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November 2008 Archives

Blawg Review #188

Langston singing in Scruggs scandals?

It would appear that disgraced Booneville mass tort lawyer Joey Langston is cooperating extensively with prosecutors in the Peters-DeLaughter branch of the Mississippi judicial bribery scandals (via). Both Dickie Scruggs and Judge Bobby DeLaughter have denied wrongdoing in the affair. Langston's sentencing is scheduled for Dec. 16.

P.S. Meanwhile, fighting continues in the presumably unrelated dispute over whether Langston and bribery-scandal figure Timothy Balducci will get to trouser $14 million in fees for representing Mississippi in that cozy little MCI/WorldCom tax dispute.

Asbestos today, ERISA tomorrow?

St. Louis personal injury firm Schlichter, Bogard & Denton, best known for representing railway workers' claims, has been busy filing class actions over fees in 401(k) plans at "more than a dozen Fortune 500 companies, including General Dynamics, Northrop Grumman, United Technologies, Lockheed, Caterpillar, John Deere, Unisys, Boeing and International Paper." Says one critic: "They won all these asbestos cases and they're looking around for the next area and they found it in the ERISA area." The firm is said to be particularly fond of filing in the Southern District of Illinois, which a reader informs us has agreed in recent weeks to certify cases against Boeing and International Paper.

If plan sponsors thought they could escape the attentions of the class action industry by shifting from defined-benefit to defined-contribution plans, it looks as if they have another think coming.

Milwaukee lead paint recoupment lawsuit

A jury wouldn't go along with the city's case, and now an appeals court won't either.

Dept. of Dickensian contrasts

The highest-earning solicitors in Britain? Those would be the plaintiffs' lawyers who handle miners' health compensation claims. The Times wonders whether there might seem anything wrong with this picture.

Definite point in Holder's favor

Gerry Spence isn't thrilled about the new attorney general (via Genova).

Trial lawyer lobbying: Let the meme blossom

Walter's post on lobbying by the U.S. Chamber's Institute for Legal Reform prompts us to take another look at the American Association for Justice's lobbying disclosure form for the 3rd quarter. The trial lawyers' lobby lists lobbying expenses of $1.32 million for the quarter.

Like the Chamber's ILR, the AAJ pursues legislation in many, many subject areas. Is there a unifying theme? You might describes its activities thusly: "The American Association for Justice, the chief lobbying organization for the nation's trial lawyers, spent more than $1.3 million in the latest quarter trying to expand the legal grounds for suing business, government and individuals.

The trial lawyers' lobby also continued its push for a $1.6 billion tax break for its attorney members, allowing them to deduct upfront the loans they extend to clients to keep help their lawsuits alive."

Oh yes, it's there. Page 17, the taxation category:

H.R. 6049 (Renewable Energy and Job Creation Act); specific interest in Section 311 of House-passed bill, regarding uniform treatment of attorney-advanced expenses and court costs in contingency fee cases; also specific interest in the same issue in versions of the bill in which the language of Section 311 was not included (e.g. S. 3335; Jobs, Energy, Families and Disaster Relief Act; and S. Amdt. 5633 and S. Amdt. 5635 to H.R. 6049; and H.R. 7060 and H.R. 7202).

This tax subsidy for trial lawyers was a big issue last spring (see Overlawyered), and it will surely return as a priority for the AAJ during the 111th Congress.

We've put the AAJ's entire list of areas and legislation lobbied in the extended entry.

From 10 a.m. to 2 p.m. next Tuesday in midtown Manhattan:

Marie Gryphon, senior fellow at the Manhattan Institute's Center for Legal Policy, has a new report exploring the likely effects of adopting a "loser pays" rule for attorneys' fees in the United States. Loser pays, sometimes called the "English rule" but actually, in essence, the rule in place in the rest of the world, refers to the principle that parties who lose in litigation must reimburse the winners' legal expenses, including attorneys' fees. This study argues that loser pays could be an important part of a larger effort to reduce litigation costs, better compensate prevailing litigants, and better align tort law with its goal of deterring socially harmful conduct.

A panel of legal experts will react to Ms. Gryphon's proposal, and award-winning ABC journalist John Stossel will discuss the broader public implications of the policy proposal.

I'll be among those offering comments in response. If you haven't been invited and would like to attend this event, contact me or someone else associated with the institute. (Space is limited and invitations are by discretion.) A response form with more information about the event is here.

EFCA's stalking horse

Critics of EFCA have concentrated most of their fire on the bill's abolition of the right to a secret ballot before installing a union. But Michael Maslanka at Texas Lawyer suggests that union and Democratic strategists may be willing to trade off card check and instead accept some less radical alteration to current election procedures, such as snap elections in which employers would have relatively little time to make their case. That would furnish cover for pushing through EFCA's other main provision, the one that hasn't gotten so much attention, which would direct the imposition of an arbitrator-written union contract if the parties failed to reach one after the initial vote. "The unions will put up a fight on the secret ballot but won't really care. ...The gem of EFCA for unions is that they always, always, always get a contract. Sweet." More: Carter @ ShopFloor.

The Daily Business Review reports on the Hess case, the first individual trial resulting from the Florida Supreme Court's rejection (discussed by plenty of us on this blog, in the day) of the massive Engle v Liggett class action against tobacco manufacturers.

To recall, in 2006 the Florida supreme court quite properly quashed a $145 billion plaintiffs' verdict, the largest in U.S. history, and at the same time decertified the estimated class of 700,000 smokers, on the grounds that each smoker has individual proof issues that precluded a class action. But the Florida supremes tossed an important bone to any individual plaintiffs who would wish to sue: it allowed them to be able to rely on the class action jury's finding that cigarette companies knowingly placed defective and unreasonably dangerous products on the market.

Of the 700,000 potential plaintiffs, about 1% elected to sue individually within the time frame allowed by the Florida supremes. Half of these cases are in state courts, and half have been filed in or removed to federal court. More on the federal cases below.

Elaine Hess, the widow of a smoker who died from lung cancer, will be first to the post next week in Broward County Circuit Court. Ms. Hess's task is to prove her late husband would have been part of the class of sick Florida smokers that was disbanded by the 2006 court decision.

Circuit Judge Jeffrey Streitfeld has estimated that the trial will last about three weeks, which is about two weeks longer than plaintiffs' lawyers had figured the individual suits would last. The judge will split the trial into three phases. The jury will be asked first if Mr. Hess was addicted to cigarettes and if that addiction caused his death. If the jury agrees that he was, the Engle findings would be disclosed and compensatory damages would be determined. A third phase would set punitive damages.

Hess and Philip Morris disagree about what will get admitted in the first phase. Plaintiffs want to present evidence that Big Tobacco knew and hid information that nicotine was addictive and smoking was deadly. They claim Philip Morris will attempt to demonstrate Hess chose to smoke cigarettes, despite knowing of their dangers and his doctor's advice to stop smoking. But Philip Morris claims that information about its misbehavior does not belong at this first, causal phase.

Meanwhile, several judges in the various federal courts to which half of the individual trials have been removed have interpreted the Florida Supreme Court's holding (that Philip Morris may not re-try the question of tobacco's "defective and unreasonably dangerous" characteristics) as violative of Due Process. Earlier reports (see, e.g., this one) reveal, for example, that in late August U.S. District Judge Howard Schlesinger in Jacksonville squarely rejected the Florida Supremes' findings. U.S. District Judge Steven D. Merryday in Tampa adopted Judge Schlesinger's order the same day. Schlesinger concluded that Florida violated the U.S. Constitution by depriving the tobacco industry of the right to defend its product in the individual suits. "This court will not sacrifice the fundamental right of due process upon the altars of expediency, thrift and 'pragmatism,'" he wrote. At the same time, Judge Schlesinger certified this question to the 11th U.S. Circuit Court of Appeals, conceding that, "there is a substantial ground for difference of opinion." He intimated that the Circuit might rapidly agree with him, and that all the suits might be withdrawn forthwith: "An immediate appeal from the order may materially advance the ultimate termination of the litigation."

