The WSJ has Paul Wolfowitz's detailed rebuttal, which is so thorough and persuasive that it makes one question the motives and good faith of those who seek to oust him.
April 2007 Archives
Point of Law's favorite Yale Law professor, George Priest, will deliver the May 2007 Bradley Lecture at AEI on May 14:
Currently dominant histories of the founding of America�by Gordon Wood and Bernard Bailyn, for example�emphasize the religious and democratic origins of the United States, adjusted for the history of slavery. This lecture will attempt to shift that emphasis by focusing on the economic basis of the founding of the North American colonies; the nature of colonial rule, largely directed by economic ideas; the economic forces leading up to the American Revolution; the economic ideas informing the Constitution; and the establishment of the framework for a market economy in the United States.
Bruce Nye gives a thorough summary of California's bounty-hunter "Prop 65" law, whose main safety effect is to create hundreds of thousands of meaningless �Warning, this building contain chemicals known to the State of California to cause cancer, reproductive and developmental harm� signs throughout the state. The post includes an extensive quote from the Consumer Defense Group v. Rental Housing Industry Members case. See also Overlawyered Apr. 8 and links therein.
We've been remiss lately in noting the weekly installments of Blawg Review, the traveling carnival that collects some of each week's best law-related blog posts. Last week's (#105) was hosted by Toronto law librarian Connie Crosby, who like many of her predecessors generously included a highlight from Point of Law (Michael Krauss's post on the irrationality of punitive damage calculations). Other recent installments have been hosted by Sheryl Schelin at South Carolina Employment Law Blog (#104), Jonathan Frieden at E-Commerce Law (#103), Californian George Wallace's perennial-favorite insurance blog Declarations and Exclusions (#102), Kentucky lawyer Diana Skaggs's Divorce Law Journal (#101), and the anonymous instigator of Blawg Review him/herself (#100). And the newest in the series, #106, is hosted by Iowa patent attorney Brett Trout.
- The calming storm? Sen. Lott and State Farm settle his Katrina insurance suit [AP]
- Did you know much-honored Harvard lawprof Arthur Miller "has had a longstanding relationship with Milberg Weiss"? [Lattman; more on lawprof consultants from NLJ]
- Despite hype, activists have failed to prove bias underlies male-female pay gap [Chapman]
- Calling Gerry Spence a limousine liberal may not be great for your career as a young trial lawyer [Cernovich]
- Some N.J. lawmakers would like to ban lawyers from soliciting as clients persons whose names are scraped from court and police records [NJLJ]
- Billions at stake as Supreme Court mulls whether to uphold exemption of home health workers from FLSA wage/hour standards [AP]
- Just sad: tenured prof departs Iowa Law School (albeit with big severance) after faking student evaluations [Volokh]
Reversing a number of campaign pledges, Oklahoma Governor Brad Henry on Saturday vetoed S.B. 507, a measured passed by both houses of his legislature to reform Oklahoma's tort law.
Glenn Coffee, the Republican Co-President pro-tem of the Senate said, "The governor missed a grand opportunity to send a message to the nation that Oklahoma is pro-jobs, pro-doctor, and pro-business. Instead, he sent a message that millionaire trial lawyers are still running the show.�
Connecticut's activist attorney general Richard Blumenthal is running into increasing criticism for the legal hardball he's been playing on behalf of advocates who favor the aggressive long-term use of antibiotics against persistent Lyme disease. The Centers for Disease Control, as well as professional groups, have endorsed Lyme treatment guidelines which discourage such therapy, but Blumenthal has deployed the threat of antitrust action against the Infectious Diseases Society of America over this supposed infringement of patients' rights -- the nub being that if the treatment guidelines stand, many health insurers will go on denying coverage for the antibiotic therapy as needless or dangerous. The Hartford Courant covered the story last month (reprinted at LymeNet); Cliff Hutchinson also comments on the controversy.
Even the tort bar understands how deeply loathed it is by the American public. The Association of Trial Lawyers of America didn't last year change its name to the bland "American Association for Justice" for nothing.
So no, even the old liberal lawsuit bulls such as Henry Waxman or [Barney] Frank won't start calling for the repeal of the 2005 Class Action Fairness Act, or for other blatant legislative assists to the trial bar. Instead, Democrats intend to reward the legal industry with more subtle payoffs. The most obvious gift will be a moratorium on further legal reform. Beyond that, Democrats will rely on two tried-and-tested tools to aid and abet the legal community. They've employed both in the past few weeks. ...
A Democratic Congress means far more regulation, and any new regulation is an opportunity to insert a line or two giving the tort bar greater rights to sue. These provisions will be subtle and technical, designed to escape notice. But just in case they do raise a red flag, they'll also be tucked into bipartisan or must-pass legislation (such as the Iraq supplemental), making it that much harder for Republicans or President Bush to shoot them down.
It's a measure of how well Republicans played tort abuse to their political advantage that Democrats today are reluctant to brazenly flack for the legal class. If the GOP wants to keep it that way, it will have to start working harder to expose the quiet ways in which the left is now helping trial lawyers bilk the system.
The other means is by taxpayer-funded subpoenas and hearings to develop evidence and publicity for the trial bar.
Strassel claims that there is such an earmark created at the behest of ATLA, subtly providing an implied cause of action against chemical manufacturers in H.R. 1591, the soon-to-be-vetoed Iraq War supplemental funding bill. Indeed, the provision is difficult to find amidst the provisions for the milk income loss contract program and renewal grants for women's business centers. I suspect Strassel is referring to the anti-preemption provision in Section 1501(a) of the bill, effectively permitting lawsuits against chemical facilities that comply with Department of Homeland Security regulations without once mentioning the word "lawsuit." If there is a terrorist attack on a chemical facility, trial lawyers will have a deep pocket to blame.
Perhaps we, as a society, would agree with the Democratic Party and would prefer trial lawyers, instead of the Department of Homeland Security, to be in charge of chemical plant security. (Trial lawyers do have the advantage of getting to operate only in hindsight.) But shouldn't that critical decision be made openly?
On Thursday the Manhattan Institute hosted a half-day forum in downtown Manhattan on this subject, with a keynote speech by Treasury Undersecretary Robert Steel; Jim Copland moderated a panel on Sarbanes-Oxley which included blogger-lawprofs Steve Bainbridge and Larry Ribstein as well as MI's Nicole Gelinas, and I moderated a panel on litigation which included Christine Edwards of Winston & Strawn, Prof. Michael Perino of St. John's, and Peter Wallison of AEI. Press coverage (mostly of Undersecretary Steel's comments on hedge fund regulation): Bloomberg, Reuters, New York Sun, and among blogs, Bainbridge, Ribstein, Dealbreaker.
Our readers may remember Steve Presser from his extensive constitutional law discussion with Richard Epstein after Chief Justice Roberts was nominated to the High Court. Professor Presser has a new piece in this spring's City Journal on the jurisprudence of Clarence Thomas, "Reading the Constitution Right". Presser's conclusion?
Far from being an embarrassment to the Supreme Court, Thomas is contributing some of its most forceful and learned opinions. Even more remarkable, perhaps, is his willingness to go against the prevailing constitutional wisdom. Race probably did play some part in his selection. But by the time he retires, the general assessment will doubtless be that he was one of the most influential justices of his time.
More repercussions from Judge Jack's exposure of "red flags of fraud" among repeat silicosis/asbestos claimants, per the Associated Press: "A doctor who made thousands of questionable diagnoses of the lung disease silicosis has surrendered his Texas medical license amid an investigation by the Texas Medical Board. Raymond A. Harron, 74, last week agreed to no longer practice medicine in Texas and not seek renewal or re-issuance of the license he got 44 years ago. His Texas medical license expires May 31." Our earlier coverage of Dr. Harron's exploits is here.
Our own Jim Copland has an op-ed in Thursday's New York Sun on the idea, now under consideration at the Securities and Exchange Commission, of allowing public companies to change their bylaws to opt for arbitration in lieu of traditional class-action shareholder suits:
Why should we be excited about this idea? America�s unique securities lawsuits are regularly cited among the top reasons executives would prefer to be listed abroad. For the diversified shareholder, these suits accomplish little: They merely shift dollars from one set of investors to another, so the common investor with a broad portfolio of securities is equally as likely to be a plaintiff as a defendant.
Only one group is sure to prosper from securities litigation: the plaintiffs� lawyers. And securities class-action lawyers have been profiting handsomely indeed. Even excluding Enron and WorldCom litigation, securities settlements in 2006 totaled a record-shattering $10.6 billion, more than 300% above those in 2005.
The lawyers argue that the threat of such litigation deters corporate fraud. But academics who have studied the issue, such as Michael Perino at St. John�s Law School, have found this deterrent effect largely illusory.
