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June 2008 Archives

Massachusetts attorney Bob Ambrogi, of blog fame, asks whether the practice is ethical, in a column for IMS Expert Services' BullsEye.

U.K. to review "No win, no fee"

American-style fees were introduced widely in 2000, but ministers in the Labour government say experience indicates that the device "is open to abuse and failing to widen access to justice" and are going to consider revisions, per Frances Gibb in The Times:

Bridget Prentice, the junior justice minister, says that there are growing concerns about how the arrangements work. She told MPs: "We are aware of growing concerns that 'no win, no fee' arrangements may not always be operating in the interests of access to justice.

"This includes a perception that consumer interests are not always being best served, allegations over the possible misuse of 'no win, no fee' agreements and a potential adverse impact on the administration of justice.

"We feel now is the appropriate time for a comprehensive, objective and evidence-based examination of the operation of 'no win, no fee' arrangements in relation to personal injury, employment and defamation/privacy cases."

Gourdine v. Crews

Drugmaker Eli Lilly & Co., which makes synthetic insulin, was sued after a fatal crash in Prince George's County, Maryland, caused by a diabetic driver who hadn't followed her doctor's orders on the use of one of her drugs. The state's high court heard arguments earlier this month in the case. According to the Pacific Legal Foundation's amicus brief, summarized by PLF's Deborah La Fetra, the plaintiffs are trying to chip away at the learned intermediary doctrine by arguing that Lilly should have done more to warn the patient directly about the hazards of noncompliance, not just warned her doctor. (Update Sept. 10: court rules for Lilly on ground that there is no duty to third parties).

In a Moscow courtroom

That very curious RICO-invoking multi-billion suit by Russian customs authorities against Bank of New York Mellon is being aired.

Around the web, June 30

  • NYC lawyers say 30 percent of those suing over Ground Zero dust from 9/11 cleanup aren't seriously ill at all, let alone ill from the dust [NYT, AP] New York expanding disability benefits for more rescuers, anyway [NYT]
  • Asbestos, tobacco, Orioles magnate Peter Angelos is giving $5 million to expand University of Baltimore Law School, defense lawyers don't even try to keep up [AmLaw Daily]
  • "Conspiring former partners" at Milberg Weiss ID'd as Jared Specthrie and Robert Sugarman, still in good standing with the New York bar, and the late Larry Milberg [Portfolio]
  • Blog about e-discovery, data security and related legal topics [Hack-igations, via Genova]
  • Speaking of discovery: Our client fell off your trailer, now let us rummage through 600,000 checks written by your family businesses [MC Record and editorial]
  • Because of Supreme Court's Valdez ruling, plaintiff's lawyers suing Exxon might get only $188 million in fees [AmLaw Daily]

End of the term wrap-ups

The week ended with the usual wrap-up stories about the just-completed term for the U.S. Supreme Court. Dow Jones especially had a good review: "Supreme Court Term Is Mixed For Business, But Wins Were Big": "The U.S. Supreme Court handed the business sector a mix of wins and losses in the 2007-2008 term ending Friday, but when business did win, it won big." The opinions Dow-Jones highlights are Stoneridge, Riegel v. Medtronic and the Exxon Valdez case. More...

Meanwhile, Akin Gump Strauss Hauer & Feld LLP and SCOTUSblog.com issued their annual end-of-term statistical summary of the U.S. Supreme Court's decisions. A few highlights:
  • The Justices issued 67 merits opinions after argument this term, the lowest number since the 1953-54 Term
  • The Justices decided 71 cases in total this term, the lowest number of decisions in recent memory.
  • Five-to-four rulings represented 17 percent of the term's opinions; last year's percentage was 33 percent.

Its Congressional backers didn't tell us that the cost of reopening suits against the USDA might be $3 billion, not $100 million. Shouldn't there be more careful scrutiny of litigation earmarks ahead of the fact, as opposed to these surprises afterward?

Criminalizing asbestos cases

Given the Supreme Court's high-profile rulings in Heller and the Exxon Valdez cases, little national media attention was paid to the Court's June 23rd decision to not consider W.R. Grace's challenge to the criminal indictments of top executives. The Missoulian quotes W.R. Grace spokesman Greg Euston: "We are disappointed. We take this seriously. When Judge Molloy sets a trial date, we will be prepared to defend ourselves." (Washington Post story.)

The criminal case begin with a federal grand jury indictment in Montana in February 2005, charging six executives and the company with conspiracy, Clean Air Act violations, wirefraud and obstruction of justice. (Indictment here; Seattle Post-Intelligencer story here.) As the case progressed, the Ninth Circuit overturned the trial court's decision to exclude evidence about those forms of asbestos that do not fall within the EPA's definition.

The National Association of Manufacturers -- my employers -- the American Chemistry Council and National Association of Criminal Defense Lawyers filed an amicus brief in May (available here) asking the Supreme Court to hear the case. The brief argued that the prosecution used a definition of asbestos far broader than the long-standing definition in EPA's regulations, subjecting the defendants to potential jail time without due process. The brief also contended that the Ninth Circuit ruling threatened to treat defendants there more harshly than those elsewhere, using broad interpretations of hazardous materials, and refusing to recognize the rule of lenity, which requires that criminal statutes be clear and provide fair warning. It also undermines the requirement of mens rea when assessing blame, which will cause businesses to over-invest in regulatory compliance.

The U.S. District Court in Montana maintains a website with all the case documents here. And, of course, the criminal case is separate from the civil personal injury claims, which W.R. Grace settled in April in a deal worth about $1.8 billion, settlements which will allow the company to emerge from the bankruptcy declared in 2001.

The media coverage has been interesting in its own right. The W.R. Grace case is understandably high profile in Montana -- the vermiculite was mined in Libby - and the Seattle Post-Intelligencer has made the company the subject of an aggressive multiyear reporting initiative (i.e., campaign). There was a special report by the PI, "Uncivil Action," about the suffering of the workers and others associated with the Libby mine - health and economic pain - as well as the package, "Forgotten Killer," about the legacy of asbestos. And here's a lengthy chronological list of all the stories between 1999 and 2002. Putting my former cynical reporter's hat on, I'd say, "All designed to win the Pulitzer." (Hopes dashed.) But in any case, the coverage must have certainly influenced the major players.

We mention the coverage after reading the blog post by the PI's national correspondent Andrew Schneider -- author of the book on Libby and W.R. Grace, "An Air that Kills" - in commenting on the Supreme Court's decision last week: "After almost three years of stalling, questionable court rulings and a flood of appeals, it looks like the criminal trial of W.R. Grace and six of its top executives may actually happen."

One man's stalling is another man's due process, one might observe.

The Arizona Business Gazette catches us up on a ruling by the state Court of Appeals last week, overturning a limited effort at medical tort reform. In a unaminous opinion, the court threw out a 2005 law (ARS ¶ 12-2604[A]) that set requirements for experts witnesses in medical malpractice suits. As the paper described the law, "The person not only has to be licensed as a health-care provider but also must be a specialist in the same area as the defendant and actively practicing or teaching in that area."

Judge Patrick Irvine wrote that the state's constitution generally gives the judicial branch the power to enact its own rules, and the law violated the separation of powers. The Legislature can determine court proceedings only if they are "reasonable and workable and do not conflict with, or tend to engulf, the rules promulgated by the (state) Supreme Court."

The opinion in Seisinger v. Seibel, M.D., (CV07-0266) is available here. Gov. Janet Napolitano signed the bill, SB 1306, in April 2005, but in a signing letter expressed serious doubts about its constitutionality.

UPDATE (1:30 p.m. Friday): On a related topic, a recent Washington Legal Foundation Legal Backgrounder, "Georgia Supreme Court Rejects Constitutional Challenge to Expert Testimony Law": "In 2005, the Georgia General Assembly enacted tort reform legislation that affected the state's existing laws on venue, medical malpractice claims, offers of judgment, and damage awards in certain civil actions. As part of Senate Bill 3, the General Assembly enacted O.C.G.A. section 24-9-67.1, which governs the admission of expert testimony in civil cases.1 In Mason v. Home Depot U.S.A., Inc. et al., 283 Ga. 271, 658 S.E.2d 603 (2008), the Supreme Court of Georgia upheld the constitutionality of the statute over challenges on several fronts. The decision in Mason provides for a uniform approach to the analysis of the admissibility of expert testimony in line with the Federal Rules of Evidence and also paves the way for Georgia's trial courts to require expert testimony to meet higher standards for admissibility than perhaps any
other state in the nation."

DC v Heller

A fundamental constitutional right was protected today, folks. Here is NPR's talk show on the subject, in which yours truly claims that the decision is the greatest civil rights case since Brown v Board.

A perspective on the Inspector General report on DOJ hiring missing from the mainstream media coverage from David Frum:

The Inspector General's report on political hiring at the Department of Justice was released yesterday. And yes it does seem to show that the Bush administration went to lengths to hire more conservative young lawyers into the Honors track. ...

On pp. 20-21, we find the numbers that establish that the DoJ career staff in 2002 nominated twice as many identifiable liberals as identifiable conservatives for the Honors track program: 100 vs. 46.

And on page 27, we read that the DoJ bureaucracy advanced nearly three times as many identifiable liberals as conservatives for summer internships that year, 81 vs. 29.

If anything, the ideological bias of the DoJ bureaucracy seems to have become more entrenched with time. In 2006, it nominated five times as many liberals as conservatives for Honors track positions, 150 v. 28, and more three times as many liberals as conservatives for summer internships, 68 v. 16. (See p. 41 and p. 54.)

The evidence suggests that DoJ hiring was contaminated by ideology long before the Bush administration came to town. The Bush administration may have erred and over-corrected. But let's not allow the permanent government and the Democrats (but I repeat myself) to get away with spreading the claim that things were done in a neutral fashion beforehand.

Occam's wallet

From Politico: "Dems Who Flipped On FISA Immunity See More Telecom Cash": "House Democrats who flipped their votes to support retroactive immunity for telecom companies in last week's FISA bill took thousands of dollars more from phone companies than Democrats who consistently voted against legislation with an immunity provision, according to an analysis by MAPLight.org."

From the American Tort Reform Association: "As Senate Debates FISA, ATRA Notes Trial Lawyer Political Giving": "So much of the media coverage of this developing story has, for months, all but ignored the obvious up-tick in trial lawyer lobbying and campaign contributions as they tried desperately to preserve dozens of potentially lucrative lawsuits against telecommunications companies that cooperated with the government in pursuit of terrorists after 9/11," began ATRA communications director Darren McKinney. "Reporters and editorial writers didn't hesitate to document the efforts of the telecoms to preserve in the legislation a degree of retroactive immunity from such lawsuits ....but a typical media consumer could have come away with the impression that such political activity was strictly one-sided."

Darren's media analysis -- especially if extended to the blogs -- is accurate. (You can read all of ATRA's release in the extended entry.) But having closely watched the politics of FISA, it's an unprovable leap to suggest campaign contributions changed minds, either direction. The House Democrats moved away from the position of no immunity for telecoms mostly because their Blue Dog cohort feared the political consequences of blocking effective surveillance.

Meanwhile, by a 80-15 vote, the Senate last evening voted to invoke cloture on the motion to proceed to H.R. 6304, the FISA Amendments Act. AP story here.

UPDATE (9:55 a.m.): Some more thoughts, including on Sen. Hatch's legal analysis, are at the NAM's blog, Shopfloor.org, here.

It will surprise none of his friends that Civil Division chief Peter Keisler comes off among the few heroes in the mini-scandal, singled out for commendation in the Inspector General's report for the strong objections he raised to the subversion of merit/civil service principles. And of course it reveals a great deal about the U.S. Senate confirmation process that Keisler's name has for years topped the list of superbly qualified and fair-minded Court of Appeals nominees blocked by influential Senators as being too principled conservative for their tastes. More: Paul Mirengoff, PowerLine; Steve Chapman, syndicated/Chicago Tribune.

Carrie Lukas of the Independent Women's Forum had this to say on Obama's "equal pay" pander, to which I alluded Monday:

For a "new" kind of politics, Barack Obama's rhetoric sounds awfully familiar. The senator from Illinois may decry his critics as practicing "old politics," yet he freely employs one of the most shopworn political tactics when pandering to women.

At an event this week in New Mexico, Obama repeated the misleading claim that "women still earn only 77 cents for every dollar earned by men," and dismissed the notion that factors other than discrimination explain the wage gap as "just totally wrong."

Yet even the organizations that champion the most aggressive government action in the name of equal pay acknowledge that most of the wage gap is a result of men and women's different choices related to work, not employment discrimination. A 2007 report from The American Association of University Women, for instance, found that most of the wage gap could be explained by factors such as employment, education and personal choices.

Unlike the former editor of the Harvard Law Review, Lukas also gets the legal question right:

Obama tars those opposed to legislation called the "Fair Pay Restoration Act" as opponents of equal pay for women. That's a gross mischaracterization. Equal pay is already required by law; it has been since 1963. The Fair Pay Restoration Act would extend the time period during which an employee can bring suit against an employer for discrimination. Instead of having to take action within 180 days of a decision about compensation, employees could sue within 180 days after receiving a check related to such a decision. As a result, lawsuits could be filed decades after a compensation package was negotiated.

This longer period wouldn't discourage discriminatory behavior today - but would open the door for lawyers to unearth old grievances in pursuit of new legal fees.