Stay tuned!

Regulating novel financial instruments

Some suggest that government be empowered to regulate the introduction of financial innovations, screening out those that are not sufficiently transparent or that might pose systemic risk if misused. Careful about that, writes Steve Randy Waldman at Interfluidity:

Also, consider common stocks. No rational regulator concerned with substantive transparency would approve of common stock, if it were a novel investment vehicle. It guarantees no cashflows whatever, its "control rights" are so weak for most purchasers that representations thereof should be viewed as fraudulent. Empirically common stock behavior is very weakly coupled to the performance and health of the firms that stocks fund. The only instrument in wide use more substantatively opaque than common stock is fiat money.

An AP story begins:

The U.S. Chamber Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce focused on neutralizing the power of plaintiff trial lawyers, spent more than $9 million lobbying the federal government in the third quarter, according to a recent disclosure form.

Wow. $9 million is a lot of money, especially in a season when there was no broad liability-reform legislation moving through Congress or likely to do so. The poor trial lawyers, facing such an onslaught!

Read on, however, and you'll find the story's first sentence was badly misleading:

The institute lobbied on judicial salaries, consumer product safety, attorney-client privilege, arbitration, drug labeling and other issues.

That conveys a very different picture: it seems the Chamber tackles a wide range of issues important to business legal departments, and is not just "focused on neutralizing the power of plaintiff trial lawyers". On the first issue mentioned, judicial salaries, the Chamber's position may in fact coincide with the position taken by many or most plaintiff's lawyers. Nor do disputed changes in the handling of attorney-client privilege necessarily track plaintiff-defendant divisions. Revisions of the laws on consumer product safety and drug labeling are mostly seen in the business world as regulatory issues, even if they do have some non-trivial spillover into litigation strategy. Only one of the five issues listed -- arbitration -- presents itself as a classic showdown between trial lawyers and their adversaries.

But just wait. Some in the litigation lobby will shortly be asserting that the Chamber spends $3 million a month to fight trial lawyers. That won't make it true, though.

P.S. Yep. Just as predicted, it didn't take long.

When the crisis ends

Creative rethinking is going to be needed not only in rebuilding the financial and regulatory system but in planning for the recovery of the battered New York City, state and regional economies, hard hit by the crisis. As the New York Observer notes, the Manhattan Institute -- sponsor of this website and home of such sharp-eyed observers of political economy as E.J. McMahon, Nicole Gelinas, and Steve Malanga -- is likely to be at the forefront of idea-work in that task. More: Jane Genova.

Adventures in Connecticut whistleblowing

Stirring outrage in Connecticut, a lawyer-discipline committee has recommended a mere reprimand and ethics-course attendance for Maureen Duggan, a lawyer on the state payroll who wrote a bogus letter denouncing her boss and then moved into whistleblower-protection mode while he got fired. In the letter, Duggan posed as a parking-lot attendant reporting on misconduct by then-state ethics chief Alan S. Plofsky, at whose agency Duggan then worked; Plofsky "was investigated and fired, though an appeals panel later found he was terminated without just cause. Duggan, meanwhile, was transferred into a supervisory position at the state Department of Children and Families, earning $105,000 a year, where she remains employed to this day." (Andy Bromage, "Truth & No Consequences", Hartford Advocate, Nov. 13; Jon Lender, "Reprimand Recommended For State Agency Lawyer", Hartford Courant, Nov. 2; "Ms. Duggan's Duplicity" (editorial), Hartford Courant, Nov. 12). A state agency investigating the matter declined to recommend Duggan's removal, in the Advocate's words, "on the grounds that the state has no specific policy prohibiting that sort of charade," even among lawyers at its own ethics agency. And the department where Duggan found such a soft landing, that of Children and Families, is now the subject of its own brouhaha: its legal director was discovered to have been checking confidential files on a matter in which a member of her own family was involved, and drew a ten-day suspension for this violation of privacy policy. (Jon Lender, "Top Lawyer Broke Own Agency's Rules", Hartford Courant, Nov. 23).

Bailout priorities

The logic seems to be that hundreds of billions of federal dollars can fly out the door to prop up financial institutions, often with relatively little oversight, so long as tough limits are imposed on the (sometimes trivial) share of the sum that goes toward executive salaries. Hodak Value wonders whether this really makes much sense.

Around the web, November 25

  • Brink o' the abyss: report for U.K. judiciary is said to recommend plunge into U.S.-style lawyer contingency fees [Times Online]
  • Wage/hour law: is turning on the computer the new "donning and doffing"? [Daniel Schwartz]
  • Colorado Attorney General John Suthers criticizes activist drift of some of his fellow state AGs [WLF, w/co-author Geoff Blue]
  • Ninth Circuit navy sonar case shows that liberal judicial activism is no mere memory of past days [Stuart Taylor, Jr., National Journal; more]
  • Vol. VII in "Legal Shakedowns and Scandals" series takes up case of Dr. Oscar Frye, elusive authenticator of West Virginia asbestos injury [AJP]
  • "Trial lawyers more important than doctors" braggadocio from Gerry Spence provokes some strong reactions [Orac]

Constitutionalizing labor relations law

For all the passionate resistance rightly being mounted to the AFL-CIO's proposed labor law power grab, we can at least be grateful for one thing, which is that hardly anyone is arguing that the U.S. Constitution requires federal labor law to assume a pro-unionization stance. Up in Canada, unfortunately, things are different.

Prof. Ribstein has some thoughts.

FACTA and Madison County, Ill.

Should have been predictable that they'd go together like caramel and pecans.

Around the Web, November 24

It works to make employers more reluctant to allow telecommuting.

Ted Frank (with co-author Ohio State lawprof Sarah Rudolph Cole) has a new paper out at AEI on the hot subject, likely to be the target of a push by litigation advocates in Congress next year. Summary:

In 2007, the advocacy group Public Citizen issued a scathing report attacking the consumer arbitration process. This report, coinciding with more than a dozen pending antiarbitration bills in Congress, as well as lawsuits against National Arbitration Forum and credit card companies, provided support to many antiarbitration advocates' claims that consumer arbitration is bad for the "little guy," a conclusion repeated with little scrutiny by stories in Business Week and on Good Morning America. Academics and arbitral organizations responded quickly, providing arguments and statistics that suggest significant difficulties with Public Citizen's analysis of the available empirical evidence. Although problems with consumer arbitration exist, our review of the available empirical evidence suggests that claims by Public Citizen and others that consumer arbitration is inherently unfair to consumers are overstated.

In writing this article, we reviewed the available empirical evidence about consumer arbitration. We did not consider empirical findings related to employment arbitration because the two processes are different in many ways. More important, perhaps, analysis of employment arbitration data is probably no longer necessary to provide insight about consumer arbitration. California's requirement that various arbitral organizations collect data about their California consumer arbitration cases provides a rich resource from which to draw conclusions about the benefits and drawbacks of consumer arbitration. Public Citizen utilized this rich resource of consumer arbitration data in preparing its report on consumer arbitration. Public Citizen's analysis of the California data, which appeared to reveal many potential concerns about consumer arbitration, is, however, only one of a number of analyses of that data.

Our analysis of the Public Citizen report and evidence collected in California and elsewhere reveals different, and more positive, conclusions about the state of consumer arbitration.

See also Ted's post at Overlawyered.

