...and its profitable international division departs the U.S. entirely, to reincorporate in Lausanne, Switzerland, where the legal environment is more disapproving of expropriation. Hans Bader has some thoughts on capital flight.
January 2008 Archives
Following up on our earlier dispatch, the Daily Business Review reported last week that "Embattled lawyer Jay Wingate agreed Thursday to drop out of 77 shipboard injury cases after Royal Caribbean Cruise Lines claimed his firm paid a cruise employee for inside information. Wingate said he is closing his practice, but the future of the cases is uncertain. ... a fired Royal Caribbean employee said she accepted cash from two Wingate investigators in exchange for information about lawsuit settlement authorization, including the amount of money the cruise operator was willing to pay to settle cases."
The tension between the interests of relatively strong and relatively weak claimants -- which helps to stretch legal ethics to the breaking point in the Vioxx settlement -- would be more manageable if we adopted the sensible incentives of loser-pays. Thus argues PoL's own Marie Gryphon in this new piece at City Journal.
It is a good sign for whether the 85% thresholds will be met that a group of Florida attorneys has, reports the AP, filed a motion begging to permit their clients to join the settlement, even though they are ineligible because they did not have pending litigation at the time of settlement. (Florida's statute of limitations has not yet expired.) In the words of the motion (docket #13286):
- "Could Scruggs lose his tobacco settlement fees?" Probably not unless scope of scandal broadens [White Collar Crime Prof Blog]
- When John Edwards denounced "special interests", it's a wonder his tongue didn't cleave to the roof of his mouth [ATRA]
- More thoughts on the OHSU cutbacks following Oregon high court's wastebasketing of liability limits [Victoria Taft via Schuelke; earlier]
- Not a shockeroo: recently ousted Louisiana AG Charles Foti joins plaintiff's class action firm [Kahn Gauthier Swick press release]
- Lopez-Torres decision (NY judge-picking) marks welcome SCOTUS retreat from second-guessing of election methods [Hamilton/Findlaw via Turkewitz; earlier]
- Tasteful and appropriate: Sen. Chris Dodd, in FISA/immunity debate, likens telecoms to Nazi underlings invoking Nuremberg defense [YouTube]
A New York Times editorial (who said we always disagree with them?) says federal regulation of human-subjects research under the Institutional Review Board system is slowing down hospitals' efforts to study the benefits of tightening safety protocols on such matters as handwashing and sterile practice. "Seeking approval is a cumbersome process that could delay studies for months. Surely, as the nation�s health care system works to reform dysfunctional practices, this makes no sense. The rules intended to protect patients could instead slow organizational reforms that would benefit the patients." More at Future Pundit and Health Care for All; earlier coverage of IRBs here and here. The problem of IRB oversight of hospital checklist development was earlier explored in a December Times piece by author/surgeon Atul Gawande. And see Orac, Respectful Insolence, Jan. 3.
- California court hears appeal by Santa Clara County of Judge Komar's landmark ruling restricting contingency-fee outside representation in public nuisance suits [UCL Practitioner; earlier]
- "Subprime feeding frenzy" seen for big law firms [ABA Journal]; Ohio AG Marc Dann files shareholder suit against federally sponsored Freddie Mac [same]
- First of its kind? Pioneering U.K. class action wins damages for consumers in "football shirt rip-off" case [Times Online]
- Construction-defect suits still rage in California [L.A. Times]
- Journalist Quin Hillyer, often heard from on litigation-reform issues, joins Washington Examiner [a commentary]
- Since 1998 class actions led by Illinois's Stephen Tillery have taken in at least $1.8 billion [MCRecord]
Eric Turkewitz is the first of many plaintiffs' lawyers to jump on President Bush for complaining about "junk medical lawsuits" in last night's State of the Union (Jan. 28). Turkewitz complains that Bush didn't mention any studies (though State of the Union addresses are for policy proposals, not for discussions of the pros and cons of empirical evidence) and then says no such studies exist.
Which just isn't so, of course. As I note in my latest law review article, critiquing Thomas Geoghegan for thoughtlessly repeating the same trial-lawyer talking point,
The Harvard study in fact found that 28% of patients who suffered no medical error received compensation (as did 16% of patients who sued without any medical injury), and that only 60% of cases filed involved medical error. David M. Studdert, et al., Claims, Errors, and Compensation Payments in Medical Malpractice Litigation, 354 NEW ENGLAND J. MED. 2024 (May 11, 2006).
Now, even leaving aside the simple fact that not every "medical error" is actionable medical malpractice, so the Harvard study was measuring the wrong thing, perhaps Turkewitz sincerely thinks that it is not a problem that the plaintiffs' lawyers' decision to bring a lawsuit is little better than a coin-flip in determining whether a doctor committed medical error, or that bringing a meritless suit against a doctor gives one a 28% chance of getting paid.* Policymakers and doctors likely would have a different opinion if they thought about it.
Note the typical anti-reform debating tactic of using "frivolous" in the narrowest of technical senses to minimize the existence of a problem, though politicians who support reform use the word "frivolous" in the broader colloquial sense.
In his last State of the Union speech tonight, President Bush said that "Congress must ... confront the epidemic of junk medical lawsuits" in order to make health care affordable. He didn't offer any details, but it was good to have the issue raised.
Robert Novak broke the story on Friday and Tucker Carlson is following up right now on MSNBC. Sources close to the Obama campaign claim that Senator Obama plans to offer former trial lawyer John Edwards the post of Attorney General in a future Obama administration.
It is difficult to overstate how much harm the suit-happy Edwards could inflict on the nation in a position that would allow him to initiate, for example, antitrust proceedings against oil companies. Being a plaintiffs' lawyer is about doing whatever you can to win cases. An attorney general should have a less, er, entrepreneurial approach. Legal reformers should shudder.
Prof. Richard Nagareda of Vanderbilt Law has made a big splash with his new volume Mass Torts in a World of Settlement, which argues that the fair and socially efficient resolution of mass injury cases is going to require revising cherished old notions of individualized treatment and client control in litigation. In our newest featured column, a piece written for this site, Prof. Nagareda concisely explains why he thinks it's time for new rules.
- Don't fall for NYT scare on mercury in tuna sushi, especially when it comes from perennially alarmist reporter Marian Burros [Shafer, Slate]
- More discussion of California bubble-buyer's suit against real estate agent [Cowen, MargRev; earlier and at OL]
- "Earwigging" has an evocativeness to it that "improper ex parte contact with a judge" just doesn't [Folo comments on branch of Scruggs scandals]
- Connecticut didn't spend its tobacco-suit loot on anti-smoking efforts, and maybe that's a good thing [Powell, Journal-Inquirer]
- Supreme Court set to revisit knotty issue of state unitary taxation of multistate business [What About Clients?]
- No, Justice Scalia isn't the devil incarnate, in the eyes of this criminal defense lawyer [Greenfield]
Now for something a little different, an "experimental economics" paper by Kevin McCabe and Laura Inglis from GMU's Mercatus Center:
This paper provides an overview of the tort process and introduces a scientific approach for evaluating tort reform proposals. In this paper, we describe an experiment that models the tort process and attempts to identify factors that promote pre-trial settlements. Results of the experiment indicate that promoting pre-trial settlements would benefit both plaintiffs and defendants, because money spent on costly litigation could be used to compensate tort victims and that speedy resolutions would give injured parties quicker access to the funds they need.
Long ago, in a legal galaxy far, far away, American courts saw antitrust law as a way to protect competitors from, well, the competition. These days everyone outside the Ninth Circuit Court of Appeals concedes that if antitrust has any claim to legitimacy, it lies in its ambition to maximize consumer welfare, not competitor protection. ...