  • A statement from ExxonMobil's Chairman and CEO Rex W. Tillerson, reaffirming the company's efforts and empathy for Alaskans, but not addressing the legal issues.
  • Lots of coverage and background from the Anchorage Daily News. It includes a visceral, non-legal response from an attorney for the original plaintiffs: "'I prefer to think of it as five of the justices on the Supreme Court going out of their way to help big business,' said Brian O'Neill, one of the main attorneys for the plaintiffs. 'This is a huge favor for big business, that's what it is. They don't feel punished at all by this. It isn't even a mosquito bite. They're laughing.'"
  • The Anchorage Daily News' editorial makes what seems to us the most substantive argument against the ruling, that of justices legislating. "With Wednesday's ruling in the Exxon Valdez punitive damages case, a 5-3 majority on the U.S. Supreme Court took it upon themselves to write new law that shields corporate wrong-doers." Except a $500-million-plus damage award hardly represents a shield's protection.
  • Legal Newsline notes that the involvement of state AGs did not achieve its desired goals.
  • Otherwise, there's the usual class-warfare inveighing from the left -- Mother Jones blog claims "a long-running campaign by Exxon and other big companies to try to abolish these sorts of awards entirely." Although heated, Doug Kendall at the Huffington Post does hit the top legal/political objections to urge a renewed battle by progressives to control the courts. Make it a textbook case, he says. He means a campaign issue, one infers.

Legal Newsline writes up the case here, including comments from yours truly.

Illinois Attorney General has now filed a suit against Countrywide ("mortgage giant" is just the nickname) and related parties. From the lengthy news release:

Chicago - Attorney General Lisa Madigan today filed a lawsuit in Cook County Circuit Court against Countrywide, the nation's largest mortgage lender and servicer. The complaint alleges that Countrywide Home Loans, Inc., and its parent company, Countrywide Financial Corporation, engaged in unfair and deceptive conduct on a large scale in creating, originating, marketing and servicing unnecessarily risky and costly mortgage loans for Illinois homeowners.

The complaint also names as defendants Countrywide's subprime lending unit, Full Spectrum Lending; the company's servicing arm, Countrywide Home Loans Servicing LP; and Angelo Mozilo, the co-founder and former CEO of Countrywide Financial whose name has become synonymous with the excesses of the subprime mortgage industry. The lawsuit is the result of a nine-month probe by Madigan's office into the lending practices of Countrywide.

The complaint is available here.

With the timing of the filing, Madigan has certainly magnified the PR and political impact of the suit. Countrywide's shareholders approved the company's purchase by Bank of America today, and there's a highly charged debate in the U.S. Senate about housing finance legislation, H.R. 3221, which received unflattering attention in a Washington Post story today, "Vital Part of Housing Bill Is Brainchild of Banks."

Of course, California AG Jerry Brown has also sued Countrywide et al. From his news release.

Brown alleges that Countrywide Financial used deceptive tactics to push homeowners into complicated, risky, and expensive loans so that the company could sell as many loans as possible to third-party investors. According to the lawsuit, the company marketed complex and difficult to understand loans with very low initial or "teaser" interest rates or payments. Countrywide employees, including loan officers, underwriters, and branch managers--who were under intense pressure to process a constantly increasing number of loans--misrepresented or obfuscated the fact that borrowers who obtained certain types of loans would experience dramatic increases in monthly payments.

The complaint, filed in Superior Court, County of Los Angeles, Northwest District, is here.

And Brown manages to find an environmental angle: The phrase "high pressure sales environment" appears six times in the complaint.

I also would like to point out the Exxon opinion's effective reading of statistics regarding punitive damages:

The real problem, it seems, is the stark unpredictability of punitive awards. Courts of law are concerned with fairness as consistency, and evidence that the median ratio of punitive to compensatory awards falls within a reasonable zone, or that punitive awards are infrequent, fails to tell us whether the spread between high and low individual awards is acceptable. The available data suggest it is not. A recent comprehensive study of punitive damages awarded by juries in state civil trials found a median ratio of punitive to compensatory awards of just 0.62:1, but a mean ratio of 2.90:1 and a standard deviation of 13.81. Juries, Judges, and Punitive Damages 269.16 Even to those of us unsophisticated in statistics, the thrust of these figures is clear: the spread is great, and the outlier cases subject defendants to punitive damages that dwarf the corresponding compensatories. The distribution of awards is narrower, but still remarkable, among punitive damages assessed by judges: the median ratio is 0.66:1, the mean ratio is 1.60:1, and the standard deviation is 4.54. Ibid. Other studies of some of the same data show that fully 14% of punitive awards in 2001 were greater than four times the compensatory damages, see Cohen 5, with 18% of punitives in the 1990s more than trebling the compensatory damages, see Ostrom, Rottman, & Goerdt, A Step Above Anecdote: A Profile of the Civil Jury in the 1990s, 79 Judicature 233, 240 (1996). And a study of "financial injury" cases using a different data set found that 34% of the punitive awards were greater than three times the corresponding compensatory damages. Financial Injury Jury Verdicts 333.

We have long argued that mean, not median, verdict statistics are the relevant data points: the outliers on the tail of the distribution are the tails that wag the dogs. The Supreme Court decision gets that point -- ironically citing to the summary statistics in a Ted Eisenberg et al. study that all-too-typically hypes up median awards ("Perhaps the most remarkable finding . . . is the stability in the median punitive-compensatory damages ratios for judges and juries over time.") while obscuring verdict spreads by using logarithmic data in its empirical analysis.

While the precedential value of today's Supreme Court ruling in Exxon v. Baker is limited -- it's a maritime law case -- the analysis in part IV of the majority decision, which discusses punitive damages, is quite interesting. I first note the Court's comparative analysis of punitive damages:

[P]unitive damages overall are higher and more frequent in the United States than they are anywhere else. See, e.g., Gotanda, Punitive Damages: A Comparative Analysis, 42 Colum. J. Transnat'l L. 391, 421 (2004); 2 Schlueter S. 22.0. In England and Wales, punitive, or exemplary, damages are available only for oppressive, arbitrary, or unconstitutional action by government servants; injuries designed by the defendant to yield a larger profit than the likely cost of compensatory damages; and conduct for which punitive damages are expressly authorized by statute. Rookes v. Barnard, [1964] 1 All E. R. 367, 410-411 (H. L.). Even in the circumstances where punitive damages are allowed, they are subject to strict, judicially imposed guidelines. The Court of Appeal in Thompson v. Commissioner of Police of Metropolis, [1998] Q. B. 498, 518, said that a ratio of more than three times the amount of compensatory damages will rarely be appropriate; awards of less than 5,000 are likely unnecessary; awards of 25,000 should be exceptional; and 50,000 should be considered the top.

For further contrast with American practice, Canada and Australia allow exemplary damages for outrageous conduct, but awards are considered extraordinary and rarely issue. See 2 Schlueter SS. 22.1(B), (D). Noncompensatory damages are not part of the civil-code tradition and thus unavailable in such countries as France, Germany, Austria, and Switzerland. See id., SS. 22.2(A)-(C), (E). And some legal systems not only decline to recognize punitive damages themselves but refuse to enforce foreign punitive judgments as contrary to public policy. See, e.g., Gotanda, Charting Developments Concerning Punitive Damages: Is the Tide Changing? 45 Colum. J. Transnat'l L. 507, 514, 518, 528 (2007) (noting refusals to enforce judgments by Japanese, Italian, and German courts, positing that such refusals may be on the decline, but concluding, "American parties should not anticipate smooth sailing when seeking to have a domestic punitive damages award recognized and enforced in other countries").

Yahoo News (among many others) has the details: the Supremes have decided, 5-3 (Alito conficted out, but would have been a 6th vote) that punitive damages should not exceed compensatories, and that Exxon's punitive liability for the Valdez disaster should be reduced from $2.5 billion to $500 million, an 80% reduction. (A jury had decided Exxon should pay $5 billion in punitive damages, but the 9th Circuuit cut that verdict in half in 1994.) Dissenters pointed out (not incorrectly) that the Supreme Court still has no principled way to intervene in state punitives cases....

Around the web, June 25

  • Ted's objection to the Grand Theft Auto hidden-sex-scene class action settlement gets him in the New York Times, complete with [SFW] picture [Jonathan Glater, more coverage at OL, CrunchGear]
  • Plaintiffs in $14 billion pharmacy-wholesaling private class action against McKesson have been getting favorable rulings from Judge Saris in Boston [Bloomberg via AmLaw LitDaily]
  • Michael Papantonio's list of mass torts he wouldn't embrace includes Oxycontin and Sept. 11 as well as 28 others we'd happily print if we knew what they were [Barrett, Forbes via Erichson/Mass Tort Prof]
  • Yikes: "The survey found that a plurality of Democrats (37%) believe the oil industry should be nationalized." [Rasmussen]
  • Congress has declined to disturb so-called Lexecon rule on transfer of mass tort cases, and Beck and Herrmann have some theories as to why [Drug & Device Law]
  • Dechert partner Joseph Hetrick on product liability developments in Europe and the terrifying costs of e-discovery [Genova]

Illinois AG suing Countrywide

From the New York Times:

The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure.

The lawsuit, which is expected to be filed on Wednesday in Illinois state court, accused Countrywide and Mr. Mozilo of relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its heavily advertised "no closing costs loan."

The suit will be filed in Cook County Court. More from The Wall Street Journal, Reuters, and Portfolio, "Angelo's Ashes." The Conde Nast publication broke the stories about favorable mortgages to Sens. Chris Dodd (D-CT) and Kent Conrad (D-ND).

In March, AG Madigan subpoenaed Countrywide and Wells Fargo "to determine whether the lenders unfairly steered African American and Latino borrowers into higher cost or otherwise inappropriate home loans in violation of fair lending and civil rights laws." They should have just gotten on the phone with Angelo.

Directorship magazine and the American Justice Partnership Foundation have released the 2008 Boardroom Guide to State Legal Climates, with a memorable title, "Dire States." The article is written by Steven B. Hantler, AJP's Chairman and former Chrysler assistant general counsel.

The article highlights the next big threat from the trial lawyers.

[There'] the danger of the "litigation trifecta." The first stage was asbestos lawsuits, the longest running mass-tort category in history. The second stage was the $265-billion national tobacco settlement between states and tobacco companies. The R&D arm of Trial Lawyers Inc. hopes to cash in on the third stage of the trifecta: global climate-change litigation. If the plaintiffs' lawyers hit the "litigation trifecta," U.S. tort costs could soon exceed Russia's GDP of $1.2 trillion.

To which we say, nyet.

The issue also carries a story on the global warming litigation, focusing on the suit by the Alaskan village of Kivalina against energy companies for conspiring to use their First Amendment rights. Or something like that. Which provides an opportunity to link to AJP's report, "The Most Dangerous Litigation in America: 'Kivalina.'"

UPDATE (10:55 a.m.): The chart of the rankings of 50 states is available here. Tennessee comes in as No. 1, and Illinois drops from 46th to 50th. West Virginia makes progress to No. 49.

These rankings always have an element of subjectivity to them, but still provide a pretty good sense of which states have a balanced legal climate absent the capriciousness that scares away investment. And justice.

Senate Majority Leader Harry Reid (D-NV) filed a cloture motion on H.R. 6304, the FISA Amendments Act, which means votes should take place Wednesday. A leading opponent of the measure, Sen. Russ Feingold (D-WI) says he will not attempt a filibuster but instead settle for highlighting what he sees as the bill's flaw. Speaker Pelosi, who voted for the bill last week, says an extended debate would be a good thing.

The anger and anguish of the privacy absolutists/anti-Bush activists continues to flow, focusing on provisions that would, in effect, grant immunity to the telecom companies that assisted in post 9/11 surveillance of foreign-based communications. A federal district court will determine if the telecoms acted on instructions from the Administration, and -- assuming so -- then dismiss the more than 40 lawsuits filed against the companies.

Salon's Glenn Greenwald, a lawyer, is the go-to guy for the opponents of the bill; his commentary is here. And there's a lot of this kind of sentiment, expressed at the Progressive Magazine: "Barack Obama's rightward sprint is nowhere more obvious than in his betrayal on the FISA bill."

Reaching back for historical slur

The Center for Justice and Democracy, a trial-lawyer-supported group that publishes the Tortdeform website PopTort website, has a new flyer out attacking the U.S. Chamber. You can see the flyer here.

The Chamber is depicted as an octopus strangling America's institutions and people with its tentacles.

Either the staff at CJD is woefully ignorant of the past or someone there has on purpose selected imagery with an ugly, ugly history. It's hard to believe someone would consciously choose to use symbolism that so obviously evokes anti-Semitic propaganda from the Nazi era.

So we'll say "ignorant."

CORRECTION: I originally had the wrong website published by CJR. Apologies to the Drum Major Institute for incorrectly citing its blog.

Accused of defrauding their clients of $200 million, plaintiffs' lawyers' defense is that they "may not have been able to grasp the complexities of the class action", and that one should be excused because of "severe alcoholism" "that made him unable to think rationally", reports AP.

Show trials asked for energy execs

For propagating incorrect opinion -- a speechcrime rather than a thoughtcrime, if one may classify. Our coverage of the Kivalina global warming suit (which, to be sure, proceeds along more of a "speechtort w/punitive damages" than a "speechcrime" theory) is here.

More: Jonathan Adler @ Volokh has a direct link to Dr. James Hansen's call for "public trials" of CEOs for "high crimes against humanity and nature"; Eric Berger/Houston Chronicle.

Views critical of Hansen include Spectator Business, Glenn Reynolds, Outside the Beltway, Sweetness & Light, Mike the Actuary. Not so critical: Rep. Ed Markey (D-Mass.), Grist "Gristmill" (both skipping over the point), Oil Change International (enthusiastically supporting).