Oklahoma's tort reform bill, S.B. 507, is now sitting on Governor Brad Henry's desk. The Governor has stressed the need for tort reform several times in the past, in 2004 outlining 28 "key areas" that needed to be reformed in the law.
The Governor's office has not yet made any statements concerning S.B. 507.
Eric Turkewitz at his New York Personal Injury Law Blog has begun assembling these roundups regularly (link here). Invariably worth reading, they demonstrate (among other things) that new blogs are sprouting in large numbers on the plaintiff's side of injury law, and that their content is by no means confined to the predictable practice-promoting sorts of fare.
Earlier this month there arrived some of the best legal news of the year so far:
...a Santa Clara County judge has told several cities and counties they can't contract with private lawyers on a contingency basis in their nuisance suit against lead paint manufacturers.
The ruling by Judge Jack Komar says lawyers for the government are supposed to be neutral, a stance that's not possible when a contingency fee is riding on the outcome of their efforts.
In his written order issued Wednesday, Komar rejected an assertion by Santa Clara County Counsel Ann Ravel and other government lawyers that they retain decision-making authority, even though they've brought in Burlingame's Cotchett, Pitre & McCarthy and other firms for assistance since the lead paint litigation was filed some seven years ago.
Ravel said she will probably appeal Komar's decision, partly out of concern that it could derail other public interest litigation.
As I pointed out way back in The Litigation Explosion (1991) precedents in both the federal and California court systems provide compelling support for the idea that lawyers cannot bring the requisite scrupulousness and neutrality to representing the government if they stand to collect a share of the booty -- which is why we would never think of permitting criminal prosecutors to be paid per scalp. Beck and Herrmann have a typically good post in reaction; the ruling if upheld obviously throws into much doubt the legitimacy of the whole "affirmative litigation" sector and the cozy alliances of public and private lawyers it calls forth, as Hans Bader notes. Another example: many Medicaid "cost recovery" suits by states against drugmakers.
(Updated and expanded 6:52 PM.)
In [Ted Frank's] view the market is currently adjusting to the problems in mortgage origination. Everything will work out if we just leave the markets alone because "lenders have every incentive to lend only to those who can repay." I disagree. The current legal system creates the incentive for loan brokers and originators to (1)take large commissions and closing costs, (2) pass off bad loans to the secondary market, (3) distribute the revenue from lots of closings to management and employees, (4) wait for the bankruptcy code's preference window to close, then (5) declare bankruptcy when the secondary market tries to exert its recourse options.
Except what Peterson is describing is intentional securities fraud, for which there already exists plenty of civil and criminal deterrent. Management doesn't escape scot-free: in the First Alliance Mortgage case, its chairman and CEO, Brian Chisick, was on the hook for $20 million in an FTC action over that bankrupt company's mortgage practices, even aside from the losses he incurred from the drop in value in his equity interest in the company.
Moreover, in such a scenario, the secondary market investors lose their money in their investments—surely deterrent enough to engage in appropriate due diligence to not invest in a fly-by-night operation that is issuing bogus loans. Why victimize them twice? The only thing that accomplishes is to punish the honest by creating an infeasible risk premium.
The multiply-illegal scam Peterson posits (involving mortgage fraud, securities fraud, and possibly bankruptcy fraud and breaches of fiduciary duty) just is not a viable business model for any reasonable length of time: can we identify anyone who is living high off the hog through these means?
Is it possible for a lender to have such poor oversight over its brokers that the brokers rip off both borrowers and lenders to acquire commissions to which they would not obtain if they acted honestly? Absolutely, but the case of the potentially unethical mortgage broker is no different than any other agent who represents the principal to third parties, from nursing home aides to car salespeople to law firm associates to Wal-Mart's top advertising executive. Management's desire to exercise appropriate controls over its agents so that the latter does not realize improper rents through fraud is self-regulating. The incentives to create the appropriate incentive structure already exist, and those organizations that fail to do so will be driven from the market. But to impose liability on peripheral investors who have no control over the actions of those agents defies every principle of fairness and justice. It's an underhanded way to achieve an under-the-radar ban of a legitimate practice through litigation risk that would not fly politically if the same activists were to propose it in a straightforward fashion.
(And why stop with financing? Surely fraudulent mortgage lenders would not be able to achieve their ends without office supplies or grocers or telephones. Those vendors of goods and services are at least as much a but-for cause as the secondary investors. What's the principle that holds liable the pension fund that purchases mortgage securities as a means of diversifying its portfolio, but not a Dunder-Mifflin for selling the paper that a First Alliance used to print out its forms?)
Those pension funds and hedge funds and investment banks and insurance companies that invest in mortgage securitization do not do so out of charity or because they have an idiosyncratic fondness for the ideal of homeownership; they do so because they are looking for a place to put capital to invest within a diversified portfolio. Mortgage securities compete with any number of other investment options: equity, debt, commodity, derivative, real estate, ad infinitum. If Frank-Bachus passes, there are countless other options for capital placement that will not involve incalculable liability for matters completely outside the investors' control. Consumers will not suddenly have increased recourse if upstream investors in mortgage securitizations are liable for low-level broker fraud. Instead, the mortgage securitizations just will not happen because that money will instead be elsewhere in the marketplace.
Mortgage fraud will decrease, but so will legitimate mortgages—and indiscriminately. Families that wish to use their home equity to finance medical or college or home improvement expenses will be deprived of a consumer choice that they responsibly believe will make them better off. Mortgage interest rates will be higher, and consumers will be unambiguously worse off—even aside from the repercussions throughout the rest of the economy from the shock of credit contraction. This is bad law that contradicts fundamental notions of fairness, and bad public policy that helps noone.
There's a pattern here--namely an interest-group-pleasing willingness to see the economy permeated by a legalistic adversarialism ("comparable worth" lawsuits, union-management negotiations) that might not trouble a president of the Harvard Law Review as much as the rest of us.
The Daily Business Review reports that the chief judge of South Florida federal courts has condemned attorneys on both sides in an overtime wage case. Their name-calling and refusal to settle is "an abuse of the judicial process". Plaintiff's lawyer will not collect the $144K in fees that he demanded to pursue an overtime pay case of $11,000 which the defendant admitted owing. Defendant's lawyer will not be able to recover $110000 in claimed attorney's fees. The report is replete with descriptions of the outlandish behavior of attorneys. Here's hoping the Florida Bar is next in line to sanction them.
Abuse of attorney fees in federal "overtime pay" cases has gone on for years. May this be a warning to the abusers.
George Lenard: "In my view, this FedEx class action settlement is yet another sign that after years of near-dormancy, employment discrimination claims not based on disability, harassment, or termination of employment (e.g., those based on hiring and promotions) have become the biggest area of corporate employment law risk. The ascendancy of these employment discrimination claims is led by very high-powered, fabulously wealthy class-action attorneys." (earlier)
Lawprofs Craig Lerner (George Mason) and Moin Yahya (U. of Alberta) have a new paper on SSRN entitled "'Left Behind' After Sarbanes-Oxley". Abstract:
Although the common law's embrace of a mens rea requirement in the criminal law reflected an advance - on both moral and efficiency grounds - over ancient law, recent legal developments suggest an unfortunate return to what are, in effect, strict liability crimes. Some modern criminal laws have explicitly abandoned any mens rea requirement, creating de jure strict liability; more commonly and insidiously, criminal laws applicable to many regulated industries are so ambiguously drafted, and entail such severe penalties, that the effect of the law is what we call de facto strict liability. In this article, we argue that these two trends - soaring penalties for corporate crimes and dilution of a mens rea requirement - could have the paradoxical consequence of creating more corporate crime and not, as the standard story goes, less.
We conceive of the competition for corporate control as waged by three human �types� - ideal entrepreneurs (who are risk-neutral with respect to business decisions, but risk-averse with respect to compliance with the criminal law), swashbucklers (who are risk-neutral with respect to both business decisions and criminal law compliance) and bean counters (who are risk-averse on both of these margins). From society's perspective, the optimal environment is one that allows the ideal entrepreneur to thrive. Unlike bean counters, she is willing to take entrepreneurial risks that benefit society. Unlike swashbucklers, she is hard-wired to comply with the criminal law even at substantial cost. But as the criminal law becomes increasingly draconian, and its application unpredictable - that is, as it becomes one of de facto strict liability - our model demonstrates that she will flee for other environments. As every increase in criminal penalties more thoroughly drives away the ideal entrepreneurs, adverse selection operates, and swashbucklers more completely dominate the field. The ultimate irony is that the indeterminate widening of the scope of white-collar criminal law, and the penalties that attach for its violation, may drive away the very people most susceptible to being deterred by the criminal law.
Fred Thompson defends his vote against Congressional action to prevent trial lawyers from stealing billions from taxpayers in the Tobacco Master Settlement Agreement on grounds of "federalism." For why this is jaw-droppingly ironic, see Michael Greve's 2002 essay on the subject. Ramesh Ponnuru also responds.
