When the only tool in your toolbelt is a hammer, every problem looks like a nail. The Supreme Court has increasingly recognized this in its recent antitrust jurisprudence by moving away from inflexible per se rules of anticompetitive conduct that fail to differentiate between truly anticompetitive acts that hurt consumers and acts that merely hurt competitors: they are not the same thing. While the Court's Con Law decisions from yesterday got all the attention, the Leegin antitrust case, also handed down yesterday, marked another step in the court's walk away from per se standards toward a more flexible case-by-case analytical standard. Randy Picker explains the case at the University of Chicago Law School Faculty Blog. Here is a pdf of the case itself.
June 2007 Archives
This post by David Nieporent at Overlawyered got me thinking about enforcement of intellectual property rights. In my view, IP rights are more likely to be underenforced than overenforced, but this very fact leads holders of IP rights to seek to make public examples of alleged infringers as a warning to all the others out there that can't be caught. One problem with enforcement that leads to ham-handed cease-and-desist warnings and stupid litigation is that company higher-ups learn of infringement and set a policy of dealing with it, but the people actually charged with doing so have no discretion or fear looking like they are insufficiently zealous in carrying out company priorities. This story in the Oregonian about a woman sued for music piracy despite substantial evidence the real culprit was someone she didn't even know may be an example of that tendency.
If you are keeping a list of national disgraces, your list is incomplete unless it includes the federal National Flood Insurance Program. The NFIP is set up and run in a way no state insurance commissioner would allow a real insurance company to be run: for example, the NFIP does not even go through the motions of capitalizing itself with reserves to meet anything other than an average year of losses. These chickens came home to roost when Hurricane Katrina hit, leaving the NFIP some $20 billion in debt to the Treasury, and since it is run as a political program rather than a true insurance program, it cannot raise premium rates to pay this money back or even build sufficient reserves for the next big disaster. Congress is currently considering some kind of fix to this broken system, and here is a report by the Congressional Research Service on proposed measures to make the NFIP more sound. It should be remembered the NFIP exists in the first place because homeowners policies sold by private insurers exclude flood damage from coverage, and the reason this coverage is excluded is that it creates potentially massive uncapitalized losses that can bankrupt an insurer, and when losses exceed reserves, the state regulators show up to padlock the doors. So when the federal government created the NFIP in 1968, it knew what it was getting into, but has often ignored economic reality.
The current proposals in the U.S. House include allowing the Federal Emergency Management Agency, which oversees the NFIP, to charge actuarially sound premiums for businesses and for second homes. However, the proposals do not include allowing the NFIP to charge real rates for primary residences. The proposals also include dramatically raising the penalty for mortgage lenders that fail to require flood insurance in high-risk areas. There are some other good ideas: allowing the NFIP to sell new lines of insurance, such as business interruption coverage, is a step in the right direction. But the proposals don't address what to do about the $20 billion the NFIP owes the Treasury -- there does not appear to be any option other than to forgive the debt, because raising premiums to cover the shortfall is politically unpalatable. One depressing thing about the report is the implicit admission that the incentive to buy flood insurance is frequently minimal, given that the report acknowledges that if people don't buy flood policies, they often will be "insured" directly from the Treasury anyway through disaster relief. Here is a post I wrote with further discussion of the report, and here is a past post I wrote on a related problem -- why people disregard flood warnings and the need to buy flood insurance.
Judge Weinstein, he of the creatively lawless class-action certification (e.g., May 2005 (Simon II) and Oct. 1 (Schwab)), has refused summary judgment in a similarly questionable putative class in In re Zyprexa Products Liability Litigation, No. 04-MD-01596. The putative class plaintiffs allege no physical injury (they cannot, as this would create wildly individualized issues). Nor do they allege that they were sold a drug that failed to safely and effectively treat the conditions for which it was prescribed. (As even Weinstein concedes, "There is little doubt about the usefulness of Zyprexa for both on-label and some off-label purposes.") Rather, they allege that Eli Lilly's speech about the drug, while truthful, increased demand for the drug. (Why such a suit does not run afoul of the First Amendment is not immediately obvious, nor is it addressed by Judge Weinstein.) The goal is one Roy Pearson can identify with: bring a lawsuit seeking wildly inappropriate damages through overbroad application of consumer fraud laws to a situation where noone is actually injured. Weinstein refused � 1292(b) certification of interlocutory appeal until after class certification is decided, however, which will prevent the Second Circuit from correcting his mistake until after Eli Lilly spends tens (and perhaps hundreds) of thousands opposing what may be a futile class certification motion and even more on discovery waiting for the opportunity for a Rule 23(f) appeal.
Coincidentally (but perhaps not out of happenstance), must-read drug-law-bloggers Beck and Herrmann address precisely the questions at issue in Zyprexa in lengthy detail in a post today, but do so without once mentioning the word Zyprexa, simply by analyzing in detail a decision out of the Southern District of Florida about a case with an identical theory, Prohias v. Pfizer. Unlike Judge Weinstein, however, Prohias got it right and threw the vast majority of the case out. Judge Weinstein does not cite the May Prohias decision much less attempt to distinguish it or explain why that court is incorrect.
The definition of "intoxication" under New York law does not include impairment due to inhaling chemical substances, says a ruling by the New York Court of Appeals, the state's highest -- no pun intended -- appellate court. The ruling came in a criminal case involving a teen-aged driver who inhaled a mouthful of Dust-Off, a product used for cleaning computer keyboards, and in his intoxicated state almost immediately drove into oncoming traffic, killing an 18-year-old occupant of another vehicle. The court said "intoxication" has consistently been interpreted as applying to alcohol consumption. New York law also forbids driving while under the influence of certain drugs, but the chemical in Dust-Off was not among those listed by the Legislature, which is considering changes to the law to close loopholes. From the New York Law Journal via Law.com.
Florida's insurance "fix" just keeps getting more and more broken. Earlier this year, legislative measures backed by Gov. Charlie Crist were supposed to reign in supposedly abusive practices by insurers (attempts to limit their exposure in a state beset by hurricane losses) and lower insurance rates. Well, the legislative fix so far has been disappointing, lowering rates for homeowners insurance a disappointing 10 percent or so, instead of the hoped for 30 percent or more. That hasn't worked, so Florida is now working on making its next insurance crisis: as Martin Grace points out at RiskProf, one problem is that developers keep putting more and more high-priced property where it is most likely to be damaged by hurricanes, and these properties are unlikely to be attractive to insurers, who have been dropping property policies in the highest risk areas. The result? The state-run insurer, Citizens Property, has to step in, taking on more and more risk. Where does this all lead to? No one knows for sure, but one thing is for sure: Florida will continue to pray to the hurricane gods.
As I mentioned to someone earlier today, writing about Hurricane Katrina litigation is my chocolate, I can't stay away from it or get enough of it. Well, actually chocolate is my chocolate, but Katrina litigation is right up there with it. Tort baron Dickie Scruggs has pretty much had things his own way in Katrina litigation, dominating the news cycle, setting the tone of the discussion, coming up with the storylines that make the paper and the evening news. But he hit a patch of ice on the road recently when Judge William Acker of the U.S. District Court for the Northern District of Alabama referred Scruggs to the U.S. Attorney's Office for prosecution of criminal contempt, for allegedly violating the judge's injunction in a case involving the "whistleblower" Rigsby sisters -- two women who worked for a State Farm contractor and secretly funneled documents from their employer to Scruggs in alleged violation of their confidentiality contracts. Here is a recent post I wrote about Judge Acker's ruling, wherein he said Scruggs had engaged in "defiance" of the court, and that may have been the nicest thing the judge said about him.
State Farm, which has been demonized by Scruggs for two years, lost no time in seizing the opportunity, and filed a motion in the Southern District of Mississippi, where Scruggs' cases were filed, asking Judge L.T. Senter Jr. to disqualify Scruggs and the entire Scruggs Katrina Group from lawsuits against State Farm on ethics grounds. The court's electronic docket shows Scruggs' response is due July 16.
Dickie Scruggs has not been used to taking a punch in these Katrina cases, much less a one-two combination to the jaw, and he immediately fired back, filing a lawsuit against State Farm the next day making civil RICO claims against the insurer -- if someone accuses you of an ethics violation, accuse them of a crime. I read the complaint, and as this post from my blog shows, I think the claims are dubious and that the complaint does not even allege all the necessary elements of a RICO claim. Incidentally, I believe in open sourcing: whenever possible my posts contain pdf's of the relevant documents so you can read them for yourself and see if you agree or disagree with me. All three of the posts linked to above have pdf's of the court documents.
This post by Peter Lattman about depression among lawyers got me to thinking: are lawyers really more depressed than other people, or are they just bigger complainers? Studies indicating that lawyers are in fact more prone to depression probably act to relieve the depression of others, who don't like lawyers and are happy to learn attorneys are having a miserable time. Now, if the studies indicated politicians and used car salesmen were also depressed, this news would make many people's day.
