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August 2006 Archives

Column: Exploiting for Profit

I have a new column, co-written with Tiger Joyce, the president of the American Tort Reform Association, in the most recent issue of the National Law Journal. The piece describes the rise in litigation under state consumer protection acts, which as applied in some states offer statutory and treble damages to classes of plaintiffs with no evidence of injury or reliance. For online audio of the July conference from which this column emerged, see here.


Turns out, as the WSJ reports (subscription needed) that a juror owed money to a winning Vioxx plaintiff (and maybe had reason to obtain plaintiff's gratitude....).

New Times column -- Katrina verdict

My new column at the Times (U.K.) Online is on last week's Mississippi Katrina insurance verdict. (Walter Olson, "Insurers can breathe easier over Katrina lawsuits", Aug. 30). Concluding paragraph:

Major coverage issues remain to be resolved (and appealed), but at least we can take note at this point that America is not Zimbabwe or Bolivia. As Dickie Scruggs said before the Leonard ruling, "If you win it, it's a huge win. If you lose it, you spin it the best way you can."

Also, I was a guest last evening (6:30 p.m. Eastern) on Marc Bernier's high-rated radio show, "The Talk of Florida" to discuss the article (cross-posted from Overlawyered).

Quick off the dime on the Comair crash

By Monday, a day after Comair Delta Connection #5191 crashed in Kentucky, this law firm had already posted extensive front-page web content soliciting clients from the disaster -- though as of this writing the firm has left various other pages of the site filled with lorem ipsum. (E.g., "Pharmacist Malpractice: Ut wisi enim ad minim veniam, quis nostrud exerci tation ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo consequat.")(Hat tip: reader K.L.).


A new trial was ordered on damages only in the Barnett case -- the judge conceded that no non-biased jury could have concluded that a 50 year old FBI agent suffered damages to the extent this jury found. The plaintiff was retired, so lost wages and earning capacity had no bearing on the damages � and, while his energy may be reduced, he apparently has returned to many of his daily activities....

Ted fact-checks a lawn-mower lawsuit

Ted thought a newspaper's coverage of a lawn mower lawsuit against Wal-Mart seemed a little one-sided. So he wrote the reporter a note of inquiry and, on getting an unsatisfactory response, started digging.

The results -- and the reporter's reaction upon being fact-checked -- aren't exactly flattering to the MSM's reputation.

Also, Ted's recent guest column for the Business & Media Institute on press coverage of the first Katrina insurance trial appeared yesterday as an article at National Review Online.

It happens but seldom

Greedy Trial Lawyer says that I "[am] right", as to this post.

ATLA to media: go away

For the second year running, the Association of Trial Lawyers of America (soon to be known as AAJ, the American Association for Justice) has excluded the press from its annual convention, held last month in Seattle. David Yas of the Massachusetts Lawyers Weekly wrote a column on the matter which we've posted as our latest featured column. Jim Romenesko has already linked to it on his widely read Poynter Institute media blog. More: Robert Ambrogi comments ("Bunker Mentality Ill Serves ATLA").


The latest cost of the backdating "scandal" -- firms defaulting on their debt because of backdating-caused delays in quarterly reports. Here's my thoughts. Chalk this up, at least in part, to business journalists inflating this molehill into a major story. As to whether it's a molehill, consider Holman Jenkins in today's WSJ, and my analysis, on the origins in mandatory expensing, and the folly of that rule.

What Should Be Taught In Torts?

Ten people from across the legal spectrum—practitioners and academics, a judge, a 3L who's also an MD—participate in a blog-posium of sorts on the TortsProf blog this week. Check it out, including my contribution.

Blawg Review #72

It's at Ernie the Attorney this week. And while we're at it, Denise Howell has launched a new law-blog for ZDNet called Lawgarithms.

Wal-Mart as social program

Sebastian Mallaby in the Washington Post:

According to a paper for the National Bureau of Economic Research by Jerry Hausman and Ephraim Leibtag, neither of whom received funding from Wal-Mart, big-box stores led by Wal-Mart reduce families' food bills by one-fourth. Because Wal-Mart's price-cutting also has a big impact on the non-food stuff it peddles, it saves U.S. consumers upward of $200 billion a year, making it a larger booster of family welfare than the federal government's $33 billion food-stamp program.

"A Taxonomy of Obesity Litigation"

A Little Rock friend of mine had an emergency gap in his law review, and solicited me to write about the fast-food litigation. I'm not a big fan of the eight-footnotes-a-page-style that law reviews like, but I think the piece is a good overview of what has happened to date. The article, 28 UALR L. Rev. 427 (2006), can be downloaded at SSRN (help me catch up with Bainbridge!) or at the AEI Liability Project website. (cross-posted at Overlawyered)

I worry that events have outstripped me; one sentence in the article, "Why is selling soda [to 17-year-olds] an attractive nuisance, but selling ... Internet connectivity is not?" predates the MySpace litigation.

Asbestos double-dipping

Must-read coverage how asbestos plaintiffs "double-dip" into billions of dollars of asbestos bankruptcy trusts run by plaintiffs' lawyers (like Baron & Budd, the namesake of John Edwards's money man, Fred Baron) through making boldly inconsistent claims of exposure. (Daniel Fisher, "Double-Dippers", Forbes, Sep. 4). Courts are cracking down for the first time, though the only people suffering consequences so far are clients, rather than the unethical attorneys—the shareholders who lost their money and the workers who lost their jobs in the fraud are out of luck. The Friable Thoughts blog comments:

This story on how plaintiff's lawyers are filing claims with asbestos bankruptcy trusts shouldn't come as a big surprise to many defense lawyers. With the settlement amounts confidential and claims records hard to get, who wouldn't have expected plaintiff's lawyers to make exposure claims that were inconsistent with claims they would make in litigation against non-bankrupt defendants?

Law firms as publicly traded companies

That idea could become a reality in Great Britain under proposals being pushed by the government there.

Spitzer as New York governor


The NYT indulges Gretchen Morgenson with a major page 1, above-the-fold story on supposed insider trading in connection with mergers. As I discuss here, the story is misguided mix of bad law, bad economics and slanted analysis. Worst of all, by putting its financial columnist front and center on the news page, the Times deliberately obscures the important difference between news and opinion. The story is of interest because it calls, among other things, for increased policing of trading on non-public information which could decrease market efficiency.

Lead paint lawsuit blogging

Jane Genova, who has blogged intensively about the Rhode Island lead paint trial and its aftermath, now has a stand-alone blog devoted to the paint litigation and other legal issues, spun off from her regular blog.


A thorough report in the Wall St. Journal, entitled "Plaintiffs' Lawsuits Against Companies Sharply Decline" [subscription required to view] notes that in recent months, judges have dismissed or challenged tens of thousands of cases in matters ranging from claims of lung damage from asbestos and silica dust to allegations that the diet drug fen-phen caused heart problems. Moreover, fewer new claims like these are being launched, as state and federal courts and legislators attack the methods used to round up plaintiffs for mass tort litigation.

There is no reliable count of claims, but a look at several key areas -- particularly asbestos and silica claims -- shows large-scale litigation against single products is on the wane.

This year, new securities-fraud class-action lawsuits are down 45%, to 61 through June from 111 in the first half of 2005, according to a study mentioned in the article. This all looks to be (positive) fallout from District Judge Jack's rebuke of phony silicosis cases.