Obama's equal pay gambit

In a presumed effort to appeal to female "Clinton voters," Barack Obama today criticized Senator McCain for being unwilling "to stand up for equal pay as president":

Democrat Barack Obama, determined to win over female voters, talked Monday about the women who helped shape his life in arguing that he would be a better proponent of equal pay than Republican John McCain.

The presumed Democratic nominee toured a baking facility and chatted with female workers about their economic challenges.

Sen. Obama told how he was raised by a single mother and his grandmother, who made sacrifices to support their family. He told them that Sen. McCain opposed legislation earlier this year that would have made it easier for women to sue their employers for pay discrimination. Obama supported the bill.

"I'll continue to stand up for equal pay as president -- Senator McCain won't, and that's a real difference in this election," Obama said.

McCain has said he supports equal pay for women but had said the measure would lead to more lawsuits.

The measure in question is none other than H.R. 2831, the "Lilly Ledbetter Fair Pay Act of 2007," with which PointofLaw readers should be very familiar.

As we've pointed out here (and the justices themselves pointed out in Ledbetter), the plaintiff in the epnoymous case could have had a potentially valid suit had her attorney bothered to file under the Equal Pay Act, which remains in force. The legislation Obama supports and McCain opposes is nothing more than a sop to Trial Lawyers, Inc., which would open up decades-old employment actions to judicial review (as well as expanding the scope of potential litigation to non-compensation decisions and the scope of potential litigants to non-employees).

Fortunately, Obama doesn't seem to be arguing his case by reference to his far-more-extreme piece of legislation that would institute national "comparable worth."

Division of spoils

Directly below we cite Michael D. Hausfeld in the New York Times article about tort wars, discussing the future for litigation overseas.

Turns out many in Europe are already familiar with Mr. Hausfeld, as recounted in this October, 2004, article in the German political magazine, "Cicero" entitled, "The Business of Suffering." Our quick translation of a few paragraphs follows.

Payments from the foundation, "Memory, Responsibility and the Future" to forced laborers under the Nazi regime are entering their final stage. Also in the balance are the enormous fees flowing to the U.S. attorneys.

It's 7,700 against 7.7 million. The 7,700 Euro is the highest amount that an individual Nazi-era forced laborer can claim as damages. The 7.7 million Euro, that's the highest fee that the New York attorney Melvyn Weiss can add to his checking account for his work on the case. His colleagues are also earning hefty sums: 6,1 million Euro is going to Michael Hausfeld from Washington, 5.1 million to the New York law professor Burt Neuborne. In total, 51 attorneys will divide about 60 million Euro among themselves.

Certainly not a flattering story about the American legal profession.

Mr. Hausfeld has been in the U.S. news recently as an attorney in the suit Isuzu Motors v. Ntsebeza. That's the Alien Tort Claims litigation suing U.S. and foreign companies for having conducted commerce with apartheid-era South Africa, consistent with U.S. foreign policy. The U.S. Supreme Court failed to get a quorum to hear the case because of recusals, which means the suit remains alive at the appellate level. (Earlier Point of Law.com post here.)

Wonder what the division of spoils might be in that one?

P.S. Google searches in German, Spanish and French turned up no recent news stories about Mr. Hausfeld.

A mark, a yen, a buck or a pound

Re-reading Sunday's NYT business article, "To the Trenches -- The Tort War is Raging On", we finally get to the conclusion, which offers something to look forward to:

PLAINTIFF-SIDE lawyers are innovating. Some firms are looking to courts outside the United States.

"If, for example, you have a company that defrauds its shareholders, shareholders around the world who invested in that company in any market should have the same rights to recover," said Michael D. Hausfeld, partner at Cohen Milstein Hausfeld & Toll, which has opened an office in London and is allying with law firms in several countries. While the firm itself is not lobbying for legal changes to make it easier to sue in foreign courts, Mr. Hausfeld said, "we are involved with others who are doing that."

Meanwhile, fear sweeps the Triad

That item below about bisphenol A from WFMY-TV in the Triad region of North Carolina caught our eye because it was so typically unbalanced -- all scare, no opposing view. Toxin! Baby bottle! Ovarian cancer! Environmental Working Group!

How typical? Well, there's this, also from WFMY-TV, "Dangerous Chemicals in Car Safety Seats."

Kernersville, NC -- As a mother of four, Brooke Marston knows how to keep her kids safe. But, harmful chemicals used to make her kid's car seats is something she has no experience.

"Chemicals leeching from the sun? We live where it is hot, so it's going to get hot in the car and I would have never expected that to be a problem with car seats."

And then there's this, from WFMY-TV.

"Like every new mom, Liz Sedgwick wants to make sure her baby is safe.

"We've been looking at childproofing and looking at some of the potential contaminates in the house and things like that trying to just be really aware."

But, she never thought to look at her plates which were passed down by her great aunt. Many of Liz's plates tested positive for lead. And she isn't alone."

And there's more, including phthalates and CFL bulbs.

One thing in common in all these WFMY stories is Dr. John Spangler, a professor of family medicine at Wake Forest University who's involved in tobacco prevention programs.

Well, if you've got a story about some potential health threat and you want to goose it for maximum impact, there's your formula: Find a scared mother, ignore any balance or opposite side, and call a medical source you can count on to elevate the fears. It's good for a splashy TV news story about, oh, once a month -- and that's just in the Triad region. Imagine the effect on potential litigants and jurors of this kind of reporting spread around the country.

Speaking of BPA

In light of Professor Krauss's op-ed in the Financial Post on the precautionary principle and bisphenol A (BPA), I thought it might be useful to see what's been on the wires in recent weeks about the chemical.

But first, from the FDA: "Based on our ongoing review, we believe there is a large body of evidence that indicates that FDA-regulated products containing BPA currently on the market are safe and that exposure levels to BPA from food contact materials, including for infants and children, are below those that may cause health effects. However, we will continue to consider new research and information as they become available."

And second, let's note the recent introduction of federal legislation to ban the substance based on some reports and lots of fears and yes, the precautionary principle as instinctively interpreted by legislators.

H.R. 6228: To ban the use of bisphenol A in food and beverage containers. Sponsor: Rep. Ed Markey (D-MA)
S. 2928: A bill to ban bisphenol A in children's products. Sponsor: Sen. Charles Schumer (D-NY).

And now for the news!

  • AP, "Parents sue over baby bottles": "Columbus, Ohio - Four Ohio parents have filed a federal lawsuit against makers of baby bottles, claiming the bottles were made with a harmful chemical that sparked congressional hearings and prompted Wal-Mart and other retailers to pledge to phase out the products."
  • WFMY-TV News, Triad, North Carolina, "Beware of Toxin in Your Plastic Bottles": "Greensboro, NC -- The chemical acts like Estrogen. It's called bisphenol-A or BPA. A Centers For Disease Control study found practically every American, 95% of us, has BPA in our system and at levels known to impact the health of test animals. A government research group is expected to come out next month with a study on the dangers of BPA." This being television, there's a scared mom, but no balance. The story does contains a link to the very nongovernmental Environmental Working Group.

Fen-phen, wrapping it up

Concluding arguments in the Kentucky fen-phen trial are set for today in a Covington federal courtroom, the issue being whether three attorneys who won a class-action case ripped off their clients when they took $51 million out of the $200 million settlement.

The Cincinnati Enquirer has a wrap-up story, Fen-phen case nears climax," with all its strange elements: The lawyers buying a race horse, the machinations of Cincinnati class-action guru Stan Chesley - granted immunity - and the pain suffered by the clients. (The Enquirer has published a special section: "Prescription for Scandal" featuring all the coverage so far.)

Meanwhile, Florida A&M Law School defends a $1 million contribution from one of the accused, Shirley Cunningham, endowing a chair for himself. Horsehide?

Very cool, very useful, and thanks to Akin Gump and Ben Winograd as the SCOTUSblog live blogs the U.S. Supreme Court's public session today. A copy of the orders list is available here.

No Exxon Valdez, no Heller.

Let's say you run a "trust-based" business, where customers' confidence in your surviving in business is crucial to their willingness to buy your service. After a series of reverses, you begin to wonder whether your fund is headed for the status of "toast". Do you rush to the nearest microphone and announce that to the public, thus ensuring in a self-fulfilling prophecy that it will become toast even if you weren't convinced that was a certainty before? Or, like Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin, do you instead steel yourself for eventual federal prosecution, complete with camera-ready perp walk?

My op-ed in Friday's Financial Post (Canada) deals with the precautionary principle as it pertains to product regulation. Readers can find it here. The National Post editors thought enough of this piece that they crafted their lead editorial around it.

The Constitution Subcommittee of the Senate Judiciary Committee holds a hearing Wednesday morning, "Laptop Searches and Other Violations of Privacy Faced by Americans Returning from Overseas Travel." The hearings follows the recent ruling by a panel of the 9th Circuit in U.S. v. Arnold, 08 C.D.O.S. 4533, which upheld the search of a border control agent who found child porn on a computer after instructing the traveler to boot up his laptop. (A Law.com story is here, and the WSJ Law Blog has a post and a copy of the opinion.)

The decision has exercised civil liberties groups, who have asked the full 9th Circuit to take up the case. The Association of Corporate Travel Executives (ACTE) and the Electronic Frontier Foundation (EFF) filed an amicus brief as reported in Information Week. The groups will have witnesses testify at Wednesday's hearing, as will a group called "Muslim Advocates." Also testifying are Nathan A. Sales of the George Mason University School of Law (a former Homeland Security appointee in the Bush Administration) and Peter P. Swire of The Ohio State University and the Center for American Progress.

Around the web, June 22

All-blog edition:

  • "If you don't practice in courts where the "blind strike" [juror selection] method is used, you've probably never heard of it." [Deliberations, with great use of stock art]
  • Bruce Carton [ex-Securities Litigation Watch] is back blogging on class action and corporate governance themes [Unusual Activity]
  • Top marginal tax rate on income to rise to 60% in next administration? [Kaus]
  • Those who follow qui tam/False Claims Act issues should be sure to take a look at the recent Martin Redish paper on private government counsel [Beck & Herrmann]
  • New Jersey edging away from its reputation as a pro-plaintiff jurisdiction for pharmaceutical suits? [Beck & Herrmann again]
  • Prof. Cass Sunstein not far enough to the left to make a proper Obama legal adviser, think some [TalkLeft]
  • New sex and race harassment lawsuit against NASCAR -- was your first thought, "yeah, they're probably guilty", and if so is that stereotyping? [Schwartz]

With federal preemption being such a hot topic in Congress and legal/lobbying circles, we'd be remiss not to note this language in H.R. 6304, the FISA Amendments Act.


`(a) In General- No State shall have authority to--

`(1) conduct an investigation into an electronic communication service provider's alleged assistance to an element of the intelligence community;

`(2) require through regulation or any other means the disclosure of information about an electronic communication service provider's alleged assistance to an element of the intelligence community;

`(3) impose any administrative sanction on an electronic communication service provider for assistance to an element of the intelligence community; or

`(4) commence or maintain a civil action or other proceeding to enforce a requirement that an electronic communication service provider disclose information concerning alleged assistance to an element of the intelligence community.

NYC's new campaign-finance law

Funny how it exempts the unions, notes Brad Smith at City Journal.

Those who know me realize that however much disdain I hold for Trial Lawyers, Inc., I hold far more for the University of New Jersey at Durham, a/k/a Duke. So I was particularly tickled when I saw what happened when trial lawyers and Duke crossed paths:

[The University of Louisville] sued Duke for $450,000 -- or a series with another Atlantic Coast Conference opponent -- after the Blue Devils backed out of a four-game football contract with three dates remaining.

The contract called for a penalty of $150,000 per game if a date with a "team of similar stature" could not be arranged.

Duke's lawyers argued the Blue Devils, which have a record of 6-45 over the past five seasons, were so bad that any team would be a suitable replacement.

Judge Shepherd agreed in his summary:

"At oral argument, Duke (with a candor perhaps more attributable to good legal strategy than to institutional modesty) persuasively asserted that this is a threshold that could not be any lower. Duke's argument on this point cannot be reasonably disputed by Louisville."

Sen. Obama supports FISA compromise

Quite a surprise, taking a stand against one of the most fumed-over issues among the activist left and keyboard cadres. From Talking Points Memo.

Under this compromise legislation, an important tool in the fight against terrorism will continue, but the President's illegal program of warrantless surveillance will be over. It restores FISA and existing criminal wiretap statutes as the exclusive means to conduct surveillance - making it clear that the President cannot circumvent the law and disregard the civil liberties of the American people. It also firmly re-establishes basic judicial oversight over all domestic surveillance in the future. It does, however, grant retroactive immunity, and I will work in the Senate to remove this provision so that we can seek full accountability for past offenses. But this compromise guarantees a thorough review by the Inspectors General of our national security agencies to determine what took place in the past, and ensures that there will be accountability going forward. By demanding oversight and accountability, a grassroots movement of Americans has helped yield a bill that is far better than the Protect America Act.

"I will work in the Senate to remove this provision so that we can seek full accountability for past offenses." Really? How?

UPDATE (5:15 p.m.): Much disappointment on the left. And anger, especially at Hoyer.

Enumerated Powers Act on Senate-side

On May 14, we wrote:

Rep. Shadegg has introduced the Enumerated Powers Act, H.R. 1359, which will require that all bills introduced in the U.S. Congress contain "a concise and definite statement" setting forth the specific constitutional authority "relied upon for enactment." The idea is to encourage Congress to engage in more debates upon the scope of its constitutional authority before passing legislation, though with no Democratic co-sponsors, one imagines it is unlikely Rep. Conyers will let the House Judiciary Committee let it get to the floor. Sen. Coburn will introduce parallel legislation in the Senate.