The problem is that a price-squeeze complaint amounts to telling one company -- AT&T in this case -- that it is charging consumers too little. And forcing AT&T to raise its retail prices might help linkLine, but it would hurt consumers, who would be forced to pay more for Internet access in the name of preserving a "competitive" market. Our courts used to think that punishing consumers to keep competitors alive was normal, reasonable behavior. Antitrust regulators in Europe still think this way. And so, apparently, does the Ninth Circuit, which may explain why it ruled that linkLine's case should go forward.
Two British doctors, writing in Lancet, note that the theories of cardiovascular risk attributable to COX-2s (e.g., Vioxx) are equally applicable to the over-the-counter NSAIDs (e.g., ibuprofen) on the market. After all, NSAIDs are also COX-2 inhibitors; the main difference between the two classes of drugs are that the COX-2 selective drugs do not inhibit COX-1, and thus have a gastrointestinal advantage. Drs. Warner and Mitchell theorize that NSAIDs and COX-2 inhibitors have identical cardiovascular risk profiles—a theory, one notes, that is consistent with Dr. David Graham's own dataset in his Lancet paper, though he made wild accusations about Vioxx despite the inconsistency with his own dataset's showing a lack of a statistically significant difference between COX-2s and NSAIDs's cardiovascular risk profile. (Timothy D Warner & Jane A Mitchell, COX-2 selectivity alone does not define the cardiovascular risks associated with non-steroidal anti-inflammatory drugs, Lancet 2008; 371: 270�73.) (h/t J.C.)
If so, the panic over Vioxx may well have taken a safer drug off the market while exposing consumers to worse health risks. Recall that serious ulcerations have increased 21% since Vioxx has been withdrawn from the market. The trial lawyers will still collect at least $2 billion for their role in this fiasco, but those who would have benefited from Vioxx and were injured by the substitution of an NSAID will not have a cause of action.
But they told us the malpractice crisis was just a myth dept. (Associated Press):
Oregon Health & Science University plans to cut at least 200 jobs and raise tuition by at least 10 percent to free the money needed for higher insurance costs following an Oregon Supreme Court ruling.
The December ruling cleared the way for the family of a brain-damaged child to pursue malpractice damages from the university. It effectively eliminated a liability cap of $200,000 designed to protect state agencies from major damage awards.
The cutbacks, expected to be announced Friday, were first reported by The Oregonian newspaper. Besides trimming jobs and hiking tuition, OHSU expects to restructure or close clinical, research and education programs, and scale back construction on Portland's South Waterfront.
OHSU said the court ruling will add $30 million a year in insurance and administrative expenses. Though that's only 2 percent of OHSU's annual operating budget of about $1.5 billion, it amounts to more than 60 percent of its annual support from the state's general fund. ...
OHSU is Portland's largest private employer with about 12,000 staff.
More: Victoria Taft.
The fastest-growing area of employment litigation in recent years has been wage-and-hour class actions, perhaps the biggest subset of which are lawsuits charging that white-collar employees have been misclassified as exempt from hourly wage and overtime calculations. Like many big employers, IBM has been hit with such suits from lawyers seeking to represent thousands of its employees. Information Week:
The good news for those workers is that IBM now plans to grant them so-called "non-exempt" status so they can collect overtime pay. The bad news: IBM will cut their base salaries by 15% to make up the difference, InformationWeek has learned.
The plan has been greeted with howls of protest from affected workers.
The payroll restructuring goes into effect Feb. 16 and applies to about 8,000 IBM employees classified as technical services and IT specialists, according to internal IBM documents reviewed by InformationWeek and sources at the computer maker.
The plan calls for a "15% base salary adjustment down across all units with eligibility for overtime," the documents state. The move is a direct response to the employee lawsuits -- at least one of which has apparently been settled.
"To avoid protracted litigation in an area of law widely seen as ambiguous, IBM chose to settle the case -- and to conduct a detailed review of the jobs in question," the documents state.
The giant tech company also intends to lobby for modernization of New Deal era wage-and-hour laws which might allow it to restore the previous compensation methods. Good luck with that -- even if it can show that most of the workers involved would themselves favor salaried rather than hourly status, the political clout of unions and trial lawyers has stymied efforts at legislative reform in the past. (Paul McDougall, Information Week/EETimes.com, Jan. 23)(cross-posted from Overlawyered).
SEC Commissioner Paul Atkins adds his voice in the WSJ to the large chorus of sensible people objecting to civil scheme liability:
In Stoneridge,the Supreme Court held that investors in one company cannot sue other companies for securities fraud unless those other companies did something that the plaintiffs specifically relied on when making investment decisions. The court warned that if it adopted the plaintiffs' concept of reliance, the "cause of action would reach the whole marketplace in which the issuing company does business." In other words, had Stoneridge gone the other way, plaintiffs would be able to reach into the pockets of customers, vendors and other firms that simply do business with companies that defraud investors.
Regardless, Stoneridge sparked an outcry from those arguing that in the name of "fairness" and "justice" someone should be forced to pay if the primary wrongdoer cannot. This outcry could lead to demands on Congress to rewrite the securities laws to give plaintiffs like those in Stoneridge what they could not get in court -- the ability to reach into a deep pocket regardless of culpability. But justice is not merely finding someone who can pay. Exposing one company to class-action lawsuits because another company defrauded its investors is not fair or just to shareholders who shoulder the burden of class-action settlements.
Today was the deadline for banking institutions operating in Second Life, an online alternative universe, to shut their doors and refund deposits. The LA Times reports that Linden Lab, creator of Second Life, mandated the shutdown folowing the failure of Ginko Financial, a shady virtual bank that formerly offered double digit interest rates to virtual depositors. All commerce in Second Life takes place in Lidens: a unit of virtual currency that generally trades against the US doller at a rate of about 270:1.
The Ginko failure alone eliminated about $75,000 of deposits. There is no word yet on what additional funds may have been lost in the unwinding process scheduled to end today. Cornell professor Robert Bloomfield believes that "no individual seems to have lost enough money to make filing a lawsuit worthwhile," but I think he may lack imagination. Does anyone want to bet that a class action suit will be filed in California, home of Linden Lab? Oh, wait, gambling has already been banned on Second Life due to legal concerns.
The article also mentions that Second Life's virtual securities took a tumble as a result of the current financial crisis. Sarbanes-Oxley, anyone? After all, Second Life already has its own bar association.
As the Wall St. Journal's Law Blog notes, it's getting better and better.
Jane Doe buys 800-thread count sheets. They don't feel right. She has the threads counted. Turns out there are two schools of thought about how to count threads. One method gives these Bed Bath and Beyond sheets 800. The other gives them 400. Upshot: class action. "A dry goods Enron", exclaims the plaintiffs' lawyer.
BB&B denies liability but settles anyway, blah blah blah. " �All purchasers between August 1, 2000 and November 9, 2007 of multi-ply sheet sets, pillowcases, down comforters, bedskirts, shams, duvets, and down pillows from Bed Bath & Beyond that were labeled as �plied,� �two-ply,� or �2-ply� shall be eligible to receive �a series of refunds and discount certificates.� The class representative gets $2,500. The lawyers receive $290,000.
Lawrence Lindsey asks in the Washington Post: now that Bill Clinton has spoken of the voter intimidation by unions he saw at the Nevada caucus, perhaps Hillary Clinton should rethink her opposition to secret-ballot unionization votes? Earlier on Point of Law: other card-check posts.
He's for the bill (nonsubscriber link works only temporarily):...
doubts about the legality of Bush's actions are no justification for holding hostage telecoms that relied on the administration's assurances of legality and were in no position to second-guess its assertions that the surveillance program was essential to national security.
Not, that is, unless we want to risk that the telecoms, credit card companies, banks, airlines, hospitals, and other private companies -- whose cooperation is essential to finding terrorists before they strike -- will balk or delay when the next president seeks their help in an emergency.