The Fulton County Daily Reporter (via law.com) has an interesting story on the just-ended successful corporate class action against Coca-Cola (which was found to have committed "fraud on the market" by inflating its income. Plaintiffs may have succeeded, but their lawyers did not emerge unscathed: U.S. District Judge Willis B. Hunt chopped many millions from their claimed fees and expenses. For example, regarding expenses, the Judge found itemized travel expenses, at an estimated $1,365.95 per person per night, excessive. The court observed, "This Court is not troubled by the apparent fact that Coughlin [Class counsel Coughlin Stoia Geller Rudman & Robbins -- once the firm of former name partner and disgraced class action king William Lerach --] attorneys seek high comfort on their journey but neither should the class finance such a lifestyle. This Court finds that a client could reasonably expect to pay $300 per night for his attorney's food and lodging on domestic trips, and that is the level at which this Court will reimburse Coughlin for its travel." Another expense disallowed was $93,960.67 for LexisNexis, Westlaw and Online Library Research. Judge Hunt correctly observed that, "charging separately for use of a research sevice is akin to charging for the use of a case law reporter. That is, the research service is a tool, much like a computer or a pen, and this Court considers the use of such a service part of a firm's overhead. ... Moreover, this Court is aware that many firms pay a flat rate to Lexis and Westlaw regardless of their usage, and class counsel cannot claim such flat rate payments as an out-of-pocket expense."

About fees, the court found it curious that of 24,914.15 hours billed by Coughlin, only 1,411.74 were billed by the 11 associates assigned to the case whose hourly rates were $350 or less. "This Court would find it surprising if only six percent of the work performed in this matter was of the type that could be performed by lower-level associates...."

Having written this week (here, here, here, here and here) on the various public policy aspects of the tobacco master settlement agreement 10 years after its enactment, we now get to perhaps the most important and lasting consequences of the MSA: the astounding increase in money and political power the agreement brought to the nation's trial lawyers, as well as the expansion of states' use of private contingency lawyers to carry out cash-seeking litigation. Any review of the decade following the MSA that omits these profound implications for the U.S. legal and political system is incomplete, woefully incomplete.

So that's the way we'd describe NPR's series, "The Tobacco Settlement, 10 Years Later," the most prominent media take on the MSA's anniversary. Each individual story was OK within its limited scope, but the reporters and producers all but skipped the trial lawyer angle, producing woefully incomplete journalism. A non-broadcast sidebar profiled some of the actors, "Update: Key Players In The Tobacco Settlement." There's a paragraph on Mississippi's former attorney general, Mike Moore, who initiated the state lawsuit against the tobacco companies because, "His friend, attorney Mike Lewis, came to him with the idea." And there's a paragraph on Dickie Scruggs:

Mississippi trial lawyer Richard "Dickie" Scruggs first became well-known taking on the asbestos industry on behalf of sick shipyard workers. He was then hired to sue Big Tobacco, representing Mississippi in the protracted tobacco litigation in the 1990s and helping to broker a deal. He said the settlement earned his firm close to $1 billion. He continued as a class action warrior until getting into a dispute over legal fees in the settlement of Hurricane Katrina insurance cases. In 2007, he was indicted on charges of attempting to bribe a judge. He pleaded guilty and is serving five years at a federal prison in eastern Kentucky.

And that's it on the subject of trial lawyers.

The insurance consulting organization, per its press release, "has issued its 2008 report, which measures tort costs for 2007 and shows trends dating back as far as 1950". It indicates that the cost of the liability insurance sector of the U.S. economy expanded by 2.1 percent in 2007, a slower rate than the 4.8 percent expansion of U.S. GDP as a whole. Because the data series tracks the size of the liability insurance market, its short-term movements tend to reflect the cyclical nature of long-tail liability insurance itself, in which "soft" and "hard" markets alternate, depending on such factors as the expected path of future payouts and the expected return on investments in the interim. The past few years have been a period of "soft" market conditions in which the cost index has grown at only a modest rate or even, as in 2006, dropped. More: ShopFloor, Business Insurance.

The Tillinghast studies are particularly useful in assessing long-term trends in liability-cost burdens (since long-term data will tend to transcend the vagaries of passing hard/soft markets) and in international comparisons (since well-defined liability insurance markets exist in other advanced countries and can be subjected to comparable metrics). Perhaps for those very reasons, and because the figures are widely acknowledged within the industry as having a high degree of accuracy in measuring what they set out to measure, the Tillinghast numbers have been furiously attacked by organized trial lawyers and their allies. For an introduction to this ultimately tiresome literature (unless watching the litigation lobby engage in nonstop misrepresentation is your idea of entertainment), see posts here, here, and here, as well as other past Point of Law coverage here.

Around the web, November 21

  • Big news in asbestos: Wayne County, Mich. judge throws out medical opinions by prolific Lansing internist Michael Kelly [Free Press, earlier]
  • Law is what they say it is dept.: Oklahoma high court tosses out another chunk of liability reform, this time on statute of limitations in medical liability suits [Journal Record]
  • Doing well at institutional reform litigation: high court urged to review $10.5 million fee in Georgia foster care case [Fulton County Daily Report, earlier]
  • Lawsuit against Detroit police department seeks entitlement to light-duty accommodation for pregnant employees [Workplace Prof Blog]
  • Patent lawyer rule of thumb: "if the inventors are all B.A.'s and J.D., it's looking grim." [John Steele, Legal Ethics Forum]
  • Newish California program monitoring individual "chemical biomarkers" has implications for litigation [Beck & Herrmann, CalBizLit]

Walter's mention of Sen. Daschle's alliance with the trial lawyers prompts a link to the National Association of Manufacturers' tally of the Senator's voting record from the 106th to 108th Congress (1999-2004).

We break out votes on legal issues, i.e., what the NAM "Key Vote Committee" deems to be the tort-reform position. On the identified 10 votes, Sen. Daschle voted against the tort-reform position 10 times. (Included were four health-care, medical liability-related votes.)

Click here and scroll down to see the tally.

Departing chief judge Judith Kaye won plaudits for some pioneering steps to improve the efficiency of court administration in New York, but it sounds from Eric Turkewitz as if there's a long, long way to go.

Auto bailout: a legal pork barrel?

Per AmLaw Daily, environmental lawyers are demanding that Detroit drop its aggressive litigation challenge to state tailpipe emissions standards if it wants a bailout. Not to give anyone ideas, but can it be long before the trial lawyers jump in to demand that the Big Three stop fighting product liability suits so hard if they want public money?

Around the web, November 20

  • Sorry, docs: new health czar Daschle is a longtime trial lawyer ally [Overlawyered]
  • Union-backed ad campaign for EFCA begins; just what economy needs now, business-labor Armageddon [L.A. Times]
  • As electronic discovery proliferates, so do tactical allegations of spoliation, often hard to defend against [Texas Lawyer]
  • California's sanctions rule for grossly unfounded litigation is almost identical to federal Rule 11, but can have slightly different interplay with procedure [CalBizLit]
  • Illinois Supreme Court decision discusses at length the development of defective design standards in product liability [Scheuerman, TortsProf]
  • Louisiana attorney discipline action provides a look inside one "settlement mill" [Pero]

Preppy Plaintiff

Popped collars, it seems, have consequences that at least one fashion victim is unwilling to bear. Michael Minelli has reportedly sued the author of "Hot Chicks With Douchebags" for featuring a photograph of him. The photo and accompanying derisive prose, Minelli complains, have exposed him to "hatred, contempt and humiliation" at the hands of friends and coworkers. Truth is a defense to a charge of libel, so some patriotic jury might have to determine whether Minelli is, in fact, a douche bag.

Via Andrew Sullivan.

Overlawyered.com mostly down

Continuing technical problems at my other site, Overlawyered, have kept it mostly down since yesterday. Some readers can reach the site by omitting the "www" prefix from the URL, others can't reach it at all. Thanks for your patience as I work with the hosting service to resolve the problems. Update noon: back up now.

It all sounds so wonderfully meta and self-feeding, doesn't it? A recent study by the Goal Group, a UK-based "class action services specialist", finds it deplorable that Asian institutional investors often refrain from participating in U.S.-based securities class actions, even after settlement when there would seem to be free money for the taking; the group's managing director describes the institutions as having a "clear duty" to pursue the claims, implying perhaps that a valid class action would lie against them if they fail to cash in. Paul Karlsgodt wonders whether in future to expect "nested" class actions.