The Baltimore Sun reports that Peter Angelos has set his sights on Honeywell, Inc.
The Baltimore lawyer, who made a fortune from asbestos and tobacco, has placed advertisements in The Sun trolling for clients who "have regularly visited Swann Park or have lived near [Baltimore's] Swann Park".
Swann Park lies beside the Middle Branch of the Patapsco River, next to the former site of an Allied Chemical plant, which closed thirty years ago. Tests this year showed high levels of arsenic at the park.
Allied Chemical was acquired by Honeywell International well after the factory closed...
Gary Becker and Richard Posner consider whether calls for increased regulation of subprime mortgage loans will do more harm than good. In his typically esoteric and comprehensive style, Posner points to this latest debate as being part of a continuum of concerns over the morality of charging interest that date back to Medieval Christianity. Both place faith in the opportunities provided by markets and the availability of commodities people want, and view the questionable morality of some subprime lenders as being a relatively small factor in the present default rate. Says Posner: "For government to place a ceiling on price prevents people from buying the commodity who would be willing to pay a higher price, and thus it prevents a mutually beneficial, and therefore value-maximizing, transaction."
I'm reminded that I overlooked an important detail yesterday: to mention who I am and why you suddenly see a new name posting in this space. I am an insurance law litigator at the Dunn Carney firm in Portland, Oregon, and I am guest blogging for Walter Olson this week. Frequent readers may have seen Walter and Ted link to my posts at my own blog, Insurance Coverage Law Blog, where I have been neck-deep in analyzing Hurricane Katrina insurance litigation for many months. Now, I have been a blog reader myself for a long time, much longer than the 18 months I've been blogging, and I know that regular readers of a site usually are ambivalent about guest bloggers -- blogging is pretty idiosyncratic and you can't just plug in someone who is equivalent, especially to someone the caliber of Walter. So instead of trying to be Walter I will just be myself, while attempting to uphold the high standards of Walter and Ted.
Like any forced ranking system where some gotta win and some gotta lose, the U.S. News & World Report's annual law school rankings generate controversy, accusations of arbitrariness and reliance on incorrect measures of value, and frankly, a great deal of anger and angst by law school officials at the scrutiny and pressure to do well in the rankings. One reason the U.S. News list, which first appeared in 1990, has had such staying power is the horrific expense of law school -- consumers want some justification and validation for a spending decision that is often equivalent to financing several luxury vehicles. Another reason is that the list may generally be accurate, at least within a given tier, as Judge Richard Posner observed in a paper quoted in this WSJ story on the rise of several alternative law school rankings.
The story mentions a frequent complaint about the U.S. News list -- it tells the total percentage of a school's graduating class that is employed, but doesn't differentiate between the quality of the jobs or even distinguish between legal and other types of employment. The complaint has some validity, and the rankings are certainly no substitute for talking to current students at a school as well as to recent graduates and lawyers who have been in practice for a few years about their experiences. At many lower tier schools, for example, students are often shocked to learn that quite a large percentage of the school's graduates have to scramble to find jobs, and many have no prospects for employment even while they are being sworn in as lawyers and have loan payments ready to come due. By the time students come to this realization in their second year, they may have dropped $70,000 or more, a sum pretty much in line with what they would have paid at a top 20 school where job selection is much greater. More information from Peter Lattman, TaxProf Blog, and The National Law Journal, which says deans are unlikely to boycott the U.S. News list despite widespread fear and loathing.
The Washington Supreme Court has ruled that a plaintiff's lawyer who collects a contingent fee need not reimburse that fee to the defendant if the decision in the plaintiff's favor is reversed on appeal. The decision came on June 7 (Ehsani v. McCullough Family Partnership, Wash., No. 78353-5, 6/7/07).
Pursuant to a trial court judgment, Sayed Ehsani paid approximately $77,900 to his trial opponents' attorney, David B. Cullen, rather than posting a supersedeas bond to stay the judgment pending appeal. At the direction of his clients, Cullen paid part of the funds to certain of his clients' creditors, retained another portion as his fee, and remitted the balance to his client. The appellate court overturned the judgment. On remand, Ehsani filed a motion for restitution asking the trial court to order Cullen to restore the full $77,900 previously distributed from Cullen's client trust account.
The trial court denied the motion; the court of appeals held that Cullen must repay Ehsani for the full $77,900. But the supreme court reversed, siding with Cullen and the Washington State Bar Association, which took part in the appeal as amicus curiae.
Cass Sunstein has a paper out suggesting that judges and juries consistently overestimate the value of some losses involving so-called hedonic damages, or those that cover foregone gains or opportunities, as opposed to affirmative distress like long-lasting pain. His observations: people who suffer a traumatic event like the loss of fingers or toes or who become paraplegics are able to recover their former degree of happiness relatively quickly, and do not focus on their loss on a day-to-day basis. On the other hand, Sunstein says, consistent low-level pain may be undervalued in that it has a much greater impact on day-to-day happiness. Naturally, however, he concludes that all this supports a greater government emphasis on social welfare and efforts to improve social well-being. The abstract of his paper is available here, and you can easily obtain a copy of the complete text of the paper by e-mail at the same source.
When it was handed down late last year, the decision by federal Judge Stanwood Duval in In re Katrina Canal Breaches Consolidated Litigation was widely greeted with amazement. Judge Duval declared the flood exclusions in a number of insurers' policies ambiguous (and therefore not enforceable) because, he said, they did not clearly exclude flooding from man-made sources like New Orleans' canals, as opposed to floods that are "natural occurrences." Never mind that what caused the New Orleans canal breaches was a natural occurrence called Hurricane Katrina. Randy Maniloff has written an analysis of judicial restructuring of contracts that focuses on the case, which he renames "In re: Breach of Common Sense." Interestingly, he notes that in a prior case with lower stakes, Judge Duval appeared to come out on the other side of the question. See prior posts by Ted Frank on this case here and here.
In what may bring a whole new meaning to the phrase "judicial activism," some have detected an increasing willingness by judges to get off the bench and join the ranks of litigants themselves. For example, the Legal Times reports that in 2005, judges brought 25 libel suits, one-tenth of the number nationwide. (It appears the story is talking only about lawsuits against the media: there surely were far more than 250 lawsuits involving libel claims in 2005). One hesitates to discuss any specifics of the cases brought by the judges -- for fear of getting sued for libel -- but the case of Robert Thomas, chief justice of the Illinois Supreme Court, is notable in that it has inspired some media pushback and claims that the defendant newspaper can't get a fair hearing in Illinois courts. Anthony Sebok thinks the recent $54 million judicial pants suit against a Washington, D.C. dry cleaner and Robert Bork's personal injury suit against the Yale Club are part of trend of judges behaving badly. And then, of course, there was the case of Marion Opala, an associate justice of the Oklahoma Supreme Court, who sued his fellow justices for age discrimination. Via TortsProf Blog and Robert Ambrogi.
Peter Schuck of Yale Law School has a nice Commentary in The American Lawyer (here seen via Law.com in favor of a "qualified regulatory compliance defense" to drug manufacturers' tort liability. FDA approval of a drug or device should ordinarily pre-empt "design defectd" liability, unless plaintiff can show that the manufacturer failed to fully inform the FDA of risks of which the manufacturer was or should have been aware.
A letter in today's Wall Street Journal, responds to an op-ed suggesting that inefficiencies in having multiple doctors treat a single patient adds to health-care costs:
The elephant in the room that Dr. Bach does not mention is the liability physicians face when they do not refer a patient to a "specialist" and something untoward happens. Certainly it is more cost effective for society when care is coordinated more closely by salaried doctors, but when the diabetics' renal functions slowly decline, for example, their physicians better have consulted a nephrologist or there will be trouble. This scenario is played out in triplicate when the patients are more critically ill. To ignore this dynamic is to ensure that your prescription for savings will be ineffective.
Bruce Bodner M.D. F.A.C.S.
There are, of course, multiple incentives involved in these sorts of referrals (including the fee-for-service model criticized by Bach), so it would be difficult to tease out the marginal effect of excess malpractice liability (and then that effect would need to be offset by any increased health benefits, even if inefficient, from the increased referrals), but it is a reasonable estimate to say that the net cost of defensive-medicine referrals is in the tens of billions of dollars a year—a figure absent from the PRI $865 billion estimate, not to mention less pessimistic estimates of the cost of the tort system.
Over the weekend, the Washington Post reported on an incredible new law in Virginia that would drastically raise traffic fines for Virginians breaking traffic laws to help pay for Virginia roads. I analyzed the law, reporting among other things that one wag had called it the Lawyer Full Employment Act because it could significantly increase incentives to litigate traffic cases (among many other bad effects). Now we have a report that the law's principal proponent in the legislature is a partner in a law firm that defends traffic tickets. Big surprise.