Collective corporate scienter

Lyle Roberts at 10b-5 Daily reports that expansive ideas are afoot in some federal courts on what it takes for securities plaintiffs to establish fraudulent intent on the part of a business enterprise as a whole. In two recent cases, courts have adopted the theory that "it is sufficient for a plaintiff to establish that a management-level employee of the corporation acted with fraudulent intent, even if that employee is not a defendant and did not make any alleged false statement." In the third recent case, a court in the Southern District of New York held that a plaintiff can establish that the corporation acted with fraudulent intent without demonstrating that any particular employee held such intent, thus raising a question Roberts posed a while back: "if an officer makes the statement and a janitor knows the statement is false, has the corporation acted with fraudulent intent?"

Selling short: the Cuban angle

Those who followed our discussion this spring between Moin Yahya and Larry Ribstein on short selling and insider trading -- or who are otherwise interested in the subject -- should check out this new post from Professor Bainbridge. It seems Dallas Mavericks owner Mark Cuban has a new website, Sharesleuth.com, intended to expose "unsavory business practices and misleading accounting by public companies." The catch? Cuban intends to short-sell the stocks of companies the website will target. Professor Bainbridge's analysis is, typically, right on the money.

More on vaccines at MPT

In addition to Peter Huber's Forbes article Ted mentioned earlier, Medical Progress Today, a sister site to Point of Law also sponsored by the Manhattan Institute, has a special edition today focusing on vaccines. The centerpiece is an interview of The Cutter Incident author Paul Offit by MI's Paul Howard, but MPT also collects other MI writings and conference transcripts on the subject, further useful resources, and even a contrary view by Robert Kennedy. Those interested in the impact of litigation on vaccines, check it out.


Hans Bader comments on Judge Kessler's decision.

3M settles LePage's piggyback class action

In a notoriously risible en banc decision, the Third Circuit held 3M liable under an antitrust suit brought by a competitor complaining that 3M undersold it to retailers by charging "too little" for tape through the use of bundling and volume discounts (Jan. 20, Oct. 31). (So nice for a court to step to the defense of consumers by demanding higher prices!) We noted the copycat suits at the time, and one of those cases, Meijer Inc. v. 3M, has settled for $28.8 million, $7.5 million of which goes to the attorneys, who receive over $1600/hour for the attorney and paralegal time spent on a case where 3M was collaterally estopped from defending itself on some of the most damaging allegations. (Shannon P. Duffy, "Judge OKs Settlement of 3M Antitrust Suit for $28.8 Million", Legal Intelligencer, Aug. 24).

Another putative class action, Bradburn Parent/Teacher Store Inc. v. 3M, is close to settlement. And another class action was settled for a $41 million donation to charity plus $7.5 million to the attorneys, where the twenty-eight law firms involved somehow made do with $900+/hour in that case.

Pat Hynes leaving Milberg Weiss

Patricia Hynes, one of the most respected litigators at the Milberg Weiss firm (and a former name partner there), is jumping ship for the British firm Allen & Overy. The New York Law Journal has the full story here.

Why is birth control more expensive?

The Ortho-Evra patch's price has increased from $10 to $15, and publicly-funded clinics worry they can no longer afford to provide birth control. Bloggers and Salon complain that and Slate runs through a list of possible reasons why (via Kevin MD) Ortho-McNeil raised rates for its birth-control pills and patches, but no one points out the most likely reason: increased litigation. Johnson & Johnson is facing 500 lawsuits over a product that they sell $416 million a year on, not a tenable combination in the long run. Lawyers benefit, but consumers suffer.

"Vaccines Are Scarce. Why?"

Peter Huber retells the tale from Paul Offit's The Cutter Incident (Apr. 13; Apr. 3; Mar. 15; Feb. 28) in the September 4 Forbes.

Kentucky fen-phen lawyers suspended

Melbourne Mills, Shirley Cunningham Jr. and William Gallion were "temporarily suspended" from the practice of law by the Kentucky Supreme Court this week. The three had taken well over half of a $200 million settlement Wyeth had given them on behalf of 440 fen-phen users they had represented. (Brandon Ortiz, "3 Fen-phen case lawyers are suspended", Lexington Herald-Leader, Aug. 25; Andrew Wolfson, "Fen-phen case fees poured into racehorses", Louisville Courier-Journal, May 30; Andrew Wolfson, "Judge: Fen-phen lawyers breached duty", Louisville Courier-Journal, Mar. 10; Beth Musgrave and Jim Warren, "Fen-phen settlement is back in the courtroom", Lexington Herald-Leader, Jan. 29, 2005 (reprint)). More: May 10, 2005 (civil lawsuit); Mar. 6 (judge who profited from approval of settlement resigns).

Mills was recently in the news because he won a suit against a secretary who claimed (with the help of a recording) that he promised her an "Erin-Brockovich"-style payment for her help in the settlement. (Brandon Ortiz, "Ruling benefits Melbourne Mills Jr.", Lexington Herald-Leader, Apr. 4). (cross-posted at Overlawyered)

Plunge in Texas med-mal cases

Fort Worth Star-Telegram surveys the landscape.


So as to ensure a regular stream of cases for themselves to defend? Nope. That would never happen.

Was Grasso worth it? who decides?

Eliot Spitzer wants to know: who knows more about executive pay, Treasury Secretary and former Goldman Sachs chief and NYSE director Henry Paulson or a New York trial judge? Here's my update on Spitzer's case against the NYSE's Richard Grasso.

More from KevinMD

* Retired Idaho doc would like to volunteer, but the med-mal coverage would cost $10K (via).

* "Being sued is part of the job" if you're an ob/gyn in West Virginia (and did you know that physicians could prevent nearly all cases of eclampsia if they really wanted to?) (via).

* Talk of including disaster physicians under the protective umbrella of the Federal Tort Claims Act (via).

* New blogger House of Caduceus observes that the government under EMTALA forces emergency docs like himself to accept and treat a steady stream of patients who can't pay, while simultaneously setting them up for liability suits when things go wrong (via).

"Would tort reform stop this case?"

Suicide attempt by chronic depressive, insurer's offer of $250K is rejected, jury returns defense verdict (via KevinMD).

Merck wins two more Vioxx cases

1. In a case previously scheduled to begin September 11 in Atlantic City, Patricia Hatch had claimed that her husband (who had no record of ever purchasing Vioxx) had received two years of free samples of Vioxx before dying of a heart attack. (See also Aug. 8.) Hatch decided to dismiss her case with prejudice.

2. In July, a Texas state court dismissed the Vioxx lawsuit brought by James Miller II on the principle of judicial estoppel: Miller had failed to list his claim against Merck amongst his assets when he had filed for bankruptcy. (But see Biesek v. Soo Line (7th Cir. 2006).)

Out of 22 cases resolved at the trial level to date, Merck has won thirteen by dismissal with prejudice, won four more at trial, and lost four at trial; a 22nd case, Humeston, was won by Merck at trial, but Judge Higbee granted a new trial (Aug. 17). (And one of the product liability jury wins still required Merck to pay a plaintiff $15 plus attorneys' fees on a consumer fraud theory.) About three hundred more cases have been dismissed without prejudice, and it's unclear how many of those plaintiffs will choose to refile within the statute of limitations.

For many potential plaintiffs in many states, the statute of limitations will have been considered to start ticking on September 30, 2004, and expire on September 30, 2006; we are likely to see one last burst of filings in the next five weeks.