We posted before the election on the AFL-CIO-backed Proposition 201, which would have imposed a 10-year warranty on new Arizona homes and much broadened homebuyers' right to sue builders over dissatisfaction with their purchases. The state's voters didn't think much of the measure, defeating it by a four-to-one margin. Four years ago Colorado voters lopsidedly defeated a bill to expand construction-defect litigation in that state.

Around the web, November 19

  • Have the Lerach/Weiss scandals and PSLRA really changed financial class actions? And what will the election mean? Panel discussion with Joseph Grundfest, Boris Feldman, Judge Vaughn Walker, others [D&O Diary]
  • Trial lawyers are determined to get Nevada's MICRA-like medical malpractice limits overturned [Insurance Journal]
  • $580 million Engle tobacco class action fund: you mean it might be taxable? And subject to Medicare recoupment? What fun is that? [DBR]
  • Even Democratic NLRB guru Bill Gould finds EFCA's arbitration provisions unfairly tilted toward unions that refuse to negotiate [Hirsch, WorkplaceProf]
  • "A Pennsylvania lawyer came to Charleston last month and filed 900 lawsuits in one day." Defendants were railroads CSX and Norfolk Southern, most were asbestos claims [WV Record]
  • Only the most reliable and objective sources: insurance official says "many of the allegations contained in the [AAJ insurer-bashing] report appear to have been lifted from legal briefs filed by [now-imprisoned felon] Richard Scruggs and other plaintiff attorneys" after Katrina [National Underwriter]

Many of the public-health groups who originally cheered on the attorneys general litigation against the tobacco companies are now marking the 10th anniversary of the tobacco master settlement agreement. They issued a news release today hailing the agreement's accomplishments while decrying the states' unwillingness to spend the billions of dollars exclusively on anti-tobacco and public health campaigns.

Their solution? Reallocate the dollars AND raises tobacco taxes even higher. The recommendation is included in a new report, "A Decade of Broken Promises: The 1998 State Tobacco Settlement Ten Years Later," released by the Campaign for Tobacco-Free Kids, American Heart Association, American Cancer Society Cancer Action Network, American Lung Association and Robert Wood Johnson Foundation.

From the news release:

  • Congress should enact legislation granting the U.S. Food and Drug Administration authority to regulate the manufacturing, marketing and sale of tobacco products. The U.S. House of Representatives on July 30 voted 326 to 102 to approve this legislation, and it has 60 sponsors in the Senate, including President-elect Barack Obama and Senate Majority Leader Harry Reid.
  • Congress should also significantly increase the federal tobacco tax and utilize some of the revenue to fund a national public education and smoking cessation campaign.
  • The states should fund tobacco prevention programs at CDC-recommended levels, further increase tobacco taxes and enact comprehensive smoke-free workplace laws (24 states and the District of Columbia have enacted such laws to date). The CDC has estimated that if each state sustained the recommended level of funding for tobacco prevention and cessation programs for five years, five million fewer people would smoke in the U.S., and hundreds of thousands of premature deaths would be prevented.

So the dollars have not been spent efficiently, reflecting the public policy goals as determined by...the litigants? Perhaps if the public health groups had worked through the policymaking branch of government, legislatures, then they could have achieved more.

Although, realistically, that's surely not the case. Reflecting the will of the electorate, state legislators are more reluctant than public health advocates to raise taxes and limit First Amendment rights, the end effect of the MSA. So the AGs and their special-interest allies instead used litigation; at least a nationwide lawsuit gave the public health groups potential access to the money.

Finally, we're struck by the (too-familiar) mindset reflected in this release and the groups' arguments: If only we had enough money, if only we could spend more on education and campaigns and public service announcements, we would change these people! We would stop these smokers and wipe out tobacco once and for all!

The perfectability of man...

Earlier posts:

Master & Settlement: Budgets, bonding and bailouts
Master & Settlement: General Tobacco sues AGs, competitors
Master & Settlement: The many related issues
Master & Settlement: Coughing at the 10th anniversary

U.S. litigation, viewed from abroad

Carter notices comments by Andrew Pincus, former general counsel of the Commerce Department under Clinton, at a recent AEI conference on business and the Supreme Court:

I know in some quarters it's heresy to talk about comparing our judicial system with the rest of the world, but in fact, if you represent ....foreign clients, and you say to them, well, you've just been sued, and now you have to spend some money to file a motion to dismiss. And, by the way, the way that gets decided is that the judge assumes that everything in the complaint is true, even though you know of course that many of the things are totally preposterous.

And if that's denied, you have to spend $1 million -- with electronic discovery, maybe $10 million, $100 million - defending yourself, which you have no chance of getting back, even if at the end of the day you're quite confident you're entirely innocent, not liable, under whatever the claim is. In most countries of the world, that's sort of craziness, but that's the system we have.

Employee Free Choice Act, the maneuvering

The passions, politics and positioning (prattle and palaver, too) involving the Employee Free Choice Act have actually seemed to increase since the November 4th elections. The unions are pushing to place the anti-democratic measure at the top of the Congressional agenda in January, running TV ads, releasing partial polling results, etc. Labor appears to have gotten the upper hand over business, at least with respect to PR.

Anyway, thought a round-up of developments and commentary might be worthwhile:

  • Garry Mathiason, Human Resource Executive Online, "Employment Law: The Shifting Legal Landscape." Mathiason is shareholder, partner and vice chair of Littler Mendelson in San Francisco. He writes: "The 2009 agenda for HR professionals must assume EFCA in some form will become law. In anticipation, employers should consider auditing conditions to determine whether they would support an organizing drive; monitoring union-organizing activities within the industry or geographical location; training management about rules associated with union organizing, potentially providing employees with information and arguments about union representation when organizing activity is anticipated and -- in some highly targeted industries -- even before receiving evidence of organizing activity; and, most of all, reviewing overall employment conditions to ensure they are competitive and the needs of employees are being addressed."

Around the web, November 18

  • All-purpose public contingency fee lawyers? Already representing Bay Area's San Mateo County to go after former lead-paint makers, Cotchett Pitre has now gotten itself hired to pursue financial claims in Lehman Brothers failure [NLJ]
  • Theodore Dalrymple reviews Paul Offit's new book on autism and anti-vaccine crankery [City Journal]
  • Judge Acker issues broad ruling against Rigsby sisters, the ones who funneled State Farm Katrina documents to Scruggs informants, in Renfroe contract dispute [Memorandum Opinion PDF, YallPolitics]
  • Adopting views of Third Restatement would be step in the right direction for Pennsylvania product liability [Stephen Fogdall (Schnader Harrison) for WLF, PDF]
  • At Drum Major Institute discussion on shareholder "say on pay", sounds as if panelists march to same drum [Hodak Value]
  • On card check/labor law reform, Obama memoir is ominous: "I owe those unions. When their leaders call, I do my best to call them back right away." [EFCA Updates]

New SSRN paper by NYU lawprofs Samuel Issacharoff and Geoffrey Miller (via Mass Tort Prof):

This paper considers Europe's experiment with aggregate litigation in light of American experience. European thinking on the topic appears to have reached consensus on two points: first, aggregate litigation will soon be the norm for Europe; and second, whatever form European aggregate litigation takes, it will not replicate American class action litigation with its domination by entrepreneurial plaintiffs' attorneys.

Issacharoff and Miller worry that Europe will not be liberal enough in allowing entrepreneurial methods and thus will miss out on (what they see as) the benefits of lawyer-driven mass litigation. More: LaCroix, D&O Diary.

Mark Cuban insider trading charges

Prof. Bainbridge has an analysis, and Prof. Ribstein has additional thoughts.

Judicial selection and business, cont'd

Writing at Slate, Bert Brandenburg of the Justice at Stake Campaign cites the recent election results as casting further doubt on many business advocates' crusade for partisan elections as a way of picking judges, and quotes my comments this summer on the subject. And Eric Dixon at Missouri's Show-Me Institute adds further thoughts, with a kind word for me along the way.