This week, Sen. Coburn, along with 22 other Republican co-sponsors, including Sen. John McCain, introduced the corresponding S. 3159. Still no Democrats on board this basic good-government principle.

The National Law Journal (via Law.com) reports that the judicial conference of the USA (the policy-making body of the judiciary) has asked the U.S. House of Representatives to consider impeaching U.S. District Judge G. Thomas Porteous on the grounds that he "solicited and received" cash from lawyers in a pending case.

The allegations of accepting a bribe go beyond previous revelations about the judge in a 5th Circuit Court of Appeals inquiry in 2007; at that time he was accused of perjury and false financial disclosures to conceal cash in a bankruptcy case. The letter to speaker Pelosi cited those allegations of repeated perjury and also violation of criminal law and ethical canons while presiding over In re: Liljeberg enters, Inc. v. Lifemark Hospitals, Inc. That case, a bench trial where Porteous rejected a recusal motion and declined to inform the opposing side that one side's lawyers "had often provided him with cash," was partially reversed by the 5th Circuit.

Porteous was appointed by President Clinton in 1994. He was a former Louisiana state judge for the 10 years preceding his appointment. In a 2002 case he ruled that the state of Louisiana was illegally using federal money to promote religion in its abstinence-only sex education programs (thereby hampering a policy of the Bush administration) because many of the groups participating in the Governor's Program on Abstinence were "furthering religious objectives." In 1999 he had struck down a Louisiana law aimed at banning partial birth abortion.

A huge margin of victory on H.R. 6304, the FISA Amendments Act. We'll post the roll call when it becomes available. (And here it is.)

Wonder what grounds opponents will find to litigate on...

Also, a commendable column by Andrew C. McCarthy, a former federal prosecutor and currently director of the Center for Law and Counterterrorism at the Foundation for the Defense of Democracies: "A Good Deal On Surveillance Reform."

Meanwhile, C-SPAN just had a caller segment before the final vote was announced. Not a single caller supported the plan. Anger surged across the phone lines.

UPDATE (1:30 p.m.): The Electronic Frontier Foundation, which will see its class-action lawsuits disappear, condemns.

Also, ACLU condemns: "The bill allows for mass, untargeted and unwarranted surveillance of all communications coming in to and out of the United States." No it doesn't.

Majority Leader Hoyer's floor statement.

UPDATE (1:38 p.m.): And finally we hear from the trial lawyers, or at least one of their financed and directed groups, the Drum Major Institute and its Tort Deform blog.

UPDATE (3:45 p.m.): More from Andy McCarthy, refuting Sen. Arlen Specter's reading of the law with some basic points about the difference between the private sector and government.

It's a far from edifying legal fight even by recent Ohio standards, but hard to keep from watching: Will state lawmakers succeed in grabbing funds originating in the 1998 multi-state tobacco settlement for general-revenue purposes? Or, alternatively, will the now-dissolved Ohio Tobacco Prevention Foundation get away with handing the $190 million over to the nationwide American Legacy Foundation, the better to keep hectoring smokers and vilifying tobacco execs with? A prominent role is played by now-disgraced state AG Marc Dann, so you know to expect the worst [Toledo Blade, Canton Repository]

Lessons of Lerach dept.: the Texas lawmaker will be addressing a Federalist Society gathering next Wednesday afternoon on the Hill. Details here.

The Majority Leader's office indicates that the House will vote on H.R. 6304, the FISA Amendments Act, by 2 p.m. today.

The Wall Street Journal's editorial today, "The Intelligence Deal," does an excellent job of summarizing the issues at play, and the editors are not that thrilled with the outcome.

On the bright side, the deal gives crucial immunity to the telecom companies that in good faith assisted this surveillance after 9/11. A reality of this Internet era is that the feds need these private companies to monitor terrorists; our spies can't merely bug the phones of Russian spies like they could during the Cold War. The left understands this and has hit the companies with some 40 lawsuits in an attempt to shut down the surveillance by the backdoor, without a political debate that voters might understand.

The telecom (and other) companies have thus made it clear that they can't afford to cooperate any longer without immunity. And so the deal will let the companies escape the lawsuits, for past and future cooperation, if they present to a federal judge a certification from the Attorney General that they are helping at federal request. The eavesdropping orders that expire in August can thus be renewed, so our security services won't have to "go dark" over the global antiterror battlefield.

But, this protection comes at the cost of injecting the courts into the executive branch's war-making authority -- a compromise that future administrations will regret.

Also making reasonable observations about the legislation is the Washington Post's opinion page, "A Better Surveillance Law."

Update: Tennessee cy pres

In a post on litigation slush funds last December, we glancingly referred to the controversy that arose after a Tennessee judge presiding over a shareholder class action against pharmacy firm CVS/Caremark instructed lawyers to take $400,000 in money that would otherwise go to their fees and give it to enable needy kids to attend local Nashville Predator hockey games. This spring the ABA Journal had the update: the controversy deepened, and the judge eventually backed off and recused himself from the case. Would that other ill-considered cy pres allocations could be reconsidered as willingly...

Vicarious wage-hour liability

In today's fastest-growing form of employment litigation, prepare to be blamed not just for your own sins but also for those of your subcontractors and temp agencies. Lynne Hermle of Orrick, Herrington & Sutcliffe explains in Law.com's GC California.

Meanwhile, Julie Kay of the NLJ writes that the Middle District of Florida federal bench is coping with a glut of wage-hour suits filed by two high-volume Orlando firms, Morgan & Morgan and the Pantas Law Firm. The judges say the two firms, which some defense lawyers assail as wage-hour complaint "mills", have consistently ignored scheduling orders, and have asked them to show cause why they should not be sanctioned or disciplined. Morgan & Morgan, which has offices in several cities and now says it has more than 1,000 active cases, concedes through a partner that it has had "growing pains".

It appears that the long and politically charged debate over renewed Foreign Intelligence Surveillance Act (FISA) authority is finally being settled in Congress, with the private sector protected from litigation orchestrated by a coalition of privacy absolutists, angry White House foes and trial lawyers.

House Majority Leader Steny Hoyer, Republican Whip Roy Blunt, Senate Intelligence Chairman Jay Rockefeller and Ranking Member Kit Bond issued a joint statement today announcing a compromise on FISA, the authority that has allowed intelligence agencies to monitor foreign electronics communications that may pass through a U.S. telecommunications nexus. From the statement:

The FISA Amendments Act, H.R. 6304, will increase the nation's security by strengthening the ability of the intelligence community to conduct lawful surveillance of terrorists, as well as protect constitutional rights by requiring warrants before the government can surveil any American.

"This bipartisan bill balances the needs of our intelligence community with Americans' civil liberties, and provides critical new oversight and accountability requirements," said Hoyer. "It is the result of compromise, and like any compromise is not perfect, but I believe it strikes a sound balance. Furthermore, we have ensured that Congress can revisit these issues because the legislation will sunset at the end of 2012."

Text of the bill is here.

Telecommunications companies assisted the federal government in post-9/11 surveillance of foreign communications -- including possible calls and e-mails from overseas to U.S. residents -- abiding by administration orders, but not judicially issued warrants.

This cooperation brought down about 40 lawsuits against the telecom companies, including from such parties as Studs Terkel (Terkel v. AT&T Corp., 441 F. Supp. 2d 899 (N.D. Ill. 2006). His case was eventually dismissed for lack of standing.

The most prominent lawsuit was Hepting v. AT&T, a class-action lawsuit against the company representing a collection of wild accustions about unfettered wiretapping. Activists like the ACLU and the Electronic Frontier Foundation drove the public debate, with the trial lawyers keeping a low profile. Bloggers and others of the Bush-hating left provided the political energy.

Jed Babbin of Human Events summarized our personal view of the issue in a column today: "These lawsuits aren't merely the latest evolution in class action ambulance chasing. They are a form of 'lawfare': the use of the courts to interfere in America's conduct in the war the terrorists are waging against us."

But the new "compromise" -- betrayal, to the left -- appears to provide legal protection to the telecom companies.

This is a troubling New York Times op-ed by a former Reagan and Bush advisor -- it advises yet another state AG group suit. I despise many OPEC nations, but it's not clear to me how an agreement between foreign sovereigns, entered into on foreign soil, violates US law. Of course, it's also not clear to me how a foreign warrior trying to kill Americans on foreign soil gets US constitutional rights, either -- so I guess I just don't "get it."

Republican Florida Gov. Charlie Crist, who keeps mysteriously appearing on lists of possible veep picks for Sen. McCain, has repeatedly defied economic logic and fairness in his interventions into the deeply troubled market for homeowners' hurricane insurance in his state. In a paper (PDF) for Washington Legal Foundation, Victor Schwartz and Phil Goldberg of Shook, Hardy and Bacon note that Crist "has personally solicited mass tort lawyers to investigate and sue the industry" -- the latest of many reasons to suspect that future catastrophes to hit the Sunshine State will be not entirely meteorological in origin.

P.S. Steve Bousquet of the St. Petersburg Times reported last month that "trial lawyers are back in force" in Florida's capital, with the enthusiastic support of Gov. Crist, who announced early in his term that "Lawyers are back!"; they've scored victories that include the deep-sixing of an Orlando mass transit plan (on the grounds that it shielded railroads from litigation) and the defeat of proposed limits on contingency fees chargeable by outside lawyers to the state as plaintiff.

AP reports that Mexico has asked the International Court of Justice in the Hague to "block" executions of Mexican nationals in US states. Dissatisfied with a Supreme Court ruling that held that President Bush had no constitutional authority to block executions in Texas (and other states) of murderers who had been given all the rights of US citizens, Mexico is now dissing our constitution a second time. Of course Mexico must know that the ICJ has no authority to enjoin an American execution. Twenty years ago outrageous illegal behavior like Mexico's would have been laughable, but in the days of activist "I'm the law" judges, who knows what havoc might be wreaked?

Around the web, June 19

Few battlegrounds of legal reform have been harder-fought than that in the state of Michigan, where I grew up. On the plus side, the Wolverine State has seen three rounds of legislatively enacted litigation reform, along with the appointment by former Gov. John Engler of probably the most reform-minded state supreme court majority in the nation. On the minus side, trial lawyer interests have long been key players in state politics, often practicing a bare-knuckled brand of advocacy, and the career of colorful (and recently acquitted) Geoffrey Fieger of Southfield, arguably the Midwest's most prominent trial attorney, is virtually a synonym for waywardness in the courtroom and out.

Now the Manhattan Institute's Trial Lawyers Inc. series, under the able direction of Jim Copland, has published a new installment taking a look at the state's tense legal politics. Trial lawyers are expected to work hard this year to knock off reformist Supreme Court Justice Clifford Taylor at the polls, and are also engaged in an all-out push to repeal the state's one-of-a-kind law directing its courts in liability cases not to second-guess Food and Drug Administration determinations on pharmaceutical approval and marketing. To get up to speed on these issues and more, start here.

For decades New Jersey was known for having one of the nation's worst and most expensive auto insurance environments, but it's been mending its reputation somewhat since Trenton lawmakers in 2003 enacted serious reforms and opened the system to competition. Now a 4-3 decision by the New Jersey Supreme Court could put the progress in jeopardy by opening the way for lawsuits for emotional distress by persons who see loved ones hurt, though they themselves do not suffer serious enough bodily injury to file claims against other drivers under the law. Though cases in that category may not be numerous, it's still advisable for the legislature to fix the hole in the law, say the editorialists of the Star-Ledger.

Following up on Michael Krauss's earlier post about a law school conference contemplating the filing of war crime charges against leading members of the current administration, with an eye toward their eventual execution by hanging, this press release arrived via email this afternoon:



The conference to plan a strategy to put President Bush on trial for war crimes is being held at the Massachusetts School of Law at Andover September 13-14. Please disregard any headline in subject line that says the law school is sponsoring the conference. It is not. Also, in the release itself please delete the words National Lawyers Guild. The corrected release follows.

Sherwood Ross

Media Consultant to Massachusetts School of Law at Andover

[phone # omitted]

The $1.6 billion tax break for trial lawyers, shot down again. The Senate was supposed to have a cloture vote Monday on a motion to proceed to H.R. 6049, the Renewable Energy and Job Creation Act, i.e., the tax extenders bill, but a wicked band of storms passed through and prevented some Senators from getting back for the scheduled 5:30 p.m. vote.

So the vote -- the second go at cloture -- happened today, and the result was 52-44, short of the 60.

The debate has actually barely mentioned the trial lawyer tax break -- explained here -- and has instead focused on whether to raise other taxes as offsets for the incentives. But as a brand new tax break rather than the bill's other provisions, the extenders, the accounting changes certainly don't help win converts from the Republican side.

More on Ricci v. DeStefano

More analysis of that New Haven firefighter racial preference case, and the notable fissures it elicited within the Second Circuit, from Ilya Somin and Jonathan Adler at Volokh Conspiracy, Ed Whelan at Bench Memos, and (taking a different view) Daniel Schwartz at Connecticut Employment Law Blog. (But you did hear about it here first, blog-wise.)

P.S. And more from Jonathan Adler and Workplace Prof Blog on the newly filed Jacobs dissent and Calabresi concurrence.

Milberg's deal with the feds

The WSJ has details on the $75 million settlement of criminal charges, which involves admissions of wrongdoing. The New York Times even runs the story on its front page, just as if it were, you know, significant news or something. Maybe we succeeded in shaming them?

A few other points from Jonathan Glater's NYT coverage:

  • Remember the murmurs, never very credible even at the time, about how the crackdown on abuse was supposedly meant to do away with the class-action biz altogether? Nothing of the sort, of course, has happened. Notwithstanding a general trend in the courts to hold plaintiffs to higher standards, the supply of securities fraud suits remains "robust", notes Joseph Grundfest.