Milberg Weiss "nearing iceberg"

That's the New York Observer's assessment of the indicted class-action firm's course these days. Even hiring a bunch of high-profile legal academics -- Burt Neuborne, Arthur Miller, Samuel Issacharoff -- hasn't done the trick. (Neuborne tells the Observer that the lawprofs are "advising on how to keep the firm 'delivering high-quality services.'� Oh, so that explains it.) The WSJ Law Blog has another update here, to go with the ones back in June here, here and here.

Suing employers of illegal aliens

We've covered the trend often (see here, here and our employment page) and now the AP has a report on it. Allied with the trial lawyers who file the suits is a group called the Immigration Reform Law Institute, described (by its general counsel) as the public interest law affiliate of the Federation for American Immigration Reform (FAIR).

Consumer disclosure 101, for lawyers

One of the most basic and relevant disclosures a lawyer can make to clients is whether he is covered by professional liability insurance or not. Somehow the legal profession has been slow to grasp this point, even while its members take the lead in enforcing rather more stringent consumer disclosure laws aimed at other occupations and professions. About one-third of states have decided through their regulators to require this disclosure from members of the bar, but in California -- the same state that goes to truly loopy lengths to require disclosures of essentially imaginary consumer risks -- a large body of lawyers argues that it's just too onerous. And guess who's taken the lead in that anti-consumer stance?

The Legislature in 1992 passed a bill requiring insurance disclosure by attorneys, but a year later the California Trial Lawyers Association -- now the Consumer Attorneys of California -- tried to eliminate what it perceived as an onerous, and unfair, burden.

The organization succeeded in getting a sunset clause, which eventually repealed the statute -- Business and Professions Code �� 6147 and 6148 -- on Jan. 1, 2000....

"The inference here," Pitre said [CAOC president Frank Pitre, of class-action powerhouse Cotchett Pitre], "is that if you're not insured, somehow or other you're less qualified to do the work or you're perceived as a lawyer who's a bad lawyer."

More: Greedy Trial Lawyer agrees with me. Update Nov. 21, 2007: bar still grappling with question.


Japan, long known for its very low rates of litigation and very sparsely populated legal profession, looks likely to change all that. The Associated Press reports that "the government has decided to more than double the number of legal professionals, including lawyers, prosecutors and judges, to 50,000 by 2018." As part of this policy, 72 new U.S.-style law schools have been opened, and the bar exam is to be made easier. Rates of litigation are also on the increase, at least if a rise in personal bankruptcies is any indication.

Grundfest supports Olis

Stanford's Joe Grundfest has donating his time to an important cause -- reducing the sentence of Jamie Olis. Olis' 24-year sentence for securities fraud based, among other things, on a flaky damage theory has been a symbol of the excesses of post-Enron corporate criminal liability. Grundfest's report may go a long way toward rectifying that injustice. Here's my discussion of that report and the Olis case.

WSJ on Mich. asbestos unbundling

Today's WSJ editorializes favorably (sub-only) on the Michigan court initiative we noted last week.

New Orleans radio

I was a guest this morning on Shane Warner's radio show on New Orleans' WIST, discussing Judge Senter's latest ruling in Katrina insurance coverage litigation. For more on that subject, see my posts here and here, Ted's and Martin's posts, and my WSJ piece here.


Under existing state law the Oregon Health Sciences University, with its teaching-hospital mission, enjoys substantial protection from malpractice liability, which is capped at a low level. Trial lawyers and others have for some time been campaigning against this immunity and now a three-judge state appeals panel has decided to crown this campaign with victory, with no tiresome need, of course, to muster the votes for any actual legislative action to lift the immunity. Last month the court decreed that even if the immunity protects the hospital system itself, it does not protect individual doctors and nurses for being sued for unlimited damages. Since OHSU will need to make sure that its staff is protected against loss of personal assets, there goes the force of the immunity. The Oregonian reports here, a one-sided earlier press account can be found at KATU, and the appeals court opinion is here.


"A federal appellate court has overturned nearly $400,000 in sanctions imposed against Fort Lauderdale, Fla., employment lawyers William and Karen Amlong for bringing an allegedly frivolous sexual harassment suit against the Denny's restaurant chain." In a lengthy dissent (PDF), Senior Judge James C. Hill "wrote that the majority opinion 'will eviscerate the ability of our district courts to sanction exactly the sort of conduct that the district court in this case found to be a reckless abuse of the judicial process.'" The sanctions figured among a series of sanctions of employment discrimination lawyers in South Florida which prompted some of those lawyers to complain that their ability to bring such cases zealously was being chilled. U.S. District Judge Joan Lenard will still have a chance to re-impose the sanctions by conducting a separate hearing.

P.S.: Ted writes:

You left out the appalling fact that the plaintiffs were able to drag out the sanctions proceedings for ten years. The delay is not trivial: e.g., p. 50:
"When defense counsel deposed him later (with an Amlong attorney present), Green testified that a "female attorney" who identified herself as Norelus's attorney offered him money for false testimony supporting Norelus's claim, but he refused. Green did not remember her name, and he died before the sanctions hearings."

Here's a beaut on p. 51: "Amlong explained that it was her frequent practice not to interview fact witnesses, even those testifying for her client, prior to trial because they usually lied."

Pages 53 to 56 show a pretty blatant instance of lawyer involvement in crafting testimony by the plaintiff that, to put it charitably, lacked credibility.


In today's NYT, Gretchen Morgenson flogs mutual fund companies that do not vote as she wants them to, and companies that display "disdain" for shareholders by not answering letters. I my weekly report, as usual, I have to clear away a thick fog of rhetoric to figure out what's really going on.

Brickman on silica and asbestos

Cardozo Law School Prof. Lester Brickman, a contributor to this site, has a new paper entitled "On the Applicability of the Silica MDL Proceeding to Asbestos Litigation", forthcoming in the Connecticut Insurance Law Journal and also as Cardozo Legal Studies Research Paper No. 158. Its SSRN abstract reads as follows:

In previous published writings on asbestos litigation, I discussed how the litigation underwent a radical shift in the mid-1980s from the traditional model of an injured person seeking a lawyer to an entrepreneurial model under which plaintiffs' lawyers and their agents actively recruited hundreds of thousands of potential litigants who could claim workplace exposure to asbestos containing products. I concluded that a substantial percentage of the nonmalignant claimants thus recruited had no disease caused by asbestos exposure as recognized by medical science and no loss of lung function.

Recently, in a multi-district litigation involving approximately 10,000 silicosis claims, U.S. District Court Judge Janis Jack has issued findings with regard to silica litigation that largely track those that I had published with respect to asbestos litigation. Because silica litigation involves the same modus operandi as entrepreneurially generated nonmalignant asbestos litigation, the same screening enterprises, doctors, and law firms, it is reasonable to conclude that Judge Jack's findings apply with equal force to asbestos litigation. In this article, I discuss the significance of Judge Jack's findings. I begin by briefly reviewing the elements of the entrepreneurial model of nonmalignant asbestos litigation including screenings, bogus medical evidence created by a comparative handful of X-ray readers and doctors, the use of entrepreneurial witness preparation techniques to implant false memories, the mass filings of claims in a small number of jurisdictions with the intent and effect of overwhelming these courts' dockets, the judicial response of aggregating the claims in order to move them through the judicial system, the perverse effects of these aggregations, and the consequent defense strategies which included inventory settlements totaling billions of dollars though most of the claimants had no actual asbestos-related injury.