Out in the budget-beleaguered states, politicians are again eying distributions from the tobacco master settlement agreement -- 10 years on and still producing cash -- to ease their financial problems. Since it's public revenue raised outside the legislative process, drawing on the dollars appears a politically safe route. You know, "We've balanced the budget without raising taxes!" Or, "The federal government wouldn't help us, so we're forced into this step. At least we didn't raise taxes."

Unfortunately for the borrowers and re-allocators, the financial crisis has made "creative financing" more difficult. From around the states:

Upon the 10th anniversary of the tobacco master settlement agreement (see below here and here), we find the legal disputes carrying on. Indeed, it appears the settlement did more sparking than settling. Perhaps that's the inevitable result of addressing important policy questions through a joint lawsuit by state attorneys general instead of through a state-by-state basis by legislative bodies, which can better weigh public sentiment and balance political considerations. So, more litigation.

A news release from General Tobacco, October 28.

North Carolina based manufacturer and distributor General Tobacco (GT) announced today it is suing 52 attorneys general of the United States and its territories and 19 tobacco companies. GT is asking for treble damages in excess of $1 billion from competitors for allegedly conspiring with the states to set up the Master Settlement Agreement (MSA) so that later market entrants, such as GT, have to pay the states substantially more than certain competitors pay. GT believes the effect of the MSA is to drastically limit future competitors from fair market competition.

The 10th anniversary of the tobacco master settlement agreement (see below) reminds us that no week goes by without a political or legal dispute somewhere in the nation over the agreement's provisions or, more frequently, the distribution formulas established by each of the states. Just one example, from my former home of North Dakota:

On November 4, voters approved by 54-46 percent Ballot Measure No. 3. Ballot summary: "This measure would establish a tobacco prevention and control advisory committee and an executive committee; develop and fund a comprehensive statewide tobacco prevention and control plan; and create a tobacco prevention and control trust fund to receive tobacco settlement dollars to be administered by the executive committee." For more on Ballot Measure No. 3, see the Secretary of State's office.

As the Campaign for Tobacco Free Kids explained in a news release:

North Dakota has been receiving about $40 million a year in tobacco-generated revenues from the tobacco settlement and tobacco taxes, but currently spends only $3.1 million a year in state funds on programs to prevent kids from smoking and help smokers quit. Measure 3 will increase North Dakota's investment to the $9.3 million recommended by the CDC.

Chairman of the campaign was former Democratic Attorney General Heidi Heitkamp, who was involved in the negotiations over the master settlement and who was mightly incensed when the Legislature decided to spend most of the proceeds on education and water development. From The Williston Herald:

"North Dakota for 10 years will receive on the average a little bit under $14 million a year as really a reward for the work the AG's office did," she said. "I said if ever there was a time to again pursue an idea to have a fully funded, comprehensive program in North Dakota, that we should do it."

Heitkamp and the tobacco control advocates did discuss the idea of going back to the Legislature one more time, but they all "realized that those attempts had been woefully unsuccessful in the past. So we said, 'What about initiated measure?'"

In a small state like North Dakota, $14 million goes a long way in buying education, prevention and lecturing. People are going to get very, very tired of all the public service announcements interchangeably scolding and edifying.

Tobacco.org keeps a running list of news headlines on tobacco and the tobacco settlement.

Personal disclosure below...

NPR this morning ran a story on the 10th anniversary of the tobacco master settlement agreement, "What Has Changed Since The Tobacco Settlement?" The first of a weeklong series, today's report did little more than provide background and let former Mississippi Attorney General Mike Moore justify the litigation. The only objection raised is that the states have spent just an average of 5 percent of the settlement on tobacco control.

While most of the attorneys general who helped negotiate the deal are disappointed that states haven't done more with their cash, Moore says the money wasn't as important as what has happened culturally.

"Most of all we've changed the way people look at tobacco," he says. "There's no question anymore in anybody's mind that it's harmful and it will kill you."

So that's a federal policy decision being made to change American culture through the authority of state attorneys general. One hopes that NPR and the others who celebrate the 10th anniversary examine that policy implications of the master settlement, including the encouragement it gave to aggressive attorneys general to exceed their statutory authority and become the de facto federal arbiters of product liability law.

Another old but important issue also warrants attention: The ability of state AGs to supersede legislative authority to raise taxes.

"Myth of defensive medicine" dept.

Leading health care economist Uwe Reinhardt, in the Times' Economix blog, says defensive medicine prompted by "our uniquely American tort laws" is one of the "prominent" reasons health care costs are so much higher in the U.S. than in other advanced societies (via KevinMD).

Michael Hausfeld in the news

American Lawyer's AmLaw Litigation Daily recalls Hausfeld's hand in the framing of Texaco with a bogus racial-slur transcript, a story I wrote about at length at the time.

"A decidedly Clinton-esque flavor"

Some good news and some bad news from the Congressional hearing front. (The bad news: expect tighter regulation anyway.)

The morning event is the fifth in a series co-sponsored with the Robert Wood Johnson Foundation. Among likely topics that will come up: Democratic Sen. Max Baucus of Montana, who chairs the Finance Committee, has introduced a bill that would provide incentives for states to experiment with alternatives to med-mal litigation (via TortsProf).

Employment lawyers "busier than ever"

Massive payroll-slashing means more advisory work coping with the many legal pitfalls of layoffs, including the WARN Act, which is giving rise to a mounting docket of litigation; the law requires 60-day advance notice of many planned layoffs of 50 or more employees. The law has an exception for "unforeseeable business circumstances", but "courts have not historically counted major economic downturns under that exception, attorneys say." (Of course. What could be more foreseeable than sudden sharp economic downturns? That's why it's so easy to make money playing stocks!) Littler Mendelson expects October to be the busiest month in its history, and other management-side firms report big jumps in business as well. (cross-posted from Overlawyered).

Around the web, November 14

  • "Truly awful" policy consequences of unprecedented decision by California court to hold brand-name drug company liable for injury caused by generic version of drug [Beck & Herrmann]
  • Upstate appeals court dismisses suit by New York judges demanding pay raise [NYLJ]; Chief Judge Judith Kaye bids the court goodbye [Turkewitz]
  • Some in Wisconsin fume at what they see as backscratching dealings between outgoing university chancellor John Wiley and defeated Supreme Court Justice Louis Butler [Wisconsin Club for Growth via Pero]
  • "Voir dire is unconstitutional": adherent of "fully informed jury" movement makes an appearance at Anne Reed's jury blog [Deliberations]
  • Do apologies by defendants help speed reasonable settlements? Well, clients' and lawyers' reactions to apologies are two different things [Jennifer Robbennolt (Illinois), SSRN, via Schuerman, TortsProf]
  • You mean if Detroit's Big Three were put through the Chapter 11 wringer the UAW would lose its Jobs Bank program? [Declan McCullagh]

Unsupported Assertions?

A group of plaintiff's attorneys are attempting to ruin the holiday shopping season by denying the procrastinating male masses their choice of fancy underwear gifts, CNN reports. At least one woman has already filed suit against Victoria's Secret alleging that her bra contained trace amounts of formaldehyde, causing welts and blisters, and several other women have come forward to second the allegations. A class action suit is apparently threatened. Victoria's Secret denies that it uses formaldehyde in any of its processes.

If your bra makes you itchy, you should be allowed to return it, but a multimillion dollar class action suit seems a bit much. This is potentially the most serious legal assault on a woman's right to look good in a halter top since the baseless breast implant cases of the 1990s.

Paul Secunda at Employment Law Blog has some speculation as to which academics might fill which jobs bearing in mind that "much of the labor and employment law professoriate is, shall we say, on the progressive side of things".

Bill Ayers to speak at Georgetown Law

He'll be sponsored by the school's chapter of the National Lawyers Guild. Ron Radosh has background. More: Above the Law.

Law professor career paths

Apparently they can include "auto czar" (as well as, of course, "President of the United States").