[Also see: Overlawyered, May 5, 2006 -- W.O.]
Good New York Times piece on how New York's fair housing laws make it harder for buyers to learn about buildings:
�If a family with children wants to know if there are other children the same age in a building, we�re supposed to say, �You should stand outside the building between 2 and 5 p.m. and see who walks in,� � said Michele Kleier, the president of Gumley Haft Kleier. �But how do you say something like that with a straight face?� ...
[Neil] Garfinkel goes on to warn brokers that they should not identify the school districts where apartments are located. This, despite the fact that real estate ads often boast that an address is zoned for top-rated schools like P.S. 6 on the Upper East Side or P.S. 234 in TriBeCa.
He said that while it is all right to name a school district when specifically asked, the fact should not be advertised because some school districts have distinctive racial compositions and advertising the district could be seen as a way of expressing preference for a specific race. Brokers are often stunned by this prohibition, he said, �but I�m a lawyer, and I�m going by the strict letter of the law.�
The story goes on to note that New York City is considering expanding its fair housing laws even further in a way that would effectively destroy co-op boards' ability to pick their neighbors. (Vivian S. Toy, "Questions Your Broker Can't Answer", June 24). Now all we need is for the Times editorial page to start reading their news pages and figure out that more liability isn't always better.
Those of us in the DC area know that construction of the new stadium for the Washington Nationals is proceeding apace. The DC council set a strict budget of $611 million for the stadium. It turns out this budget may be busted (with huge political and legal repercussions) thanks to -- you guessed it -- inflated lawyers' bills. As Legal Times reports, the Venable law firm, hired by the District to take care of legal work required for the procurement of land for the stadium (allowed under Kelo) has billed for almost 3 times the amount it limited itself to under its engagement contract.
During the first year of the contract alone, Venable submitted invoices totaling nearly $1.2 million � $250,000 more than the contract called for. By that point, the District had already paid the firm $945,000, raising no questions about the invoices. There is no evidence that the District's attorney general�s contracting officer ever reviewed bills before forwarding them on to the Office of the Chief Financial Officer for payment.
The newspaper reports that associates and others whose jobs weren�t disclosed were billed out at much higher rates than allowed. According to the contract, in the second year of its contract Venable associate billing rates were capped at an already generous $268 an hour, yet they were billing between $285 and $310 an hour. With associates billing hundreds of hours, the additional fees quickly added up.
From November 2006 until March 2007, Venable overbilled the city more than $200,000, according to the auditor�s report. The firm also billed for meals not covered by the contract. Yet the city kept paying � no questions asked. That is, until the money ran out and the D.C. auditor got involved. The firm has quickly offered to return $300,000, but an investigation is now underway.
Plaintiffs, represented by Hagens Berman, win what looks like a big one in Boston. Federal judge Patti Saris ruled that pharmaceutical companies AstraZeneca, Schering-Plough and Bristol-Myers Squibb engaged in unfair and deceptive trade practices in the setting of Average Wholesale Prices (AWPs) used as a benchmark for reimbursments; the judge ruled that Johnson & Johnson had not violated the law. Earlier: Mar. 20, Feb. 12, etc.
Ben Stein once again sounds off in the NYT on aiding and abetting. As I discuss, he prefers to obfuscate by beating the Enron horse rather than actually dealing with the genuine problems involved in extending aiding and abetting liability. I also show that we might be better off if this were the Enron case because that would give the Court an opportunity to kill scheme liability rather than just cutting off some limbs.
So far it's been the month Motley Rice would like to forget: on Wednesday the Ohio high court let stand a decision barring plaintiffs from suing former lead-paint manufacturers unless they can in fact identify who made the paint used in given structures. As with the Missouri Supreme Court's ruling last week, the ruling took ambitious "market-share" liability theories off the table (defendants' press release)(via Genova).
Perhaps we shouldn't rush to conclusions about this filing by plaintiffs' counsel in Madison County, Ill., who are aiming a complaint under the federal RICO racketeering law against two lawyers and a Florida resident who had sought to block a $63.8 million class action settlement over the drug Paxil. After all, not all class action settlements are a bad deal for class members, some objections to such settlements are unmeritorious, and there are even some bad objectors out there who are more concerned with being paid to go away than with saving class members from a bad deal. Still, it may not take many treble-damage RICO suits before both types of objector, the helpful and the unhelpful alike, begin to reconsider showing up in court, will it? (Steve Gonzalez, "Plaintiffs in $63 million Paxil case claim 'objectors' violated RICO in new class action", Madison County Record, Jun. 9)(cross-posted from Overlawyered).
The big news today, of course, is that with its ruling, the Court enforces the strict pleading standard requiring a "strong inference" intended by Congress when it passed the PSLRA, requiring "more than merely plausible or reasonable -- it must be cogent and at least as compelling as any opposing inference" of scienter. And one has to like this language from Justice Ginsburg: "Private securities fraud actions, however, if not adequately contained, can be employed abusively to impose substantial costs on companies and individuals whose conduct conforms to the law." Scalia has the better of the argument in arguing for still stricter standards than the rule propounded by the majority opinion, but I think Justice Alito is correct that there is not much practical difference between the Scalia and Ginsburg position. I'm quoted in the Forbes.com coverage. Also: Lattman; Parloff; WSJ; AP. Earlier: April 1.
Paulson, the former head of Goldman Sachs who has made reducing regulatory and legal burdens a signature issue, told the House Financial Services Committee that the case has �enormous implications for the U.S. economy.�
�What concerned me was exposing a wide range of individuals who happen to do business with public companies to primary liability without bright lines,� he told lawmakers. Allowing investors to sue third parties �would create a very uncertain legal environment� and exacerbate what Paulson says is �excessive litigation risk� for companies that do business in the U.S.
This is manifestly a position that makes investors better off; alas, the Washington Wire persists in buying the trial lawyer propaganda that the pro-trial-lawyer position is the "pro-investor" position because they sue in investors' names.
It's getting to be that season. Guest blogging for a week at Point of Law is a great way to reach a new (and high-level) audience and call attention to your writing or professional work. Most of our guest bloggers have either some experience blogging already or some professional involvement with law (teaching, practicing, writing) but all volunteers will be considered. If the idea appeals to you, drop me a line at editor - at - [this domain name] - dot - com.
Failing unions, like failing industries, turn to government for protection in the form of coercion. Failing industries have traditionally sought corporate welfare in the form of tariffs (coercion of consumers). Unions seek laws to confer what their persuasiveness cannot convince people to consent to.
...citing alleged ethical lapses arising from the Renfroe-document heist. David Rossmiller has a thorough report, with links to original documents (PDF). The memorandum in support of the motion, he writes, draws on work by Cornell legal-ethics "heavy hitter" Charles Wolfram, and "was written with a gusto and joie de vivre I have not often seen in State Farm's Katrina briefing." The WSJ editorialists (sub-only) were on the case yesterday, too.
From Clyde Haberman's column in yesterday's Times, unfortunately behind TimesDelete:
...Perhaps Mr. Bork could offer advice to Mamadou Soumare, the unfortunate immigrant from Mali whose wife and 4 children were among 10 people who died in a terrible fire in the Bronx three months ago. Last week, a New York Post reporter came across a notice of claim that Mr. Soumare had filed with the city comptroller�s office. The notice was a required first step in a possible $100 million lawsuit � repeat, $100 million � against the city.
Among those named by Mr. Soumare was the Fire Department, which he said had �failed to respond in a timely manner.� Never mind that firefighters arrived 3 minutes and 23 seconds after 911 was called. Never mind that the call had come disastrously late because people in the burning house had wasted precious time trying to put out the flames themselves.
The notice of claim does not mean that Mr. Soumare, who is in this country illegally, will definitely follow through with a lawsuit. But it means that he might. If he does, he will show that he truly understands American ways.
American Medical News is behind a pay screen these days, so we no longer link to them very often, but the first few paragraphs of this story are free and lead off with an arresting and, alas, very likely anomalous anecdote:
When New York dermatopathologist A. Bernard Ackerman, MD, is called to testify as a medical expert witness, he refuses to know which side the lawyer represents.
It is his way of remaining objective when he evaluates a case. In addition, the academic clinician typically previews his presentation of the facts and his opinion for a student audience, as a way of holding himself accountable.
"I want to let the facts speak for themselves," said Dr. Ackerman, who has testified equally for the defense and the plaintiff in medical liability cases and in other cases where medical expertise is needed, such as criminal cases. Sticking to the facts, he says, prevents a cross-examining lawyer from tripping him up about his opinion being consistent.
That's not always the typical experience. Dr. Ackerman is among many doctors and lawyers who say they too often see "hired gun" experts testify in areas beyond their qualifications, leading the judicial process astray.