The New York Law Journal reports that the Empire State's intermediate court of appeals has refused to disregard the state's three-year statute of limitations on product liability suits.
Warren Robare had quit smoking in 1991, admitting then that he knew of tobacco's dangerous propensities. He sued all the tobacco companies in 1997. Too late, said the court.
Robare's attorney cited Zumpano v. Quinn, 6 NY3d 666 (2006), in which the Court of Appeals (NY's highest court) denied plaintiff's claim that equitable estoppel required disregarding the statute of limitations. That suit had been pressed by victims of sexual abuse by priests. The Zumpano Court had suggested that equitable estoppel could be invoked if a plaintiff refrained from filing a timely action due to the "fraud, misrepresentations or deception" of the defendant. Robare argued that Big Tobacco was guilty of just such fraud, but the court was unpersuaded, since any alleged fraud clearly did not hoodwink Robare. The fact that Robare had started smoking at age 9, and had suffered a head injury at age 13, did not vitiate his knowledge at age 30 of the dangers for which he decided to sue at age 37, noted the court.
Its members are often saddled with their own conflicts of interest, notes an article by author Arthur Allen at the Huffington Post (!) (via the ever-vigilant Orac). And speaking of which, an item the other day on the WSJ law blog confirmed that anti-vaccine activist Robert F. Kennedy, Jr., America's Most Irresponsible Public Figure (r), is of counsel to Florida's Levin Papantonio, the mass-tort specialists. For more on RFK Jr. and vaccines, see this link and this one, among others.
At American Heritage, business historian John Steele Gordon is unimpressed with a new history in which Atlantic editor Jack Beatty pursues an ain't-capitalism-awful theme in tub-thumping style:
This anger that the people of the latter half of the nineteenth century often did not run their world as Jack Beatty thinks they should have permeates what is a remarkably old-fashioned book. From its tone (utterly unforgiving of human nature and an earlier generation), style (orotund, what William Jennings Bryan might have written had he been better educated), and historical perspective, Age of Betrayal might have been written 80 or even 100 years ago, when the Victorian world was deeply out of fashion.
While the author relies extensively on such ancient books as the highly tendentious History of the Great American Fortunes by Gustavus Myers (1910) and the flatly dishonest The Robber Barons and The Politicos by Matthew Josephson (1934, 1938), he often ignores the work of later historians, especially those of the last 30 years, who have brought a different and far more balanced perspective to the age of the �robber barons� and to the often remarkable characters who dominated it.
The Oklahoma legislature last week passed a comprehensive tort reform bill which, among other things:
(1) reforms the rule of joint and several liability among joint tortfeasors;
(2) caps punitive damages in most cases (greater of two times compensatory damages or $500,000);
(3) requires opt-in class membership for most class actions;
(4) restricts the admission of expert testimony and provides standards for the qualification of expert witnesses; and
(5) creates a general immunity for volunteers and charitable organizations.
Tom Elliott, in the New York Post, reports that the labor-agitating Restaurant Opportunities Center may not all be that might be wished in its own role as employer (more).
Knoxville blogger Katie Allison Granju learns why a hospital won't let her use a birthing ball. Women's Health News quotes the following apt observation: "Instead of simply risk-managing the things that might help women in labour, surely what we really need to address is the culture of fear and litigation which has somehow enshrouded pregnancy and birth, and the ways in which we can break this down, for the sake of everybody concerned." (via KevinMD). More on midwives and midwifery here and here.
At the WSJ, John Fund describes some of the ambitious pro-liability adventures of the current Wisconsin Supreme Court majority. Following voters' decisive defeat this month of a trial-lawyer-backed candidate for the high court, Fund predicts that the next battle will be fought over the seat of former Milwaukee judge Louis Butler, who lost by a 2-1 margin in a 2000 campaign for the high court but was appointed anyway by Democratic Gov. Jim Doyle after incumbent Diane Sykes departed for a seat on the Seventh Circuit. Next April Judge Butler, who's aligned himself with the pro-liability-expansion majority, must stand for a full ten-year term on the court.
As earlier reported last week [WSJ Apr. 13; WSJ Law Blog], a Harris County judge has thrown out Ledbetter v. Merck's failure-to-warn claim and stayed 1300 or so other Vioxx cases pending appeal. (Ledbetter herself has other claims pending; the press coverage inaccurately states the entire set of cases are gone.) Contrary to some press and blog reports, the judge's decision, released earlier today, was made not based on the FDA preamble statement to its new disclosure rule, but based on a 2003 Texas statute, Tex. Civ. Prac. & Rem. Code Ann. �82.007, that was apparently ignored by the last two Texas state judges to consider Vioxx cases. (It's possible that the statute doesn't apply to those two cases if they were filed before the statute became law in 2003.) The Texas statute has an exception for fraud-on-the-FDA, but that is preempted by federal law—not by the FDA's recent regulation, but by the U.S. Supreme Court in Buckman, 531 U.S. 341 (2001), which held that fraud on the FDA was a federal inquiry that could only be resolved by federal officials. [Merck press release; WSJ Law Blog]
We'll see what the Texas Supreme Court has to say down the road, but a plain-language reading of the statute would appear to support the claim that all of the Texas failure-to-warn cases against Merck must be dismissed. One would think that this is fatal reversible error in the two multimillion-dollar Texas plaintiffs' verdicts in Garza and Ernst, if those cases were filed after the statute was passed in 2003.
YNetNews: "More than 60 years after the Holocaust, the children of the survivors are demanding compensation from the German government for their suffering. ... Following an initiative to file a joint class action to second generation members from Israel, Germany and the United States, the Fisher Fund is holding talks with senior German officials in a bid to receive financing for mental treatments required by some second-generation Holocaust survivors."
It's an irony worth cherishing that the New York Times's business section (which sometimes can come across as an editorial page dressed up as a business section) has decided to promote as its favorite cause "shareholder democracy" in its most simplistic form, even as the number one example of the blatant flouting of shareholder-democracy principles remains...the New York Times Company itself, with its Class A and Class B stock. Larry Ribstein here and here, and Prof. Bainbridge here, offer different takes on this paradox.
Trial consultant Adrienne Lefevre, writing in the ABA's Products Liability Newsletter:
Jurors, like sporting event spectators, look to pick, and then root, for a side. When jurors have no allegiance to either side, many rely on the story behind the parties to motivate them to commit to a "team." An effective story should incorporate simple arguments that appeal to jurors' common sense. In today's courtrooms, when attorneys simply argue a products liability case using the law or mounds of complicated scientific evidence, they unwisely increase the risk of defeat.Get it? Don't count on relying on the law or the facts, unless you are able to conjure up a "good story" that appeals to common sense and the jury's need to "root for a team." Lefevre goes on to discuss ways that jury decisionmaking tends to conflict with basic principles of our legal system (e.g., juries rely on a defendant's general reputation to assess blame in a particular case, juries award larger damages against big corporations). Some of my thoughts on civil juries, and why they should be abolished or at least restricted, can be found here.
The New Jersey Law Journal highlights a jury verdict on Wednesday in a major Products Liability case.
Ford Motor Co. had been found liable for $10.6 million in compensatory damages (of which $8.5 million was for "pain and suffering") to a paralyzed driver. Ford's allegedly defective throttle design in 1997 Ford Explorers apparently made its accelerator stick in the closed position. When plaintiff Rebekah Zakrocki, then 21, pressed hard on the gas in order to accelerate while driving on the Garden State Parkway, the vehicle lurched forward. Panicked, she turned the wheel to the left, causing the vehicle to roll onto its roof. Her injuries were devastating. Her compensatories were reduced by the "28% comparative negligence" found by the jury (she was speeding, obviously contributing to the potential to lose control of her vehicle).
But Ford was spared a possibly huge punitive damages verdict because its lawyer was allowed to tell jurors about the carmaker's dire financial straits and mass layoffs.
The jury awarded only $42,500 in punitives despite the large compensatories award. Ford's lawyers were allowed, over plaintiff's objections, to enter evidence about the automaker's recent mass layoffs and losses. Ford reported a 2006 full-year net loss of $12.7 billion, and in January the automaker announced plans to eliminate 25,000 to 30,000 jobs in North America and close 14 plants by 2012.
The less efficient a company, the fewer punitives? The more efficient (the more it adds value to the country) the greater the punitives? Decisions like these are surely applauded by defendants, but they are just as surely indications that punitive damages as currently awarded make no sense at all.
The oil giant agreed to pay roughly $400 million to investors, and U.S. securities plaintiffs' lawyers are crowing that it's a breakthrough for their mighty efforts to open up the virgin soil of Europe for U.S.-style class actions. More: W$J ("'It's the first pan-European settlement of a securities-fraud case that I'm aware of,' said Jay Eisenhofer of Delaware-based Grant & Eisenhofer P.A., the lead law firm representing the European investors."), Roberts, Best in Class.