  • Thomas P. O'Brien, a U.S. attorney, calls the Milberg misconduct "probably the longest-running scheme ever conducted by a law firm".

  • One "longtime New York shareholder lawyer", complaining that Milberg's misdeeds had "poisoned the well" with judges, "insisted on anonymity out of fear of retaliation by other lawyers; such is the powerful reputation of Milberg still."
Ted has some additional thoughts at Overlawyered, and I see has had some of the same reactions as I.

Every once in awhile (no, in point of fact, much too often) I am chagrined by the dreck that emerges from American legal education. Now I learn that the Massachusetts School of Law at Andover will convene a conference in September to lay plans to prosecute President Bush and other high administration officials for war crimes, according to Legal Blog Watch. "This is not intended to be a mere discussion of violations of law that have occurred," says MSL's dean Lawrence Velvel in a statement announcing the conference. "It is, rather, intended to be a planning conference at which plans will be laid and necessary organizational structures set up, to pursue the guilty as long as necessary and, if need be, to the ends of the Earth."

"We must insist on appropriate punishments," Velvel said, "including, if guilt is found, the hangings visited upon top German and Japanese war-criminals in the 1940s." Sending administration officials to the gallows, he added, "would be a powerful lesson to future American leaders."

Mass. School of Law has not yet made it into US News and World Report fourth and last tier, as the school cannot meet the ABA's accreditation standards. But Mass. School of Law has already made itself famous by opposing Justice Samuel Alito's nomination to the Supreme Court (he was "too intellectual", wrote the learned Dean Velvel: Roberts and Alito are "liars," he sniffed, concluding with the erudite, "Excuse my French, but what bullshit. What absolute bullshit.... If Alito proves, as threatened, to support the actions of these dangerous and incompetent clowns in the Administration from Bush on down, then all the hoped for Democratic gains of 2006 -- even if they were to occur despite the fact that many persons will refuse to give otherwise available support to the Democrats because of extreme distaste for the Democrats, obvious cowardice -- all the hoped for Democrat gains of 2006 will not make one goddamned bit of difference.").

My guess is that Dean Velvel likely opposes capital punishment -- except when it concerns high-ranking members of the administration, perhaps. Maybe the Secret Service would like to provide a legal lesson to the Dean about death threats against the President.

Around the web, June 17

  • Ole Miss professor Curtis Wilkie, a former Boston Globe correspondent, lands a book deal to write up the Scruggs story [Paul Quinn blog]
  • Embarrassing? West Virginia officials rolled out welcome mat to Mel Weiss, crowning his firm "exclusive" representative of state employee pension fund in investor suits [WV Record]
  • Profile of Ohio-based class-action "professional objector" can't quite resolve whether he's been a useful watchdog or just gets paid to go away [Cleveland Scene via ABA Journal]
  • Most corporate leaders view litigation as grim "tax to be paid, even though no lawmakers ever passed it, it is unfairly imposed, and business cannot calculate or anticipate it." [Joseph F. Speelman/Texas Lawyer]
  • Profile of tort king Jere Beasley, whom Republican Alabama officials keep hiring to sue big business on behalf of the state [AP]
  • Four vacancies may offer chance to change direction of much-criticized Florida Supreme Court, if anyone in Tallahassee has the inclination [ABA Journal]

After Allison Engine

"The U.S. Supreme Court last week dealt a blow to the government in Allison Engine Co. v. United States, rejecting an expansive interpretation of the False Claims Act that would have extended liability to almost any company in any industry. Jenner & Block's Linda L. Listrom explains why the ruling will allow some -- but not all -- in the business community to breathe a collective sigh of relief." (Law.com)

Many newspapers (here's a sample) report that William Lerach (see the summary of Wally's superb Conde Nast posting on this fiend below), now serving a two-year prison term for conspiracy in the federal minimum security prison at Lompoc, California, has asked to be moved to a residential alcohol abuse treatment program. The court has refused Lerach's request -- he'll just have to tough it out at Club Fed. Funny how Lerach wasn't as far as we know receiving treatment for alcohol dependency before he was convicted.

"I am an 87-year-old man who was very active until Vioxx was taken off the market", writes Richard Loftfield of Jacksonville on June 14 in the Wall Street Journal (subscription required). Too bad Mr. Loftfield must live in constant pain when a drug exists that could relieve it.

Rebutting Bill Lerach in Portfolio

The editors at Conde Nast Portfolio were kind enough to invite me to contribute a rebuttal, which is now online, to William Lerach's egregious apologia pro crookery sua. The allotted space permits me to address briefly only a couple of Lerach's worst howlers, in particular his bald assertions that his concealed kickbacks did no harm to class members or to competing lawyers. (It's true that named class representatives do a very poor job at their intended mission of standing in for other class members' interests, but secretly aligning their incentives with the size of fee awards, rather than the value of the settlement to the class, is a corruption meant to keep them from ever living up to their theoretical watchdog role.)

For a more extended look at what's wrong with Lerach's article, let me recommend Joseph Nocera's excellent column a week ago in the Times:

In the article, Mr. Lerach expresses zero remorse, positions his crimes as having hurt no one while serving a greater good and makes the absurd claim that he was railroaded by his political opponents.

It is a brazen, shameful piece of work -- and it must infuriate the prosecutors who made the plea agreement with him, and the judge who accepted it, especially since Mr. Lerach wrote his own remorseful letter to the judge ahead of his sentencing. It also ought to infuriate anyone who cares about the law. Plenty of criminals head to prison still believing they're above the law, but Mr. Lerach takes the cake.

Ted Frank has some further thoughts on that point. And note (from Nocera) that Lerach's "everyone did it" swipes at his colleagues -- which many, including we, have read as grounds for an investigation -- are by no means passing without contradiction from colleagues:

Mr. Lerach's statement has infuriated other plaintiffs' lawyers. "It would just be unthinkable" to give kickbacks to lead plaintiffs, said Max Berger, of the firm Bernstein, Litowitz, Berger & Grossman. Added Sean Coffey, another Bernstein, Litowitz partner: "It is bad enough that this confessed criminal cheated for years to get an unfair advantage over his rival firms. But for this guy, on his way to prison, to say that everyone does it is just beyond the pale."

The shadow government

Or government in exile. Or government in waiting. Or, I hear you knockin', but you can't come in. From Politico, " A new day for liberal legal group?"

Eight years after the Clintonite legal elite were cast out to the wilds of academia and white-collar private practice by Bush v. Gore, a new optimism was on display at the eighth annual national convention of the American Constitution Society, which convened a host of law professors, lawyers and judges -- many of them former Clinton administration officials -- at the D.C. Hyatt Regency over the past three days.

This year's keynote speaker was Eric Holder, a co-chair of Barack Obama's campaign, a member of his vice presidential search committee and the cover subject of the current issue of The American Lawyer, whose headline asks, "Is he the next AG?"

"With this new administration that will be taking its place in January of 2009, we're going to be looking for people who share our values, and I suspect those people are here today," Holder told the receptive crowd.

Reports and videos on the conference's events are available at the ACS blog.

The prepared text of Sen. Leahy's remarks is available here; he speaks at length on federal pre-emption issues, including the FDA case, Wyeth v. Levine (background information at the ScotusWiki here.)

More on Holder's remarks here. Also, Judge Kozinski was supposed to be a panelist at the ACS event, but he did not show.

Plus ca change

From WRAL, Raleigh-Durham:

SUNSET BEACH, N.C. -- The North Carolina Academy of Trial Lawyers is changing its name.

The group voted Sunday during its annual convention to change its name to the North Carolina Advocates for Justice.

Group president Joe Cheshire said the new name will better reflect that the 46-year-old body's mission to fight for justice and protect people's rights. The change is expected to take effect in October.

The group's website is here.

Listed as a witness in the upcoming Senate Judiciary Committee hearing on nursing home arbitration -- see below -- is Ken Connor of Wilkes & McHugh, who testified in last week's House Judiciary subcommittee hearing on nursing home arbitration. The Mother Jones blog posts on the political complications that Connor ostensibly poses for tort reformers, as he's the former president of the Family Research Council and a right-to-life conservative Republican who sues nursing homes. From "A Right-to-Lifer and the GOP's Nursing Home Dilemma":

While the GOP views trial lawyers as its mortal enemies, Connor doesn't see any contradiction between his profession and role as family values crusader. Instead, he sees his lawsuits against nursing homes as an extension of the work he did in the Schiavo case. "Removing the feeding tube, letting Teri Schiavo starve to death," he said in an interview, "I see this all the time with the elderly." Connor believes that the frail elderly are second only to the unborn in their suffering due to what he sees as a prevailing "quality of life" mindset, as opposed to one focused on the sanctity of life. He says he's witnessed bioethicists in Florida argue that if an elderly person suffers from dementia, there would be nothing wrong with hastening his or her demise. "If you call yourself a Christian, you have an obligation to fight for social justice," he says, noting that, "It's much easier to make the case for the elderly than for the unborn."

Connor recently won a $2 million verdict against Sunrise Senior Living in California for letting an elderly woman develop fatal bedsores.

The Mother Jones posts also notes that the "nursing home arbitration bill is one of nearly a dozen Democratic-backed measures introduced in Congress over the past year that would ban mandatory arbitration in everything from new car contracts to meatpacking company agreements." The InjuryBoard blog, a trial lawyers' blog, also comments on Connor in this post.

UPDATE (7:45 p.m.) We've corrected the spelling of Connor's name -- two o's, no e. Apologies. Also, please note this 2005 Point of Law column by Ramesh Ponnuru on the Center for a Just Society, chaired by Connor.

A group calling itself Reform Michigan Government Now has proposed an initiated measure to rewrite the state Constitution, including provisions for all three branches of government. The Associated Press reports the measure would reduce the size of the Michigan Supreme Court from seven to five seats. The state Court of Appeals would drop from 28 judges to 21, while 10 judges would be added to local circuit courts. Salaries would be cut 15 percent.

The financial backing of the group is unclear. The Republican Party has expressed sharp disagreement with the "stealth petition campaign"; the Democratic Party is receptive. The Grand Rapids Press reports: "Notably, the measure uses seniority to determine that Justices Stephen Markman and Robert Young, half of a conservative majority on the high court constructed by GOP Gov. John Engler, would lose their seats in a downsizing of the court. Cuts in the Court of Appeals target Republican jurists as well." The Michigan Association for Justice, the trial lawyers group, says it's not involved.

Details of the measure here. Supporters must submit 380,000 valid petition signatures by July 7 to qualify for the ballot.

Assault on arbitration continues

Supporters of litigation over arbitration are sure keeping up the drumbeat in Congress, holding yet another hearing on legislation to vitiate predispute arbitration clauses in long-term care contracts. From the official hearing notice:

The Senate Committee on the Judiciary has scheduled a joint hearing before the Subcommittee on Antitrust, Competition and Consumer Rights and the Special Committee on Aging on "S. 2838, the Fairness in Nursing Home Arbitration Act" for Wednesday, June 18, 2008 at 10:30 a.m. in Room 226 of the Senate Dirksen Office Building.
Chairman Kohl will preside.

Sen. Kohl (D-WI) is chief sponsor of S. 2838. Included in the witness list is University of Kansas Law Professor Stephen J. Ware, who has written several books on arbitration.

In other arbitration news, the American Association for Justice on Friday higlighted the ruling in Woebse v. Health Care & Ret. Corp. of Am., 977 So. 2d 630 (Fla. 2d Dist. App. 2008). AAJ describes the ruling: "Florida court holds compulsory arbitration is unwarranted when arbitration agreement is substantively and procedurally unconscionable."

Our newest column, by my Manhattan Institute colleague Steven Malanga, looks at the contrast between the string-'em-up coverage of business scandals found in some quarters of the press and the restrained, at best, coverage in those same quarters of recent scandals exposing widespread fraud in the big business of suing people.

The Federal Communications Commission is mulling over whether Russian-roulette high-stakes class actions in state courts are the best way of setting ground rules for the practice (more). As a hearing proceeded, word arrived from Alameda County, Calif. that a jury had awarded a win to defendant Sprint Nextel in one such suit, leaving more chambers left to be fired in trials against Verizon, AT&T etc.

If judges can decide that federal gun laws are inadequate, that lack of wrongdoing and causation don't preclude tort liability for pain manufacturers, and that votes must be counted differently in each county in order to assure victory for a particular candidate, why can't judges decide that their salaries are too low and that they must be raised NOW? Well, as the Wall $treet Journal reports, they are now doing just that.

New York Supreme Court Justice Edward Lehner has just ordered the state Senate and Assembly to pass a pay raise for judges within 90 days - and make retroactive to boot. The four judicial plaintiffs had suggested $600,000 each. For the New York Judiciary, that puts taxpayers on the line for $700 million.

New York Governor David Paterson was unamused. Only the state legislature has the power to set judicial salaries, his office rightly pointed out in a statement. The judge's decision "flies in the face of the state constitution."

What can we expect, though? People like Patterson applaud judicial disregard for precedent and law when it suits their purpose. Maybe this outrageous behavior will be a wake-up call to politicians on the left -- the Rule of Law serves us all, and regulation via litigation hurts us all.

Personally, I don't think judges (federal or state) are particularly underpaid at all. Alternative jobs do exist for judges, yet there is a constant demand for judicial jobs by people quite quite decent credentials, thank you very much. We would all like to make more money than we make, but few of us have the power to declare that the law demands this be the case.