"Evidence key to ongoing investigations of alleged fraud in silicosis-related litigation has gone missing from a repository in Texas, fueling a bitter row between a federal judge [Janis Graham Jack] and the state's attorney general [Greg Abbott]." The New York Sun's Josh Gerstein has details.

Inconsistent verdict in Barnett v. Merck

1. The jury in the Barnett case was asked both if Merck should be held strictly liable for failure to warn and causing Barnett's heart attack, and if Merck was negligent in failing to warn and causing Barnett's heart attack. Interestingly, the jury answered the first question "No," and the second question, "Yes," which is logically inconsistent. While it's possible to not be negligent, yet held strictly liable, it's impossible to both be negligent but not strictly liable.


Courts in the Golden State had been in the forefront of chipping away employers' right to terminate employees at will, a process I documented in my book The Excuse Factory some years ago. But the trend has been in retreat in recent years, and earlier this month the state Supreme Court delighted employers with a ruling (PDF) declaring that when a company tells a worker that employment is at will, it means just that. Per Mike McKee in the Recorder:

Much of [Brook] Dore's case rested on his claim that a letter by Arnold Worldwide executives defining "at will" as a right to terminate employment "at any time" was an implied-in-fact agreement that he could only be fired for good cause.

That argument wasn't a stretch, either. State appellate courts have reached the same conclusion in three other employment cases in the last 21 years.

The California Supreme Court emphatically disagreed, however, and threw out the appellate precedent which had creatively conjured a tenure promise out of the very effort to deny one.
Clay Robbins III, a partner in L.A.'s Magana, Cathcart & McCarthy who represented Dore, said he was surprised by the ruling. He felt there was extrinsic evidence -- such as prior managers being fired for cause and Dore's job being described as a long-term position -- that indicated cause was required for termination.

Robbins said the ruling "gives almost carte blanche power to employers -- in my mind -- to improperly define terms and also gives imprimatur to employers to describe a position in certain ways and basically reverse position once they get [a person] into an employment relationship.

"It's almost like 'buyer beware,' frankly."

Being offered a job, with no guarantee of getting to keep it forever or of it never changing its character. Imagine that.

Outsourcing of state AG lawsuits

Judge Senter on Katrina, cont'd

I'm not sure I really intended my first post on this, which reacted to initial news reports, to commit myself to an upbeat, cheery posture (or its reverse). At the time, I hadn't yet read the actual opinion.

The portion of the ruling that is hardest to comprehend is surely the part knocking out Nationwide's clause excluding coverage, not as unconscionable but rather as supposedly ambiguous. The plaintiff's lawyers had identified a (seemingly poorly drafted) passage elsewhere in Nationwide's policy which, read in a strained way, might seem to disclaim the same coverage for conventional wind damage that was being promised by the rest of the language in the policy. Note that Nationwide itself was not advancing or endorsing this (harsh if not fraudulent) interpretation, which meant nobody was. And yet by seizing on this supposed ambiguity -- between the exclusion Nationwide actually had made, and the super-duper-exclusion it had not intended to make -- Judge Senter came up with the remedy of disallowing both exclusions. It is as if, finding a letter which looked very much like "T" but could strainedly be read as "Z", the judge decided that plaintiffs would be permitted to read it as "D".

I had to remind myself that courts have a long tradition of seizing on supposedly ambiguous language in insurance policies and construing it against the insurer, often in creative and even acrobatic ways. (Insurance Coverage Blog has a discussion of the ambiguity issue here.) The logic, I gather, is that since the insurers devise the policies they can go back next time, perhaps several hundred million dollars later, and try to draft language that will be more judge-resistant. Of course Nationwide can also be expected to raise the issue on appeal.


AP. We had covered the case Feb. 5, 2005 and Jul. 24; see also Overlawyered June 21, 2005 and links therein.

Update, 5:22 pm. A 1653-page ruling is tough going, but early indications are both sides are secretly unhappy while claiming to happy; the government didn't get the billions of dollars of damages it sought (though that vindicates the decision of government officials that it would be unreasonable to seek even more after the D.C. Circuit struck the disgorgement claim), but the tobacco industry is being ordered to make concessions about fraud that could cost it billions in future litigation.

Update, 7:15 AM. I'm surprised the after-hours market is resulting in a rise in the price of tobacco stocks. This is perhaps a result of the fact that no damages were awarded, but the requirement of admitting to fraud, if upheld, is going to cost the tobacco companies much more in the long term. There are still a number of "light" consumer fraud cases pending. Walter comments in much more detail at Overlawyered. WSJ, NY Times, WaPo, and the LA Times all have coverage.


Gerald Barnett received $50 million in "compensatory" damages, with the jury to return to the question of punitive damages. Barnett had high blood cholesterol, a family history of cardiac problems, and documented cardiovascular disease before he ever took Vioxx. The verdict, if reduced to judgment, will set up a defense challenge to Judge Fallon's questionable Daubert rulings, which we noted on Nov. 23. Merck has won seven out of eleven cases so far, and five out of nine trials—at least, that was the score before Judge Higbee's bombshell today. (Heather Won Tesoriero, "Merck Failed to Warn Doctors About Vioxx's Risk, Jury Says", Wall Street Journal, Aug. 17).

Update, 1:42 PM. The jury awards $1 million in punitive damages. (More Point of Law coverage on the Barnett case.) In addition, Peter Lattman is reporting that Judge Higbee (with remarkably coincidental timing) has ordered a new trial in the Humeston case that Merck won last year (Nov. 3, Nov. 4). Readers will recall that we have been skeptical of the claims that Judge Higbee's courtroom in New Jersey provides Merck with "home court advantage" (e.g., Apr. 6, Oct. 7).

Update, 3:49 PM: Forbes' Matthew Herper is reporting that Higbee's decision was based on NEJM's editorials, which we discussed on Feb. 22, Feb. 27, Jun. 28, Feb. 14; Jan. 8; Dec. 16; Dec. 10; and Dec. 8. (Update to the update: Peter Lattman excerpts from the ruling, which appears to come from the bench.)

One thing we haven't yet mentioned about the NEJM editorial was the Wall Street Journal May 15 expose confirming our earlier suspicion that the timing and content of the editorial was politically, rather than scientifically, motivated:

The Real Wind v. Water Debate

Ted has taken a more pessimistic view of the recent Katrina case ruling in Leonard v. NationwideWalter and David Rossmiller both have taken a more optimistic view.  I think there is some room for optimism too.  While the judge threw out the anti-concurrent causation language as being vague, Judge Senter did hold in his rulings of law that ...

Under applicable Mississippi law, in a situation such as this, where the insured property sustains damage from both  wind (a covered loss) and water (an excluded loss), the insured may recover that portion of the loss which he can prove to have been caused by wind. Grace v. Lititz Mutual Insurance Co. 257 So.2d 217 (Miss.1972). Nationwide is not responsible for that portion of the damage it can prove was caused by water. To the extent property is damaged by wind, and is thereafter also damaged by water, the insured can recover that portion of the loss which he can prove to have been caused by wind, but the insurer is not responsible for any additional loss it can prove to have been later caused by water. Lititz Mutual Insurance Co. v. Boatner, 254 So.2d 765 (Miss.1971).