Is this what our legal system has wrought? Have we so intimidated the medical profession that its members fear admitting their mistakes and offering to correct them; that we need legislation to protect them against the consequences of apologizing? Concededly, doctors are faced with baseless malpractice claims, exorbitant insurance premiums, the expenditure of time and emotion in defending suits and the possibility that their mere threat causes them to practice and prescribe in a manner that they would not do otherwise. ...
I had a doctor for years who had a sign in his waiting room: I HAVE NO INSURANCE. IF YOU PLAN TO SUE ME, PLEASE GO ELSEWHERE. If he made a mistake, I know he would tell me, because he was more concerned with my health than his liability. If we in the legal profession have reversed that then I hope none of us ever gets sick.
WashingtonPost.com's "Think Tank Town" feature "asked prominent think tanks which public policies failed and which can be improved in the wake of the the Virginia Tech shootings." The results include contributions from Jim on gun control, Ted on fear of litigation, and me on the legal constraints on universities faced with problem students.
Reporter Michael Orey's article is subtitled: "How the threat of litigation is making companies skittish about axing problem workers". Which seems like a good occasion for marking the ten-year anniversary of my book The Excuse Factory (Free Press, 1997), which treated this phenomenon at book length (annotated table of contents, review highlights, other information on book, Amazon link). David Nieporent has more at Overlawyered.
Lack of evacuation plan and adequate backup power system = practicing medicine below the standard of care, or so alleges a suit against New Orleans's Methodist Hospital (via KevinMD).
The historically pro-business, chemical-industry-friendly state might seem an unlikely forum-shopping choice for plaintiffs doing toxic tort work, but both SimmonsCooper and Baron & Budd have been heading there with asbestos and benzene cases lately, reports the Madison County Record. A key figure: senatorial scion Joseph ("Beau") Biden III of Wilmington's Bifferato, Gentilotti and Biden, now the state's attorney general. Earlier: here and here, among others.
A onetime Illinois HMO was hammered with a $334 million judgment [last month], the largest of its kind ever in northern Illinois and an amount almost equal to the company's profits since it was founded....
The case, brought by a civil whistleblower and then joined by federal authorities and the state attorney general's office, charged that Amerigroup cherry-picked "healthies" and purposely avoided women in their third trimester of pregnancy because they cost more to insure....
The verdict nearly equals the $384 million in profit that Amerigroup has made since it was founded in 1994, Jenkins [company spokesman Kent Jenkins, Jr.] said....
Whistleblower Cleveland Tyson of Buffalo Grove, former vice president of government relations, will get 15 percent to 25 percent of the total award -- a benefit allowed under the Fraud Claims Act, designed to encourage whistleblowers.
Those of us who are not fond of qui tam/whistleblowing laws note that they reward informants and their lawyers far in excess of any plausible desert. In this case, Tyson would get $50 million to $83 million if the reported numbers hold up.
Why is the United Methodist Church lending its prestige and influence to the widely discredited vaccines-cause-autism theory, in league with a coalition of personal injury lawyers, misguided families, and grossly irresponsible public figures? Kathleen Seidel raises some pointed questions as well as calling to our attention a few recent developments in the medical journals. And Beck and Hermann dissect the recent Eastern District of Pennsylvania case of Sykes v. Glaxo-SmithKline, et al., a major win for vaccine defendants, in which the plaintiffs were the same Sykes family that has been instrumental in drawing the Methodist church into its ill-considered involvement with the issue.
Per Gary Shapiro in the NY Sun: "The New York State Legislature is considering one bill that would have the state formally apologize for its role in slavery and another that would study and recommend remedies for the descendants of slaves." Assemblyman Hakeem Jeffries (D-Brooklyn) is the sponsor of the bill to establish a commission to study reparations for slavery. Heather Mac Donald of the Manhattan Institute is quoted calling the measure a foolish idea and a "clear shakedown for businesses".
As we've had occasion to note in the past (scroll), there's a campaign underway to create a broad-based new entitlement for low-income persons (and perhaps others as well) to be provided with lawyers at public expense to handle a variety of civil matters, and not just criminal defense matters as provided in the Supreme Court's decision Gideon v. Wainwright. David Giacalone's critique of the idea is worth reading:
Like the proponents of the ABA�s Civil Gideon Resolution (e.g., here and here) [attorney Paul] Martinek argues that no lawyerless litigant can get a fair hearing when the other side has a lawyer � and that having a lawyer will ensure such fairness. Although he mentions that there are �some practical downsides� with Civil Gideon (such as its �staggering� cost, difficulties telling who is eligible, and disincentives to settle when you have a free lawyer), Martinek concludes that �something� must be done and:�The issues that are litigated in family courts - especially those involving the right to see and help raise one�s children - are too important to be dealt with by emotionally overwhelmed mothers and fathers with no training in the law.�
I believe we need to ask whether it makes more sense to increase the importance of lawyers in family and housing courts or to work much harder to structure the judicial system so that most individuals can achieve fair and effective justice without lawyers (see our About page). Based on my experience as a self-help law proponent, a legal ethics watchdog, and an observer of the legal profession�s attitude toward access to justice, and after spending a decade in a law practice focused on Family Court, here are some of the problems that I have with the lawyers-for-all-style Civil Gideon:1. It looks far too much like an Attorney Employment Assurance Plan for underemployed members of the Main Street bar. In addition, Civil Gideon is backed by some groups that resisted court-based self-help centers, for fear they would undermine legal aid budgets, as well as by private lawyer groups who resisted both self-help centers and alternative dispute programs at courts, for fear that they might lose clients or have cases shortened by settlements.
2. It assumes that lawyers can do a better job than reasonably-informed laypersons in presenting cases that involve their families (or sustenance and housing conditions). This infantilizes litigants and denigrates the intelligence of the vast majority of pro se litigants, who know far better than any lawyer the facts of their situation and are capable of telling their stories to receptive judges. It also contradicts studies of family court lawyers; see below)
3. It assumes that two opposing lawyers will more quickly and fairly settle a case than will unrepresented parties. (As Law Guardian for hundred of children in family court, I saw far too many cases where lawyers dragged out cases, inflamed conflict, misunderstood the basic needs of the parties.)
4. It assumes that Assigned Counsel will competently and diligently represent their low income client (see discussion below).
5. It overlooks the fact that hiring an attorney virtually impoverishes, or is simply beyond the financial ability of, a very large portion of Americans who are not considered poor, but are far from rich � and, unlike self-help programs, Civil Gideon makes no accommodation for these people. [update: March 10, 2007: see our post �the dis-accessed middle class of North America,� which discusses the situation in Canada, as seen through the eyes of their Chief Justice.]
6. It overlooks the fact that every single day thousands of low-income Americans are able to receive a fair hearing of their disputes in Family (and other people-oriented) Courts � and that self-help centers and pro se programs for judges and court staff are spreading and becoming more and more effective.
Giacalone goes on to detail problems with the existing system of publicly assigned counsel. The whole post, which includes a response from attorney Martinek and other reader comments, is here.
Per the NLJ, it's employers' lucky day:
The federal government has launched an initiative aimed at cracking down on discriminatory hiring practices in the workplace -- a program that could land unsuspecting employers in court, employment attorneys are warning....
Specifically, the EEOC will focus on hiring decisions that are based on names, arrest and conviction records, employment and personality tests and credit scores -- all of which may disparately impact people of color....
Many states have laws that restrict employers from asking about or considering criminal records when hiring. The EEOC holds that if an employer denies a job to an applicant because he or she has a criminal record, it could be considered discrimination if the person is a minority.
For more on efforts to keep employers from taking applicants' criminal records into account, see Overlawyered, Feb. 13 and links from there.
At Volokh, occasional PoL contributor David Bernstein terms this 2003 book by Toronto psychiatrist Andrew Malleson "very interesting and entertaining":
there are many useful tidbits of information and startling hypotheses in this book, with sufficient citations to the academic literature that the reader could look up the relevant studies for himself if he is skeptical. This is certainly a book that should be on the shelf of, among others, (a) anyone who represents insurance companies in automobile accident injury litigation; (b) anyone interested in "junk science" in general; (c) anyone interested in how the medical profession, or elements thereof, sometimes creates official "illnesses" that are really just clusters of symptoms with no common or known physical cause; (d) anyone interested in the effects of litigation on accident victims, and whether the victimization that are required to exhibit for legal purposes may hinder their emotional and physical recovery; (e) anyone interested in somatic illnesses; (f) anyone interested in malingering and fraud in the workers' compensation and tort systems; and (g) anyone interested in how the legal system encourages, profits from, and sometimes precipitates (c).