The city of New Haven, Connecticut, went to great lengths to devise a firefighter test that would not have "disparate impact" on minority applicants, but when the results of the 2003 test-taking came in, applying the city's "Rule of Three" which required selection from among the highest scorers, "no blacks and at most two Hispanics would have been eligible for promotion to captain and no blacks or Hispanics would have been eligible to make lieutenant". So the city civil service board vacated the results, frankly acknowledging that it was in search of better minority hiring numbers. White applicants sued and were thrown out of court by District Judge Janet Bond Atherton, who was upheld by a Second Circuit panel. Now a sharply split full circuit has refused en banc rehearing, with Judge Cabranes for the dissenters formulating the core question: "May a municipal employer disregard the results of a qualifying examination, which was carefully constructed to ensure race-neutrality, on the ground that the results of that examination yielded too many qualified applicants of one race and not enough of another?" (New York Law Journal).

The publication yesterday includes two concurring opinions (by Parker and Katzmann) as well as the one dissenting (Cabranes). Our spies tell us that other opinions in the case, not yet published, are likely to be of interest too.

Wednesday evening, Jun. 25, at the Cornell Club, with participants Richard L. Herz (Litigation Coordinator, NGO Earthrights International), Julian Ku (Associate Professor, Hofstra University School of Law), and Vince Vitkowsky (Edwards Angell Palmer & Dodge LLP), moderating. Details here.

Several business associations, defense counsel groups and the Washington Legal Foundation recently filed an amicus brief in United States v. Ionia Management S.A, challenging the conviction of Ionia Management S.A. for violating the Act to Prevent Pollution from Ships when employees dumped waste oil overboard. Ionia has appealed, arguing in part that it could not be vicariously liable for the acts of employees who violated strict company policy, acted outside the scope of their employment, and whose illegal acts provided no benefit to the company.

The amicus brief -- available here -- was filed by the National Association of Manufacturers (my employer), the U.S. Chamber of Commerce, the National Association of Criminal Defense Lawyers, the N.Y. State Association of Manufacturers, the New York Association of Criminal Defense Lawyers and the Washington Legal Foundation.

Ellen S. Podgor has a post at the White Collar Crime Prof Blog, including a link to Ionia's brief. More, as well, from the FCPA Blog, a thorough post called "Justice for Foreign Corporate Defendents," explicating respondeat superior. (The FCPA Blog -- Foreign Corrupt Practices Act -- is the project of Dick Cassin at the Cassin Law Firm.)

More on the trial and verdict...

When I saw this editorial this morning, praising a Congressman for having "laid bare the folly of using for-profit gunslingers to undertake the highly sensitive task of handling and questioning", I almost thought for a moment that the New York Times had joined those of us who think it's a bad idea for governments to hire contingency-fee counsel (or vice versa) to dive into defendants' filing cabinets and depose their executives in high-stakes litigation. No such luck; it was just another editorial about war policy in the Middle East.

You still have to wonder, though: would it be more reassuring, or less, if the outsourcing of interrogation to Blackwater and other privatized law enforcement entities operated on a "no fee unless successful" basis?

Vivia Chen and Daphne Eviatar at AmLaw Daily present the story as if it's somehow surprising and counterintuitive:

Indeed, it's not often that heroes of the radical Left are honored at a white-shoe law firm like Clifford Chance. But last night, there they were: Janet Nocek, Hany Kiareldeen, and [longtime anti-business activist] Ray Rogers -- just three of many recent victims of the sort of arbitrary, Kafkaesque government actions that most of us thought had ended with the McCarthy era.

The occasion was a promotion of a new oral history/photography book celebrating litigants including "Margaret Randall, ordered deported in 1984 on the basis of her past communist writings; seven Palestinians arrested in Los Angeles in 1987 for distributing literature for the PLO, and who spent the next 21 years in deportation proceedings," Pete Seeger, Benjamin Spock, and so forth. Presiding was pillar of the legal Left David Cole (Center for Constitutional Rights, Georgetown Law, correspondent for The Nation).

The walls of Clifford Chance's New York office lobby now attest to the courage of those who've stood up against such abuses and insisted on exercising their constitutional rights. They feature photographs of and words from 19 such individuals included in the book. ... Clifford Chance sponsored the book party on the advice of a consultant who advises the firm on art and diversity.

Well, actually, none of this should come as particularly surprising -- not in a world where the American Bar Association selects Bernardine Dohrn to co-chair its Task Force on Children, nor in a world in which lefter-than-thou pro bono work seems to come pretty much standard at white-shoe firms. (Wanna come to the U.S. to distribute PLO literature? Sure, you've got a Constitutional right to do that, and it's McCarthyite for anyone to think otherwise.) It seems pretty well accepted that the ideological center of gravity at elite law firms like this one, as expressed in pro bono and "public interest law" activity, registers quite a few notches to the left of, say, the average Democrat in the street. Maybe that's a story in itself? (& welcome David Bernstein @ Volokh readers).

To be expected... you can't poke fun at the trial-lawyer front groups without eliciting a round of sneering and mockery in return, which is how the PopTort blog responds to yesterday's post about the Center for Justice and Democracy's "white paper" on activist attorneys general, "State Attorneys General: The People's Champion."

We thought the over-the-top enthusiasm of the authors for litigating AGs spoke for itself, but the front folk thought otherwise. Fair enough. So here are some substantive critiques of excessive litigation and activism by state attorneys general:

Coincidently, today's Wall Street Journal carries a relevant editorial, "A 'So-Called' Attorney General," reviewing the corruption and collusion that results when activist AGs get into bed with the plaintiff's bar.

Lawsuit legend and admitted felon Dickie Scruggs is headed for the Big House, but his methods are continuing to tarnish his partner in lawsuits, Mississippi Attorney General Jim Hood. Last week, Alabama federal Judge William Acker gave Mr. Hood a well deserved whack for colluding with the trial kingpin to evade a court order in a case regarding Hurricane Katrina claims.

The underdebated federal media-shield legislation is the topic of my "My Turn" column in the latest edition of Forbes, "Too Much Freedom of the Press." Congressional discussion and media coverage/promotion have framed the issue as "free flow of information" vs. "national security," ignoring almost completely the consequences for the private sector of allowing the media to protect their sources unilaterally, without effective judicial oversight.

The House legislation is H.R. 2102, which passed the House last October by a vote of 398-21. The Senate version is S.B. 2035.

I've written about the issue at the National Association of Manufacturers' blog, Shopfloor.org here, here and here.

NYLJ: "Manhattan Supreme Court Justice Edward H. Lehner today gave the Legislature and Governor David A. Paterson 90 days to adjust the pay of the state's 1,300 judges to reflect the rise in the cost of living since their last raise nearly 10 years ago." Observes Ron Coleman: "It's good to be the king." Background: this Jim Copland column from last year.

Senate Judiciary Chairman Patrick Leahy today opened up a committee hearing on the Supreme Court and preemption with an aggressive anti-court, anti-business statement. Excerpt:

[Many] Court observers have noticed that business interests have been the big winners, over workers and consumers. In this worsening economy, mothers and fathers are struggling with health care coverage, the uncertainty of retirement, credit card payments and mortgages. Congress has passed laws to protect Americans in these areas, but in many cases, the Supreme Court has ignored the intent of Congress in passing these measures, oftentimes turning these laws on their heads, and making them protections for big business rather than for ordinary citizens.

Leahy spends some time on the Ledbetter decision, which as far as we could tell was a case of the court clearly understanding Congress' intent in legislating statutes of limitation. Meanwhile, Sen. Russ Feingold (D-WI) highlighted ERISA issues and binding arbitration in his opening statement.

The witnesses (list here) were divided four-to-two against the Court and preemption. The clearest case for federal pre-emption was made by Richard M. Cooper of Williams & Connolly LLP, testifying for himself, focusing on Riegel and the value of federal preemption in food and drug law.

Related items

Larry Ribstein writes:

Michael Perino has written a paper, The Milberg Weiss Prosecution: No Harm, No Foul?, which has gathered significant attention, including a publicized presentation at AEI, and substantial notice by leading New York Times columnist Joe Nocera. The basic question the paper addresses is whether the actions of Milberg Weiss and its now disgraced principals, including Melvyn Weiss and Bill Lerach, injured the very plaintiffs they were supposedly championing by paying kickbacks to named plaintiffs. Because Perino's paper raises some significant policy issues, several of which Bruce Kobayashi and I have dealt with in our prior work, we have done an extended analysis of Perino's paper in this post on my blog.

Michael Perino responds.

It's a few months old by now, but the report still makes for entertaining reading -- a full-throated defense of activist attorneys general hiring contingency lawyers to sue industry. "State Attorneys General: The People's Champion," comes from the Center for Justice and Democracy, one of the many "consumer" groups financed by the plaintiff's bar. From the news release announcing the report:

In State Attorneys General: The People's Champion, authors Emily Gottlieb and Amy Widman find that state AGs act on behalf of citizens in many diverse areas, including consumer protection, antitrust and utility regulation, and environmental protection. The White Paper delves into many past and current AG lawsuits, including cases where AGs, whose offices may be underfunded and understaffed, work with private outside counsel to accomplish these goals. Outside counsel are hired on contingency at no cost to taxpayers. According to the study, such agreements have been the target of brazen criticism by conservative business groups whose members have often been found liable by state AGs and forced to repay taxpayers millions of dollars.

Gottlieb and Widman write, "When Attorneys General and private attorneys join together, the power of the state is made stronger by the additional resources, manpower and strategic advice provided by private counsel. It increases their access to documents so the state can investigate exactly what was happening behind corporate doors. Also, because the state is involved, it can provide more whistleblower protection to insiders willing to speak the truth about industry misconduct." Moreover, "[S]ettlements and fees are paid for by the wrongdoer, not the taxpayer, and the money is used to cover the costs of the litigation as well as disbursed into public programs related to the lawsuit or funneled back into the Attorney General's office."

All rightee. Walter Olson has written about the group over the years, and Ted Frank* has aptly described CJD as a "trial lawyer front group." It's a 501(c)(3) organization that got out of the lobbying business back in 2006.

*We've updated the post to reflect clearly it was Ted, not Walter, who used the term "trial lawyer front group."

On May 23rd, we posted on the coincidental release of two books from trial lawyers, one arguing against the existence of God, the other praising the Lord. We suggested a national debate tour, Bryan-Darrow II, on the road.

Comes now an e-mail from one of the authors mentioned:

Carter Wood mentioned my upcoming book Beyond Reasonable Doubt: A Lawyer's Case for Disbelief in God on a the Point of Law Forum entry, "Inherit the Wind, The Sequel", on May 23rd.

I could not find a way to post a comment on POL, but I wanted to give him and your readers a link to some excerpts.

Book page: www.xlibris.com/BeyondReasonableDoubt.html
Author page: www.xlibris.com/GeoffJ.Henley.html
In answer to Mr. Wood's question concerning a national debate tour, I certainly would entertain it.

Best of luck.
Truly yours,
Geoff J. Henley

OK, ball's in your court, Mr. Merkle.

Trial-bar scandal? What scandal?

The Times's relegating of the Mel Weiss sentencing to a page C-3 story, and a generally tepid level of interest in the Weiss, Scruggs and asbestos scandals in many other press outlets, gets my Manhattan Institute colleague Steve Malanga to thinking about the contrast:

When then-New York Attorney General Eliot Spitzer sued the New York Stock Exchange's Richard Grasso over his rich pay and severance package, the New York Times alone reacted with 10 stories in less than a week--including a profile of Grasso's attorney, an approving editorial encouraging Spitzer, an analysis of Spitzer's legal strategy, and an op-ed column.

For more background on the Texaco affair mentioned later in the column, check here.

It's time to upgrade the stolen-insurance-files affair to a scandal in its own right, with Judge Acker's declaration in his opinion that the Rigsby sisters "copied State Farm documents using a list of Scruggs's clients" and that they and Scruggs operated as "alter egos" of each other -- a picture less evocative of "whistleblowers" than of, say, spies. David Rossmiller explains, and comments "I presume Scruggs can easily pay [the new $65,000 sanctions order] out of his annual receipts of tobacco settlement money".

As readers know, the California courts are considering an issue of high importance: whether government entities can hire private counsel on contingency fee to pursue public nuisance cases, which these days include ambitious ventures in regulation through litigation such as public-entity lead paint suits. A trial judge agreed that a precedent known as Clancy bars allowing private lawyers to prosecute such cases in exchange for a share of the proceeds, an appeals court disagreed, and the issue now heads to the state's high court. Now the National Association of Manufacturers (which which co-blogger Carter Wood is associated) in conjunction with several other business groups (the American Chemistry Council, the Coalition for Public Nuisance Fairness, and the Association of California Insurance Companies) has prepared an amicus letter, which can be read at this link.

The brief points out that the exception the court carved out of Clancy, authorizing suits in which the government entity supposedly retains control over the course of the litigation, will be "virtually impossible" to enforce, at least absent extensive and ongoing court supervision of the internal workings of the public-entity litigation teams; indeed, the lawyers on those teams will have both motive and opportunity to simulate fictional city or county control of actions that are in fact steered and managed by the contingency-seeking outside counsel. Earlier here and here, etc.

The House Judiciary Subcommittee on Commercial and Administrative Law has completed its hearing on H.R. 6126, the "Fairness in Nursing Home Arbitration Act of 2008," sponsored by the committee chairman, Rep. Linda Sanchez (D-CA). The bill would render pre-dispute arbitration clauses in long-term care contracts invalid.

Written testimony is now posted online, with three witnesses lauding the legislation -- including a fair dose of emotional appeals -- and one supporting the value of arbitration.