The three lawyers accused of stealing more than $65 million from clients had argued that federal investigators violated confidentiality rules when they sent law firm employee Rebecca Phipps into private meetings to gather evidence of the scheme. "U.S. Magistrate Judge Gregory Wehrman declined to dismiss the indictment but agreed to hear more information about evidence gathered during the course of the investigation," per the Lexington paper. Judge Bertelsman imposed unusually heavy bond requirements: $52 million for William Gallion; $45 million for Shirley Cunningham, Jr.; and $5 million for Melbourne Mills, Jr. (earlier).
In the WSJ, whose opinion pages are no longer behind a subscription wall:
Critically, however, "union pension funds" do not belong to unions. The funds are managed by trustees -- half appointed by the union and half by the companies that contribute to the fund pursuant to their collective-bargaining agreements. Under the federal employee benefits law (ERISA), which is administered by the Department of Labor, these trustees are to act "solely in the interest of the plan's participants and beneficiaries, and for the exclusive purpose of paying benefits and defraying reasonable administrative expenses," as the Department reiterated in an advisory opinion last month.
The Labor Department letter addressed a reported AFL-CIO plan to promote shareholder proposals that press companies to offer more generous employee health-care benefits, and that would require companies to disclose political contributions so shareholders could see if support was being given to candidates who don't share labor's views on health care.
Before undertaking "to monitor or influence the management of corporations," the department said, fiduciaries "must first take into account the cost of such action and the role of the investment in the plan's portfolio, and cannot act unless they conclude that the action is reasonably likely to enhance the value of the plan's investments." ...
In a word, unions are not entitled to use retirement funds to raise costs at the companies where the funds are invested. And unionized corporations are not required to permit this. Rather, management trustees and the Labor Department are obligated to prevent it.
Must they be written in bureaucratic legalese to protect the employer from litigation? Ted discusses at Overlawyered, as does Dan Schwartz at Connecticut Employment Law Blog. My book The Excuse Factory has a considerable discussion of how lawsuit incentives shaped the modern employee handbook; it's unfortunately not online, but you can get the gist of some of it in reviews like this one.
So asks the Patent Baristas blog in discussing the sovereign-immunity issues of Biomedical Patent Management v. State Of California and the related cert petition. The Wall Street Journal discussed the issue November 13.
My op-ed on the Supreme Court's denial of cert in the Enron class action is in today's New York Sun.
George Cohen's letter to the FTC (reported in today's New York Times) asking for antitrust review of the Vioxx settlement, is somewhat shorter than one might expect, and essentially recounts what he said at AEI two weeks ago. I repost it in its entirety below the jump, and will have more to say about the letter (and about Adam Liptak's article) next week.
That Ted Frank guy who told the Legal Times "The proper way to look at it, I think, is that the Enron case is dead after today," appears to have been right. The plaintiffs' attenuated "scheme liability" theory contradicted federal law, as Stoneridge affirmed, and the Court refused to hear the appeal of the Enron plaintiffs from the Fifth Circuit decision shutting down the case.
Of course, the banks that settled for billions of dollars rather than risk tens of billions of dollars of liability after the erroneous district court ruling don't get to get their money back, and the plaintiffs' attorneys (including the felon Bill Lerach) will make hundreds of millions of dollars in their use of the courts as legalized extortion.
An impressive lineup produced by the Tulane Law Review includes Russ Herman (Vioxx PSC), Judges Carol Higbee and Eldon Fallon (Vioxx), and Judge Janis Jack (silicosis). Other impressive figures speaking include, but are not limited to, Judge Lee Rosenthal, the indicted Dickie Scruggs, and law bloggers Alexandra Lahav and Mark Herrmann. (via Scheuerman)
Sharing virtual space today with reports of the Fed's emergency interest rate cut, a NYT article details one woman's quest to make her realtor pay the price of an ill-considered real estate purchase.
Marty Ummel claims that her realtor misrepresented the strength of the California market in which she purchased her retirement home in 2005, the height of the bubble. If her lawsuit succeeds, she may open the door to a new wave of bust-related litigation: the National Association of Realtors could find no suit in the last five years that concerned solely the issue of house valuation. Previous suits concerned alleged misrepresentations about the condition of the purchased property itself.
Ummel has racked up $75,000 in legal fees so far. There is no information on why she was unable or unwilling to find a contingincy fee lawyer. "I do not think I am obsessive-compulsive," says Ummel, who reportedly picketed ReMax on weekends for a year, "but I am 114 pounds of absolute perseverance."
- TV's "Law and Order" portrays a lawsuit over dry cleaner's lost pants, but -- don't worry! -- there's plenty of anti-business sentiment [Carter Wood/NAM "Shop Floor"]
- Milberg Weiss, despite guilty pleas from four of its principals, keeps waltzing away with huge fee awards. Anything wrong with that picture? [Examiner editorial]
- Economic experts and Daubert challenges [Neckers/Wikander, FDCC Quarterly PDF, via Day on Torts]
- Series last summer in Hampton Roads paper probes municipal liability, plenty of good info despite predictable slant against sovereign immunity [Virginian-Pilot via Obbie, who has links to other installments]
- Transcending her background? Washington Supreme Court gets (another) former trial lawyer member with latest appointment by Gov. Gregoire [The Olympian]
- Wasting money is the least of the sins of tax-funded legal services programs, argues Hans Bader [CEI Open Market]
- No damages payout, just governance reforms in Schering-Plough shareholder suit, but lawyers to get $9.5 million anyway [NJLJ/Ted at Overlawyered]
- Getting the Supreme Court's message? Punitive damages not running away so much lately [Fisk/Bloomberg]
- Framing of trials as underdog vs. big dog often crucial [Reed]
- Some credit affidavit of merit, same-expert-specialty rule with stabilizing Arizona's med-mal climate [Denogean/Tucson Citizen]
- Individual issues predominate: a judge decertifies a big Lakin Law Firm class action against Ford over flaking paint [MC Record]
- Sordid tales involving superstars-of-suing Lerach and Scruggs "are legal-sector equivalent of Buffett heading to jail and Bill Gates being indicted on felony charges." [Richmond Times-Dispatch editorial/ TradingMarkets.com] For regular updates on the Scruggs affair, check the Overlawyered scandals page.
The physician/author, an expert on vaccines and the law, is interviewed by the Manhattan Institute's Paul Howard.
Wyeth v. Levine, certiorari to the Supreme Court of Vermont, will decide to what extent FDA regulation of warning labels preempts failure-to-warn claims. The solicitor general's brief nicely explains the stakes, and why reversal is merited now that the Court has granted cert. Public Citizen's pro-litigation brief is also on the web. (Update: Beck and Herrmann have a comprehensive post.)
Altria v. Good, certiorari to the First Circuit, will resolve tobacco companies' preemption defense to light-cigarette consumer fraud class actions. Can a manufacturer be held liable for "consumer fraud" for using a government-mandated description for their product? The NCLC brief explains why this is important beyond tobacco. Public Citizen's brief in a similar Illinois case is on the web. Public Citizen's brief in a similar Illinois case is on the web. (Update: see also Steenson and WSJ. Also Lahav, who mistakenly labels Public Citizen's position as "pro-consumer," though it would raise prices, reduce consumer choices, and, in at least in the drug context, hurt consumer safety.)
AP reports that at today's status conference, "lawyers have amended the November 2007 pact so that attorneys are directed to exercise their 'independent judgment in the best interests of each client individually before recommending enrollment in the program,'" which should resolve any remaining ethical ambiguity in the Vioxx settlement. "I'm satisfied that nothing in the agreement imposes on a lawyer any impermissible restriction on the practice of law," AP reports Judge Fallon saying. All objections have been withdrawn, though it is unclear whether that includes the pending Fifth Circuit appeal. I'll have more on the "tweaking" once I can evaluate it. The parties have reported that 57,167 plaintiffs have registered, and, so far, over 3000 of those have enrolled. The first enrollment deadline is February 29. Reuters has a short piece on today's hearing, also, and Pharmalot also repeats the AP account.
