Results matching “ledbetter”

How the trial-lawyer tax is hurting hiring - PointOfLaw Forum

Charles Hugh-Smith and Jim Geraghty note that if an employee cannot generate revenue to cover his or her wages plus overhead costs, he or she won't be hired. This is absolutely true, but both understate the problem, and the degree to which the Obama administration has made it worse, and is planning on exacerbating it.

One of the biggest overhead expenses is the expected litigation expense of an employee. Employees have a wide variety of rights under federal and state law to sue their employer—not just for the hiring and firing decision, but for promotions or work conditions. A dishonest employee can impose a great deal of cost on an employer by bringing a meritless suit; whether the employer takes a hard line or pays the Danegeld, these are very real expenses. (For example, defending against the notorious meritless Jamie Leigh Jones suit cost KBR $2 million.) It's little surprise that California, where employees can sue for a variety of technicalities in a lawyer-friendly litigation environment, has a much higher unemployment rate than the rest of the nation, despite a dynamic technology industry and being so attractive to millionaires that the state thinks it can raise revenue rather than drive away taxpayers with a 13.3% tax rate.

That overhead cost isn't just awards to plaintiffs with meritorious, or even plaintiffs with unmeritorious, grievances. It's the lawyers, on both plaintiffs' and defense sides, who collectively receive more than employees take home from litigation victories and settlements. But it's also the (as-far-as-I-know yet-unmeasured) compliance costs: the vast human resources bureaucracy that keeps track of these laws and maintains the paperwork to protect the company in the event of future litigation. The compliance costs can have non-monetary effects as well. But take, for example, something as simple as employee appearance. Even something as simple as "It's not good for the corporate image to have someone with a Maori face tattoo interacting with customers" has an litigation minefield overlay, including EEOC litigation. That costs money, and that money comes at the expense of hiring.

So it's worth noting that these laws, on balance, hurt the average employee. Plaintiffs' attorneys' fees often outstrip the returns to the clients; add to that the defense attorneys' cost, and the cost of a human resources apparatus to ensure compliance, and the vast majority of the benefits of employment litigation is going to white-collar professionals, and most of that going to attorneys in the top decile, or even the top 1%. That overhead cost may add up to more than 10 percent of wages: a $30/hour employee is, instead of being paid $33/hour, getting a $3+/hour "benefits" package, most of which ends up in the pockets of people wealthier than him or her. Now, perhaps we as a society are willing to accept these costs to vindicate the relatively rare cases where a bigot or predator unfairly treats an employee and management acts against the company's interest in letting qualified employees be chased away. (One of the silliest things about the Wal-Mart employment litigation was the premise that the most aggressive cost-cutting company in the world would systematically choose to throw money out the window just to discriminate against qualified women in promotion decisions.) But these costs are rarely ever acknowledged in the policy debates in the first place.

And, even as structural unemployment rises to scary levels, this administration has sought to increase these overhead expenses to make hiring more expensive. The Lilly Ledbetter Fair Pay Act makes it easier to bring meritless suits by obliterating the statute of limitations. (Statutes of limitations are important for justice. Without a statute of limitations, someone can sue for very old alleged injuries, and a defendant would not have a fair chance to defend herself. (Ledbetter sued over her pay after she was retired!) Memories fade, evidentiary documents are discarded, people change employers. If an employee can wait until a middle manager of years ago died before accusing the company of discrimination, justice is impossible.) The EEOC has become increasingly intrusive. Though courts have largely rejected the move as arbitrary and capricious, Obama's NLRB appointments have sought to abolish arbitration agreements as an unfair labor practice. All in the supposed name of increasing workers' rights, but with the effect of exacerbating inequality and unemployment.

The State of the Union bodes more of the same. Not just the proposed minimum wage increase from $7.25 to $9, which will fall disproportionately upon unskilled workers who already have a double-digit unemployment rate. But the administration is reiterating its proposal for a "Paycheck Fairness Act that will surely increase unemployment as well. (More from Hans Bader.)

