 2, 2006)). If Philip Morris appeals to the U.S. Supreme Court, it will be the first opportunity to see what Justices Roberts and Alito think about those two decisions and the question of constitutional limits on punitive damages. State Farm, a 6-3 decision, had departed justices O'Connor and Rehnquist in the majority, but Scalia, Thomas, and Ginsburg in the dissent.

Oregon law requires 60% of punitive damages to go to the state, but Oregon has already foresworn its share as part of the multi-billion-dollar tobacco settlement, so Philip Morris will only be on the hook for $32 million.

Here we go, folks: Apple is being sued over iPod's volume control, as this Forbes article indicates.

It seems that if you crank the ipod volume way up, it's too loud! Go figure!!

Law schools' clinics, and leanings

This week the Manhattan Institute's Heather Mac Donald, author of a widely discussed article in the latest City Journal criticizing law school clinics, faces off against Yale lawprof Ronald Sullivan Jr. at Legal Affairs' "Debate Club". And, somewhat relatedly, last week's "Debate Club" pitted Yale's Peter Schuck against Texas's Brian Leiter on the topic, "Do Law Schools Need Ideological Diversity?".

A group of women, backed by Planned Parenthood and NARAL, have sued Wal-Mart for allegedly failing to stock the "morning-after" contraception pill.

The plaintiffs, all women, claim that they tried to buy the contraceptive pills at Wal-Mart but were turned away and told that the store does not carry the drugs.

It was all a set-up, of course, as the AP reports:

The women said they knew they would be refused when they went to the Wal-Marts in Quincy and Lynn and that the action was planned with the abortion rights groups and lawyers. The suit is being backed by Planned Parenthood, NARAL and other abortion rights organizations.

At issue is a Massachusetts statute that requires pharmacies to stock "commonly-prescribed medicines." A letter from Wal-Mart's legal department to the plaintiffs before suit was filed took the position that the morning-after pill was not "commonly-prescribed."

Legal blogger I.M. Kierkegaard writes:

It doesn't sound as if Walmart is holding these women hostage and preventing them from taking their business elsewhere or otherwise affirmatively trying to stop them from getting the pill. Walmart is just deciding not to carry a particular product which, it looks to me, they are not required to carry.

If Wal-Mart had to maintain a ready inventory (in every one one of their 3,800 stores in the U.S.) of every medication that one interest group or another proclaimed to be "commonly-prescribed" the result would be higher costs for Wal-Mart (and its competitors) and higher prices for consumers.

Big-box retailers compete on the basis of "just-in-time" inventory management. A litigation strategy that forces these companies to abandon JIT inventory management makes a political statement at the expense of the consumers who will be unable to avoid higher prices as a consequence. (Cross-posted)

D'Amato signs on with asbestos lawyers

The Hill reports (via ICJL) that former New York Sen. Alfonse D'Amato has been lobbying since September on behalf of Madison County, Ill. powerhouse plaintiff's firm Simmons Cooper against the proposed federal asbestos trust fund bill. While in office, D'Amato sometimes sided with and sometimes against organized trial lawyers, who exert particular sway in the politics of Long Island, his home turf.

HB 4984, introduced into the Illinois General Assembly by Rep. David Reis (R-Jasper County), would allow defendants in asbestos cases to introduce evidence that a plaintiff had been exposed to asbestos products other than its own, thus reversing the notorious "Lipke rule" followed by many Illinois courts.

Law firms and HIPAA

Two ob/gyn patients at JFK Medical Center in Edison, N.J. complained that they'd been contacted by the large plaintiff's law firm of Blume Goldfaden, Berkowitz, Donnelly, Fried and Forte, which seemed to be awfully familiar with their medical records. Did the law firm violate the women's rights under HIPAA, the federal health privacy statute, when it obtained the records? That's what the hospital and women have alleged in thus-far-unsuccessful litigation, on appeal at last report. New Jersey Law Journal, Health Care Law Blog and Holland & Hart Blog all covered the controversy in October. Per the NJLJ, "Blume Goldfaden contends that JFK's suit was filed to divert attention from the hospital's misreading of more than 100 Pap smears and to intimidate and harass the firm because it represents plaintiffs in suits against JFK."

Speaking of obstetric liability, the British Medical Journal has just published a new study by the South Australian Cerebral Palsy Research Group, implicating viral infection as a risk factor in CP, a development that will be anything but welcome to the birth-defects bar; see coverage in The Australian (first, second, third pieces) and the BBC. The second of the Australian articles also discusses possible ways of reining in "rogue" expert witnesses who have kept litigation going in fields like this.

Bush in SOTU on med-mal

According to last night's speech:

And because lawsuits are driving many good doctors out of practice � leaving women in nearly 1,500 American counties without a single OB-GYN � I ask the Congress to pass medical liability reform this year.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.