"What if that physician made the same statements in a classroom rather than a courtroom? What would be the judgment of his peers then?" Dr. Ackerman asked.
In response to the problem, states in recent years have ratcheted up efforts to rein in false medical experts. They have adopted legislation requiring experts to be qualified or have stepped up state medical board oversight over who testifies and what they say.
A majority of states have laws that require medical experts be licensed and have training and expertise in the same specialty as the defendant physician or in an area directly related to the case at hand. At least 10 states this year are pushing for even tighter measures, according to American Medical Association data. For example, North Carolina and Missouri are seeking to require that the testifying physician be actively practicing in a related field at the time he or she testifies or when the claim arose. Missouri's legislation also would give state medical boards the authority to discipline unethical experts. Oregon would require experts to disclose information about other cases in which they've testified and about their compensation.
And you thought the 419 scams were a destructive racket:
More states in Nigeria are suing American tobacco companies for billions of dollars. The suit began when one state in Nigeria decided to sue U.S. cigarette manufacturers for $20 billion, claiming they were responsible for Nigerian smokers� sicknesses and health care costs.
A WSJ editorial takes note of the concurrence in the 7-1 Credit Suisse First Boston v. Billing decision yesterday: "After the initial purchase, the prices of newly issued stocks or bonds are determined by competition among the vast multitude of other securities traded in a free market," Justice Stevens wrote. "To suggest that an underwriting syndicate can restrain trade in that market by manipulating the terms of IPOs is frivolous." [Legal Times; WSJ; SCOTUSblog analysis and roundup]
But I was more impressed with Justice Breyer's point, which tracks points made in Judge Easterbrook's classic law review article The Limits of Antitrust:
"Antitrust plaintiffs may bring lawsuits throughout the Nation in dozens of different courts with different nonexpert judges and different nonexpert juries...[T]here is no practical way to confine antitrust suits so that they challenge only activity of the kind the investors seek to target, activity that is presently unlawful and will likely remain unlawful under the securities law. Rather, these factors suggest that antitrust courts are likely to make unusually serious mistakes in this respect."
This point should hardly be confined to the interrelationship between antitrust and securities regulation, however. Courts are poorly situated to decide a wide variety of matters on which they pass judgment: appropriate automobile design, warnings on drug labels and other drug-safety issues, the standard of care in medicinal judgment calls, among other matters where courts have shown a disturbing propensity to make expensive mistakes. The judicial modesty shown by the court in Billing after decades of judicial aggrandizement is pleasantly surprising—and one hopes the same modesty is shown elsewhere in the legal system.
Via NAM, Kimberly Strassel sounds the alarm on the energy bill pending in the Democratic House, written by environmental Luddites:
But the big prize was an unprecedented new power allowing green groups to micromanage U.S. lands. That section creates "a new national policy on wildlife and global warming." It would require the Secretary of the Interior to "assist" species in adapting to global warming, as well as "protect, acquire and restore habitat" that is "vulnerable" to climate change. This is the Endangered Species Act on steroids. At least under today's (albeit dysfunctional) species act, outside groups must provide evidence a species is dwindling in order for the government to step in. This law would have no such requirements. Since green groups will argue that every species is vulnerable to climate change, the government will be obliged to manage every acre containing a bird, bee or flower.
It's a green dream come true, carte blanche to promulgate endless regulations barring tree-cutting, house-building, water-damming, snowmobile-riding, waterskiing, garden-planting, or any other human activity. The section is vague ("protect," "assist," "restore") precisely so as to leave the door open to practically anything.
Strassel also documents how moderate Democrats were purged from the House Resources Committee for being too willing to protect property rights.
Subtitle D of Title IV of HR 2337 is the critical provision.
Our Jim Copland had an op-ed in Friday's New York Sun on the Supreme Court's recent decision (Jun. 11, etc.) unanimously rejecting a bid by Philip Morris to move an Arkansas consumer protection class action into federal court. "The Court's decision was narrow, procedural, and certainly correct, but the underlying cause of action is reason for serious concern, as it represents the plaintiffs' bar's newest form of lawsuit abuse." Beck and Herrmann also comment on the ruling.
You may recall Thomas Cona, who claimed his heart attack was caused by taking 22 months of Vioxx, rather than his failure to take his cholesterol medicine, his high blood pressure, his weight problem, or his other medical issues. Turned out he only had seven months worth of Vioxx prescriptions, so he told a story on the stand that his doctor gave him shopping bags of free Vioxx samples to last him for over a year. The New Jersey state jury wasn't so gullible as to believe this, and ruled against his multi-million-dollar personal injury claim. One might expect an attorney who put forward such patently false claims would face some sort of sanctions, but New Jersey law instead rewards the attorneys for the partial victory: on June 15, Judge Higbee ruled that a $45 award compensating Cona for his Vioxx co-pays entitles Cona's attorneys to their share of $4 million in total attorneys' fees for the Cona/McDarby trial.
There's certainly a fraud going on here, but the biggest one in this trial isn't being perpetrated by Merck. See also our Apr. 11, 2006 post on the trial.
A representative from Merck told Dow Jones the company will be issuing a statement shortly, and we'll update the post to include it. (Update: "We believe that awarding lawyers several millions of dollars in attorneys' fees is rather unreasonable, considering the claim at issue was never worth more than about $4,000. The amount is especially unreasonable from Mr. Cona's lawyers because they lost the product liability claim that was the heart of their case." Merck will appeal the fees ruling with the liability ruling. Note that Merck will not be able to recover the hundreds of millions it has spent defending itself against tens of thousands of cases, even if it wins every one.)
I've got an op-ed in today's Wall Street Journal on Judge Roy Pearson, Jr.'s lawsuit demanding tens of millions of dollars from his dry cleaners over a pair of pants. (Walter Olson, "The Great American Pants Suit", WSJ, Jun. 18; free at OpinionJournal.com, original at subscriber-only WSJ site). My other website, Overlawyered, has covered the story from early on, most recently in Ted's post of Sunday and David's of Thursday. The judge hearing Pearson's case is expected to issue her ruling this week.
There's been a torrent of coverage of the Pearson case in the press: a few recent examples include Peter Lattman on the WSJ Law Blog here and here; Marc Fisher, "Judge Who Seeks Millions for Lost Pants Has His (Emotional) Day in Court", Washington Post, Jun. 13; Jacob Sullum, Reason "Hit and Run"; Jeff Jacoby, "Ludicrous lawsuits", Boston Globe, Jun. 17; "The plight of the pants(less) guy" (editorial), Chicago Tribune, Jun. 16; "Pressing case for reform as judge cries over pants" (editorial), San Antonio Express-News, Jun. 18. And the Washington Examiner reported on Friday: "Pants lawsuit could cost D.C. judge his $100,000 job".
It's not the kind of death for which a long-distance trucker is entitled to collect worker's compensation benefits, at least not when it comes after eleven hours of drinking and playing pool. That's the view of an appeals court, whose decision the family of Phillip Shores is appealing to the Mississipppi Supreme Court.
- House Dems keen to overturn Supreme Court's Ledbetter decision on time limits for pay claims [AP; more at Law.com; earlier]
- Law firms' anti-drug ads might make viewers sick, even aside from scaring them off their meds [Beck and Herrmann; earlier]
- More from inside the Lerach client-acquisition sausage factory [Parloff; related, earlier]
- Trial lawyer Mikal Watts, running for Cornyn's Texas Senate seat, tacks right on abortion [Houston Chronicle; Overlawyered]
- Judges keep undoing Philadelphia jury verdicts against Wyeth on hormone therapy [Legal Intelligencer]
- "Because of the way its policies are worded" -- such an unfair reason to get turned down on an insurance claim, right? [Grace]
- Maybe the lawyer should have vetted this faulty-elevator claim before it plunged to ignominy in the NY courts [Turkewitz]
- "Can health care be reformed before malpractice law is reformed?" [Emergency Room Nurse via KevinMD]
- Recently at Overlawyered.com: more on privacy laws and Seung Hui Cho; Ted on Judge Bork's suit against the Yale Club; U.K. clown told by insurers to stop blowing bubbles; dog bites woman and city is legally responsible; how to make a living suing companies that send you email; Mamaroneck cops agree not to ask day laborers about legal status, because why should cops care about legality?; doc saves a life, but resulting lawsuit hounds him out of town; John O'Quinn scandal update; on gender bias, L.A. fire department can't win for losing; plenty of coverage of Judge Pearson's $54 million suit against dry cleaner over his lost pants; are consumers and businesses enemies? and much more [visit today]
A paper by Kenneth Lehn and colleagues of the University of Pittsburgh:
Many policymakers and corporate executives have argued that the Sarbanes-Oxley Act of 2002 (�SOX�) has had a chilling effect on the risktaking behavior of U.S. corporations. This paper empirically examines this proposition. Using a large sample of U.S. and U.K. companies, we find that compared with their U.K. counterparts U.S. firms have significantly reduced their R&D and capital expenditures and significantly increased their cash holdings since SOX. We also find that the equity of U.S. companies has become significantly less risky vis-�-vis U.K. companies since SOX. Finally, using a large sample of U.S. and U.K. initial public offerings (�IPOs�), we find that the likelihood that an IPO was conducted in the U.K. increased significantly after SOX and that this effect was especially high for firms in high R&D industries. Taken together, the results support the view that SOX has had a chilling effect on risk-taking by publicly traded U.S. corporations.