The O'Quinn law firm (e.g., Jul. 15, 2005, Jul. 10, and Aug. 3) has been hit with an order to show cause questioning its alleged withholding of settlement money from its clients by charging them "interest" on money advanced for the client. Overlawyered has the text of the order, as well as information on some of O'Quinn's other cases.
Some of the proposals now popular in Congress for promoting workplace unionization (and cutting down on those pesky secret ballots with their potential for union defeats) have been in effect in Canada for many years. For a glimpse at some of the results, check out this website ("Free the Lively Seven"). Earlier: here, here and here.
On Nov. 3, 2005, I wrote:
One can understand why Wal-Mart is upset that a former executive, Tom Coughlin, allegedly swiped a half-million dollars, and wants to stop paying him in addition to referring the matter to federal prosecutors. But one doesn't understand why Wal-Mart, in an effort to recover a fairly small sum, is arguing to the court that it should disregard the mutual waiver and release that Coughlin signed with Wal-Mart when he left the job. Surely the corporation would be better off on the whole with a legal rule that strictly enforces releases than one that judges the validity of a release on a case-by-case basis.
(See also.) Coughlin has since pled guilty to fraud, was sentenced to 27 months of home confinement, and ordered to pay $400,000 restitution. Yesterday, the Arkansas Supreme Court unanimously held that that Wal-Mart's suit to recover retirement benefits can go forward on a theory that the release was fraudulently induced, notwithstanding the language in the release that both parties waived all claims, "known and unknown." (cross-posted at Overlawyered)
In Daubert v. Merrell Dow Pharmaceuticals (1993), the Supreme Court ruled that expert testimony is only admissible in court if it passes a strict reliability test, and assigned the role of evidentiary �gatekeepers� to federal trial judges. This standard, later codified as Rule 702, has undoubtedly provided significant protection against the worst abuses of junk science since its inception. But has it created a better overall environment for sound scientific evidence? Are courts misusing the rule to bar legitimate scientific evidence? Do judges administer Daubert standards effectively? Are there lingering problems caused by experts being chosen and paid by the parties to the case? What are the future opportunities for reforming the use of scientific expert testimony in adversarial litigation? In his new article �Expert Witnesses, Adversarial Bias, and the (Partial) Failure of the Daubert Revolution,� George Mason University School of Law professor David E. Bernstein addresses these questions and suggests that increased use of court-appointed experts would represent a significant improvement.
At this AEI event, Professor Bernstein will present his paper, followed by a panel discussion with Edward K. Cheng of Brooklyn Law School; defense attorney Joe G. Hollingsworth of Spriggs & Hollingsworth; Deborah Runkle of the American Association for the Advancement of Science; and epidemiologist David Michaels of George Washington University, who directs the Project on Scientific Knowledge and Public Policy (SKAPP). Ted Frank, director of AEI�s Liability Project, will moderate.
Evolving infectious organisms are a major threat to human welfare, and in a Wednesday WSJ op-ed Manhattan Institute Senior Fellow Peter Huber says that our regulatory and tort environment discourages the rapid deployment of pharmaceuticals and vaccines that will be needed to cope with tomorrow's superbugs. "Germs no longer need to be smarter than our scientists, just faster than our lawyers." (fuller City Journal version)
A plaintiffs' lawyer recycles some old State Farm emails and calls them a smoking gun, and the Associated Press and Clarion-Ledger repeats his story uncritically. David Rossmiller posts the emails and lets you know what the plaintiffs' lawyers (and the newspapers) left out. More in selective and twisted readings by plaintiffs' lawyers: Jan. 4 and Nov. 10, 2005.
Retired 61-year-old Lowell Berwick had a family history of coronary heart disease, a previous heart attack, and heart bypass surgery, but sought to blame his second non-fatal-heart attack on his ten months of Vioxx usage. His trial was scheduled to take place in California state court Tuesday, but he dismissed his claims with prejudice on the eve of trial. About half of the Vioxx cases scheduled for trial so far have been dismissed or postponed by plaintiffs; Merck has won two thirds of the remainder. More than 1225 Vioxx cases have been dismissed with prejudice. I've previously discussed the phenomenon of voluntary dismissal in Merck litigation.
Sell your house now: a few weeks ago we ridiculed Barney Frank's proposal to hold investors liable for purchasing mortgage-backed securities in the secondary market if any of the underlying mortgages were actionable. The measure would effectively abolish the $2.12 trillion secondary market for mortgages, which would cause an economic collapse of the American housing market, with repercussions across the entire economy similar to Japan's decade-plus-long deflation, all for the benefit of a handful of trial lawyers.
Now, via Kirkendall, we learn that Bloomberg is reporting that Spencer Bachus (R-Ala.), the lead Republican on the House Financial Services Committee, supports the legislation. Is it too much to ask that at least one of the two parties in the House put someone who understands financial services in a leadership position on the House Financial Services Committee?
The law school of Roger Williams University in Rhode Island is perhaps best known to readers of this site as the home base of Prof. Carl Bogus, a vocal defender of the U.S. tort system and the author of the not-satirically-titled book Why Lawsuits Are Good for America. A week from Friday, April 20, the school will be sponsoring a symposium entitled "Genuine Tort Reform". "For decades," the conference agenda notes disapprovingly, "the term 'tort reform' has been used by those who wish to curtail the civil justice system". The "genuine" reform that will be discussed at the conference, we may infer, will be more likely to involve the expansion of chances to sue.
On behalf of the conference, it can at least be said that the ideological lineup of its speakers runs the gamut from A to, oh, maybe L or M; an actual moderate or two like Yale's Peter Schuck can be found in the mix, along with the predictable line-up of pro-tort stalwarts from Marc Galanter and Neil Vidmar on down. It would only have spoiled the tone, no doubt, to invite any strong critics of the modern torts revolution, who might bring the contagion of "non-genuine" reform ideas. According to the event page, the symposium "is supported by a generous grant from the Robert L. Habush Endowment" -- Habush, of course, being the well-known Milwaukee plaintiff's attorney and former ATLA president. The agenda of the conference is here (PDF), and its brochure (also PDF) is here. Observe, by the way, the brochure's URL: http://law.rwu.edu/admin/uploads/atla.pdf. What is that concluding "atla.pdf" all about, do you think?
The Roger Williams lineup might be hailed as a model of balance and judiciousness when compared with the ideological cast of this New York Law School "Plaintiff's Bar Symposium" last spring, sponsored by NYLS's Center of Professional Values and Practice, in which the major topic of dispute appears to be whether America's plaintiff's lawyers deserve blame for not filing more suits than they do. For those who care about these things, the Peck/Vail paper (PDF) has a critical mention of yours truly.
Lest it be imagined that the problem of attorney-subservient expert testimony is unique to this country, here's an account by BabyBarista, a highly popular British law blog, of "Dr4Hire", an orthopedic surgeon with a nice little sideline in whiplash:
�Now. Turning to the next issue, Dr4Hire. Why didn�t you mention the second accident in your medical report?�P.S. 7:30 a.m.: Eric Turkewitz calls to my attention -- and I should have been observant enough to catch in the first place -- the notice on the "BabyBarista" site, "This is a fictional account of a pupil barrister undergoing the trials of pupillage at the English Bar. It is not based on fact." So this particular account should be regarded as fiction (although fiction which seems to strike many of the commenters as quite consistent with experiences they have had in the real world of British law).
�Because I didn�t want to damage our case.�
�Yes�I understand. Now, let�s see if that can perhaps be phrased more�how shall I put it�independently. Might it be that you considered it such a minor accident as to be irrelevant?�
�Yes, that might very well be. Quite.�
In our newest featured column, Ted analyzes the state of play in class actions (as distinct from individual lawsuits) arising from the sale of the Merck painkiller Vioxx, the "vast majority" of which fall into one of four categories: 1) personal injury, 2) medical monitoring, 3) consumer fraud, and 4) shareholder/securities claims. While it is possible that some or many individual suits against Merck will do well, it would appear that the prime constituency likely to benefit from the class-action theories is the lawyers themselves; of the various plaintiff groups, perhaps the likeliest to obtain a big settlement (paradoxically?) are large businesses arguing that they overpaid for Vioxx in the course of running employee health insurance plans.
The California Employee Rights Blog, put out by the plaintiff's-side Peters Law Group, had a very curious post last month endorsing an idea called the "No Bad Apples Rule":
Employers could avoid a LOT of lawsuits if they would just follow the "No Bad Apples Rule", which has its origins in a book written by Dr. Robert Sutton. ... The basic premise of this rule is that employers refuse to allow employees who are disruptive, excessively arrogant, rude or downright mean to work in their company. Often these employees are kept around because they are the top salesperson in the office or some other performance-based reason.