Update: I have posted the amendments which are, indeed, tweaks that accomplish the same end-result as the original settlement without running afoul of requirements that attorneys exercise their own individual judgment. The critical portion is Section 1.2.2, which modifies Section 220.127.116.11 of the original agreement. The other major change is that Judge Fallon has agreed to serve as the Chief Administrator.
(Bumped and expanded from Jan. 15 post.)
Ronald Benjamin, a Binghamton attorney for five plaintiffs, has filed a legally incoherent interlocutory appeal with the Fifth Circuit against an administrative discovery order (Pre-Trial Order No. 28) issued by Judge Fallon. (Agard v. Merck, No. 07-31164.)
Legal Times/New York Law Journal; Human Events; and A.M. Best Wire all quote me. Also: Bainbridge again; Ribstein again; Alt & Walsh @ Heritage; Kirkendall; Portfolio.com; Lattman (interviewing Hal Scott); Nowicki.
Separately, the remand in Tellabs, a case used by the Chemerinskys of the world to demonstrate the supposed business-bias of the Court, has resulted in the Seventh Circuit refusing to dismiss the case notwithstanding the Court's decision. Judge Posner wrote the unanimous decision.
Beck and Herrmann give a lengthy, but must-read, explanation why the esoteric 21 C.F.R. � 314.70(c)(6)(iii) is of critical importance in the ongoing question of whether state courts can penalize pharmaceutical companies for failing to contravene federal regulations—i.e., the question of preemption.
Speaking of preemption, January 18 is the day when the Supreme Court decides whether to grant cert in the important case of Wyeth v. Levine (May 22). As per usual, Beck and Herrmann have that well covered, too, with a post on the solicitor general's brief.
Lyle Roberts does such a good job summarizing with links, I'm just going to plagiarize his excellent post:
As it turns out, trials remain a risky business for both plaintiffs and defendants. Any thoughts that the JDS Uniphase defense verdict would lead to more securities class action trials will have to be tempered by yesterday's result in the Apollo Group trial. Bloomberg reports that the jury returned a plaintiff verdict that could lead to a payout of up to $277.5 million in damages.
Interestingly, the company has a web page on the litigation that includes a case summary, key documents, and a timeline of events. Comprehensive coverage of the trial and the jury verdict can be found at Securities Litigation Watch and The D&O Diary.
A status conference in federal court is scheduled for tomorrow in New Orleans. The parties today submitted a joint status report in advance:
It's true, as the plaintiffs say: New York's judicial selection methods are at best opaque and outdated, at worst hackish and corrupt (more). But as the U.S. Supreme Court has now just unanimously confirmed, the way to fix that is for New Yorkers to muster the democratic energy and will to force the needed changes, not ask an unelected federal judiciary to do it for them. More: NY Sun.
David Rossmiller sketches in some background behind the state of Florida's move to yank Allstate's license to write new auto business, not long after its governor announced that he was hiring trial lawyers to make life difficult for home insurers:
If you haven't kept up with the Florida insurance market, Florida Gov. Charlie Crist has been in a long-running battle with insurers over the state's high property insurance rates. A year ago, Florida lawmakers passed the latest in the state's legislative and regulatory "fixes" to the system -- officials pushed Florida's state-backed property insurer further into the market as a competitor, and added billions to a state fund for a reinsurance pool for the private market. All this, and more, was supposed to lead to rates coming down, but whoops, they didn't. Instead most insurers have filed for big rate increases, sending Crist into episodes of table-pounding.
The disgraced Mississippi lawyer, who entered a guilty plea on Monday in the judicial corruption scandal, has been a major player in asbestos and pharmaceutical plaintiff's work, in suits against HMOs and nonprofit hospitals, in the great tobacco heist, and on and on. I've got a pair of posts up on Overlawyered now briefly summing up Langston's litigation exploits and political involvements. For details on some of the other extraordinary developments in the Scruggs saga that have emerged over the past two days -- including newly surfacing names of other persons allegedly involved in the attempts to bribe Judge Lackey -- check David R.'s site as well as the other usual up-to-date sources.
South Florida Daily Business Review: "Two investigators with a Miami law firm paid a Royal Caribbean Cruises employee to obtain inside information on the amount of money the company would be willing to pay to settle workplace injury claims, the employee alleges in a sworn court affidavit. The affidavit by the Royal Caribbean supervisor is attached to motions asking Miami-Dade Circuit Judge Stuart Simons to disqualify the Wingate Law Firm of Miami from 75 pending lawsuits brought on behalf of cruise line crew members and passengers by the firm. A hearing on the Miami-based cruise line's disqualification requests is set for Thursday."
- Today is January 15, the first of many deadlines in the Vioxx settlement. Many in the press are reporting that today is the day for plaintiffs to sign up for the settlement, but this is not so; it is merely a registration deadline to indicate the status of all attorneys participating in the litigation, and which cases they have financial interests in. [Settlement Exhibit 1.1; NJ Star-Ledger; DowJones; AP/Newsday; Bloomberg]
- On January 9, Judge Fallon issued an order that Jeffrey Lowe's motion objecting to the settlement (Jan. 5) was "continued" without a new date for a hearing, suggesting that his objections have been addressed by the PSC without further briefing. But who knows? I've asked Lowe's co-counsel, blogger Evan Schaeffer, if he has a comment and will report back.
- Another objection, filed as a declaratory judgment action by Connecticut law firm Stratton Faxon, which had about 85 plaintiffs, was rejected in federal court in Connecticut for lack of jurisdiction on the grounds that the law firm was seeking an advisory opinion. [Lexis-Nexis]
- Ronald Benjamin, an attorney for five plaintiffs has filed a legally incoherent interlocutory appeal with the Fifth Circuit against an administrative discovery order (Pre-Trial Order No. 28) issued by Judge Fallon. The appeal is based on the faulty premise that a discovery order is a final judgment because the definitions (which are delineated as "For purposes of this order only") will be binding on future litigants in future substantive motions. And even if one were to accept the legally illiterate premise, the motion's logic is incomplete. If one assumes that Judge Fallon, by applying definitions in a discovery order, has made binding findings of fact, those findings of fact are still interlocutory, since the court has not yet dismissed any case by misapplying the definitions. Benjamin's other faulty premise is that the settlement is subject to Rule 23; but since there is no plaintiff class, there are no Rule 23 compliance requirements. Thus, the appeal will almost certainly be dismissed for lack of appellate jurisdiction, as both Merck and the PSC have requested. (Agard v. Merck, No. 07-31164.) There seem to be a handful of other appeals pending in the Fifth Circuit that were filed in the waning days of 2007.
- AP is reporting that Merck expresses confidence that the 85% thresholds will be met requiring Merck to participate in the settlement. Of course, Merck would express confidence even if they didn't have confidence, so this tells us little by itself, but in conjunction with the lack of large-scale opposition beyond a few fringe attorneys and plaintiffs, is probably correct.
Met with a hail of dead cats from Baltimore Examiner, NAM "Shop Floor", "Dreck" @ TigerHawk, KipEsquire, Amateur Economist, and various commenters at the Plain Dealer. But the Denver Post's Al Lewis finds another lawprof who admires the Cleveland suit, which is more prominently being talked up by lawprof Kathleen Engel, a specialist in this area, as mentioned here and here. By coincidence or not, the law school at which Engel teaches is Cleveland State. And activist Ohio attorney general Marc Dann, a frequent mentionee on this site, praised the Cleveland suit and suggested that he may jump in at some point with an action on behalf of the state.