The authors will present their paper at AEI on Monday; Charles W. Calomiris (AEI/Columbia), Allen Ferrell (Harvard Law), and Kate Litvak (Texas Law) will comment.
By a 4-2 margin, the court has rejected the effort of Newark and other municipalities to invoke the law of public nuisance against manufacturers that long ago sold the paint (Star-Ledger; Genova). It's been a very bad week for the plaintiff's firms that dreamed up these suits, since only days ago the Missouri Supreme Court ruled similarly on product-identification grounds. More: the defense weighs in.
I'll be speaking at Federalist Society events Wednesday, June 20 in Austin and Thursday night, June 21 in Houston on the issue of contingent fees in class actions. Other speakers include the Charles Stuckey of State Farm, Brian Anderson of O'Melveny & Myers, and (one hopes) a plaintiffs' attorney to be named later. CLE credit is available. I hope to see lots of Point of Law readers there.
The New York Law Journal reports that a unanimous New York Appellate Division panel has found that personal injury attorney James J. Moran made more than 200 loans to clients over a 7-year period, totaling more than $700,000.
The panel found six other ethics violations, including engaging in conduct involving dishonesty, fraud, deceit or misrepresentation and engaging in conduct prejudicial to the administration of justice.
Moran's PI firm, Moran & Kufta, has apparently just changed its name to Valerio & Kufta.)
Speaking of faux medical malpractice reform and North Carolina, on Thursday trial lawyer and presidential candidate John Edwards pretends he's in favor of reform by proposing do-nothing measures:
� Stop Frivolous Lawsuits: To discourage frivolous suits, Edwards will require lawyers to have an expert testify that actual malpractice has occurred before bringing a suit. There will be mandatory sanctions for lawyers who file frivolous cases, and any lawyer who files three frivolous cases will be forbidden from bringing another suit for the next 10 years.
Note that if Edwards's proposal is anything like legislation he co-sponsored in the Senate, the legislative definition of "frivolous" will be so narrow as to be meaningless, effectively covering only those attorneys whose cases were dismissed because they forgot to get the expert certification before filing, as opposed to attorneys who lose junk-science verdicts over cerebral palsy.
Eric Turkewitz writes a lengthy post that seems to be unaware that the expert certification Edwards suggests has been passed in several states without much effect one way or the other. (Edwards's use of "testify" is almost surely a staffer's oversimplification of "affidavit" or North Carolina Rule of Civil Procedure 9(j) rather than a proposal that live oral testimony be a prerequisite.)
The latest installment of the weekly carnival of law-related blog posts is at Justia. Some other recent ones are #111 at Bill Gratsch's Blawg.com; #110 at Biker Law Blog; #109 at Greatest American Lawyer; #108 at Arnie Herz's Legal Sanity; and #107 by Blawg Review's "Professor Kingsfield". Check 'em out.
Unusually, the North Carolina Medical Society and the North Carolina Academy of Trial Lawyers have both agreed to support the same reform bill, a rare occurrence whose conventional meaning is "the doctors got rolled and now the question is how soon they find out". Seriously, the bill authorizes binding arbitration, but only in cases where both sides want it (can't they do that now, already?); monetary damages in those cases would be limited to $1 million and the arbitrations would be "fast-tracked", with limited rights of appeal. More: Jacob Goldstein, WSJ Law Blog.
"The three Lexington lawyers already found in a civil suit to have defrauded clients in Kentucky�s $200 million fen-phen settlement were indicted today on charges of conspiracy to commit wire fraud.
"A federal grand jury in Covington accused Melbourne Mills Jr., Shirley Cunningham Jr., and William Gallion each of one count of fraud and demanded that they forfeit $46 million in misappropriated funds and more than $21 million in fees that had parked in a charitable fund."
While political pressure from trial lawyers caused SEC Chair Chris Cox to take the poor public policy position of supporting the trial-lawyer position in the pending Stoneridge appeal, the Bush administration held firm for protecting investors from trial-lawyer predation and refused to file an amicus brief in support. The question now becomes whether they'll file an amicus brief in opposition in July. Barney Frank and the AFL-CIO carry water for Bill Lerach and try to make political hay over the fact that the Bush Administration is doing the right thing. The Washington Post story, written by Carrie Johnson, somehow manages to ignore the litigation lobby's role in all this. Lyle Roberts has additional links, including to the plaintiffs' brief.
As Michael noted the AP reported, a study commissioned by the National Council for Community Behavioral Healthcare and Eli Lilly and Company found that "even when patients were responding well to their prescribed antipsychotic treatment, many requested a medication change because these drugs are featured in law firm advertisements. Other patients stopped taking their medication, often without telling their psychiatrist, for the same reason."
�Many of our patients already struggle with accepting their illness and staying on their prescribed treatment, and now they are experiencing new levels of fear due to the increasing incidence of these jarring advertisements,� said Dr. Ralph Aquila, assistant clinical professor of psychiatry, Columbia College of Physicians and Surgeons; director, residential community services, St Luke's-Roosevelt Hospital Center, New York, NY. �This irresponsible advertising is hindering the progress of therapy for many of these patients and disrupting the important relationship between them and their healthcare providers. Plaintiffs attorneys need to consider the consequences that these advertisements may have on patients.�
Twenty-six percent of relapses led to suicide attempts. "Thirty-one percent [of psychiatrists] found patient resistance to starting medication due to concerns generated by law firm advertisements challenging, while 28% are concerned about malpractice risk if they prescribe a drug that�s the focus of product liability litigation."
The Associated Press reports a very interesting claim by Eli Lilly.
The company, which has faced thousands of lawsuits over its anti-psychotic Zyprexa, just released the results of a survey of 402 psychiatrists who treat patients with bipolar disorder or schizophrenia. More than half of the participating psychiatrists said they believed their patients who stopped medication or reduced the dosage did so after seeing lawyers' advertisements about anti-psychotic drugs such as Zyprexa.
Hmmm.... if one such patient, scared by misleading ads into ceasing his prescription medication, causes lethal harm to himself or to another. I'm sure the trial bar will come to the victim's rescue with a massive suit against the misleading advertiser. Right?
By a 9-0 margin, the U.S. Supreme Court declined to upset Department of Labor regulations that exclude home health care workers from wage-hour coverage (earlier). Much of the news coverage, as usual, proceeded as if the question were simply: do we think exempting these workers is a good idea, or not? Fortunately, the court itself did not mistake its role for that of a surrogate legislature, and recognized that the legal issue before it was whether DoL acted within its authority in issuing the rule, which it clearly did.
In this paper from the Washington Legal Foundation (PDF, courtesy AJP), Sean P. Wajert of Dechert discusses the possibility that a pending Restatement of economic torts will advance acceptance of the novel tort claim of "medical monitoring", sought on behalf of plaintiffs who arguably are at risk of future disease because of past exposure to risk.
The June 26 Federalist Society event at the Mayflower Hotel has a phenomenal lineup of speakers, including Steven Calabresi, Judge Frank Easterbrook, Judge Douglas Ginsburg, Edwin Meese, Ted Olson, George Priest, Ilya Somin, Daniel Troy, and, of course, the honoree himself. CLE credit is available.
The settled requirement for product identification in a liability suit is enough to sink the city's nuisance action, rules the state's highest court by a 4-3 margin. Defendants say that lead-paint-as-nuisance suits have now been rejected in both the states that have reached a final adjudication on the issue, the other being Illinois. Coverage: St. Louis Post-Dispatch, AP, Legal NewsLine, Jane Genova quoting attorney Richard Faulk (and scroll for other posts).
Can't get the courts to shut down a controversial Executive Branch policy? Use the Alien Tort Statute instead to go after Boeing for providing its own government with incidental flight services.
It's certainly an embarrassment for Yale Law School: police say Ralph Cucciniello posed as a Yale lawprof specializing in immigration law in the course of scamming hundreds of illegal aliens of Irish origin into handing him $5,000 apiece in hopes of obtaining green cards. According to the Hartford Courant,
Law enforcement officials in New York and Connecticut are scrambling to find all his victims and answer a nagging question: How did a scam artist who once was in the federal witness protection program secure office space in one of the most prestigious law schools in the country, as well as a school identification card and e-mail address?