Gadberry represented the American Health Care Association (news release) and the National Center for Assisted Living. He testified:

Unfortunately, this debate is colored by anecdotes and misinformation perpetuated by high-profile trial attorneys who traditionally oppose any effort to bring balance to the personal injury playing field, and who give too little consideration to the harmful consequences on the long term care industry that follow from the high transaction costs of traditional litigation and the resulting financial drain on the system. In fact, Mr. Connor's testimony of October 2007 before this same subcommittee inaccurately portrayed the manner in which arbitration agreements are presented to perspective residents and their families upon admission to the facility. While we agree that entering into a nursing facility or assisted living residence often is a time of uncertainty and apprehension, Mr. Connor's notion that family members are threatened into signing the arbitration agreement is simply untrue.

As noted in this earlier post, arbitration is under a multipronged attack in Congress, with nursing home the initial targets.

UPDATE (8:04 p.m.): How coincidental. This evening on Baltimore TV Channel 54 -- after Family Guy reruns -- there was an ad from the Cochran Firm soliciting litigation against nursing homes. The firm's website doesn't mention that as an area of legal expertise.

The Senate failed to invoke cloture today on S. 3044, the Consumer First Energy Act, which as we noted below, envisioned lawsuits against OPEC. The vote was 51-43.

Ignoring Congress, the New York Times reports that Larry Klayman -- you remember, Judicial Watch? -- filed suit in federal court in Miami against OPEC, accusing the organization of price-fixing. (AP story.)

By a vote of 50-44, the Senate today failed to invoke cloture on H.R. 6049, the tax extenders bill, that included in the $1.6 billion tax break for trial lawyers. (Earlier posts here and here.)

In urging a no vote on cloture, Sen. Chuck Grassley (R-IA) specifically mentioned the trial lawyer provision as something that did not belong in the legislation. Perhaps now the Senate can hold a committee hearing on the bill.

Class-action transparency

An editorial in The Examiner today praises Sen. John Cornyn's bill, S.3033, the Securities Litigation Attorney Accountability and Transparency Act.

The Cornyn bill responds directly to the core Lerach/Weiss abuses (giving illegal kickbacks to clients) and also provides for greater transparency and consistency in the judicial certification of plaintiffs. It further directs courts to establish competitive bidding by attorneys in most class-action cases, and encourages the U.S. Comptroller General to publish regular studies of how much money successful class-action attorneys make per hour.

The legislation also requires disclosure of all campaign contributions from winning attorneys to elected officials were are in a position to influence the selection of counsel for class-action plaintiffs.

The Examiner has been an editorial workhorse on the topic of civil litigation reform, reflecting the views of its owner, Colorado investor Philip Anschutz, cleverly dubbed a "media wildcatter" by BusinessWeek back in 2005, and ably represented on the opinion pages by editors Mark Tapscott and Quin Hillyer. Good things going on at The Examiner, too, including a new Sunday edition beginning July 13. Also, today is the first day at The Examiner for Mary Katherine Ham, who will oversee the paper's upcoming, reworked website, dcexaminer.com.

So, more profile for tort reform issues. Good all the way around and congrats to The Examiner.

Around the web, June 10

  • Unanimous high court ruling in Allison Engine, the case raising question of whether bounty-hunting False Claims Act applies when government is an indirect payer of bills; ATRA thinks the Court's compromise is pretty good [its press release; Jurist; earlier here and here]
  • Ninth Circuit appoints special prosecutor, on top of high recommended monetary sanctions, to pursue prominent California toxic tort litigators Tom Girardi and Walter Lack in tangled Nicaraguan pesticide-injury case [Overlawyered]
  • That dreadful "ADA Restoration Act", overturning Supreme Court decisions that grafted some rationality onto the disabled-rights law, appears to be very much alive [Schwartz]
  • California trial lawyers had a good election night in Tuesday's primary [Cal Law "Legal Pad" and more]
  • Another round of credit card antitrust litigation: now Discover wants $6 billion from Visa and MasterCard [Bloomberg]
  • "In a wreck? Get a check!" TV-ad lawyer runs for West Virginia Supreme Court [Steve Cohen, Huntington Herald-Dispatch]

Blast that OPEC, Let's Sue!

The Senate will have a cloture vote in the next day or two over S. 3044, the Consumer-First Energy Act of 2008. The bill contains all sorts of anti-market provisions -- price controls via anti-gouging provisions, windfall profits tax, etc. -- and one humdinger of a litigation-related section: TITLE IV--NO OIL PRODUCING AND EXPORTING CARTELS.

As CRS summarizes it: "No Oil Producing and Exporting Cartels Act of 2008 or NOPEC - Amends the Sherman Act to make it illegal for any foreign state to act with another foreign state to: (1) limit the production or distribution of oil, natural gas, or any other petroleum product; (2) set or maintain prices for such products; or (3) otherwise take any action in restraint of trade for such products. Denies sovereign immunity or act of state doctrine protections for foreign states who engage in such such illegal conduct."

The bill is viewed as a political statement, very unlikely to garner the 60 votes to end cloture. Still, wonder how the rest of the world regards this latest outbreak of American litigiousness.

We've put the text of Title IV in the extended entry section.

The U.S. Supreme Court today agreed to hear an appeal from Philip Morris USA, a unit of Altria, on a $79.5 million award in an Oregon smoker lawsuit. (Philip Morris USA Inc., v. Mayola Williams, U.S. Supreme Court 07-126). Stories from Bloomberg, The Oregonian and Reuters.

This is the well-known case where the widow of a heavy smoker sued Philip Morris, claiming the smoker believed company claims that smoking was safe. In February 2007, the Supreme Court reversed on a 5-to-4 vote an Oregon Supreme Court ruling that upheld an $79.5 punitive damages award to the widow, Mayola Williams. (Opinion here.) The Supreme Court found that the trial court allowed the jury to punish Philip Morris for possible injuries to non-parties and sent the case back to Oregon -- but the state Supreme Court upheld the award, widely read as a direct challenge to the Supremes.

Altria, the parent company of Philip Morris, issued a statement:

"Philip Morris USA is pleased that the Supreme Court has accepted review. The Court has previously instructed the Oregon appellate courts to properly apply the constitutional standards to the punitive damage award in this case. The Oregon courts have not done so, and so the Supreme Court has agreed to review the case once again," said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of PM USA.

More background from the Washington Legal Foundation, which filed an amicus brief in support of Philip Morris.

Previous Point of Law posts:

From USA Today, "As high court term winds down, high drama expected":

WASHINGTON -- The nine Supreme Court justices will enter through crimson velvet drapes this morning and take their seats at a mahogany bench to announce decisions in some of the most closely watched cases of their annual term.

Twenty-six cases await resolution, including disputes over Guantanamo detainees, Washington, D.C.'s handgun ban and damages arising from the Exxon Valdez oil spill of 1989.

The ritual Monday and on select days throughout this month -- the last of the session -- is long-standing. In June, anticipation in the courtroom is palpable. Rulings will be blared across the Internet, read on the radio and headlined in newspapers.

We're aflutter with palpitations, it's true.

Apropos Walter's post on Chesapeake Energy deciding to build a $30 million headquarters someplace other than West Virginia, we note this recent article from the Chamber-supported West Virginia Record, "Survey shows potential jurors uneasy about lawsuits."

CHARLESTON -- A new survey of potential West Virginia jurors reveals they think lawsuits hurt the state's economy and job market. The survey, conducted by Charleston-based Mark Blankenship Enterprises, found that 45 percent of those potential jurors questioned say lawsuit have a negative impact on the economy and job market. Of those, 24 percent believe lawsuits have a "very negative" impact, while 21 percent say the impact is "somewhat negative."

The Mark Blankenship Enterprises survey memo is available here.

This spring sixteen state attorneys general filed an amicus brief with the Rhode Island Supreme Court in support of the state's public nuisance suit against former lead paint manufacturers, a dubious cause if there ever were one. The roster of signers includes quite a few AGs whose closeness to trial-lawyer interests has caused us unease in the past, including Drew Edmondson (Oklahoma), Darrell McGraw (West Virginia), Beau Biden (Delaware), Dustin McDaniel (Arkansas), Jack Conway (Kentucky), and since-disgraced Marc Dann (Ohio). Rounding out the sixteen are William Sorrell (Vermont), Steven Rowe (Maine), Gary King (New Mexico), Hardy Myers (Oregon), Robert Cooper (Tennessee), Mark Bennett (Hawaii), Mark Shurtleff (Utah), Catherine Cortez Masto (Nevada), and Alicia Limtiaco (Guam), along with one from whom we certainly would have expected better, Bill McCollum (Florida).

What may actually be most interesting about this list is who's missing. No Andrew Cuomo (New York) or Richard Blumenthal (Connecticut). No Jerry Brown (California) or Lisa Madigan (Illinois) or Martha Coakley (Massachusetts) or Douglas Gansler (Maryland). Maybe there's some part of the story we're missing, and some or all of these AGs are still destined to weigh in on the wrong side. But assuming they won't, let's take this opportunity, for which there not that many occasions on this site, to congratulate the attorneys general of New York, California, etc. for their good sense and good judgment.

The House Judiciary's subcommittee on commercial and administrative law will hold a hearing Tuesday on H.R. 6126, the "Fairness in Nursing Home Arbitration Act of 2008." (Hearing notice here.)

The CRS summary for the bill, introduced May 22, states: "Provides that a pre-dispute arbitration agreement between a long-term care facility and a resident (or anyone acting on the resident's behalf) shall not be valid or specifically enforceable." It's the companion bill to the Martinez-Kohl anti-arbitration measure, S. 2838.

The big picture is that the plaintiff's bar has embarked on a multifront campaign against arbitration; a May 1 letter to Congress from major business associations cited 13 separate bills where arbitration is under attack. From the letter:

If successful, these legislative efforts would retroactively declare unenforceable potentially millions of provisions for the orderly and economical resolution of disputes. Opponents of pre-dispute arbitration have neglected to realize that, if enacted, these provisions will actually limit the realistic opportunity for an average consumer, employee, and investor to obtain a remedy if a dispute arises. Evidence shows that arbitration can be very useful in the context of low-value claims. Studies show that plaintiffs' lawyers are reluctant to take cases involving relatively small claims because they seek larger potential attorneys' fees than would likely result from these cases. According to one survey, plaintiffs' employment lawyers said they would not take a case unless it was worth at least $60,000, on average. Therefore, without the option of arbitration, consumers would be faced with two choices--to try to navigate the legal system on their own, or to abandon their claim. The only real beneficiaries of these anti-arbitration provisions and bills would be class action lawyers who would benefit from both the rare blockbuster claim and the possibility of bringing more class action lawsuits--lawsuits that provide little benefit to class members while ensuring large payouts to class action attorneys.

The trial lawyers have made nursing homes the most prominent target in this broad assault, finding it a fruitful area for emotional pleas.

From the Senate Judiciary Committee's website: "The Senate Committee on the Judiciary has scheduled a hearing on "Short-change for Consumers and Short-shrift for Congress? The Supreme Court's Treatment of Laws that Protect Americans' Health, Safety, Jobs and Retirement" for Wednesday, June 11, 2008 at 10:00 a.m. in Room 226 of the Senate Dirksen Office Building."

Judging by the witness list, issues will be preemption and allegation of politicized science. Witnesses scheduled are Thomas O. McGarity, professor of law at the University of Texas, and co-author of a recent book, "Bending Science: How Special Interests Corrupt Public Health Research"; Robert Lawless of the University of Illinois College of Law, who previously testified on bankruptcies; and Richard M. Cooper, a partner with Williams & Connolly, a well-known attorney in the field of food and drug regulation.

Also scheduled to testify is Bridget Robb of Gwynedd, Pa., and Maureen Kurtek of Pottsville, Pa. Kurtek had sued Capital Blue Cross after it denied payment for a lupus treatment; she subsequently developed acute catastrophic antiphospholipid antibody syndrome which caused multi-organ system failure. In a March 2007 ruling, a panel of the Third Circuit Court of Appeals, ruled that the Employee Retirement Income Security Act (ERISA) preempted her state law claims that her insurer failed to approve her medical treatment in a timely fashion, causing the organ collapse. The court's ruling is here.

Senate Majority Leader Harry Reid on Friday filed cloture on the motion to proceed to H.R. 6049, the Renewable Energy and Job Creation Act, i.e., the tax extenders bill, which includes in it the $1.6 billion tax break for trial lawyers. The bill could be voted on this upcoming week. (Previous post here.)

The Examiner editorialized on the measure today, accurately describing the way it's been shoved down the throat of legislators and the public -- no usual Treasury analysis, no committee hearings on the bill in the Senate.

The lawyers' payoff was slipped into a large bill with all sorts of other provisions such as extensions of a tax credit for research and development and of an optional deduction for individuals for their state sales tax payments. While those provisions would extend current law, the lawyers' payoff would change long-existing policy that already made good sense. At an estimated cost to the Treasury of $1.575 billion, the provision would encourage class-action plaintiff lawyers to file dubious long-shot, big-money cases. It does so simply by letting the attorneys deduct fees and expenses up-front. Existing law rightly treats such expenses as loans to their clients, to be repaid from ultimate awards if they win or deducted on their income reports at case's end if they lose.

Republicans plan to raise a ruckus about the measure, largely on procedural grounds. Given the many popular provisions in the measure -- extending the R&D tax credit, for example -- a procedural fight may be the best approach.

More from Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, in a Townhall.com column, "Trial Lawyer Tax Break."

We've put the relevant portions of the Ways & Means committee report -- written by the majority -- on the provisions in the extended entry below.

The newspaper's Quin Hillyer takes a look at the positive results of lawsuit reforms in medical practice and other areas. Sidebar stories cover improvements in Alabama, and the powerful effect for better or worse that can happen when the composition of the bench changes, as in Wisconsin.