My election prediction - PointOfLaw Forum

72 hours from election day! Who's going to win?

Nate Silver says that "For Romney to Win, State Polls Must Be Statistically Biased." I think this is correct. Silver's model has Obama at a 83.7% favorite, and that is likely to turn into a 90-95% favorite by election day the way his model works. Silver's argument for Obama being a favorite: he's ahead in Ohio, and if he's ahead in Ohio, he's substantially more likely to reach 270 electoral votes. This is also correct.

That said, I do believe that there is a substantial chance that the state polls are a biased prediction of where election day results turn out. Because the 538 (and Princeton) model rely so heavily on the assumption that the state polls are unbiased, if the state polls are biased, then the 538 and Princeton models will also be biased. (Note that "bias" is a neutral statistical term; it does not mean that the pollsters are conspiring to favor Obama, just that their likely-voter model is producing results that overestimate his standing.)

1) Polls have historically had a bias against Republicans relative to how election day turns out. Silver disputes this; I've explained why his analysis on that question might be wrong before. On the other hand, the 2012 polls may have fixed this problem.

2) Polls have historically had a bias overestimating the performance of sitting presidential incumbents. There's certainly a counterargument against this. On the other hand, perhaps Kerry's failure of a 2004 bounce reflects the offsetting bias against Republicans. On the other other other hand, perhaps the 1980 and 1996 collapses by Democratic incumbents from their polling positions reflect the distortion caused by a relatively strong third-party candidate, plus Clinton's 1996 decline might simply reflect a reversion to the mean. But if undecideds break 75-25 against Obama, that's a 1- or 2- point shift relative to the polls.

3) The state poll toplines, which is all that the 538 and Princeton models use in their calculations, show enormous advantages for Democratic turnout in state races, advantages greater than even Obama realized in 2008. I think that this is very likely an error that, if corrected for, will show material change. There are many many reasons to think that the Democratic advantage of 2008 will be weaker or nonexistent in 2012, when Obama won 53-46 nationally (and Ohio by 4.6 points).

(a) Obama leads Obama voters only 84-13. Now, some 2008 McCain voters have died or won't vote for Romney; some 2012 Obama voters will be new voters; some 2012 Obama voters will be 2008 McCain voters; that 84-13 may well turn into 90-10 on election day. But it's hard to see where the improvement in D turnout is going to come from when so many Obama voters are disaffected.

(b) Independents overwhelmingly favor Romney, by 20 points in some polls. It's implausible that independents have swung so wildly, yet Democrats are more enthused and more likely to turn out than Republicans. Some, such as Josh Marshall, have posited that the makeup of independents has been changed because disaffected Perot/Tea-Party/Paulite conservatives have left the Republican party. Dan McLaughlin's counter-argument strikes me as stronger. Even under Josh Marshall's calculation of voter ID, D+7 among "all adults" should not translate into a 2012 that is better than 2008 for Democrats: Republicans are more likely to vote; Republicans are more likely to vote for Romney than Democrats for Obama (especially given the shift in Catholic opinion since 2008); and Marshall necessarily concedes that the independent vote will be less pro-Obama than in 2008. And I don't believe Josh Marshall's claim that the current makeup of all adults is D+7.

(c) McCain intentionally hamstrung his campaign in 2008 with unilaterally disarming self-abnegating campaign-finance limitations, next to no on-the-ground spending for get-out-the-vote efforts ("GOTV"), and wasting money on such tactics as a national ad congratulating Obama on winning the nomination. This undoubtedly made McCain feel better about himself, but meant that the GOP had a historically unprecedented disadvantage in GOTV. Even with the supposed 2012 Obama advantage in field offices (which neglects the fact that GOP turnout efforts are largely volunteer), Romney is doing comparatively better in 2012 than McCain did in 2008, which is the relevant comparison for whether the state polls are accurately predicting that Democratic turnout advantage will be higher in 2012 than in 2008.