A further question suggests itself: is Yale open to suit on theories of "negligent security"? After all, it's hardly unusual for lawyers suing over frauds to name as defendants large businesses which unwittingly allowed their facilities and good offices to be employed in the fraudulent schemes. The theory will be that due attention to security would have denied an opening to the wrongdoers, thus sparing third parties financial injury. Does it make a difference that the victims were never clients or customers of Yale, even if they perhaps imagined they were, so that the university can disclaim any legal duty toward them? Or is the more important factor just that on a practical level still-illegal aliens are unlikely to be willing to lend their names as plaintiffs in such an action?
Lawrence McQuillan responds in detail to my earlier post on their response to Richard Posner (who, in turn, was commenting on the PRI study Jackpot Justice).
While the continuing saga of Katrina insurance litigation provides this site with no shortage of grist for commentary, it's worth remembering that even bigger chapters in courtroom conflict might lie ahead, as the courts take up flood claims directed against the U.S. government. How vast are these claims, and the concomitant exposure of federal taxpayers? According to the Washington Post last month:
After a massive deadline filing rush recently that is still being sorted through, the United States is facing legal claims from more than 250,000 people here demanding compensation because, they allege, the Corps negligently designed the waterworks that permeate the city. ...
...officials said the damage claimed against the Corps exceeds $278 billion, an amount that dwarfs even the estimated $125 billion that the federal government has put up for Gulf Coast hurricane recovery.
Of course there's a good chance that courts will put an end to these claims by applying longstanding doctrines of sovereign immunity, despite the best efforts of trial lawyers to manage an end run around those doctrines. It would be interesting to ask the various presidential candidates whether they agree that the Department of Justice should defend the sovereign immunity principle with all due vigor against these claims, both in the financial interests of taxpayers nationwide and in the interest of preserving the federal government's own future policymaking latitude on engineering decisions and many other matters.
At City Journal, Paul Beston decries the New York City Council's move to ban metal bats from high school baseball games (earlier here). Don't miss Julian Sanchez's concise account ("The Nanny Two-Step") of the dangers to liberty in accepting the argument that runs roughly, "We pay through taxes when someone gets injured, why shouldn't we regulate the risks people take in sports?"
Gerald Skoning's annual roundup of ten of the year's weirdest employment cases is online at the National Law Journal. One that was new to us:
The Eastern District of New York has ruled that an arbitration panel did not err in ordering the reinstatement of a warehouse employee, with a history of violent behavior and felony indictments, to his job, which involved handling highly explosive chemicals. According to the court, Anthony Bennett was repeatedly disciplined for misconduct at work. His co-workers were afraid of him, citing erratic behavior, including beating a woman and on another occasion bringing a 9-millimeter gun to work. Amazingly, the court ruled that enforcement of the arbitration award did not violate public policy.
A more detailed account of the case appears on page 4 of this August 2006 law-firm newsletter (PDF). It indicates that the full fact pattern is if anything even more lurid than would appear from Skoning's brief summary. (And, yes, we realize that judicial deference to erroneous arbitration awards is by and large a sound policy. But still.)
Add a Wall Street Journal editorial and an AEI On The Issues by me to the wealth of voices (Jun. 7) criticizing SEC Chair Cox for breaking with common sense and two other SEC commissioners to vote to support the plaintiffs' case. Bloomberg is reporting that Treasury Secretary Paulson asked Solicitor General Clement to ask the Supreme Court for clarity on the primary liability of companies for other companies' fraud. (Update: also Washington Post.) We'll know how the intra-administration battle shapes up on Monday when briefs are filed.
Ribstein also comments: "The best the Court could do would be to take cert on Lerach's Enron case, the most fully developed scheme liability case to date, and kill the monster and all of its limbs."
Some paragraphs into yet another tribute to much-publicized Atlantic-hopping U.S. lawyer Michael Hausfeld appears this interesting assessment:
It is worth noting that a US class-action lawyer is setting up shop in the UK at a time when his colleagues on this side of the Atlantic have all but given up on complex group litigation. A particularly vivid example was the Vioxx litigation where claimant lawyers pre-empted the lack of legal aid in, and therefore non-viability of an action in the UK, and went directly to the US. That action - on behalf of hundreds of UK sufferers who allege heart attacks and strokes as a consequence of taking the withdrawn anti-arthritis drug - came to an end late last year when a New Jersey court ruled that it was more appropriate for the action to take place in the UK. Mark Harvey, a class action specialist and a partner at Hugh James, the South Wales claimant firm, believes that complex litigation on this side of the Atlantic is at "crunch time". "If we don�t get a couple of these cases to trial and win them I think you could say goodbye to this area of law," he says.
...A direction by the Lord Chancellor means that there is now only �3 million available in any year for big multiparty actions.
More: American Lawyer on securities actions.
The American Academy of Family Physicians offers a primer on how these can work to reduce uncertainty in med-mal litigation. One disincentive for entering into them: "a 'winning' defendant physician suffers the career-long consequences of disclosure to the National Practitioner Data Bank," since a payment is made to the plaintiff despite the jury's finding of no liability (via Kevin Pho).
...the Times appears incapable of judging him by his actual writings, preferring instead to attack the very idea of a black justice who fails to fall in, lockstep, with way the Times says a black justice should behave, as a left-wing judicial activist. Fortunately for the country, Justice Thomas is capable of thinking for himself.
Reader Joe Bingham writes:
This is certainly my favorite bit from the Adam Cohen piece:
He can be counted on to reflexively oppose discrimination claims of minorities and women, as he did last week, when he joined the majority in rejecting the claim of a woman who was underpaid for years because of her sex, on the dubious ground that she complained too late.
Ah, yes, those newfangled "deadlines." Like statutes of limitations, just another excuse for conservatives to "reflexively" avoid social justice.
We study litigation costs for personal injury tort claims in Texas over 1988-2004, relying on a detailed source of case-level data on defense legal fees and expenses, and Texas state bar data on lawyers' hourly rates. We study costs in medical malpractice cases in detail, and costs in other types of cases in less detail. Controlling for payouts (which are roughly flat), real defense costs in medical malpractice cases rise an estimated 4.6% per year, roughly doubling over this period; the rate of increase is similar for legal fees and for other expenses. Real hourly rates for personal injury defense counsel are flat, so rising rates cannot explain this increase. Costs correlate strongly with payouts. Medical malpractice insurers predominantly used outside counsel, occasionally used inside counsel, and rarely used both in the same case. Surprisingly, medical malpractice insurers did not react to the sustained rise in defense costs by adjusting their expense reserves, which did not increase either in real dollars or relative to reserves for indemnity payouts, and declined substantially as a percentage of defense costs.
In other types of commercially insured tort litigation (auto, general commercial, multi-peril, and other professional liability), defense costs rose more moderately by an estimated 2.2% per year. Defense costs are predicted by the same factors as in medical malpractice cases. However, insurers in these other lines of coverage responded to increasing defense costs by adjusting their expense reserves.
Rising defense costs imply a decline in the �efficiency� of litigation, at least as measured by transaction costs - with the steepest declines in medical malpractice cases. However, the time needed to resolve claims also declined in medical malpractice, other professional liability, and general commercial cases; on this measure, tort system performance improved.
This paper will be one of three presented at an event on economic research on medical malpractice insurance at AEI the morning of June 29. I'll have a post with more information about that event next week.
Judge Fallon issued two rulings in the MDL Vioxx docket in the last week.
U. of Penn. medical school professor Paul A. Offit, whose work we have had occasion to praise before, is in the Boston Globe with a piece on the high stakes in the massive federal claims court action over autism claimed to have been caused by childhood vaccination (see Michael's post of Tuesday). The subtitle of the piece sums it up: "How a legal case could cripple one of modern medicine's greatest achievements".
"Accusing tobacco companies of preying on black people, a Miami attorney is seeking $1 billion in damages on behalf of a Coral Springs, Fla., woman whose mother and grandmother both died of smoking-related health problems." Reporter Forrest Norman of the Daily Business Review, the south Florida legal paper, quotes me expressing skeptical opinions about the suit. In Florida's earlier Engle tobacco litigation, plaintiff's lawyer Stanley Rosenblatt came in for sharp criticism at the appeals level for the way he demagogued the racial angle; I covered the case here, here and here. This week's case was brought by solo practitioner J.B. Harris, who said of the tobacco-company defendants, "If I could, I'd try to have them charged with genocide." ("Suit Accuses Tobacco Firms of Targeting Black Consumers, Seeks $1 Billion in Damages", Jun. 6)(cross-posted from Overlawyered).
The new AEI Federalist Outlook:
State attorneys general, for example, paint their investigations and litigation campaigns as "federalism in action," and they strongly protest when federal agencies assert regulatory prerogatives. Ironically, such claims often receive a respectful hearing from conservative justices who, constitutionally, have supported states' powers against federal overreach. Yet when those "pro-state" justices do support broad claims of federal preemption, their critics charge them with simply voting their pro-business, antiregulatory ideology over their purported federalism principles.