"Wow. Judge Acker found Scruggs and the Rigsby sisters jointly and severally liable for civil contempt and a fine of $65,000 in the Renfroe v. Rigsby case, relating to failure to promptly return the stolen State Farm claims files to Renfroe's counsel." Maybe stealing documents isn't such a good strategy after all? And that's aside from what the judge said about Mississippi Attorney General Jim Hood -- which starts with the epithet quoted in the post title, and just gets more stinging from there. (David Rossmiller, Jun. 5; Anita Lee, "Judge fines Scruggs, Rigsby sisters", Biloxi Sun-Herald, Jun. 6; order, opinion PDF)(cross-posted from Overlawyered). More: U.S. Chamber-backed Legal NewsLine (Hood's response).

The awful, awful Farm Bill

Baseball Crank has a section-by-section guide to the expensive and meddlesome things it does.

Around the web, June 6

  • Yes, the car crash may have been shown fake, but that doesn't mean insurer is entitled to summary judgment [Ted at OL on New York case]
  • "Green Our Vaccines" is a new slogan promoting some bad old ideas [Orac, more, more, etc.]
  • Among several reasons doctors are so slow to adopt email, one is you-know-what [MedRants]
  • After furor in NY press over lawyers' snagging rich state pensions based on part-time work for school districts, class action filed -- against those lawyers? -- no, on their behalf [Newsday]
  • Use of miniature Dutch Boy figurines as promotions among many advertising and trade-association practices assailed by plaintiffs in Rhode Island lead paint case [Genova]
  • Blumenthal declares victory in settlement with Infectious Disease Society of America over Lyme treatment guidelines; apparently it's no conflict of interest when the Connecticut AG does the bidding of "chronic Lyme" camp [Courant, Journal News, earlier]
  • John Stossel on why we need loser-pays [syndicated]

A much-needed resource: this new monograph from the Washington Legal Foundation, about 140 pages long, lays out in considerable depth (PDF) the basis for concerns that federal prosecutors are encroaching on the due-process rights of white-collar defendants. Chapter headings include "Mens Rea, Public Welfare Offenses, and the Responsible Corporate Officer Doctrine", "Environmental Protection Agency Criminal Enforcement Policies", "Department of Justice Criminal Prosecution Policies", "Parallel Civil and Criminal Prosecutions", "Attorney-Client and Work Product Privileges", "Deferred Prosecution and Non-Prosecution Agreements", and "U.S. Sentencing Guidelines" (via Alex Adrianson, Heritage InsiderOnline, who notes of the developments narrated in the report, "It's a legal set-up that puts business people engaged in non-criminal activity at risk of being thrown in jail.")

Relocation = the sincerest kind of bid for legal reform? Per the Charleston Gazette, "Chesapeake Energy has canceled plans to build its Eastern Division headquarters in Charleston because of a West Virginia Supreme Court ruling on May 22, the company announced today." The court declined to review a jury verdict of $405 million against Chesapeake and another company in a local natural gas royalty dispute.

"While we hold a less significant amount of the liability in the verdict, we do believe it sends a profoundly negative message about the business climate in the state," [company vice president Scott] Rotruck said. "The reality of this decision is that nobody in West Virginia, similarly situated, has a guaranteed right of appeal in the judicial system."

"Private Contingent Fee Lawyers and Public Power: Constitutional and Political Implications": important paper (PDF) by Northwestern lawprof Martin Redish on the problematic ethical status of government hiring of private counsel for a share of the spoils. As the first and last paragraphs indicate, Prof. Redish's views are very akin to ours (footnotes omitted):

Imagine a system in which all police work is performed not by governmental employees but by private contractors who are paid by the arrest: the more arrests, the more money they receive. Can anyone seriously imagine that such a system would be either constitutional or in any way consistent with the values of the American political system? I think not. Now imagine a system in which prosecutors receive no set salary but instead are paid by the success of their prosecutions: the more convictions that are obtained, the more money they make. Once again, it is difficult to conceive that such a system would be held to satisfy the requirements of due process. When the coercive power of the state is asserted against private individuals or entities, our constitutional and political traditions are appropriately construed to demand that those exercising that power base their decisions and conduct on a good faith assessment of the public interest, rather than on considerations of narrow focus of personal self-interest. ....

If there is anything clear about the often murky state action doctrine, it is that what would be unconstitutional for the state to do itself cannot be somehow constitutionally laundered by delegating the very same authority to private actors operating under ultimate state control. Thus, if one accepts each of the steps of my political and constitutional analysis to this point, there can be little doubt that an arrangement in which private lawyers are hired on a contingent fee basis to perform litigation functions traditionally performed by state attorneys is, at the very least, politically improper. It is highly likely that it is unconstitutional as well.

P.S. Beck and Herrmann remind us that they rounded up a very good set of links and references on this subject last year.

Belleville, Ill. attorney Tom Keefe believes that big payouts on many locally filed class actions are "utterly ridiculous", that the asbestos docket includes out-of-state cases that "[don't] belong here", and that a few bad-apple lawyers seeking riches have "put themselves first and have destroyed the profession." Not a surprising set of views in themselves, the difference being that Keefe is a successful local personal injury attorney who clearly feels no obligation to march in lockstep with some of his brethren.

From Congress Daily:

Democrats rankled by a recent Supreme Court decision shielding medical device companies from state liability lawsuits plan to unveil legislation to reverse the ruling, the first of many expected efforts to chop away at federal rules that restrict consumers' ability to sue.

House Energy and Commerce Health Subcommittee Chairman Frank Pallone, D-N.J., and House Oversight and Government Reform Chairman Henry Waxman will introduce legislation before the Independence Day recess that would explicitly state that FDA regulation does not trump medical device patients' ability to seek damages under state law, a Pallone spokesman said.

A generally thorough article, although we would certainly disagree that business' strategy is to "bash the trial lawyers." The case for federal preemption can be argued quite effectively on its merits.

See previous posts, including Ted Frank on the Supreme Court's ruling in Riegel v. Medtronic, James Copland in The Washington Post on federal preemption, and testimony to Waxman's committee by John Calfee of the American Enterprise Institute, who argued that the lack of federal preemption would create worse markets for pharmaceuticals and harm patients on the whole. (Cited in this post.)

Around the web, June 4

  • In Scruggs scandal's Peters-DeLaughter branch, Peters is said to be working with prosecutors [Brumfield, NEMDJ via Folo, more]
  • Class Action Blawg has been rounding up weekly highlights on its subject [latest is the ninth]
  • Anthony Sebok predicts defense win, but maybe not conclusive one, in Rhode Island lead paint public nuisance case [FindLaw first and second parts, Ted @ OL, Genova, interview with Sebok there]
  • San Francisco and Hagens Berman team up to lead municipal drug-reimbursement onslaught against wholesaler McKesson, a SF company [UCL Practitioner, earlier from Carter]
  • Plaintiff's lawyers have put more than $2 million into California political races this election cycle [CJAC]
  • Roger Parloff on implications of Merck's latest Vioxx wins [Fortune "Legal Pad"]
  • You'd think Fieger acquittal would qualify as a national story given the big hole it would seem to blow in McCain-Feingold [OL and again]

California state senator Tom Harman has a short position paper out with the Washington Legal Foundation. In it he advocates withholding a percentage of class action plaintiffs lawyers' legal fees until a sufficient search for all the clients is concluded, as a way to minimize the moral hazard intrinsic to class actions. An interesting read.

The dean of the class action bar is headed to prison: a judge has sentenced Mel Weiss to 30 months, near the high end of the plea-negotiated range, in the still-not-wound-up Milberg scandal. It would be easy for readers of Weiss's hometown paper to miss this news, however, since the issue of today's New York Times in front of me relegates it to page 3 of its business section. Which can fairly be described as burying one of the year's biggest New York-related law stories. Might this relate to the Times's long having drawn on Milberg Weiss as a cornucopic source for hostile material about whatever businesses Mel Weiss was suing at the time?

The problem is not with the story itself, by reporter Jonathan Glater, or its related item on the Times's DealBook, both of which are fine. But in relegating the coverage to a snoozy inglenook deep inside the paper the Times' editors again reinforce the impression -- as we noted two years ago -- that they view the giant Milberg scandal as an embarrassment they wish would just go away. Nor are we going to hold our breath waiting for the editorial -- any more than for the (still-nonexistent) one about the Scruggs scandal. More: some funny observations from Larry Ribstein.

Around the web, June 3

  • Don't miss Roger Parloff's article on William Simon, whistleblower extraordinaire of the academic ethics-opinion-for-hire industry [Fortune; earlier]
  • Here come the bisphenol-in-baby-bottles class actions [WaPo; Poked and Prodded]
  • Legal assistant in Kentucky fen-phen trial says her boss told her to destroy documents, and other dramatic testimony [Ted at OL, ABA Journal]
  • George Mason lawprof (and friend of this site) David Bernstein calls for extending Daubert principles further into realm of criminal forensics, while making them slightly less stringent on the civil toxic-tort side [Volokh Conspiracy]
  • Asbestos action in Japan on behalf of 178 construction workers and others demands $6.6 billion yen ($64 million) from government and building materials firms [Mainichi Daily News]
  • Clean energy innovators like others in tech sector are cowed by IPO suits [Nick d'Arbeloff, Boston Globe]

Fieger acquitted

Acquitted on charges of federal campaign fraud, as was his law partner, Ven Johnson. (AP story.)

From just reading the news coverage, it seemed like the prosecution really didn't have its act together. And Gerry Spence is very good. Spence said last week this is his last trial; he goes out on a victory.

As for Fieger, he goes on his merry, abusive ways. From the Detroit Free Press, Fieger: "I'm very pleased with the American system and the jury. I thank the jury for listening. I hope this puts an end to political prosecutions in the age of Mr. Bush."

Ranging a bit afield, we still feel the need to pose several questions about Lieberman-Warner, the climate change bill that establishes a cap-and-trade system to control emissions of greenhouse gases, most prominently carbon dioxide. Clearly, S. 3036, the Climate Security Act, does raise revenue. (Specifically: Title IV, Auctions and Uses of Auction Proceeds.)

Well, then, how is it that the legislation has been introduced in the Senate and is being debated there? How is it that the Senate is getting around the clear provisions of the U.S. Constitution?

U.S. Constitution, Article I, Section 7. All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

From an earlier post at Shopfloor.org.

Connecticut's activist AG, Richard Blumenthal, last week sued the San Francisco pharmaceutical distribution company, McKesson Corp. using state consumer-protection statutes and federal RICO law in charging that the company artificially inflated drug costs for consumers and state-funded health care programs. (Reuters story. Racketeering?) From Blumenthal's May 29th news release:

The lawsuit accuses McKesson of conspiring with First DataBank to inflate the average wholesale prices (AWP) for their pharmaceuticals - creating a larger "spread" between the cost by the state and Medicare program and the actual charges to health care providers, such as physicians and pharmacies....Because federal and state agencies, like DSS, use AWP when setting pharmaceutical reimbursement rates, providers could increase their profits by prescribing or dispensing drugs from McKesson.

The case is State of Connecticut v. McKesson Corp., 08- 10900, U.S. District Court, District of Massachusetts (Boston). (Legal Newsline has the complaint.) In March, U.S. District Judge Patti Saris in Boston certified a nationwide class-action suit against McKesson and First DataBank, with the class being more than 11,000 private consumers and third-party payors. (Copy of Saris' order.)

Michael Fox at Employer's Lawyer -- who, like us, views with alarm the campaign to create a "workplace bullying" cause of action -- thinks and hopes that a new Indiana Supreme Court ruling reinstating a verdict against a cardiac surgeon is narrowly enough based as not to precipitate any bursting of the floodgates. Richard Bales at Workplace Law Prof has a link to the decision in Raess v. Doescher, PDF. Earlier here, here, etc. More: Jackson Lewis.

Around the web, June 2

  • Milberg close to settlement agreement with federal prosecutors, say insiders [WSJ]
  • Not clear whether Missouri has really had a big drop in med mal suits since passage of reform, numbers skewed by surge in suits just before law's effective date [Springfield Business Journal; earlier]
  • More on prosperity of Australian injury specialist Slater & Gordon, first law firm to become publicly traded stock company [Times Online, earlier]
  • Suggesting that actress Sally Struthers wrote that Harvard Law Review student note about poverty and corporate law is really unfair to Ms. Struthers [Lat, Bernstein @ Volokh, Kowalski/National Post, ABA Journal, Note (PDF)]
  • Washington AG Rob McKenna continues to criticize erosion of sovereign immunity in the state and resulting taxpayer exposure to high lawsuit payouts [Legal NewsLine; earlier, background]
  • Should libertarians oppose the limited liability corporation? [Tabarrok via Bainbridge]
  • "Document, ad nauseam" and fire patients no doctor can make happy: how to avoid getting sued for medical malpractice [Medical Economics via KevinMD]

The running of a knowable and definite statute of limitations on mass tort claims, such as those of prescription drug injury, is important not only for defendants but also for many plaintiffs who file timely claims, because it is common for companies not to offer a global settlement until the statute has run (lest it be overwhelmed by lawyers' recruitment of tardy participants). Jessica Davidson Miller and Geoffrey Wyatt, both of O'Melveny & Myers, write in the Federalist Society's Class Action Watch that the best rule is that which begins running the deadline from when plaintiffs should reasonably have learned of their injury. Unfortunately, some states are willing to toll the statute while a class action is pending, although class actions are very seldom certified in mass torts: "Savvy plaintiff lawyers are aware of the benefits of this approach to the doctrine, and have exploited it precisely to serve this purpose of extending limitations periods by filing class actions that in truth have no hope of certification." (link leads to PDF).



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.