SCOTUSblog has downloaded the opinion and has a good post. Steve Shapiro, who argued the case for the winning side, says in a press statement, �The Supreme Court today handed down a major victory for the U.S. economy and investor welfare. The Court understood that the trial lawyers� theory of �scheme liability� was simply a scheme to rake in billions of dollars for themselves at the expense of the investors they purported to represent.� Justice Kennedy:
In effect petitioner contends that in an efficient market investors rely not only upon the public statements relating to a security but also upon the transactions those statements reflect. Were this concept of reliance to be adopted, the implied cause of action would reach the whole marketplace in which the issuing company does business; and there is no authority for this rule.
The briefing in the Rhode Island appeal is scheduled: briefing for appeals and cross-appeals of the main judgment is due January 31, and oral argument will be May 15. Richard Faulk and John Gray have a good overview of the problems with the Rhode Island litigation for WLF.
In Ohio, a referendum effort to repeal the anti-market-share-liability bill appears to have failed to gather the signatures needed.
The industry appears to have its own website which, while not as comprehensive as it could be, includes a good deal of data on the status of various litigations.
And, of course, there is lots of Point of Law coverage and coverage at Legal Newsline. The Institute for Legal Reform also has a number of papers on the public-nuisance phenomenon, including an excellent Washburn Law Review article by Victor Schwartz and Phil Goldberg.
You can't say we didn't warn you about the dangers in lawyers' efforts to develop elastic, inventive "public nuisance" theories for suing unpopular businesses (gunmakers, makers of lead paint in 1920, global warming contributors, etc.) And now, shortly after Baltimore's lawsuit (PDF) seeking recovery from subprime lenders for various sins and insults, the mayor of Cleveland has followed with a yet more absurd and yet more dangerous lawsuit (PDF), this time invoking public nuisance law against not merely originators of mortgage loans, but even financial institutions that later bought the mortgages from their originators. The Cleveland Plain Dealer, in an astoundingly irresponsible editorial for a newspaper of its once-high reputation, actually cheers: "Wall Street should pay", though it concedes the shakiness of the actual filing: "The one-count complaint contains not one legal citation".
Meanwhile, the Baltimore Sun reported over the weekend that "Baltimore's lawsuit against Wells Fargo for its subprime mortgages has stirred up frustration among industry players, who say they're increasingly taking heat for offering loans in poorer and minority neighborhoods despite being urged for years to do just that." Some legal academics are applauding the emerging city lawsuits; see, for example, this post at Credit Slips. Earlier here.
Says the NAACP complaint: "In 2004, African-American homeowners who received subprime mortgage loans from Defendants were over 30% more likely to be issued a higher-rate loan than Caucasian borrowers with the same qualifications." (� 1.) Thus, it concludes, the disparity "result[s] from a systematic and predatory targeting of African-Americans." (� 6.)
Similarly, Baltimore's suit argues that Wells Fargo is more likely to foreclose in African-American neighborhoods—and that suit does not even attempt to adjust for similar qualifications or finances, just alleging racial disparity.
Of course, there is a difference between being targeted for a subprime mortgage loan and accepting a subprime mortgage loan. And I don't believe that African-American homeowners were targeted for subprime mortgage loans because they were African-American. They were targeted because they were homeowners.
Between 2001 and 2005, I was a law-firm associate, high-income, making multiples of what I make today at a thinktank. And, like I am today, I was also white. And the minute my adjustable-rate mortgage was registered in the title books in 2001, I got several solicitations a week in the mail from fly-by-night mortgage brokers offering to refinance my mortgage with ludicrous financial products. (And when I made the mistake of investigating on-line options for switching to a fixed-rate mortgage in 2004, I also got several e-mails a day and phone-calls a month on the same basis to the point that I switched e-mail providers.)
Somehow, I resisted refinancing with a mortgage that was not favorable to me in the long run—I took a 5.25% fixed-rate instead. But I sure was targeted with subprime opportunities, especially as the real-estate prices in my neighborhood skyrocketed about 10% a year. And if, with my skin-color, income, education-level, and impeccable credit-score, I was targeted, so was every homeowner and their grandmother.
To the extent a statistical study says minorities were, ceteris paribus, more likely to receive unfavorable mortgages than whites, the study reflects a specification error, perhaps in failing to account for different levels of consumer education. Another possibility: there is a lot of state-by-state regulation of the mortgage industry. Are subprime mortgages more likely in states with high minority populations, for example? Are subprime mortgage brokers more likely to be aggressive in urban areas in states on the coasts where real estate prices were increasing faster than average, and those states correspond to states with high minority populations?
Note that the CRL study that has been driving the debate and highlighted in the NAACP suit finds that for many types of loans, whites were "disadvantaged" relative to Hispanics, which would seem to count against a racial explanation (unless one believes that bankers hold a racial animus against whites and towards Hispanics) and more towards a geographic explanation.
Note also the irony that these same defendants were accused of failing to offer loans to African-Americans just a few years ago. (See also Apr. 1.)
Finally, note that the NAACP complaint is legally frivolous in at least one respect because of the lack of standing in a federal court. Domino's Pizza, Inc. v. McDonald, 546 U.S. 470 (2006) (no � 1981 standing for third parties). (Baltimore brings no � 1981 claim.) Fair Housing Act standing is questionable, too, given the lack of allegation of injury to NAACP in particular, though that could be fairly easily rectified by an amended complaint, especially in the Ninth Circuit. Cf. Spann v. Colonial Vill., Inc., 899 F.2d 24 (D.C. Cir. 1990) ("[a]n organization cannot, of course, manufacture the injury necessary to maintain a suit from its expenditure of resources on that very suit") (R. Bader Ginsburg, J.); Fair Housing of Marin v. Combs, 285 F.3d 899, 902 (9th Cir. 2002). N.B. that there is an amended version of the complaint that may already fix these issues. NAACP v. Ameriquest Mortgage Co., No. 8:07-cv-00794-AG-AN (C.D. Cal.). For some reason, this is not available on PACER, so I haven't seen it.
(Disclosure: I own less than $15,000 in stock in Citigroup, one of the defendants in the case.)
Bloomberg.com has a nice summary of Florida plaintiffs' lawyers' current rush to file individual tobacco liability suits, after the Florida Supreme Court in July 2006 overturned a $145 billion class action punitive-damage verdict. The Florida supremes held that plaintiffs couldn't proceed as a group, but upheld jury findings that the companies were negligent and sold defective products, which will apply in each individual case. January 15 is the filing deadline.
The last-minute filers include Willie Gary, a Stuart, Florida, lawyer who travels in a custom 32-seat Boeing plane he calls ``Wings of Justice II''. [I wrote at length about Mr. Gary in "NAFTA Meets The American Torts Crisis: The Loewen Case", 9 George Mason Law Review 69 (2001)].
Tobacco defendants will NOT be able to litigate the defectiveness of their product, but they WILL be able to argue that plaintiffs were themselves to blame or that their illnesses or deaths did not result from smoking. Florida is a pure comparative negligence state, so each case looks to be a drawn-out affair.
There has been a lot of complaining about the billable hour in recent months, but a new firm is putting money on the idea that clients are ready to abandon it. The Valorem Law Group, consisting of three former BigLaw partners from Chicago and Los Angeles, is opening in Chicago, will offer flat-rate services and, like Summit Law Group before it, a "value adjustment line" (May 2) that permits clients to choose their own billing amount. The firm eschews big offices, though will be based in a big downtown Chicago building instead of the suburbs, and claims it will outsource a lot of work currently done by high-billing associates at other law firms. [National Law Journal ($)]
Patricia Hynes, who spent 24 years at now-disgraced Milberg Weiss Bershad Hynes & Lerach and more than ten on its executive committee, is now slated to become the next president of the New York City bar association. The favorable assumption is that Hynes, a former prosecutor who became a name partner in the firm, was systematically duped by her former colleagues, as Roger Parloff at Fortune notes:
While being a dupe is not unethical, and certainly not illegal, it�s no badge of honor, either. For idealistic young law students making their career choices, it must have been reassuring if not inspirational to see former Manhattan executive assistant U.S. attorney Pat Hynes�s name so prominently displayed on Milberg�s letterhead. It vouched for the integrity of the whole operation. Whether she knew it or not, part of what she was being paid to do there for 24 years was to lend the firm an aura of integrity that, judging from three top partners� guilty pleas, it didn�t deserve.