The New York Times published a piece on December 9, "Cholesterol-Fighting Drugs Show Wider Benefit" reporting on a study that showed that cholesterol-lowering drugs, statins, can significantly lower the risk of heart attacks, stroke and death, even in people with low cholesterol levels:

"The study, presented Sunday at an American Heart Associationconvention in New Orleans and published online in The New England Journal of Medicine, found that the risk of heart attack was more than cut in half for people who took statins."

The study was paid for by AstraZeneca, which makes the drug tested, rosuvastatin, sold as Crestor. The TV networks absolutely loved this story, as you can see from the CBS News video and NBC Nightly News

So we did an online search: Crestor and "Class-Action" Lawsuit.

One clear sign that Saudi Arabia is concerned by the drop in oil prices is that it has decided to indirectly sue Big Tobacco. AP (via Law.com) reports that the Health Ministry has filed a $34 billion suit against importers of cigarettes from international tobacco companies, including U.S. firms, for costs of medical treatment of smoking-related illnesses. Cigarettes in the kingdom cost $1.50 per pack. The Saudis know the local importers cannot afford to be sued, but the Health Minister expressed confidence that they would be able to "resolve" this issue with Big Tobacco.

The legal basis of the suit is not immediately clear. "We have patients who are sick because of the agents who import cigarettes," the Health Minister said. "We have documented proof that these diseases were caused by smoking, and I am asking for compensation for these patients." There are many acute legal problems inherent in the "theory" that underlies that brief statement (is the government subrogated to individual claims? are the smokers claiming they were defrauded by the tobacco importers? is knowledge of the risks of smoking unknown or hidden in the kingdom? etc.) but of course the Saudis are here emulating American states and its federal government, all of whom have sued Big Tobacco (though the federal suit is still pending).

"Off-label" drug use and pre-emption

Despite perennial hints from some quarters that off-label use of prescription drugs or medical devices is somehow subterranean or illicit, it's in fact a perfectly recognized and appropriate thing for doctors to do across much of medical practice, and there's no reason why off-label use should ordinarily deprive drugmakers of an otherwise available preemption defense, argue Beck & Herrmann.

P.S. In a second post, they discuss the current vogue for entrepreneurial qui tam lawsuits demanding vast sums to compensate for moneys states laid out for off-label uses of drugs -- and never mind that the uses may in fact have been medically beneficial to patients.

ProPublica was launched to much fuss and applause as a new institutional backer of investigative journalism of the sort getting scarcer at major news outlets. Now it's placed a new article in the L.A. Times showcasing complaints by California state treasurer Bill Lockyer against Goldman Sachs over the firm's handling of the state's municipal debt. How bad is the article? Ask Felix Salmon ("garbage.... This isn't responsible impartial journalism, it's a gratuitous hatchet-job") or Joe Weisenthal, who comes down harder on Lockyer:

Here's what's going on. If you read the article, there's an attempt to somehow tie Goldman to the state's budgetary woes, by claiming Goldman helped push interest rates too high. Sound familiar? It should. The last time California faced a financial crisis, they set Enron up to be the scapegoat, claiming budget-crippling energy market manipulation. That was a lie: the state was hurt by the collapse of the .com bust and the attendent tax evaporation. At the time, it was Bill Lockyer leading the charge, though he was the state's AG then. Now he's Treasurer and raring to do the same thing.

More: Felix Salmon has now posted more on California's ProPublica-enabled "bullying tactics". ProPublica's philanthropic backing, incidentally, comes largely from California mortgage moguls/liberal activists Herb and Marion Sandler, and Herb Sandler is ProPublica's chairman.

Blogging a class action conference

Incentive awards in class action payouts

Brian Wolfman at Consumer Law & Policy notes some skepticism on the subject from a New York appeals court.

Big antitrust crackdown under Obama?

Don't be so sure. More: Josh Wright.

Around the web, November 11

  • "Hedge fund representatives will face Congress this week, another act in a play that will probably end with some bad regulation unless somebody gets some sense." [Ribstein]
  • Acrimonious rift leads to departure of high-profile plaintiff's lawyer Michael Hausfeld from his firm, Cohen Milstein [American Lawyer]
  • Dangers of the number "60": "There's not a single Democrat in the Senate who will filibuster" Employee Free Choice Act (and GOP's Specter is among its sponsors) [Weigel in L.A. Times]
  • Even within Bush administration, pressure building for more stringent HIPAA medical-privacy enforcement [HIPAA Blog]
  • Michigan Chief Justice Taylor "was the target of a deceptive, but devastating TV campaign bankrolled by still-unidentified Democratic donors" [Brian Dickerson, Free Press, not exactly a Taylor sympathizer]
  • Human nature at work again: with Dems' Houston sweep, GOP more aware of flaws in partisan system of judicial elections [Chronicle, Kirkendall]

A compromise on federal pre-emption?

Bill Childs suggests a way to split the difference.

Asbestos screening in Michigan

Reports a WSJ editorial:

...according to Michigan state records, over 15 years Dr. [Michael] Kelly has reported 7,323 cases of asbestos-related disease. Lawyers paid him $500 per person screened.

...In 88% of the 1,875 cases in which plaintiff X-rays were reviewed both by Dr. Kelly and hospital radiologists, the hospital readers found no evidence of disease. ...

...[Wayne County Circuit Court Judge Robert Colombo, Jr.] last week agreed to a hearing on Dr. Kelly. At which point something astonishing happened. Within 24-hours of the judge's decision, the plaintiffs attorneys voluntarily pulled all but one of the [80] suits.

With the decline of more celebrated asbestos venues such as Texas and Ohio, Michigan emerged last year as the number one state for new asbestos filings, reports the WSJ. More: Jane Genova calls the last-minute suit-yanking an example of "magic healing".

Meal and rest breaks: a question

Paul Karlsgodt: "I know this is going to make me sound like Ayn Rand, but why would we possibly want to encourage a public policy that imposes liability on employers for failing to force all of their hourly employees not to work during meal and rest breaks?" (background, more).

Rahm Emanuel, tort reformer

Yes, that's one of those headlines that warrants two questions marks, an ellipsis and seven footnotes, but still...

Reviewing the voting record for President-elect Obama's designated chief of staff, Rahm Emanuel, we see he has a few good votes on recent legal-reform votes. (This is the voting record on manufacturing-related issues as compiled by my employers, the National Association of Manufacturers.)

  • On February 17, 2005, he voted for final passage of S. 5, the Class Action Fairness Act, which passed 279-149.
  • On October 19, 2005, he voted for H.R. 554, to prevent frivolous litigation against the food industry, which passed 306-120.
  • And on June 12, 2003, he voted for H.R. 1115, that session's class-action lawsuit reform act, approved 253-170.

However, in the 109th session, he voted against several bills supported by business-minded legal reformers, including H.R. 5, federal medical liability reform; S. 397, the Protection of Lawful Commerce in Arms Act (Chicago political sensitivities there, since the city had sued gun manufacturers); and H.R. 420, Lawsuit Abuse Reduction Act.

A political loyalist who judges votes on a case-by-case basis, who take great pains to prevent his boss from being damaged by a lurch to the left (as argues John Fund)? Seems like that's the best that tort-reform advocates in the business community could reasonably ask for.

At least John Edwards isn't going to be the attorney general.

(According to Indiana University's events calendar, Edwards is supposed to resurface this Tuesday to speak on the election. Hard to imagine such a quick rehabilitation.)

On the agenda in Oklahoma

Unlike most of the country, the Sooner State saw a Republican trend in voting last week, and supporters of liability reform hope to be among the beneficiaries (via TortsProf).

Around the web, November 8

  • The gang that couldn't intimidate straight? Rumor has it ACORN sent protesters to home of Sherwin-Williams CEO Chris Connor one day, but they mistakenly carried signs from another demonstration [Law and More]
  • Monmouth County, New Jersey: "Defense firm accused of botching case received through political connection" [NJLJ]
  • Ironic and sad if this historic election spelled an end to the long established right to hold elections over unionization [George Lenard, ShopFloor]
  • Disability law symposium in University of Pittsburgh Law Review [Workplace Prof Blog]
  • Regulation through prosecution: the NatWest Three finally head home [Kirkendall]
  • Generally, gigantic patent verdicts don't come in the cases filed by trolls [Opderbeck, Concurring Opinions]

New at Forbes.com: RFK Jr. to EPA?