Thus, if the insurer or the insured can make a case for coverage based on evidence of the source of loss, I don’t think one has to worry about the concurrent causation issue as much.  Under Mierzwa (a recent Florida case) which said that if two causes were established (wind and flood) and one was excluded (flood), the insurer was responsible for the policy limits even if flood was the major cause of the homes destruction.  Judge Senter doesn’t come out and reject this, but he does assert that Mississippi law does not require the payment of the value of the policy in a case where there are two causes and the major amount of damage was caused by an excluded loss. 

It doesn’t appear that this valued policy issue was brought before the court. However, it seems like a reasonable conclusion from the opinion the valued policy notion is not as broad as Florida’s as each party must prove its version of the loss based on what caused the damage and whether the cause was covered by the policy.

 


Today's Wall Street Journal has a front-pager on Tuesday's decision in the first bench trial, as well as an editorial on the subject. I'm not as sanguine as Wally or David Rossmiller about the Senter opinion.

First, and most importantly, by failing to give credit to the anti-concurrent cause clause in the Nationwide policy, Senter is insuring that Scruggs can force an expensive trial in almost every case, creating settlement value where none is appropriate.

Second, while Judge Senter was willing to weigh the evidence impartially in a bench trial, one questions whether a jury is going to be as sympathetic to the facts in a cases involving thousands of neighbors against faceless insurance companies. The Leonards found an expert willing to testify that $47,000 in damage was caused by wind. Such experts may have more weight with more sympathetic finders of fact.

Third, though Senter did not find that the insurance agent misled the Leonard family, a clever plaintiffs' attorney is going to notice that this was so because the Leonards made several critical concessions in testimony. I'm not saying that future plaintiffs' attorneys are going to coach their clients to lie; but they're certainly going to let their clients know that admitting that they didn't ask their insurance agent for the reasoning behind certain statements or that they read their insurance policy will have consequences. "Will no one rid me of this insurance policy?" I won't be surprised if there's suddenly a rash of plaintiffs who follow the roadmap left for them in this case, and it remains unclear under what circumstances federal judges are going to completely undo insurance contracts on fraud claims.

So while Rossmiller is correct that this week's a decision is a sure loss for the Leonard family, who got less than one percent of the $130,000 they sought, Scruggs isn't completely spinning when he suggests he's happy with the opinion. Insurers still have a lot to fear in Mississippi.

Descending to the pink sheets

Just great for investors: "the higher costs that accompany increased disclosure and stiffened internal controls [under Sarbanes-Oxley] appear to be driving a growing number of companies to simply withdraw from the major exchanges. Some are going private and others 'going dark,' that is, deregistering their stock with the Securities and Exchange Commission. Instead, their shares are listed on the 'Pink Sheets,' an electronic quotation medium for companies not listed on stock exchanges." (New Jersey Law Journal)

Times Online weekly law emails

The Times Online (U.K.) publishes a steady stream of in-depth coverage about the law in Great Britain and worldwide, aside from my own periodic commentaries on the wild world of American law. Did you know that you can subscribe to the paper's weekly law update for free here?

"Fred Baron Sues Firm He Founded"

Oh, dear: internecine strife at Dallas's Baron & Budd, poster firm for legal ethics. Founder Fred Baron says he and wife Lisa Blue, both now departed from active management of the firm, are owed oodles of money, but are "extremely hopeful [their claim] will be resolved without going through the litigation process". Wouldn't thorough discovery be more fun?

First Sue, First Serve

In today�s Cincinnati Enquirer, James McNair offers an excellent description of one company�s journey through the fifty-state settement process. Omnicare Inc., a pharmaceutical supplier from Kentucky, has been hit with Medicaid billing practice investigations by Maine, Michigan, New York, and Ohio�-as well as the the U.S Attorneys office.

Thus far, Omnicare has settled with Maine and New York. Omnicare has also set aside about $54M for the federal suit (though no settlement has been made). And we can only assume that more states will follow.

Between the lines of the article, one unstated premise becomes clear: the uncertain and circuitous AG-by-AG remedial process brings a terrible social cost�-a cost that we�d be smart to reevaluate, even if every company accused of Medicaid fraud were slamdunk guilty. The intergovernmental structure of Medicaid may necessitate a burdensome administrative regime (which raises some good questions for another day), but that is no justification for a counterproductive litigulatory scheme by which �first sue, first serve� becomes the gameplan for our national healthcare and pharmaceutical activities.

If our fifty-one governments want to be in the business of pill price-fixing, at the very least they should find a more efficient way of fixing the prices than by redirecting money through piecemeal assaults by state attorneys general.

"Judge Rules for Insurers in Katrina"

Maybe Dickie Scruggs isn't going to be allowed to destroy the U.S. property and casualty insurance industry after all. U.S. District Judge L.T. Senter yesterday dealt a substantial defeat to Scruggs' pilot case seeking to force insurers to cover Katrina storm surge damage, ruling that the flood exclusion in a Pascagoula couple's Nationwide policy is valid and enforceable, notwithstanding a recalled conversation in which the couple's agent allegedly advised them not to buy separate flood insurance. Scruggs claimed partial victory because Judge Senter ruled ambiguous (and thus to be construed against the insurer) a clause excluding coverage of wind damage if a property subsequently floods. (Laura Hipp and Lora Hines, "Storm surge not covered", Jackson Clarion Ledger, Aug. 16; Joseph B. Treaster, "Judge Rules for Insurers in Katrina", New York Times, Aug. 16; Lattman, Aug. 15).

P.S. Much more at Insurance Coverage Blog here, here and here.

Deprivation of honest services

In an outgrowth of mail and wire fraud, federal law bans both public servants and many private actors from depriving clients and customers of their right to "honest services". But what does that mean? Well, that's where prosecutorial discretion -- and lots of it -- comes in. A WSJ editorial yesterday (sub-only) explains:

The problem is that no one is really sure what the phrase means. ...All of which has led to great confusion in the law, as each appellate circuit has marked out its own definitions. In the Merrill case, the Fifth Circuit chose a narrow reading, finding that the four Merrill executives had in fact provided honest services in Enron's interest in the Nigerian barge deal]. ... In his concurring opinion, Judge Harold DeMoss slammed Congress for putting the courts in this spot. Because the honest services statute was "undeniably vague and ambiguous," he wrote, "our court, and our sister circuits end up doing precisely what most would say we lack the constitutional power to do, that is, define what constitutes criminal conduct on an ex post facto and ad hoc basis." Judge DeMoss added that the statute is so vague as to be unconstitutional, and that at the very least Congress had a duty to provide the "requisite 'minimal guidelines to govern law enforcement.'"

Federal lawsuits against NYC

New York Sun reporter Joseph Goldstein quotes me today on the topic.


Sometimes I see a disingenuous statement that the person making it has to know is not true, and it just makes me mad.

That was the case with Sharon Arkin's statement in the WSJ "Legal Banter" debate on punitive damages (mentioned by Walter): "And if juries do not have 'all the information,' that could only be because the defendant's attorneys did not provide it in the trial."

Wow. Considering that the California Court of Appeals just issued a prominent decision in the punitive-damages case of Buell-Wilson v. Ford, where it held that it was appropriate for plaintiffs' attorneys to move to forbid the jury from finding out that the "defective design" that Ford was being punished for was safer than the average SUV on the road, Arkin has to know that she's not telling the truth.