Gosh, that does sound like a good plan, doesn't it? Just identify the bad employees and show them the door. What could be simpler? And no doubt companies that identify and bounce antisocial team members do succeed in avoiding many lawsuits arising from customer and co-worker dissatisfaction.
But wait a minute. Isn't California one of the states that brought us modern employment law, with its array of legal doctrines creating new rights to sue an employer who -- perhaps on incomplete or less-than-objective evaluation -- decides that certain employees are "bad apples" and fires them? Isn't the decision to can an employee on such grounds as perceived arrogance, a high-conflict personality, "poor attitude", etc., exactly the sort of thing that a lawyer would seize on to portray as subjective and indefensible, most especially when actual performance as measured by output was adequate or better? And in fact, the annals of California employment law are full of instances in which exactly this sort of employee did sue when fired, and got past summary judgment with a wrongful-firing claim.
It's true that the California Supreme Court has pulled back a good deal from its former enthusiasm for wrongful-firing litigation, with the result that employers are not in as much legal jeopardy as they once were if they try to eject the abrasive and uncooperative personalities from their payroll. But those pro-employer developments have taken place over the vociferous protests of plaintiff's-side employment lawyers. Is this the start of a new critique of employers for not firing enough?
Hoffman-Roche "does not comment on pending litigation," but the plaintiffs lined up against it alleging Accutane (isotretinoin) is responsible for gastrointestinal diseases do, so the resulting National Law Journal article is remarkably one-sided, even omitting that the Accutane plaintiffs just suffered a big loss in the New Jersey Supreme Court. The judge for 347 cases pending in New Jersey state court is Judge Higbee; the first case is scheduled for April 16 in Madison County. The plaintiffs' attorneys have already won a $2.8 million malpractice verdict in Florida for an improper prescription.
No study has proven a link between Accutane use and inflammatory bowel disease. (Indeed, the main web evidence of Accutane use and IBD are plaintiffs' attorneys' webpages.) The Accutane warnings acknowledge that inflammatory bowel disease is considered a possible side effect of Accutane usage. (Roche has changed its warnings more than once.) But the National Law Journal does not care to share the plaintiffs' theory of liability. While the attorneys only have 400 or so plaintiffs signed up, they hope for publicity to sign up "thousands." Well, yes: 0.2% of Americans suffer from inflammatory bowel disease, and five million people took Accutane, so just random chance means that there are at least ten thousand people who can try to blame their IBD on Accutane.
Note that for all the talk about how the recent Merck victory in Madison County suggests that its "judicial hellhole" days are over, plaintiffs' attorneys sure still seem inclined to expedite cases brought to that jurisdiction.
Via Kranenburg, interesting Financial Times article floating a different theory of the capital markets competitiveness crisis: during the late 1990s various U.S. domestic factions demanded that capital markets be closed to Chinese and Russian capital issuers, on geopolitical or human-rights grounds. The result? Fear of future sanctions, or other forms of "political risk", now keeps issuers from those countries and elsewhere distrustful of U.S. capital markets. So at least argues Benn Steil of the Council on Foreign Relations, who stated his case at greater length in a 2005 paper. P.S. Great minds think alike etc.: another version ran in the Apr. 5 New York Sun.
New York has by far the nation's most employer-hostile law when it comes to construction injuries caused by falls: it simply presumes employers' fault for such injuries, and subjects them to tort-style damages for them, separate from, and over and above, workers' comp awards. The law "applies to every form of building, from Trump's glitziest tower to a strip mall in Poughkeepsie," notes Jon Coppelman at Workers' Comp Insider. And while the law does offer substantial financial balm to workers who suffer calamitous falls from, say, skyscrapers under construction, it "also pays the painter, standing on a bucket in a closet, who injures himself in a fall totalling 24 inches." Gov. Pataki unsuccessfully sought the law's repeal some years back, but the Assembly refused to go along; small businesses everywhere from Rockland County to Rochester to Buffalo are up in arms against it. Nonetheless, the cause was omitted from the supposedly comprehensive workers' comp package signed into law last month by Gov. Spitzer.
More: According to Eric Turkewitz, the above description overstates the difficulties the law presents to employers:
it does not apply to the recalcitrant worker whose injury is brought on by his/her failure to use safety equipment that has been provided, nor to the worker who is injured solely due to his or her own negligence.
The claim that strict liability applies to "any injuries resulting from a fall" is simply wrong. There is no liability without a violation of safety standards, and that violation must have been a cause of the accident.
It is generally accepted that it is inappropriate for expert witnesses to be compensated based on the success of the case because of the fiction that these witnesses are neutral arbiters who just happened to be hired by the attorneys to help the jury. If nothing else, the fact that the expert has a financial stake in the case would affect his or her credibility with the jury. (Of course, many professional experts effectively have financial stakes in the litigation in that they know that they are auditioning for future fees in future cases based on their performance in this case.)
So it is a bit of a scandal, as David Nieporent reports at Overlawyered, that a New Jersey law firm attempted to stiff its witness in a losing case out of his fee, and indicated that the loss was the reason he should not be paid. (Howard Erichson also expresses dismay.)
There was an interesting accidental disclosure in the comments section to David's post by an anti-reform writer: "In my stint at a personal injury law firm, I saw several expert witnessess cut their fees when a case was lost or settled for less than was expected. But I *never* saw one raise his or her fees in case of a win."
Of course, a standard rebate of the fee for a losing expert witness is economically indistinguishable from a bonus for a winning expert witness: there is no economic difference in incentive between a $200/hour expert who agrees to halve his fee in the case of a loss and a $100/hour expert who gets a $100/hour contingent bonus in the case of a win. What Justinian Lane is describing is a violation of Michigan* Rule 3.4(b) (as per the official commentary), and apparently a violation so commonplace at the plaintiffs' firm he worked at that no one thought to tell the paralegals that there could be adverse repercussions from talking about it.
As a practice matter, it would seem to behoove attorneys on both sides of the aisle taking depositions of experts to ask the expert whether he or she has ever received a bonus or offered a rebate for expert testimony and whether such arrangements or expectations are in place in the current case.
*(Correction, 8:20 PM: Justinian writes that the law firm where he worked as a paralegal was in Texas, not Michigan. Texas ethics law is not materially different on this question; the section number, 3.04, is even the same. I regret the geographic error, which does not change the analysis of this post.)
More formidable, because less out-of-touch, than many of his colleagues:
It is fair to say that only George W. Bush did more than Schumer to help the Democrats retake the Senate last year. As chairman of the Democratic Senatorial Campaign Committee, Schumer recruited such ostentatiously centrist candidates as Claire McCaskill, Jim Webb, Jon Tester, and Bob Casey, and he raised enormous amounts of cash to fund their campaigns.
Liberal elitism, he said, as he stirred Sweet 'N Low into his tea with a chopstick, alienates middle-income families from the Party. "Middle-class people don't think everyone should have to drive a tiny little car to achieve improvement in global warming," he said. Invoking opponents of expanding the tuition tax credit to the middle class, he went on, "If we listened to the New York Times editorial board, we'd have twenty-one votes in the Senate."
-- profile by Jeffrey Goldberg, "Talk of the Town", The New Yorker, Mar. 19 (not online).
With Turkewitz and Day both mentioning the annual Healthgrades study on medical safety in hospitals, and implying that it had implications for medical malpractice law, it is worth remembering our 2006 post pointing out that when Healthgrades ranked states that year, there was no clear relationship between Healthgrades ratings and whether the state had noneconomic damages caps. Of course, there are confounding variables, but it was interesting that states with caps were more likely to be in the above average category.
Mark Steyn is friendly with Conrad Black, so perhaps that is why his reporting of the Conrad Black trial is markedly different than that of Reuters. (In particular, Creasey's accounting of the Bora Bora trip, which Steyn ridicules in the language of Black's attorney, doesn't seem so far from reasonable principles of basic cost accounting, as described by the Chicago Tribune). But if Steyn's entertaining account is at all close to reality, prosecutors have a problem.
For years Rhode Island was alone among the fifty states in its willingness to join the Motley Rice-led campaign against former makers of lead paints and pigments, but now Ohio attorney general Marc Dann has enlisted his office as a state plaintiff as well. (Cleveland Plain Dealer via Adler @ Volokh, Genova, Right Angle Blog). For earlier aspects of the Ohio lead paint story, including the state legislature's clear expression of disapproval of such actions, follow this link; for background on the Rhode Island suit, this one.
P.S. A related observation, from one of Jane Genova's informants: "By where Sherwin-Williams' stock is, Wall Street is betting that no money will be won by any state or city or lost by any former lead paint company."