This last charge rests on shaky empirical foundations, for the conservative justices do not reflexively vote for preemption. If anything, liberal justices are more likely to vote reflexively against preemption. It is important to understand which decisions are right and why, because contrary to myth, preemption and federalism are not polar opposites.
The case offers two enduring lessons. The first is that those who think about suing for libel should think again before doing so. And then again once more. While all the ultimate consequences to the Islamic Society for bringing the lawsuit remain uncertain, any adverse consequences could have been avoided by not suing in the first place.
The second lesson is that in one way (and perhaps no other) we should learn from the English system and award counsel fees to the winning side in cases like this, which are brought to inhibit speech on matters of serious public import. Because all the defendants in this case were steadfast and refused to settle, they were eventually vindicated. But the real way to avoid meritless cases such as this is to have a body of law that makes clear that plaintiffs who bring them will be held financially responsible for doing so.
Nathan Schachtman of McCarter & English has a two-pager (PDF) for the Washington Legal Foundation on the recent ruling by an agency of the Commonwealth of Pennsylvania that mass silicosis screenings at three motel parking lots, instigated by a Texas law firm using a New Jersey contractor, were unlawful. The x-rays were taken without physicians' orders, the presence of authorized medical personnel, or advance notice to state medical authorities -- call it "medical malpractice committed by attorneys" and you wouldn't be far off. Earlier coverage here, etc. (via Childs).
Although the Colorado Civil Justice League and its allies managed to stop several adverse bills and got others amended, it was still a tough year for liability reformers in the state legislature:
With no less than five separate plaintiff attorney groups actively lobbying at the Colorado Capitol for expanded business liability, this was in many ways the "Year of the Trial Lawyer."
The trial lawyers "invested" over one million dollars in political spending during the last election, and that investment is paying off. Legislators repeatedly voted to weaken the limits on lawsuit abuse that have made Colorado a national leader, making it easier and financially more attractive to sue Colorado's employers and businesses....
With so many plaintiff lawyer groups lined up on the side of expanding liability - workers compensation lawyers, construction defect lawyers, false claims lawyers, employment-law plaintiff lawyers and, of course, the Colorado Trial Lawyers Association itself - it was not a good year for lawsuit sanity.
Common Good's Philip Howard, who has long bemoaned the refusal of the judicial system to winnow cases at early stages, comments on the Supreme Court's repudiation of Conley:
In Conley, the Supreme Court had instructed judges to almost never dismiss a claim. Cited in an amazing 40,000 decisions over the past 50 years, Conley gave lawyers carte blanche to sue for almost anything: "A complaint should not be dismissed � unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."
Conley and its progeny changed American culture. With judges unable to dismiss claims, suing for the moon became standard practice. Justice became a weapon for extortion. The effects rippled through daily dealings. [...]
Conley v. Gibson is no longer the law of the land. Justice David Souter, writing for a 7-2 majority in an important antitrust case, Bell Atlantic v. Twombly, held that the "famous observation" in Conley "has earned its retirement."
Overruling a distant decision, now obscured by 50 years of practice, does not go far enough.
Earlier: May 21.
AEI has released a new collection of essays on federal preemption issues, and will hold a book forum on Tuesday, June 12:
When does federal law trump state law? Federal preemption has become the stuff of public debate and of major news stories. Consumer advocates, plaintiffs attorneys, and state officials argue that broad federal preemption claims interfere with the states� historic police power to protect their citizens against corporate misconduct. Corporations and federal agencies insist that preemption offers a vital safeguard against unwarranted and inconsistent state interferences with the national economy.
A year ago, Richard A. Epstein and Michael S. Greve, two leading scholars in this field, assembled a group of prominent legal scholars and practicing attorneys for a probing analysis and spirited discussion of these difficult issues. The ensuing debate has been published in a new collection of essays entitled Federal Preemption: States' Powers, National Interests (AEI Press, May 2007). At this event, Epstein and Greve--the editors of the book--will present their conclusions, followed by commentary from Judge Stephen F. Williams of the United States Court of Appeals for the District of Columbia Circuit, and Charles Cooper of Cooper and Kirk LLP. AEI�s Peter J. Wallison will moderate.
Audio feature "How the Trial Bar Is Taking Control in Key States" from American Justice Partnership in which Todd Young and Kristyn Shayon discuss political initiatives of the trial bar in seven states: Colorado, Delaware, Iowa, Kentucky, North Carolina, Pennsylvania, and Wisconsin. AJP has a new publication, Trial Bar Watch, which keeps an eye on such developments at the state level. According to the latest edition (#3) (PDF), things are turning chilly in once moderate states like Iowa, where the state business association says as many as 50 trial-lawyer-backed bills have been introduced in the legislature. Earlier numbers in the series are apparently not online but can be obtained by email request.
On June 11, Cedillo v Secretary of Health and Human Services will be heard before an extraordinary tribunal of three special masters at the U.S. Court of Federal Claims in Washington. The hearing will determine, for the first time to my knowledge in an American courtroom, whether a combination of vaccines (mostly MMR -- measles, mumps, and rubella -- but also Haemophilus influenzae type B (a serious disease caused by a bacteria, striking children under 5 years old) and hepatitis) with thimerosal, a mercury-based vaccine preservative, can cause autism. Thimerosal has been used since the 1930s, so the potential impact here is tremendous.
This argument sans jury will be interesting to observe. As is well known, a 2004 study released by the Institute of Medicine (part of the National Academy of Sciences) concluded that scientific evidence "favors rejection of a causal relationship" between exposure to thimerosal and autism. But due to FDA requests prompted by political pressure, by 2002 thimerosal was removed from almost all vaccines for children.
Three weeks of testimony are planned, including victims and expert witnesses. The Court of Claims has sealed the names of the witnesses, for fear they would be harassed.
The trial will take place in a 400-seat courtroom that will be filled with parents and their lawyers, and with lawyers for the pharmaceutical industry. Thousands of parents will "virtually" attend the trial, by speakerphone.
As many POL readers know, a 1986 federal law provides that, in lieu of suing manufacturers for negligent design or warning, those claiming to be injured by vaccines may choose to file claims against the government in the Court of Claims. Special masters acting as trial judges hear such cases and award damages if a causal connection has been established. No fault on the part of the manufacturers need be established, only causation. Pain and suffering damages are capped at $250,000, but economic damages (lost wages, medical and educational costs, and scheduled lawyers' fees) are fully compensated. More than $750 million has been paid out since 1986.
The autism claims are by far the biggest ever presented to the court, and could easily triple that amount if they succeed. More than 5,100 claims have been filed since 1999, compared to 2,700 for all other vaccine claims since the program started operating.
Since the program began, patients have been paying a 75 cent excise tax for each vaccine, adding $200 million to the federal vaccine compensation fund each year. The fund has accumulated $2.5 billion. So there is no direct exposure for pharmaceutical companies here -- but of course if the fund is depleted other measures may be sought, and normal tort cases alleging manufacturer wrongdoing may be bolstered.
Here is a Legal Times backgrounder on the case, focusing on the test plaintiff, an extremely autistic child. The anguish of parents of autistic children is tremendous, and their belief that vaccines caused their pain is genuine. Whether this belief is a result of junk science, of course, is the issue at hand. Arthur Allen had a nice piece in Slate Magazine a couple of years ago on this subject. Let's hope the three-master panel can ease the afflicted parents' pain and bring sound scientific closure to the matter.
Via Lattman: Adam Gopnik in the New Yorker, summarizing a new book "Lincoln the Lawyer" by Brian Dirck (U. of Illinois Press), says the legal career of the Great Emancipator was neither one of a crusader for the little guy against injustice, as some partisans have hoped, nor mostly that of a "railroad lawyer" devising crafty ways to avoid liability, as others have argued. Instead, his work was dominated by debt collection and other routine cases, typical of small-town practice in his place and era. According to Gopnik,
Dirck argues that Linoln took away from the practice of law and the love of legal language both a feeling for �grease� � that is, for finding an acceptable middle ground between contending parties � and a habit of detachment.
...What he learned was not faith in a constant search for justice but the habit of empathetic detachment. ...His magnanimity was also a function of his lawyerly sense of distance from other people�s motives, and his appreciation � honed by decades of witnessing nearly every imaginable form of strife in Illinois�s courtrooms � of the value of reducing friction as much as possible. The lack of vindictiveness Linconln displayed . . . was the daily requirement of a small-town lawyer. Lincoln believed in letting go; his magnanimity was more strategic than angelic.