One can quickly think of other examples: laws that forbid defendants from mentioning that the injured parties weren't wearing their seat-belts; the punitive damages in Vioxx cases, where the plaintiffs' attorneys were allowed to argue that Merck executives deliberately released a destructively dangerous drug, knowing that the jury wouldn't be allowed to hear that those same executives were using Vioxx themselves. (Or, in the case of non-economic "compensatory" damages, which are often indistinguishable from punitive damages, consider the case of Carol Ernst, where Mark Lanier was allowed to argue that the Ernsts were "soulmates" who would be together "forever," but Merck could not point out that Carol was the sixth Mrs. Ernst.)

I'm also disappointed that Arkin's opponent did not have the opportunity to correct Arkin on her misrepresentation of the appropriateness of cost-benefit analysis; perhaps that's worth another post another time. Stay tuned for a longer post on Buell-Wilson.

New at the WSJ: "Legal Banter"

The Wall Street Journal's law section has launched a new informal online debate feature entitled "Legal Banter". The first installment arrays defense lawyer Lori Nugent (Cozen & O'Connor) against plaintiff's lawyer Sharon Arkin on the subject of punitive damages.


Interesting news reported by Mark Hofmann at Business Insurance (via ICJL):

The Michigan Supreme Court has issued an administrative order prohibiting the "bundling" of asbestos-related personal injury cases.

Bundling occurs when personal injury cases�in this case asbestos-related cases�are joined with other related cases for settlement. The order bans bundling except for discovery, holding "that each case should be decided on its own merits, and not in conjunction with other cases."

A distinctive danger of "bundled" settlements, or "batch" or "inventory" settlements as I have called them on another occasion, is that plaintiff's lawyers may refuse to settle a relatively strong case unless a defendant also agrees to settle many relatively weak cases. In the batch settlement the defendant winds up paying more money, but since it also winds up spreading around that money among many claimants, the "strong" individual claimant (say, one with mesothelioma who worked closely with the defendant's product) may fare less well than if his case had been taken to settlement on its own.

At the same time, it would seem plausible that rightly employed, batch settlements can serve legitimate objectives of economy, finality and closure; some defendants might prefer or even instigate them, while conscientious plaintiff's lawyers might take care to manage the process so that no clients were shortchanged. Perhaps the Michigan court's action reflects a prudential estimation that in the asbestos case, these potential advantages are outweighed by the risks of abuse.

The social and the anti-social

At City Journal, Theodore Dalrymple draws a lesson from his observation of the green spaces around public and private residential properties in London.

Spitzer spotlight

Brooke Masters' new biog of the NY attorney general continues to stir comment, including this from the Manhattan Institute's Nicole Gelinas (who, like us, finds significant Spitzer's failed suit against the gun industry) and this from Prof. Bainbridge.


I (and no doubt others) have made this point before, but maybe PointofLaw.com readers can shed some light on the question for me ...

Tort law can teach you a lot about what a society values. I am particularly fond of comparisons between 19th century America and modern America, which I believe can be distinguished this way: the 19th century loved doers and modern America loves talkers.

Let me start with the 19th century: It used to be fashionable for scholars to describe tort law of that period in terms of class warfare. Nineteenth century judges were said to favor capitalists�particularly railroads and manufacturers�over ordinary folks. Some scholars made it sound like this alleged bias was conscious and even corrupt.

It comes a lot closer to the truth to say that 19th century judges were pro-action. Their "bias", if you want to call it that, seems to be in favor of people who did things�whether it was build a railroad, till the land, or fix the plumbing. Call the favored class doers, not capitalists. The negligence standard, which had become the prevailing rule by mid-century, is an example of doer protection. Sure, if a doer was acting negligently in causing a harm, he should be made to pay damages. But if the accident was not due to negligence, why punish the doer? At least he was trying to do something useful and not just sitting by the sidelines�or so the 19th century argument might run.

The textbook case used to demonstrate the establishment of a broad negligence standard in 19th century tort law is Brown v. Kendall. And it�s is an excellent example of what I�m talking about. The defendant in that case was not a railroad or a manufacturer. He was just a guy who was trying to separate a pair of fighting dogs. In doing so, he accidently hit the plaintiff with a stick, who was apparently standing there like a dummy. The court held the defendant could be held liable only if he failed to act with reasonable care.

Contrast this with much of tort law in the 20th century, a period in which strict liability standards were on the rise. The essence of a strict liability standard is that action is not privileged over non-action. Act at your peril, for if your actions are the proximate cause of another's harm, you must pay damages, no matter how careful you were. Under this view, undertaking the risk that something will go wrong is part of what you do when you act.

Furthermore, under the 20th century (and now 21st century) view, strict liability is especially appropriate if the actor is acting for profit. One can imagine a legal regime under which actors who are "goofing off" are held to a higher standard than those who are trying to perform a valuable service (and hence are charging for it). But the law is otherwise. We apply strict liability to sellers who are in the business of selling the product that caused the injury. We go more lightly on the dilettante.

I�ll confess that I don�t feel strongly about the strict liability vs. negligence issue. I can see arguments both ways. What I find interesting is the stark contrast between the way the two eras treat doers and the way they treat talkers. Nineteenth century judges had no special place in their hearts for talkers. Defamation, for example, was a strict liability tort, when just about every other tort required proof of the defendant�s negligence. If you opened your mouth and defamed someone, these judges were not in the least interested to know that you honestly and reasonably believed that what you said was true. In their view, you speak at your peril. If you don�t want to run the risk of liability, avoid saying defamatory things. Running one�s mouth off was evidently not in the same category as building railroads, tilling the land or even separating angry dogs.

Modern judges, on the other hand, evidently regard talk as the highest form of human activity. It needed "breathing room," they say. They held in New York Times v. Sullivan, for example, that in order for a newspaper to be liable for defaming a public figure it must have acted with "malice" (i.e. it must know of the statement�s falsity or act in reckless disregard of its truth or falsity). In particular, courts bend over backwards to protect newspapers, magazines and book authors�professional chatterers. Dilettantes received slightly less protection, instead of slightly more.

It�s certainly not obvious to me that all this talk about the need for First Amendment "breathing room" is false. What I don�t understand is why it doesn�t seem to occur to courts that other equally or more valuable human activities don�t also need "breathing room" in the form of legal standards that give them the benefit of a presumption in the actor's favor. Chattering is fine. I do it for a living myself. But it seems odd to elevate it over activities that receive no such presumption like the manufacture of life-saving pharmaceutical products. Might not they need a little "breathing room" too?

Criminalizing backdating, continued

With new indictments in the Comverse case, and a new story about Pixar, we're faced with having either to throw much of corporate America in jail -- including icons like Steve Jobs and John Lasseter -- or finally recognizing the significant difficulties entailed in criminalizing agency costs. Here's my thoughts.


Here's an interesting news item from the Los Angeles Times. Evidently, the L.A. area is the nation's leader in what the Times calls "non-employment." According to the Times:

"California businesses have been hiring contract and temporary workers in construction, administrative and high-tech jobs for years, and the practice appears to be spreading to industries such as real estate brokerages, beauty salons and insurance agencies, [a recent Census report] said."

The Times calls this a means to avoid "the soaring cost of health insurance and other benefits," but unless the Times is using the word "benefits" very broadly here, I think it is missing a large part of the reason for the "non-employment" phenomenon. The use of independent contractors and temporary workers allows businesses to avoid some of the risk entailed in hiring an employee in today's legal environment, which sometimes makes it difficult to fire that employee even for good reason.