AEI's Peter Wallison:
Although the public, the media, and even lawmakers seem to think that financial statements accurately record what happened in the past, financial statements prepared under Generally Accepted Accounting Principles (GAAP) are largely shaped by management estimates and forecasts about an unknowable future. Although the use of apparently unambiguous numbers gives the impression of precision, it is an illusion. This places auditors in an impossible position. They are unequipped to assess the accuracy of management estimates and forecasts, yet their standard opinion concerning financial statements suggests that they have. The Public Company Accounting Oversight Board (PCAOB) has the authority to change the format of the auditor's attestation, and thus to relieve auditors of liabilities they do not deserve and cannot avoid. PCAOB action could go a long way toward reducing the liabilities of the major auditing firms--one of the key dangers to the global financial system recognized in all the recent reports on the regulation of U.S. capital markets.
Deliberations covers "law, news, and thoughts on juries and jury trials"; it "is written by Anne Reed, a trial lawyer and jury consultant in Milwaukee, Wisconsin." The Legal Scoop: Law Students' Perspectives on the Law, published by students at four law schools in Tennessee and Mississippi, includes posts on topics as diverse as the "Super Lawyers" marketing scheme, religious paintings in public schools, and ringtone royalties. And Split Circuits, by lawprof A. Benjamin Spencer (Richmond), exemplifies the sort of specialization that blogs are so good at: it is "dedicated to tracking developments concerning splits among the federal circuit courts."
Such a long, hectically upbeat article about the controversy, and the Tiimes couldn't find a single quote from anyone who would directly criticize the bossyboots mayor or his health commissioner for their assault on the freedom of the kitchen and of the table? The closest the article gets is toward the end, when one source criticizes the city's restaurant inspection as being too geared toward monetary fines, while former Mayor Koch expresses a very mild sentiment about how food is supposed to be fun. Are the likely sources with more pungent anti-nannyism views, in particular restaurant chefs and owners, now too scared to talk? Or did the Times not even try to line up such sources?
The other day we linked to a post by David Bernstein at Volokh Conspiracy soliciting examples of bogus experts and spurious forms of expertise. The post called forth many interesting comments, among them these from Brian G. (Tomfoolery of the Highest Order), beginning thus:
I work at a civil defense firm. How about I forward you the deposition testimony of just about every expert I have come across? That should give you enough material for a year or so. My favorite is the "expert" on the effect of the lack of warning labels a Plaintiff used in an automobile accident case. According to him, because the intersection did not adequately warn motorists that traffic would cross in front of them when the light was red, and because the interior of the automobile did not contain warning stickers that adequately warned the operator of an automobile that the failure to apply the brakes in the face of oncoming traffic, Plaintiff could not be considered contributorily negligent for running the red light in his "expert opinion." Anyone involved in civil defense knows this happens all the time, and most everyone here could probably come up with an example even more sillier that this one.
And following with this:
One more example to share. An "expert" on "elder health" once said that a woman's medical condition could not have been caused by her lack of estrogen in certain areas and there was no evidence that would suggest to him that the decedent was post-menopausal. The decedent was 91 years old.
You can get an expert to tell you that there is no evidence proving or indicating that Julius Caesar is actually dead if you pay him or her $400 an hour.
And, finally, this:
OK, just one more. We deposed an "expert" who billed himself as an "accident reconstructionist." He said that his investigation concluded that Defendant was cause of the accident, and not the Plaintiff. Here is a summary of his analysis. (If I was at the office, I'd write it word for word)
"In reaching this conclusion, I give no weight to the testimony and statements of [named eyewitnesses]. Witness are often incorrect as to what they witness when a traumautic accident happens, and the trauma tends to make witnesses think they saw something they did not. Instead, according to my calculations of the tire tread marks (taken about 6 months after the accident!), the trajectory of the Defendant's vehicle in relation to the Plaintiff's vehicle as diagrammed in the police report, the directional angle of the sun at that time of day, the Plaintiff's deposition, and the deposition testimony of [ambulance driver who testifed to what the Plaintiff told him], it is clear that Defendant was the sole cause of the accident."
At the settlement conference, the federal judge told Plaintiff's counsel that if we were to file a Daubert motion, all we would have to do is write that Defendant moves to exclude and attach his report and it would be granted. And, if that is all he had to show liability on behalf the Plaintiff, he'd better settle for whatever he can get that day because Plaintiff would get nothing, either on an MSJ or at trial.
Plaintiff initially demanded the policy limits of $500,000. He got $6,000, only for nuisance value. Wonder how much of that went to this "expert."
So wrote Boone Circuit Court Senior Judge William Wehr in a motion denying both Stan Chesley's motion to dismiss a suit against him in the Kentucky fen-phen fee scandal. But, with plaintiffs' summary judgment motion also denied, a jury will ultimately decide how much that "more" should be, and whether a fiduciary duty was broken. The same order denied a request by Melbourne Mills to reconsider the finding that a fiduciary duty was broken. Chesley's attorneys state that he will pay back $7 million of his $20 million fee. (Jim Hannah, "Chesley made too much", Cincinnati Enquirer, Apr. 5). Earlier: OL Mar. 26 and links therein. (Cross-posted at Overlawyered.)
The latest Class Action Watch from the Federalist Society is out:
In this issue, Ted Frank looks at the issues surrounding �the Vioxx class actions� against the drug company Merck, which have continued to mestastasize since the recall this fall. Margaret Little considers the wider ramifi cations of the indictment of Milberg Weiss, the nation�s largest class action firm. David Owsiany reviews the Ohio controversy, in which a class action firm was recently and for the first time barred from a court over deceitful representation in an asbestos litigation case. John Shu provides an overview of the late Verizon settlement, one of the largest in American history. Tara Fumerton weighs a possible trend in Illinois supreme court rulings, and two of our members ask whether the welding fume litigation has come to an end.
Hey, I just write the American.com column about the Kentucky fen-phen fraud, not the headlines. Earlier on Overlawyered: Mar. 26 and links therein. (Cross-posted at Overlawyered.)
What disappoints me is that Professor Silver draws conclusions that outrun his data, and not for the first time. Silver takes reasonable empirical research that discusses one question, and then proceeds to draw conclusions such as "the connection between verdicts and premiums is weak" that the study either says nothing about (there's no attempt to relate haircuts to premiums in the study; and there's no attempt in the study to relate jury verdict sizes to pre-trial settlement amounts, which far and away exceed post-trial settlement amounts) or contradicts (as Silver himself acknowledges, the study finds that ultimate payment by insurers in a given case is highly correlated with jury verdict size).
There's sloppiness elsewhere: there's no acknowledgement in the post that haircuts in part reflect the risk that the jury verdict will be overturned. There's also no evidence in this study that low insurance limits reflect attempts by doctors to evade liability, though I understand Hyman et al. are looking at the question of insurance limits in another study.
Silver also misstates the results of the study when he says "A Texan would be right to say that when a jury awards more money than a doctor�s insurance policy covers, the portion of the verdict above the policy limits ain�t worth diddly-squat." I lived in Texas for half my childhood, and Silver's definition of "diddly-squat" differs from mine: as the study itself states, insurance limits are not an absolute cap on settlement amounts because of the risk of Stowers bad-faith awards—and there is great reason to believe that the study's data source failed to fully account for the full amount of settlement payments made. It is especially surprising such a definitive overstatement comes from Silver, an academic who makes a point of stating that politicians are making "false claims" when he can pick nits with a sound bite issued by an interest group. I have no objection to Professor Silver adopting the rhetoric of advocacy, but I do object when he cloaks it with academic veneer or holds those he disagrees with to a higher standard of precision than he holds himself. (Update: Silver has an addendum to his post suggesting a "truth clause for insurers" in their public statements on malpractice issues (with "truth" presumably to be determined by Silver's standards) stating "sauce for the goose = sauce for the gander" because attorneys' advertising is regulated. The irony is thick, even aside from the fact that lawyers are not precluded from making false statements about public policy issues, which is the correct analogy.)
I will reserve discussion of the problems I have with the methodology of the study for a later date, but there's much in the study and post that I agree with Professor Silver about. In particular, I agree with Silver's point in the post that one should be looking at "insurers' actual costs."
If one does look at "insurers' actual costs" (the readily available data of which Martin Grace and I reprinted in the AEI Liability Outlook in 2006), one does find that premium increases earlier this decade reflected costs rising faster than premiums. Recent reforms and premium increases stemmed the tide such that we seem to have reached a new equilibrium in the malpractice insurance market. But the problems with malpractice litigation are such that damages caps are not a long-term viable solution, and aggressive rethinking of the status quo is needed to resolve both medical safety issues and the perverse and wasteful effects of modern-day malpractice litigation. As Silver has written elsewhere, "It's the incentives, stupid."