Emily Bazelon's latest "conservative bad, liberal good" piece in Slate:
According to the advocacy group Alliance for Justice, Southwick voted "against the injured party and in favor of business interests" in 160 of 180 cases that gave rise to a dissent and that involved employment law and injury-based suits for damages. When one judge on a panel dissents in a case, there's an argument it could come out either way, which makes these cases a good measure of how a judge thinks when he's got some legal leeway.
Well, no. When one judge on a panel dissents in a case, it means simply that judges disagree. Not all dissents reflect honest disagreement; some, indeed too many, judges are simply lawless. It could be that there was honest disagreement; it could be that Southwick was irrational.
Or, it could be that the Mississippi judiciary, which for many years was packed with hand-picked candidates of the plaintiffs' bar to create one of the nation's most notorious judicial hellholes, had several judges that reflexively ruled in favor of trial lawyers' interests, and Southwick was the judge on the panel (in majority or dissent) upholding the rule of law.
I certainly have my suspicions from reading dozens of Mississippi cases which of these scenarios is most likely, but to be clear, I don't know for sure. But neither does Emily Bazelon or the Alliance of Justice. Simply counting doesn't tell us anything, even if we trust the Alliance for Justice to have counted correctly. (Southwick did vote for the AfJ's preferred candidate twenty times, showing that he's hardly reflexively pro-civil-defendant.) And that Bazelon singles out Southwick's defense of the concept of employment at will (the law in 49 states, and Montana's variance is hardly European) as an example of "extremism" shows how Orwellian the left has gotten in criticizing Bush's nominees.
Steve Hantler, whose writings this site links to often, is a commenter at the AEI panel at 2:30 today on Eric Dezenhall's new book:
Crisis management has become the latest fashion in building a corporate reputation. Companies that come under siege from interest groups, trial lawyers, and the press wage image campaigns to make themselves "better liked"--and often do so by playing down their capitalist purpose. Do these campaigns mislead the public? Do they validate the belief that for-profit entities are inherently corrupt and, therefore, injuring them is a virtuous act--not to mention a victimless crime? Does corporate social responsibility represent a good business strategy in the long run, or has reputation management become, in effect, an apology for making money? If so, does this trend ultimately pose a threat to free enterprise?
Public relations expert Eric Dezenhall tackles these issues in his new coauthored book, Damage Control: Why Everything You Know about Crisis Management Is Wrong (Portfolio, 2007). Following a book presentation, Mr. Dezenhall will join other discussants to explore the implications of this trend for modern corporations. Panelists will include Jon Entine of AEI, author of Pension Fund Politics: The Dangers of Socially Responsible Investing (AEI Press, 2005); Steven Hantler, associate general counsel for DaimlerChrysler; and public relations specialist Nancy Murphy of the Case Foundation. Ted Frank, director of AEI�s Liability Project, will moderate.
Class-action potentate Stephen Tillery since 2002 has been suing computer giant Dell in the courts of the famous little Illinois county, arguing (among other things) that it's unconscionable for Dell to have put its terms and conditions of sale, which include a binding arbitration clause, in a hyperlink for its online buyers to follow. The Madison County Record has been covering the fairly elaborate procedural maneuverings in the case.
For some time now Overlawyered has been covering the story of the Preakness-winning thoroughbred whose lawyer-owners happen to be deeply implicated in the still-unfolding Kentucky fen-phen scandal. Was the horse purchased with the proceeds of litigation fraud? The New York Times has a front-page story in today's edition.
At City Journal, Heather Mac Donald says Mayor Bloomberg and city lawyers are right to resist the federal government's demand that simple questions assessing comprehension of written material be dropped from tests because of their disparate racial impact on applicants:
Perhaps every attorney who brought this suit, from the DOJ to the Center for Constitutional Rights, can sign up for a plan whereby the firemen protecting his home and business can�t process basic written information. The rest of us can have a fire-fighting force that stands a chance of being able to perform the job adequately. The idea that all you need in fire-fighting today is a pair of strong arms is fanciful (and of course even that requirement has been lifted to get women into firehouses). The memory of September 11 should remind the Justice Department that firemen need knowledge of hazardous materials and of complex evacuation procedures; not only are the technologies for fighting fires becoming more sophisticated, but emergency medical responses depend on the capacity to learn from written material.
More on legal challenges to firefighter testing here.
Earlier: May 31.
The Washington Post is reporting that the SEC has demonstrated itself captured by the special interest of the plaintiffs' bar, and will ask the Solicitor General to intervene in the Enron appeal on behalf of plaintiffs, contrary to good law and good public policy. (Carrie Johnson, "SEC to Side With Enron Plaintiffs", Washington Post, June 2). The reporting is appalling: the final decision rests with the Solicitor General, whose brief would have been due yesterday: did the SG file or not? The reporter also mistakenly states that the Court will "hear the case" when in fact the Court is only considering a petition for certiorari. And there's no mention of the full-court lobbying press done by the plaintiffs' bar, or the fact that the SEC's position contradicts sounds law, and thus reflects political pressure.
(Update, June 3: the AP reports today that the SEC "declined to comment" about the Washington Post story, but also fails to note that June 1 was the deadline to file, and doesn't say if a brief was actually filed. I wonder if the Washington Post story is a leak to provide political cover for the SEC, and that they'll pass the buck to the SG's office for why no brief was filed? If a government brief had been filed Friday, one would expect the SEC to admit it, and would also expect it to be floating around the blogosphere.)
(Update to the update, June 3, 4 PM. A reader suggests that the Washington Post article is actually talking about Stoneridge though the article does not mention that case by name. That is a plausible interpretation that would make the Washington Post article make more sense; the reporter may have been limited by the constraints of space and forced to leave out information such as the name of the case the SEC was planning to file a brief in, even as it mentions the larger Enron case. If the Solicitor General does not veto the SEC's politically-motivated recommendation, the Stoneridge amicus brief would be due June 11.)
Eve Fairbanks at the New Republic (sub) is invited to drink the qui tam/retaliation-suit Kool-Aid, but doesn't seem to have partaken:
...as the week goes on, it becomes clear that Whistleblower Week is more than a rally. It's a chance for people who have long been miserable lone gunmen to come together and rejoice in whistle-blowing's transformation into a full-fledged personal identity -- a scene with its own specialized lawyers, therapists, 40-odd advocacy groups, a publishing imprint, swag, and even a timeless philosophy.
Amusingly, there has arisen a group of dissidents who've turned against the whistleblowing establishment itself, including its best-known entity, the Government Accountability Project (GAP): "'We're on a crusade to embarrass and enlighten GAP,' says a whistle-blower friend, detailing their plan to expose the group to its donors." Fairbanks describes their mission as "blowing the whistle on the whistle-blowers."
Daniel J. Popeo of the Washington Legal Foundation has more to say on Bill Lerach and the Stoneridge case:
The U.S. Supreme Court recently agreed to review a novel interpretation of the federal securities laws. The case won�t be argued until this fall, but its outcome, and possibly the fate of America�s dynamic securities market, may be determined in the next several weeks.
During that time, the Securities and Exchange Commission (SEC) must decide whether to take a formal position in this case, Stoneridge v. Scientific-Atlanta. The SEC�s options: Support the securities laws as Congress intended, or endorse class action lawyers� efforts to drastically expand their litigation targets and reap millions more in fees.
The battle for the SEC�s support has been fierce, with the notorious Bill Lerach leading the public relations offensive for the plaintiffs� bar. Lerach has enlisted powerful politicians and activists in the effort, and he even penned a rare op-ed in an influential legal publication arguing that the stakes for securities fraud suits have never been higher.
Mr. Lerach is right, the stakes are high, but investors and America�s position in the global economy would not come out the winners if his view prevails.
Read the whole thing in today's Examiner, here.
Victor M. Diaz, Jr., who has served as vice-chair of ATLA's aviation section among other honors in representing the plaintiff's bar, writes in Florida's Daily Business Review taking issue with some of his colleagues' doomsaying about the Class Action Fairness Act, which he says has proved "no calamity after all":
More than two years after President Bush signed CAFA into law, these concerns are proving to be greatly exaggerated. CAFA should not be feared by the plaintiffs bar.
While the days of cases filed in remote, plaintiff-friendly state court venues may be over, CAFA has led to better representation of classes by plaintiffs attorneys and better outcomes for class members. On the whole, the potential shift of nearly all class actions to federal court has elevated the class action bar and meant better quality judicial review of corporate class-wide abuses.
As with Congress's earlier reform of shareholder suits, the major effect seems to be not to choke off litigation, but to improve its average quality.
Both houses of the Illinois legislature have now passed and sent to Gov. Rod Blagojevich for his expected signature a bill (see May 8) authorizing suits over family grief and emotional distress in wrongful-death cases. As Ed Murnane at the Illinois Justice Blog has noted, the grief-damages bill did not prove as controversial as a separate bill meant to pry open deep pockets by restoring liberal principles of joint and several liability in cases of multiple defendants; that bill is still under consideration.