Years ago "at will" employment was the norm. In the absence of an agreement to the contrary, both the employer and the employee could terminate the employment relationship at any time for good reason, bad reason or no reason at all. Such a legal regime has its upside and its downside for employees. Some employees may be unfairly fired (although bear in mind that it is not in the interest of an employer to act cruelly or capriciously, so we would not expect them to regularly do so). On the other hand, since the employer can hire an employee with little risk, it isn't so hard to find another employer.

Over time, however, a large number of exceptions to the "at will" rule have developed--to the point where in some places (California included) it has become very difficult to terminate an employee--even a poorly performing one--without extensive documentation of the employee's inadequacy. And even with extensive documentation, a disgruntled, former employee can usually make his former employer miserable in court. Lots of employees can make a colorable claim that their termination was the result of some improper motivation even if they can't ultimately prove it.

The upside for employees under this system--job security--was no doubt on the minds of the policymakers who brought about this legal regime. The downside may have been less obvious: When a poorly performing employee must be kept on (or bought off), that means other employees have to take up the slack and productive employees are paid less than they are worth. It also means that high-risk employees, like the young, the unskilled, the ex-offender and the employee who was fired from a previous job often don't get job offers at all. Few employers are willing to undertake the risk. The result is chronic unemployment for some.

"Non-employment" is not a perfect solution to all this, but it's a solution. Those who favor strong "worker protection" measures are unhappy that these measures are being by-passed, but it strikes me as on the whole a good thing and in any event inevitable. The market for jobs is not as protected from foreign competition as it used to be. We might as well get used to it.


Peter Wallison writes for AEI:

"The warning signs are there: in the securities markets, in global financial transactions, and in the withdrawal of U.S. companies from public ownership, U.S. financial markets are no longer seen as hospitable either to companies or financial transactions. Although capital continues to flow into the United States for wealth protection, foreign companies are avoiding the United States, and financing transactions are increasingly carried out in freer and more efficient markets abroad. What this should tell us is that U.S. regulation has now gone over the tipping point. The Sarbanes-Oxley Act was the last straw. Urgent action by the Securities and Exchange Commission (SEC) and Congress is necessary if the United States is to retain its preeminence in the financial world."

Junk Science: Atrazine

The Madison County Record reports:

A report issued by the U.S. Environmental Protection Agency June 21 concluded that the cumulative risks associated with triazine herbicides pose "no harm that would result to the general U.S. population, infants, children or other...consumers."

That's good news for farmers, especially in Illinois. Atrazine (a triazine compound) is the most commonly used herbicide by corn growers, favored for reducing erosion and runoff, as well as being cost-effective.

Atrazine also is the number one seasonal contaminant found in surface drinking supplies in the nation. It usually shows up in low levels in the spring and summer after farmers apply it to kill weeds rather than plowing weeds. The allowable level in drinking water is three parts per billion, a standard set by the U.S. EPA.

But six class action lawsuits against makers of these herbicides sit in Madison County court, brought by local class action lawyer Stephen Tillery and Texas toxic tort giant Baron & Budd, alleging that atrazine can cause cancer and reproductive problems in humans.

In April, Jay Lehr of the Heartland Institute called the suits' claims "junk science", joining farm bureaus in opposing these types of suits.

The EPA comment period on the report ends August 21, 2006. More information here and here.

Welcome Guest Bloggers!

I'd like to thank two wonderful leaders in the fight for sane civil justice for agreeing to guest blog here at Point of Law over the next week.

Al Adomite of the Illinois Civil Justice League is in the trenches in perhaps the most notorious tort jurisdiction in the country: Madison County, Illinois. Those of us following the shenanigans in that jurisdiction owe much to Al's fine work on the ICJL blog. Al even recently was elected a Madison County alderman!

Gail Heriot is a professor at the University of San Diego School of Law. The law/politics blog junkies among us know Gail from her postings over at The Right Coast. Professor Heriot is a leader in the Federalist Society and a longstanding academic supporter of tort reform.

I hope you're as excited about these guests as I am!

Rough Summer in Southern Illinois

Class action lawyers have had a rough summer in Southern Illinois' Fifth District Appellate Court, which is the court that handles appeals arising out of Madison and St. Clair counties. The makeup and attitude of the court has changed considerably since the election of Supreme Court Justice Lloyd Karmeier in 2004.

On July 25, the court handed down two rulings in favor of Airborne Express (now DHL) and Intel. The Mt. Vernon Register-News reports the case against Intel will be moved to California court and the Madison County Record reports the court affirmed summary judgment in favor of Airborne Express.

Earlier in the summer, the same court moved a St. Clair County Vioxx class action to Cook County, citing improper venue. See this previous post about Vioxx lawsuits in St. Clair County (IL).

(Cross-posted at ICJL Blog.)

Cooper v. IBM

Sometimes the costs of plaintiff attorney greed ripple well beyond what is measured by studies like the Tillinghast-Towers Perrin model.

In Cooper v. IBM, IBM revised its pension plan. Plaintiffs' attorneys forum-shopped to find one of the most plaintiff-friendly federal judges in the United States, G. Patrick Murphy, and presented a wildly improbable theory of age discrimination based on a twisted reading of federal pension law whereby identical benefits for young and old based on identical time of service were discriminatory because of federally required calculations for imputed interest. (The Judge Easterbrook opinion does a fine job explaining the details.) Murphy agreed, and IBM would have been on the hook for $1.4 billion to "correct" its pension plan. The Seventh Circuit reversed—but the damage was already done. IBM, rather than risk being on the hook for billions more from continuing the controversial pension plan, abolished it entirely, and moved all of its employees to a 401(k) plan. The purported clients were made worse off because of their attorneys' attempt to obtain a windfall of hundreds of millions of dollars.

Update: New York Times coverage, noting that Murphy's opinion threatened to find hundreds of cash-balance pension plans illegal. And AP coverage.

The Vioxx litigation scam

I have an op-ed in today's New York Sun on shenanigans in recent Vioxx litigation, and what it means to the calls for a "global settlement."

Milberg Weiss update

The firm is down to 75 attorneys (from 125) and has closed two offices since its indictment, and has not announced any new class actions, according to an August 4 Reuters report. It has pled not guilty.

Event Audio: Consumer Protection

On July 13, the Manhattan Institute Center for Legal Policy and the American Tort Reform Foundation co-sponsored a New York event, "The Growing Use and Abuse of State Consumer Protection Laws." Our initial panel included litigators who've been in the fray fighting these suits (Pfizer's Paulette Morgan, Altria's Bill Ohlemeyer, and Goodwin Procter's Ken Parsigian). The second involved intellectual/policy types to flesh out the underlying core issues, parallels, and proposed reforms (Cornell's Jim Henderson, our own Walter Olson, and ALEC's Kristin Armshaw). Shook Hardy partner and ATRA general counsel Victor Schwartz gave the (hilarious, as always) keynote address.

The transcript is forthcoming, but the audio for each speaker is available on the Manhattan Institute's events page. At the conference, the ATRF also released a paper authored by Schwartz, available here (PDF).

Stay Tuned: Guest Bloggers

As our overworked editor is on a much-deserved vacation, we've lined up two guest bloggers this week for Point of Law. Stay tuned!