Bloomberg reports that Pfizer is premiering a two-and-a-half-minute commercial (via Childs) for its COX-2 Celebrex that acknowledges that all NSAIDs have cardiovascular risks, and then argues that the benefits of Celebrex exceed the risks. The advertising will be an interesting empirical test of the failure-to-warn theory of causation: if it increases sales of Celebrex, it shows that additional information makes consumers more likely to use the drug, but if the lengthy warnings decrease sales, it would support plaintiffs' lawyers' contentions that the lack of a warning caused people to take the drug when they wouldn't have. (One presumes that Pfizer, before blowing $200,000 per ad, focus-grouped this fairly extensively and is confident that the advertising will increase sales.)
Not that facts make much difference in these litigations: worldwide Vioxx sales went up after Merck included the VIGOR study (which had previously been released to doctors) in its warnings, yet plaintiffs' attorneys persist in arguing that Merck's delay in negotiations with the FDA over approval of the content of those warnings should result in liability.
Celebrex sales were nearly halved in 2005 in the wake of bad publicity over Vioxx and a moratorium on advertising by Pfizer, but Pfizer is still selling about two billion dollars worth of the drug a year while facing a fraction of the lawsuits Merck is after the latter withdrew its COX-2, Vioxx, from the market.
As the AP reports, infamous plaintiffs' attorney Paul Minor, who amassed a fortune from asbestos, tobacco, med-mal and automobile suits, was found guilty of 11 crimes, ranging from racketeering to bribery. He faces up to 95 years in prison.
Convicted of receiving his bribes were former Circuit Judge John Whitfield and former Chancellor Wes Teel. Whitfield could get a 50-year term and Teel could get 25 years.
Sentencing for all three was set for June 14.
Wally discussed this case two weeks ago, appropriately noting the NY Times' favorable treatment of the likes of Minor and Dickie Scruggs. Here's hoping they will find news of Minor's conviction fit to print.
Benjamin Barton of the University of Tennessee Law School has an interesting paper on SSRN:
This Article answers this question with the following jurisprudential hypothesis. Many legal outcomes can be explained, and future cases predicted, by asking a very simple question: is there a plausible result in this case that will significantly affect the interests of the legal profession (positively or negatively)? If so, the case will always be decided in the way that offers the best result for the legal profession.
The article presents theoretical support from the new institutionalism, cognitive psychology and economic theory. The Article then gathers and analyzes supporting cases from areas as diverse as constitutional law, torts, professional responsibility, employment law, evidence, and criminal procedure.
The questions considered include: why are lawyers the only American profession to be truly and completely self-regulated? Why is it that the attorney-client privilege is the oldest and most jealously protected professional privilege? Why is it that the Supreme Court has repeatedly struck down bans on commercial speech, except for bans on in-person lawyer solicitations and some types of lawyer advertising? Why is it that the Miranda right to consult with an attorney is more protected than the right to remain silent? Why is legal malpractice so much harder to prove than medical malpractice? The Article finishes with some of the ramifications of the lawyer-judge hypothesis, including brief consideration of whether our judiciary should be staffed by lawyer-judges at all.
I've previously noted the difference between the treatment of legal malpractice and medical malpractice in arguing that the substantive scope of medical malpractice liability should be narrowed, and I'll certainly be citing this paper when I expand those posts into a full-length article. But Barton, I think, misses an obvious repercussion of his hypothesis: it would provide an additional explanation for the relative hostility of the judiciary (and legal academy!) to legislative liability reform efforts. It is not entirely clear to me that non-lawyer-judges are the solution, however.
Matthew C. Katz, executive director of the Connecticut State Medical Society, in the Hartford Courant:
Each year, it's harder for Volpintesta [Edward Volpintesta, a 62-year-old family physician in Bethel, Ct.] to stay in business. His malpractice insurance costs $15,000. His annual salary is $75,000. That's not a typo - it's fairly typical for a primary care physician in Connecticut. For the record, Volpintesta plans to drive his 5-year-old Toyota until it stops running. ...
Dr. Jim Watson, a board-certified obstetrician, stopped practicing obstetrics and major surgery and went to a part-time schedule in 2006. Watson, Windham Community Hospital's 2005 Physician of the Year, cut his hours severely to reduce his annual medical malpractice insurance premiums from $120,000 to $25,000.
Watson wants to retire, but he can't afford to. His practice changed malpractice carriers two years ago to cut costs. Watson must carry the insurance for five years after the change, just in case of a claim. The only way he can retire is to pay his malpractice insurer close to $100,000 up front to cover the possibility of a malpractice suit.
As we've chronicled in this space -- and as Rick Esenberg of Marquette recently documented in a Federalist Society paper (PDF) -- the Wisconsin Supreme Court has lately been under the sway of a majority that seems keen on knocking down impediments to litigation, even if that means stretching the law. Among the victims of its law-stretchings have been doctors, lead paint defendants and product manufacturers generally. Today Wisconsin voters will determine whether the court lurches even further in a pro-litigation direction, as seems likely if liberal Madison attorney Linda Clifford fills the vacancy left by the court's most conservative justice. Clifford's rival, conservative Annette Ziegler, had been the front-runner but has been hurt by charges that she did not follow recusal rules when hearing cases with a connection to her husband's business affairs, though there's no sign that either Ziegler or her husband profited financially from her rulings.
Wisconsin was once known for a relatively polite brand of politics, but the race has been an extremely nasty one, with both sides (prominently including trial lawyers in Clifford's case) pouring in money. John McAdams has some coverage. A "progressive" group called One Wisconsin Now is attacking Ziegler for having done asbestos defense when she was in private practice. The Milwaukee Journal Sentinel has endorsed Clifford, delivering itself of the fine-sounding sentiment that "the law must evolve to meet changing needs". Update: Ziegler wins by decisive margin.
Justice Kennedy sides with the expansive-standing wing of the Court, which rules 5-4 that (in Jonathan Adler's words) "(a) states have standing to sue the EPA alleging injuries from climate change, (b) the EPA has the authority to regulate greenhouse gases as 'pollutants' under the Clean Air Act, and (c) the EPA did not adequately justify its decision not to regulate greenhouse gas emissions from motor vehicles under the Act." Jonathan Adler has breaking coverage. Earlier: AEI event. Elsewhere: SCOTUSblog.
As Justice Roberts notes in his dissent, the expansion of standing makes it seem like "a lawyer�s game, rather than a fundamental limitation ensuring that courts function as courts and not intrude on the politically accountable branches." I've previously noted the tendency of the Rehnquist Court to rule in such a manner to give them more flexibility to rule on ever larger areas of American life in future cases, and this opinion from what is becoming the Stevens/Kennedy Court is certain to increase the use of regulation through litigation.
Update: Adler has a roundup of links.
Posner does make the mistake of comparing the status quo with utter anarchy; since no one proposes to completely abolish medical malpractice liability, for example, he of all people should know that this is a question of how well the tort system performs at the margin. Does the US tort system produce safer products and better medical care than European systems that cost half as much? I haven't seen any evidence of that; indeed, the Rubin-Shepherd study implies that at the margin, the tort system's effects on deterring safety innovation and medical practice adversely affects public health and safety. (That said, one can fairly quibble with the way the PRI study incorporated the Rubin-Shepherd results into their final number.)
I'm not completely persuaded that one can extrapolate Kessler and McClellan's defensive medicine findings in the cardiology context to all medicine, but Posner makes a mistake in thinking that all defensive medicine has at least some offsetting benefits at the margin. Not so. The cardiology procedure Kessler and McClellan measured was chosen by the two economists precisely because it was a procedure that had no measurable effect on mortality, and other defensive medicine procedures such as CAT scans and biopsies may well do more harm than good at the margin even aside from the wasted resources.
Posner is correct that the social loss of products from the marketplace is a loss of consumer surplus, and that it is imprecise to simply measure the value of the lost sales: but one cannot definitively say that total consumer surplus is more or less than the value of that loss of products. If one starts to consider the third-order effects of jobs lost because of the lost sales, the number from lost innovation can easily be larger than the number PRI came up with. For better or worse, we measure the size of our economy by measuring gross national product rather than consumer surplus, and PRI did nothing wrong in using a similar metric.
Update, May 2: PRI responds.
Per the WSJ (via Childs), "Traditionally, the nation's top corporate law firms have shunned contingency-fee work -- often cases that target big corporations for punitive damages -- for fear of alienating their core clients. But driven by pressure to boost profits, more such firms are crossing over to what some lawyers call the 'dark side.'"
Lyle Roberts analyzes the Supreme Court oral argument in Tellabs v. Makor Issues & Rights, which will decide the scope of the PSLRA pleading requirements. Roberts also has a list of briefs and roundup of media and blog coverage. Potential swing vote Justice Kennedy seemed inclined to give the PSLRA teeth.
Unable to work long hours or tackle out-of-town business trips because you're too busy taking care of your kids, or parents? Sue anyway when you don't get that promotion. The legal basis for such claims can often appear rather shaky, but hopeful backers are pushing them as part of effort #1,291 to change the world by suing employers (via Marriage Debate).