Before assuming the high professional honor of a bar presidency, Parloff wonders, shouldn't Hynes be more willing to answer questions about her time at Milberg?
The Legal Times' Tony Mauro reports on the latest development following the shocking October 2007 decision by the 2nd Circuit court of appeals to allow a suit to proceed against hundreds of corporations, under the Alien Tort Claims Act, for their participation in the South African economy under the apartheid regime.
The defendants have petitioned for cert to the U.S. Supreme Court. The petition in American Isuzu Motors Inc. et al. v. Ntsebeza et al., argues that the lawsuit should not be allowed in light of strong objections by both the United States and the elected government of South Africa. South Africa sees the suit as a "completely unacceptable" infringement of its sovereignty and an interference with its reconciliation policies, and the U.S. says the suit has already undermined its foreign policy.
Saudi Arabia's barbaric laws mistreat women and viciously oppress non-Muslims. China enslaves millions, harvests organs from thousands it executes, and is still in denial over Tiananmen Square. Warning to all US companies doing business in those places -- did you know you might be committing an American tort? Talk about a tariff barrier to exports!
Yesterday a unanimous D.C. Circuit panel granted an appeal tossing a lawsuit based on an absurd District strict liability statute. The statute holds gun manufacturers liable for all deaths or injuries caused by handguns (none of which may be legally sold in the District). The panel dryly noted that federal legislation prevents this kind of law. End of story.
- Rigsby deposition: when State Farm called a meeting to brainstorm ways to counter Mississippi AG Hood's P.R. campaign against them, state troopers showed up and took down license plates [Lange/YallPolitics]
- Special welcome mat for New York business? After chipmaker AMD talks of locating a big factory upstate, NY pols rush to jump-start an antitrust investigation of its rival Intel [AP/NYTimes]
- Lawprofs' campaign contributions make interesting reading [Bernstein @ Volokh]
- Trial and error in medicine is unacceptable because medical error is unacceptable. Have we thought through the implications of that? [Dr. Wes]
- Washington state AG Rob McKenna continues his push to fix his state's unique sovereign un-immunity rule [KUOW; earlier, more]
- Florida lawyers rush to file thousands of tobacco suits as deadline set by state high court approaches [Herald, Times-Union]
"We're certainly in favor of people not being cheated; we were only opposed to anything that leads to the perception that you can't trust your lawyer," said Stephen A. Lechter, an executive board member of the Bristol County Bar Association, which had fought the proposal.
A salute to attorney (and friend of this site) Peter Morin, who with other Bay State reformers had to push for years against entrenched local Bar resistance.
The Washington Times has an interesting summary of the claims filed against the federal government for the Army Corps of Engineer's alleged negligence in the design and construction of the New Orleans Levees. One claimant is asking for Three Quadrillion dollars, which would give his attorney (assuming a 33% contingent fee...) a mere one quadrillion (about 80 times the gross national product).
"I understand the anger," said Baton Rouge economist Loren Scott. "I also understand it's a negotiating tactic: Aim high and negotiate down." Umm, I dunno. There's such a thing as aiming a tad too high...
Professor Bainbridge writes on the extensive publicity and blogosphere commentary relating to Senator Obama's supposed adoption of behavioral economics in policy-making. Behavioral economics makes claims that human irrationality leads to market failures. While it is questionable that Obama's proposed policies really do account for this new field of economics, it is in any event worth noting Josh Wright's paper asking if there's anything to the behaviorial economics claims in the first place:
Modern legal scholars frequently and increasingly base their analyses on the assumption, grounded largely in the extensive experimental literature, that individuals are subject to a number of systematic behavioral biases. Within the legal literature, behavioral economic analysis has been relied upon to generate a significant number of proposals for paternalistic regulation. These proposals are frequently accompanied by claims that neoclassical economics is insufficiently flexible to deal with these empirical observations, and that behavioral law and economics is as a superior guide for policy analysis. These claims must ultimately be resolved empirically and turn on whether incorporating insights from behavioral economics improves our ability to explain the law, understand the behavior of economic agents, or predict the consequences of legal change. This paper focuses on the shared interest of both neoclassical and behavioral economists in empiricism and explanatory power. It asks whether behavioral economic analysis of law has increased our knowledge in an area of �consumer contracts.� Specifically, the paper surveys the available empirical evidence to assess claims from the behavioral law and economics literature involving exploitation of consumer biases with credit cards, standard form contracts, and shelf space contracts. I find that the empirical studies of firm and consumer behavior in these examples do not support the claims that behavioral law and economics generates greater predictive power than conventional price theory.
John Fund on today's Supreme Court argument over the constitutionality (!) of photo-ID laws for voting:
Indiana officials make the obvious point that, without a photo ID requirement, in-person fraud is "nearly impossible to detect or investigate." A grand jury report prepared by then-Brooklyn District Attorney Elizabeth Holtzman in the 1980s revealed how difficult it is to catch perpetrators. It detailed a massive, 14-year conspiracy in which crews of individuals were recruited to go to polling places and vote in the names of fraudulently registered voters, dead voters, and voters who had moved. "The ease and boldness with which these fraudulent schemes were carried out shows the vulnerability of our entire electoral process to unscrupulous and fraudulent misrepresentation," the report concluded. No indictments were issued thanks to the statute of limitations, and because of grants of immunity in return for testimony.
Even modest in-person voter fraud creates trouble in close races. In Washington state's disputed 2004 governor's race, which was won by 129 votes, the election superintendent in Seattle testified in state court that ineligible felons had voted and votes had been cast in the name of the dead. In Milwaukee, Wis., investigators found that, in the state's close 2004 presidential election, more than 200 felons voted illegally and more than 100 people voted twice. In Florida, where the entire 2000 presidential election was decided by 547 votes, almost 65,000 dead people are still listed on the voter rolls -- an engraved invitation to fraud. A New York Daily News investigation in 2006 found that between 400 and 1,000 voters registered in Florida and New York City had voted twice in at least one recent election.
David J. Pfahler, who sued an 8 year-old boy for injuring him in a ski accident, has now asked a judge to bar the boy's parents from talking about the lawsuit, the Denver Post reports. Pfahler's lawyer hopes that the gag order, if issued, can halt a barrage of derision in the media so extensive and hilarious that "the plaintiffs will be unable to have a fair trial." I doubt it, but I suppose it is worth a shot.
Pfahler also complains of receiving death threats from enraged members of the general public. Moderate your enthusiasm, tort reformers.
Via Rossmiller: On Thursday, Jan. 17, the Federalist Society is holding a lunchtime panel discussion (PDF) entitled: "Is the Mississippi Bar Doing Enough To Combat Corruption and To Protect the Honor and Integrity of the Profession?" Timing could scarcely be better as rumors are flying fast of potentially major developments in the Scruggs prosecution. And for those who are following one of the most curious threads in the Scruggs backstory -- the matter of P.L. Blake, who appears to have been steered as much as $50 million of the tobacco settlement for services that include clipping newspaper articles and having a sense of where the Mississippi legislature was going -- Tim Kalich has a piece in the McComb Enterprise-Journal sketching things out nicely.
The City of Baltimore has sued Wells Fargo for writing bad loans within city limits, the New York Times reports. City officials claim that forclosures lower property values, which in turn reduces property tax revenues. The logical next step: suing local business owners who inconsiderately go bust.
UPDATE: Oops! It looks like the speedy and insightful Michael Krauss beat me to this one, and with more analysis (see below).
The New York Times reports on a hilarious display of legal incompetence by the new administration of Baltimore, the self-styled "City that Reads" (not).