I've got a new opinion column just out at Forbes.com on the reports that president-elect Obama may be considering America's Most Irresponsible Public Figure, Robert F. Kennedy Jr., to head the Environmental Protection Agency. Earlier this week I posted on the topic here and here (cross-posted from Overlawyered, which has additions and updates).

A patient died after an experimental chemotherapy protocol at the famed Boston institution (via KevinMD).

Around the web, November 7

Sharp elbows and class representation

We've long been used to the spectacle of figurative barroom brawls between U.S. class action firms each determined to get their hands on lucrative representations. Now it's happening in Canada too (via Karlsgodt).

West Virginia: McGraw squeaks through

The attorney general held his seat against Republican challenger Dan Greear by a margin of 4,500 votes at latest count, of more than 650,000 cast.

Around the web, November 6

  • From their lips to God's ears dept.: will Obama put EFCA on back burner? [WSJ, McKinnon/Daily Beast]
  • American Constitution Society proposes liberal law agenda for Obama administration [video, papers]
  • Speculation on Obama legal and regulatory appointments [Legal Times]. Incredibly, some float name of vaccine crank and all-round hothead Robert F. Kennedy, Jr. for top environmental posts [Overlawyered and more, Orac and more]. Mark Lanier, of Vioxx-suit fame, is pushing Dr. Steven Nissen of Cleveland Clinic to head FDA [American Lawyer]
  • Quin Hillyer on the new Commerce Department report on liability and foreign investment [Examiner]
  • "Proposed Ban On Consumer Arbitration Would Further Clog Overburdened And Underfunded Courts" [Mark Fellows, Metro. Corp. Counsel]
  • Victor Schwartz, Cary Silverman and Christopher Appel paper on Consumer Product Safety Improvement Act of 2008 [BNA courtesy NAM]

Election miscellany

  • Most surprising and dismaying news of the night for the reform cause: Justice Cliff Taylor's loss in Michigan, described by Carter below. No contemporary state jurist I can think of has accomplished more toward causes I admire, or will be missed more. I hadn't blogged much on this, assuming that Taylor was in no danger; his qualifications so outshone those of his Democratic challenger that even the Detroit Free Press, which was extremely hostile toward his judicial philosophy, had endorsed him. It's a sad day. Democrats ran a last-minute ad campaign accusing Taylor of sleeping on the bench, which he told the Detroit News "wasn't true, but it was a very compelling piece of political theater". You think those good-government groups that get upset about negative judicial campaigning are going to hop on this?
  • Mississippi Supreme Court justice Oliver Diaz, who twice won acquittal in the Paul Minor scandal, lost his seat as did two others on his court. Jake Adams at Mississippi Business Law Blog has much more as does YallPolitics. Democrats (and trial lawyer surrogates Texas Watch and Texans for Public Justice) failed to unseat any of the Republicans on the Texas Supreme Court despite a notably nasty campaign. Democrats captured two vacant high court seats in West Virginia.
  • Rep. Tom McClintock, notable California conservative in the House, is ahead by 451 votes (via) and Arizona's reform-oriented Rep. John Shadegg kept his seat.
  • Controversial San Diego City Attorney Mike Aguirre, a former plaintiff's class action attorney, lost his reelection bid [AmLaw Daily]
  • Democrats are expected to take control of the New York Senate, Delaware House and Ohio House, completing their control of those legislatures. In Washington state, incumbent Democratic governor Christine Gregoire, a favorite of plaintiff's-bar donors since her role in the 1998 state-tobacco settlement, won her rematch with Dino Rossi.
  • Legal reformers will be in a defensive crouch in Washington, D.C. as well as many other places for a while, notes MI's Jim Copland.

Alabama -- In the expensive, expensive, very expensive Supreme Court race, Republican Greg Shaw has defeated Democrat Deborah Bell Paseur by about a percentage point. From the AP: "The Shaw campaign claimed victory with a lead of more than 14,000 votes, while Paseur eyed a possible recount." Very much a business versus trial lawyers face-off.

West Virginia -- Incumbent Democratic Attorney General Darrell McGraw appears to have won a slim victory over Charleston attorney and former legislator Dan Greear. McGraw has contributed to West Virginia's terrible, anti-business legal climate -- see this Manhattan Institute "Trial Lawyers, Inc." update -- hiring highly compensated private lawyers to manage the state's lawsuits and then divvying up the proceeds of awards to his political allies. An expensive race featuring negative ads, but in that, hardly the exception. (More.)

Ohio -- Democratic state Treasurer Richard Cordray easily won a three-way contest for Ohio attorney general yesterday, taking 57 percent of the vote over Mike Crites, a former federal prosecutor. Cordray fills the remaining two-years of the term of Democrat Marc Dann, who had resigned in disgrace amid a sex and administrative nightmare scandal. From The Columbus Dispatch: "Cordray said his top priority will be fighting mortgage fraud. He will also work to strengthen enforcement of consumer-protection laws."

Ohio remains the only state left with a public nuisance suit against lead paint manufacturers, one filed by Dann and kept alive by the interim AG. The city of Columbus previously dropped its suit after the Rhode Island Supreme Court ruling in July. Perhaps Cordray's clear-cut victory gives him the political maneuvering room to drop the pointless, expensive and anti-economic-growth litigation. Respectfully suggested line of argument: "I intend to devote my energies to our most pressing problems, where we can do the most good."

UPDATE: We should note that in the case of West Virginia, Democratic Governor Joe Manchin was re-elected with a big margin. Manchin is a pro-growth governor who has been critical of the state's degraded legal climate, so his election offers continued hope for reform.

UPDATE, Texas: From the Wall Street Journal Law Blog, "If plaintiffs lawyers in Houston are a little groggy this morning from too much partying, please forgive them. They've got much to cheer about: Last night, Houston trial courts underwent a massive face lift, as 22 Democratic judges swept into office." Big picture: "Democrats won 22 of the 26 district-court races in Harris County (Houston). In Dallas County, which also used to be a GOP bastion before a partisan shift in 2006, Democrats won all six district-court races."

Another state court watched by legal reformers was the Ohio Supreme Court, and you can see why in the August update of the Manhattan Institute's "Trial Lawyers, Inc." series, "JUDGING OHIO: Legal Reforms are Steering Ohio's Struggling Economy in the Right Direction."

The voters stayed the course. From The Toledo Blade:

COLUMBUS - Races for Ohio's highest court yesterday again bucked statewide trends as voters affirmed at least two more years of an all-Republican court.

Supreme Court Justices Evelyn Lundberg Stratton, 55, and Maureen O'Connor, 57, defeated their respective Democratic challengers, Cuyahoga County Common Pleas Judges Peter Sikora, 56, and Joseph Russo, 46.

Judges Sikora and Russo apparently gained little traction with their argument that Ohio isn't well served by a one-party high court. Since judicial candidates do not appear on general election ballots with partisan labels, it's unknown whether voters didn't care or didn't know who the Republicans and Democrats were.

From Detroit News:

Chief Justice Clifford Taylor of the Michigan Supreme Court was defeated Tuesday by Democratic challenger Diane Hathaway, becoming what is believed to be the first sitting chief justice in Michigan history to lose at the polls.

"It looks like she's won," Taylor told The Detroit News in a telephone interview at about 11:30 p.m. Tuesday. "It looks pretty conclusive."

Hathaway, a Wayne County Circuit judge, was leading Taylor based on exit polls conducted by Tim Kiska and Associates for The Detroit News and Channel 7 Action News.