Chicago Tribune on Phil Beck

Sunday's Chicago Tribune has an interesting profile of Merck defense attorney Phil Beck (Nov. 8).


The NYT's Gretchen Morgenson discusses Spitzer's case against Richard Grasso, formerly of the NYSE. Is she reporting, commenting, or what? I discuss the confusion. Keep tuned for more (this Sunday?)

Posting lull

I'll be taking some time off for the next ten days or so. Check in to see what other contributors -- and perhaps a guestblogger -- have to say. See you in mid-August.

"The Silicosis Bar Association"

Yesterday's WSJ editorializes:

The now-defunct Houston firm of O'Quinn, Laminack & Pirtle, for instance, liked to point out that its firm doesn't handle asbestos cases. (The argument being that it therefore couldn't profit twice.) Former partner Richard Laminack repeated this denial to Congress last week. Yet the very same day, several silicosis defendants filed a motion in Mississippi court claiming that, in 2002, the O'Quinn firm had represented a Roger Redditt in both asbestos and silicosis claims. According to the motion, Mr. Redditt was diagnosed with both diseases by the same Dr. Ray Harron, and the suits were filed within weeks of each other.

The Redditt case also appears to be just one example of how O'Quinn used the same clients twice. Mr. Laminack admitted to Congress that O'Quinn had once financed a separate Houston law firm, Foster Harssema. The Foster firm then handled asbestos claims, while the O'Quinn firm handled silicosis. Mr. Laminack acknowledged that he and another former O'Quinn partner were listed as managers of the Foster firm, and that O'Quinn collected referral fees for asbestos cases that Foster won.

None of these suits would have been possible without a handful of for-hire doctors. Some of these docs have since recanted their diagnoses; others have taken the Fifth. Congress got the lawyers to fill in some blanks about their relationships with these "experts." Campbell Cherry partner Billy Davis confirmed that his law firm had provided doctors with the language they were to use in silicosis diagnoses -- the better to make them admissible in court. Mr. Davis, who made quite a to-do in his opening statement about his firm's high standards, admitted that his firm had only paid screening companies for positive diagnoses.

A webcast of the Congressional hearing is online, and a transcript will be available in 60-90 days.

Two views of the "CSI Effect"

A skeptical view can be found by Professor Tyler in the Yale Law Journal; in contrast, Maricopa County chief prosecutor Andrew P. Thomas thinks it very real, and has survey data he says backs it up. See also Overlawyered Apr. 22, 2005.

It's all about truth-seeking, right?

It's hard to keep up your faith in the vaunted truth-seeking function of legal process, when you see accounts like this. It describes a plea bargain deal in Spokane that resulted in a defendant's pleading guilty to something he palpably didn't do, so as to beat the rap on the more serious offense he'd been charged with at first.

$1 million bid for Spitzer access

Jacob Gershman in yesterday's New York Sun, on a lucrative offer declined:

A company under investigation by Eliot Spitzer's office last year offered one of the attorney general's closest friends, Lloyd Constantine, $1 million to attend a single meeting with Mr. Spitzer in the hopes that his last-minute intervention would lead to a lower settlement, Mr. Constantine said.

Mr. Constantine, a prominent antitrust lawyer and former law partner of Mr. Spitzer's, outright refused the [unnamed] firm's extraordinary offer, which took place in mid-2005, he said. The offer was made "right before" a large settlement was announced between the firm and Mr. Spitzer's office....

With Mr. Constantine, who has donated the legal maximum of $50,100 to Mr. Spitzer's gubernatorial campaign, the company was seeking no ordinary access.

The two lawyers have known each other since 1982 when Mr. Spitzer was serving as an intern in the New York attorney general's office, where Mr. Constantine was in charge of antitrust enforcement. Mr. Spitzer was a founding partner of Mr. Constantine's boutique antitrust law firm, and he tapped him to lead his transition team after he was elected attorney general in 1998. They are also longtime tennis partners.

More on Mr. Constantine at Overlawyered, here and here.


The jury deliberations took just four and a half hours. "The 12-person jury deliberated for four and a half hours before finding that Merck wasn't negligent. The jury didn't award Mr. Grossberg any damages. The jury voted that Vioxx did have risks that were knowable, but that the risks didn't present a substantial danger to users." Early WSJ coverage. More Point of Law coverage of Vioxx litigation.

Blawg Review #68

It's at Jeremy Blachman's -- he being the author of the blog-derived new book, Anonymous Lawyer -- and it's an unusually pithy edition of the weekly feature.

Effects of med-mal reforms

New five-author study, entitled "The US Medical Liability System: Evidence for Legislative Reform", in Annals of Family Medicine:

This study is the first to use the most comprehensive national medical liability payment data available to investigate the relationships between 10 specific state tort statutory reforms and malpractice payments and premiums. For the years 1999 through 2001, total and noneconomic damage caps were associated with lower dollar amounts per payment, confirming findings from smaller and less-recent studies. An important new finding is the association between total caps and lower insurance premiums; there is a suggestion that hard noneconomic damage caps are also associated with lower insurance premiums. This association is not surprising and calls into serious question the argument that recent increases in medical liability premiums are unrelated to payments.

Like much earlier work, the study finds that malpractice-suit curbs other than damage caps, whether or not desirable for other reasons, have much less of an observable effect on payouts or premiums. The authors include Janelle Guirguis-Blake, George E. Fryer, Robert L. Phillips, Jr., Ronald Szabat, and Larry A. Green.

AGs target off-label drug promotion

Mississippi Attorney General Jim Hood has joined AGs from four other states (Louisiana, Florida, Alaska, West Virginia) to sue Eli Lilly & Co. over its much-prescribed psychiatric drug Zyprexa. The AGs' theory -- or so it sounds like, at least, from this report and this one -- is that it was a fraud on Medicaid for Lilly to promote the compound for off-label uses whether or not it did in fact work to patients' benefit in some of those uses. Our sister site Medical Progress Today has run numerous items on off-label prescribing and its very real potential to bring medical benefits to patients; see, for example, this item (many doctors consider Zyprexa promising against intractable anorexia) and this one (statins).

P.S.: Reader Skip Oliva (Voluntary Trade Council) writes in to say, "There was an FTC case not too long ago where the Commission imposed conditions on a pharmaceutical merger *because* of the 'off label' use of a product. In other words, the merger wouldn't reduce competition for the product's on-label purpose, but it would harm competition for an off-label use. The implication is that the FTC saw no problem with off-label uses."

Bankruptcy blog bingo, cont'd

A year ago, blog commentary on bankruptcy matters was mostly found on generalist sites that happened to be discussing the issue. Now there has been a proliferation of specialist bankruptcy and credit blogs, including Steve Jakubowski's Bankruptcy Litigation Blog, CreditSlips, launched by seven academics, and In the Red: The Business Bankruptcy Blog, not to mention a large number of others handily assembled in Steve Jakubowski's blogroll.

Lead-counsel auctions, considered

Some federal trial judges have experimented with imposing competitive-bidding procedures on law firms seeking lead-counsel status in securities class actions; the Ninth and Third Circuits, however, have rebuffed such initiatives. As Jonathan noted last month, however, a bill in Congress would revive the practice, and a House panel recently heard testimony from Chief Judge Vaughn Walker of the U.S. District Court for the Northern District of California, known as a pioneer of the auction format, as well as critics of the bill, H.R. 5491. The National Law Journal's coverage of the hearing is here.

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.