In the suit, Mayor Sheila Dixon joined with the City Council to ask that the court bar Wells Fargo Bank from charging higher fees to black borrowers. It seems that the suit alleges that:
1. The bank allowed subprime loans in Baltimore;
2. These loans have defaulted in large numbers;
3. The defaults have led to foreclosures, and to a lowering of property values, hence to a lowering of the tax base to be tapped by Baltimore City.
Let's see, hmmm. You shouldn't have loaned money to unqualified borrowers, and now that you insist they pay back their promised amounts you are harming the city they were fortunate enough to own property (thanks to you) in. Legal incompetence and Economic incompetence all rolled together in one suit. Nicely done, your Honor.
Per the Chamber-backed Madison County Record, forty-seven plaintiffs from around the country have been brought to the southern Illinois county to sue drugmaker Sanofi-Aventis over alleged complications of the antibiotic Ketek. Whether or not St. Clair and neighboring Madison County remain the worst of the worst from defendants' point of view, they certainly would still seem to be a target of opportunity for forum-shopping.
I wasn't the only one who thought the paper's report on California's MICRA law -- to quote Prof. Obbie -- "state[d] a point of view for which it lacks convincing proof".
The Supreme Court is being urged to resolve that question, which flared up when a three-judge panel of the D.C. Circuit found such taxation unconstitutional, and then subsided when the full circuit sitting en banc reversed that decision. The case, which arose under whistleblower statutes, is called Murphy v. IRS. [TaxProf/ABA Journal]
I was pleased that legal reform made a cameo appearance in Saturday's ABC/Facebook Republican Presidential debate, if only in the form of a recognition that we do, in fact, have a big problem. Mitt Romney said the following in his closing remarks:
American corporations -- last year they spent more money defending tort lawsuits than they spent on research and development. We're upside down.
According to the Club for Growth, Romney's record on legal reform is strong and steady: as Governor of Massachusetts he supported a bill to cap noneconomic damages at $500,000, tightened the standards that administrative tribunals apply to medical malpractice claims, and reduced the amount recoverable in attorneys fees by successful plaintiffs in large cases.
As a Governor, Romney -- like Mike Huckabee, who also got props from the Club for limiting punitive damages in Arkansas (although almost nothing else) -- was able to avoid the sticky problem of reconciling legal reform with principles of federalism.
Senators John McCain and Fred Thompson received more mixed reviews. McCain consistently favors federal remedies to the nation's litigation problem. He voted for legislation to bar lawsuits against gun manufacturers, to cap medical malpractice damage awards, and to limit attorneys fees in some class action cases. The Club for Growth did ding him, though, for voting for the Patients' Bill of Rights, which created new causes of action against medical providers.
Thompson, a former (but reformed?) trial lawyer, gets a lukewarm reception on legal reform. He voted more than once against federal damage caps, refused to alter the burden of proof in some medical malpractice cases, and opposed granting immunity to manufacturers for Y2k-related problems. Thompson cites federalism as his reason for refusing to meddle in state law, even in order to correct abuse.
In this sentiment, at least, Thompson is aligned with Congressman Ron Paul, who has opposed "denying states the right to decide their own medical standards and legal rules." Paul has opposed several federal bills to grant immunity from state causes of action or cap damages. He did, however, vote for a bill that would remove national class action lawsuits from state to federal courts.
Mayor Rudy Giuliani has had limited scope to directly advance legal reform, but he has proposed limiting suits against New York City more than once. Critics call foul over his decision in 2000 to file suit against gun manufacturers for costs related to City violence. On the other hand, he has shown promising interest in Loser Pays reforms over the years.
Every Republican in the Presidential race supports legal reform -- a promising sign of increased public awareness of this issue. Their styles and priorities differ, though, so the committed reformer should seek more details before casting a ballot if they plan to participate in the Republican primary.
In my talk on the panel today, I mistakenly said that Judge Fallon of the MDL ruled that Dr. Thomas Baldwin could testify as to specific causation. Though Judge Fallon made the initial ruling permitting Baldwin to testify in contravention of Daubert, two weeks later, he later agreed with Merck that Baldwin's testimony as to specific causation violated Daubert and should be excluded.
I regret the error about the specific ruling on the specific expert. I stand by the larger point that Judge Fallon and the trial judges in the two Texas trials committed reversible error in permitting expert testimony in violation of Daubert and the Texas analogue to Daubert.
- Despite New York's 2003 abolition of ad damnum clauses (earlier, as well as here), many in the press continue to find news in the notional damages numbers lawyers announce when they file suits [Turkewitz]
- If you're a commenter from Langston Law Firm dropping by a blog that's probing the Scruggs scandal, best not to take an abusive tone [Lotus/Folo]
- Resentment of chain stores, and legislation aimed at curtailing their spread, goes back a long way [Moynihan/Reason]
- Proposal for medical no-fault liability via contract [NCPA via Robinette/TortsProf]
- Early inferences from Supreme Court's Tellabs decision on pleading standards in securities litigation under PSLRA [Kuwayti & Tkachenko/WLF]
- If you thought the fees paid to outside lawyers in the Mississippi/MCI tax case were indefensible, well, here's someone defending them [Bill Minor/NEM Daily Journal]
- Blawg Review #141 is hosted by Charon QC in the UK; for a panoramic tour of the blawgosphere try zipping through #140, #139, #138, #137, #136, #135, #134, #133, #132, #131 and others listed at Blawg Review.
Judge James T. Vaughn Jr. of Delaware Superior Court, described as the state's top judge, has appointed a panel to investigate business complaints of a flood of out-of-state asbestos claims into the state of Delaware. "James A. Wolfe, the state Chamber's president and chief executive officer, noted that there were 62 cases -- nearly all alleging exposure in Delaware -- on the court's docket in 2004. But between May 2005 and Sept. 30 of this year, 577 more cases were filed -- 445 by nonresidents who largely allege they were exposed to asbestos in another state." (Dec. 3 issue of Business Insurance, Dave Lenckus, no free link). Earlier coverage here. Chrysler's Steven Hantler also discussed the issue while guesting at Overlawyered last summer.
T. Leigh Anenson (Maryland Business) in the Pepperdine Law Review:
The common law doctrine of absolute immunity provided to litigation lawyers is said to be �as old as law.� This centuries-old doctrine protects litigators from lawsuits instigated by the adversaries of their clients. It is typically invoked, irrespective of any nefarious or malicious motives, so long as the course of action taken bears some reasonable relation to the lawsuit. This Article examines the historical antecedents of the litigation privilege as well as the policies motivating its creation. It also provides a comprehensive description of the doctrine of absolute immunity, explores the circumstances in which it has been applied, and discusses potential legal issues that may effect its application in any given case. After considering its venerable jurisprudence, the Article derives an analytical framework for future cases of absolute immunity and details the determinants of the doctrine given prominence in the precedents. The paradigm is intended to assist in the development of the lawyer's litigation privilege and support its continued existence in the twenty-first century.
- A motion challenging the ethical implications of the settlement was withdrawn before a hearing next week, but a new one was filed by different attorneys Thursday (AP), including Madison/St. Clair County forum-shopper Jeffrey Lowe (cf. Oct. 2005) and his co-counsel law-blogger Evan Schaeffer (not mentioned by name in the AP article). Plaintiffs' Steering Committee member Chris Seeger expresses confidence to the AP that the objection will be withdrawn. If so, one wonders why it's taken two months for the PSC to clear this up with Lowe, an attorney with one of the largest inventories of clients outside the PSC, given the looming January 15 deadline.
- The AP article cites Merck's co-national counsel on Vioxx, Ted Mayer, as saying that the plaintiffs negotiating committee has explained the settlement to more than 700 lawyers in meetings around the country and none have said they were staying out of the deal. If this is so, barring any efforts by state-court judges to scuttle the deal ultra vires, the settlement will likely go through, with only a handful of unrealistic plaintiffs holding out.