Hathaway's win signals a major shake-up, reducing a 5-2 Republican majority to 4-3 on the state's highest court, where one of the Republican-nominated justices, Elizabeth Weaver, has been a frequent dissenter from majority opinions.

Hathaway's victory occurs during a Democratic blowout in Michigan, with Obama winning 56 percent of the vote and defeats for incumbent Republican Congressmen Joe Knollenberg, and it appears, Mark Wahlberg. The left-leaning "judicial reform" groups like the Soros-backed Justice at Stake will declare Taylor's defeat as a major achievement for good government and repudiation of business-spending on judicial campaigns.

Anyway, discouraging for rule-of-law judges. (And for disclosure purposes, my boss at NAM is former Michigan Gov. John Engler, who originally appointed Taylor.)

Beck and Herrmann are your one-stop resource for coverage of the drug pre-emption case, and I'm not even going to try to compete with them.

P.S. Lots from Carter at ShopFloor, too.

Election roundup

  • Suing their way into office? Political contestants filing lawsuits galore against their opponents [WSJ, Legal Times, Incisive Media]
  • About that "Michigan Supreme Court rated worst in the nation" smear campaign [RightMichigan; more from Eric Posner @ Volokh]
  • Supposed conservative takeover of U.S. Supreme Court: beyond the hype [Mauro, Legal Times summarized at LawBeat]
  • Jonathan Adler on vastly-improved Ohio Supreme Court in the balance [NRO, earlier]
  • Presumably the folks decrying incivility in judicial races will come down hard on trial-lawyer-allied Texas Watch for its demagogic swipes against Texas Supreme Court. Right? [Ambrogi]
  • Unfortunately, if unsurprisingly, Alabama and Mississippi once again have some of the nation's most acrimonious high court races [Overlawyered]
  • Despite those big donations (thanks Illinois AG Madigan!) I'll be independent of SimmonsCooper if elected, says candidate for Delaware governor Jack Markell [Wilmington News-Journal, letter to editor, earlier]

Around the web, November 4

  • Boeing clobbered with $237 million punitive and $371 million compensatory damage award in satellite contract dispute [CalBizLit]
  • McGraw and Greear fight down to the wire in West Virginia attorney general race [Times West Virginian]
  • Blawg Review #184 has a professorial theme [Faculty Lounge]
  • University of Pennsylvania Law Review prints symposium papers on Class Action Fairness Act [CAFA Law Blog]
  • Courts have thrown out WWII reparations claims against French national railway, but N.Y. Sens. Clinton and Schumer pushing legislation to revive them [NYTimes]
  • Sorry, but unless you can prove your class exists we may have to decertify it [NJLJ]

How timely. In an interview published today by the Corporate Crime Reporter -- a cranky but diligent trade publication -- the American Association for Justice's Les Weisbrod says, in effect, don't worry about a President Obama being a tort reformer. All that rhetoric? He didn't really mean it.

The interviewer notes Senator Obama's occasional references to his support of the Class Action Fairness Act (for example) and asks Weisbrod if Obama wasn't using the trial lawyers as whipping boys. Weisbrod:

No. Senator Obama chose his words very carefully. He said he voted for a class action bill and that the trial lawyers were unhappy about that. And that's true. What he didn't say was that as a result of that, and as a result of having dialogue over the issue, studying the issue more, that he doesn't support any additional broad based tort reform measures. If you look at his written positions and statements on his web site and campaign, he doesn't have anything near what we have seen. And in fact, his position with regard to medical malpractice is a good example. As opposed to embracing caps on medical malpractice, his position is that the way to reduce malpractice premiums for physicians is to subject medical malpractice insurance carriers to antitrust regulation.

Sure looks like somebody from the campaign was telling the trial lawyers, "Hey, don't sweat it. You know who loves you."

As Ted Frank wrote back in December, 2006, "So Obama may have annoyed the lunatic left with his vote for CAFA. As a reform supporter, I'm far from convinced that this makes him someone willing to cross the plaintiffs' bar."

Senate races

Some states where lawyers are giving money.

Litigation Lobby: just wait till January

Trial lawyers and their allies believe they may have a shot at going on the offensive with their most sweeping legislative agenda in many a year, reports the WSJ. Lester Brickman warns of the "most significant enlargement of tort liability since the 1960s." Key action items are the same ones the lobby has been banging the drums on for the past year: rolling back pre-emption and replacing arbitration with litigation. "The trial lawyers used the last Congress to learn where the soft spots were," says Victor Schwartz. And CAFA or no CAFA, "pro-plaintiff groups see an ally in Sen. Obama, a former law professor, who has offered support for tighter consumer-safety regulations and co-sponsored a bill in August to roll back mandatory arbitration for military-service members and their employers. The bill remains in committee."

Our newest featured column is on what may be the hottest legislative topic of the next Congress: the peculiarly titled Employee Free Choice Act, which would abolish secret-ballot union elections in favor of a "card-check" system and would impose mandatory arbitration when employers failed to agree to an initial union contract, among other provisions. Chicago professor and Manhattan Institute adjunct fellow Richard Epstein sorts through the likely impacts.

New: Trial Lawyers Inc. -- West Virginia

In the latest in the popular series of state-based reports from the Manhattan Institute's Trial Lawyers Inc. project, Jim Copland looks at West Virginia, a state that perennially ranks at or near the bottom in surveys of business confidence in state legal systems. The situation is by no means hopeless, with Mountain State voters having shown a newly stirring awareness of the problems, but the state has a long, long way to go.

Earlier in the series: California, Michigan, Illinois, and Ohio.

Labor and employment law expansion

Come January, a nightmare term is shaping up in Congress for employers, including toughening of the WARN (plant-closing) Act and the Family and Medical Leave Act, as well as EFCA, Fair Pay, a bar on arbitration of employment law complaints (even as arbitration is made mandatory for union demands), and even more -- perhaps including the removal of the cap on damages for sex, religion and disability discrimination claims.

Chamber's new reports

The Department of Commerce has released a new paper, "The U.S. Litigation Environment and Foreign Direct Investment," documenting, among other things, the perception overseas that the United States is excessively litigious. A highlight:

Fear of litigation is among the top issues listed by senior executives who manage internationally owned U.S. businesses. Significantly, U.S.-owned companies that operate in other advanced economies do not express a similar concern. Also, there is the perception that, at least in some contexts, other countries' legal systems are more predictable and that the legal costs of doing business are substantially less. These perceptions exist even though the overall high quality of the U.S. legal system is also well recognized internationally.

The report calls for more analysis in several areas, including the deterrent effect of the legal climate on foreign companies not yet doing business in the United States, as well as a better delineation of which aspects of litigation have the greatest deterrent effect on direct foreign investment.

Secretary Carlos Gutierrez spoke about the new report, litigation and the business climate at theU.S. Chamber of Commerce's 9th Annual Legal Reform Summit, Oct. 29th. His remarks are here. The Chamber's Legal Newsline reported on his speech.

Powers & Santola's judicial generosity

"Supreme Court Appellate Justice Anthony J. Carpinello's re-election campaign accepted a $10,000 gift in May from an Albany law firm that had recently appeared before him in court to argue a medical malpractice appeal. Three months after the contribution, which was disclosed in his campaign's filings with the State Board of Elections, Carpinello cast a deciding vote in a 3-2 decision on the case, Caruso v. Northeast Emergency Medical Associates. He also wrote the majority opinion that could allow the firm, Powers & Santola, to collect as much as $200,000 in fees. The judge claims he was unaware of the contribution." Powers, a former president of the state trial lawyers' association, denies any impropriety and says "all of the solicitations from his firm were initiated by the judges' political committees -- which often regard the firm and its renowned political generosity as 'low-hanging fruit' for their harvests of campaign cash." (Mark Lagerkvist, "System Is the Crime", Judicial Reports, Oct. 29). Eric Turkewitz also comments.

P.S. And there's a Part Two that examines more broadly "the tangle of rules governing the conflict-ridden financial relationships between lawyers and judges" (via Obbie/LawBeat).



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.