- The WSJ Law Blog has the Lowe motion, as well as a similar challenge filed by Kentucky and Tennessee attorneys, but hasn't posted the supporting briefs.
- C-SPAN has announced that they are taping the January 7 AEI/Federalist Society panel on the Vioxx settlement for broadcast at some unknown hour (likely after the New Hampshire primary), but there's still free registration to see it live.
- Weird goings on a medical-school blog's comments from someone purporting to be plaintiffs' attorney Mark Lanier. Overlawyered has details. (Update: Mark Lanier himself participates in the discussion at Overlawyered.)
Per a report by the National Law Journal's Tresa Baldas (Nov. 12, no free link) a first-of-its-kind law will go into effect this month in Maine "mandating that legal-funding companies register with the state, disclose all fees and costs up front in a written contract, and outline what is owed over time as the case develops." The business of lending money to lawsuit plaintiffs on the security of their expected winnings has been growing rapidly, more than doubling in the past three years, according to the American Legal Finance Association (yes, there's a trade group). The practice has critics on both sides of the aisle: Baldas quotes Long Island plaintiff's lawyer William Sayegh as saying that he is
"100% opposed" to legal funding, and that he tries to talk clients out of using such services.
Sayegh believes legal-funding companies overcharge clients, pressure them into making earlier settlements so they can get their money faster and ask for information covered by attorney-client privilege. "Trusting an unknown third party? I have very serious concerns with that," Sayegh said. "They're definitely interfering with our work".
Meanwhile, defense lawyer Dwight Davis of King & Spalding in Atlanta recalls a case in which the legal-funding company, he said, "invested heavily in the case and 'could not allow [plaintiffs] to settle for a reasonable amount."
- Aside from the terrorism-suit issue, Bush's pocket veto of defense bill also spared the country an expansion of the FMLA via military-related leave [Schwartz, Connecticut Employment Law Blog, Jottings of an Employer's Lawyer]
- Even for those jaded by all the reports of Scruggs-duggery, the Kerri Rigsby deposition has some pretty amazing stuff regarding those stolen Katrina insurance files [Rossmiller]
- Did California's lawsuit against EPA land in Ninth Circuit via venue gamesmanship, and if so who was the game-player? [Adler @ Volokh via ShopFloor]
- We want your hard drive: one of the scarier discovery requests [NYLJ]
- Attorney for asbestos-diagnosis figure Dr. Ray Harron denies that his client is hard to find [WV Record/earlier]
- Justice at Stake campaign, which campaigns against (among other things) money in judicial elections, has new blog [Gavel Grab]
Point of Law placed a very respectable sixth among the thirteen contenders in the generalist category of law blogs. My other site, Overlawyered, missed winning the competition by just 19 votes. All the other sites are worth checking out, and some might become part of your regular reading regimen as they long have been of ours. The thirteen sites (in order of their finish) are: QuizLaw, Overlawyered, American Constitution Society blog, How Appealing, Legal Juice, Point of Law, Ernie the Attorney, OnPoint News, BLT/Blog of Legal Times, Blawg Review, May It Please the Court, Jurist "Paper Chase", and LawBeat.
Our latest featured column is a bit different than most. It offers a firsthand account of the role played by, well, slightly creative public lawyering at one of the most crucial junctures in the history of New York City's governance, the fiscal crisis of 1975. Former federal tax official (and friend of this site) Alvin Lurie was at the center of the events he describes, and some of the details he recalls here have to the best of his knowledge never appeared in print until today's Point of Law exclusive (bumped 12:15 p.m.).
Forbes's Daniel Fisher profiles efforts of lawyer David Bernick, representing W.R. Grace, to persuade a federal bankruptcy judge to assess at zero tens of thousands of asbestos claims where product-exposure or medical evidence is in Grace's view lacking. It's not just a question of whether Grace winds up paying money to the marginal claimants; it's also a question of whether their lawyers will be allowed to retain veto power over Grace's plan of bankruptcy reorganization, which must pass muster with 75 percent of claimants, a flimsy case getting the same vote as a strong one.
Please register for this event online at http://www.aei.org/event1626.
The AEI Legal Center for the Public Interest and the Federalist Society present:
The Vioxx Settlement
Monday, January 7, 2008, 12:00 p.m.�2:00 p.m.
Wohlstetter Conference Center, Twelfth Floor, AEI
1150 Seventeenth Street, N.W., Washington, D.C. 20036
In 2004, Merck withdrew its pain reliever Vioxx from the market because of new studies showing increased cardiovascular risk. Merck announced that it would not settle any of the tens of thousands of Vioxx lawsuits filed, and set aside over a billion dollars to litigate cases without reserving a penny for damages. After a $254 million verdict in the first Vioxx trial in 2005, some observers predicted over $25 billion in liability for the company. Fifteen trials later, Merck and the plaintiffs� attorneys announced a settlement of the outstanding personal injury litigation�for under $5 billion. Merck stock rose after the announcement, and is now higher than before it withdrew Vioxx from the market. But some law professors are arguing that a new and unusual provision in the settlement raises ethical concerns.
Why did Merck settle? And why was the settlement for so much less than originally anticipated? Is the Merck settlement different from the Wyeth fen-phen settlement, which was originally announced as a $3.75 billion settlement, but has so far cost more than $20 billion? Will the settlement stand up under legal challenge, and what will remain of the Vioxx litigation if it does?
At this event cosponsored by AEI and the Federalist Society, a panel of experts will explore these and other questions. Speakers include Vanderbilt law professor Richard Nagareda, author of Mass Torts in a World of Settlement; Virginia legal ethics professor George Cohen; author and leading pharmaceutical mass torts defense attorney Mark Herrmann; Andy Birchfield, a member of the Vioxx Plaintiffs� Steering Committee; and Ted Frank, director of the AEI Legal Center for the Public Interest. AEI resident scholar John E. Calfee will moderate.
Registration and Lunch
Andy Birchfield, Beasley Allen
George Cohen, University of Virginia School of Law
Ted Frank, AEI
Mark Herrmann, Jones Day
Richard Nagareda, Vanderbilt University Law School
John E. Calfee, AEI
Wouldn't it be nice if the US product liability laws for "failure to warn" consistently recognized the same common-sense principle that the British government does? Compare: John Edwards or the controversy over the Bush FDA recognition of the dangers of overwarning.
- New York is among the states that have wisely enacted payee-notification; wonder whether that might be a reason this $300,000 Long Island defalcation was caught quickly [NYLJ]
- Big mess ensues after Corpus Christi political kingmaker and injury lawyer Mauricio Celis gets accused of practicing law without a license [San Antonio Express-News and more, C.C. Caller-Times and more, Dallas News, AP/El Paso Times]
- Seventh Circuit throws out $156M verdict which held contributors to Hamas responsible for its terrorist acts [WSJ law blog]
- Feud between Illinois AG Lisa Madigan and state EPA over disposition of lawsuit winnings [State Journal-Register, Chicago Sun-Times, Legal NewsLine and again]
- Disgraced attorney Stephen Yagman might just be L.A. Times's favorite felon [Patterico, scroll a lot]
- You'd think disclosing conflicts of interest would be sure to improve outcomes when consumers interact with experts -- and yet... [Overcoming Bias via Pigasys]
- ABA Journal best-legal-blog balloting ends today: alas, Point of Law is well behind, but you can vote for our sister site Overlawyered which is in a tight race for first [go do that]
The state legislature had attempted to limit damages payable by the University of Oregon, its hospital, and other public agencies, but the message from the Oregon Supreme Court is that we're the bosses around here.
Meanwhile, the Los Angeles Times is forgoing a revenue opportunity if it didn't charge the trial lawyers' association ad rates for its new attack on California's MICRA malpractice limits.
Center for Legal Policy at the