(d) Some polls show Republicans more excited about this election than Democrats; others show the excitement level about even. But even taking the latter polls as an accurate metric, the relevant comparison is again versus 2008, where the Democrats had a huge excitement advantage. If the Democrats are going to outperform 2008, which they have to achieve the slim lead they achieved in 2008 given the shift in independents, they need to be more relatively excited than in 2008. They're not.

(e) The Obama campaign is assuming turnout will be 72% white; polls are assuming turnout will be 74% white. But there's a strong argument that turnout will be more like 75% white. Whites favor Romney by about 61-39; non-whites Obama about 80-20. This would be a shift of 0.8% relative to the polls.

(f) Reports about early voting are mixed, with National Review and Battleground Watch reporting relative advantages for Romney versus 2008, and Democrats claiming otherwise. This election will likely have a record percentage of early voters, and it's hard to say to what extent that reflects cannibalization or improved turnout. We'll disregard this as ambiguous.

The Princeton model takes the state polls at face value; Nate Silver has made a decision to have the 538 model disregard each of these factors and assume that the polls are as likely to be biased for Obama as for Romney. Thus, there is a substantial chance that the 538 and Princeton models are reflecting a house effect. GIGO: garbage in, garbage out. McLaughlin's post on the subject is a must-read; so is Kevin Holtsberry on Ohio; Michael Barone makes the aggressive case for Romney.

All that said, if I had a gun to my head the morning of November 3, I would rate Obama a slight favorite, with about 60% to 40% chances, a movement from the tossup I suggested on Twitter. (I'm not going to succumb to the fake precision of Nate Silver's model and suggest I can forecast with three significant digits.) Why?

(1) Each of the effects I mention above are overlapping to some extent. You can't add them up to say that the polls are biased by seven points. And Obama has some lead in the state polls, plus has more favorable electoral-college scenarios than Romney in a close election: the so-called "firewall." Thus, I could be right about three, four, or even all seven of those points about state-poll bias, and it still might not add up to enough of an effect to put Romney over the top.

(2) I have to recognize that there's some chance that I'm suffering from confirmation bias, looking only at the data that favors my preferred result, and that I'm wrong. Nate Silver is spending a lot more time thinking about the election and polls than I am, and it's more likely that he's seeing things that I'm not than I'm seeing things he's not; maybe if I were to try to duplicate his efforts, I would end up with a model that was closer to his than my current thoughts are. I thus have to discount my thinking that Romney is doing better than Silver thinks. I think partisans on both sides have been silly about Silver, with some Democrats treating him as infallible to the point that a challenge of Silver is a challenge of scientific truth, and some on the right being simply innumerate in their attacks on Silver. Still, occasionally Silver lets the mask slip and makes a statement that's pretty close to mine about the unpredictability of the election and the chances his model is wrong.

(3) There are pollsters who do take the effects I mention into consideration somewhat; in particular, Rasmussen is very aggressive in doing so. But even Rasmussen shows an election that is close to a tossup, with Obama having more "outs" in the electoral college than Romney. And I think there is a reasonable argument that Rasmussen is too aggressive in its likely-voter model.

(4) A certain number of intangible factors favor Obama. Hurricane Sandy changed news coverage dramatically in the last week of the election: a disaster brings Americans together, lets a president seem presidential, and, in this particular case, provides a conscious or subconscious reminder of Bush administration incompetence. Moreover, every minute spent on dramatic Sandy stories is a minute the news isn't spending on Obama administration failures in the economy, in energy policy, in deficit reduction, in Libya. It's hard to think that the double-standard of "fact-checking" that more harshly (and often incorrectly) scrutinizes Romney claims than Obama claims doesn't have some effect on undecided voters.

(5) What am I supposed to think about Romney throwing $12 million into Pennsylvania at the last minute? Pennsylvania has consistently voted more Democratic than the rest of the nation. It's hard to imagine a scenario where Romney wins Pennsylvania but doesn't win Ohio and/or 270 non-Pennsylvania electoral college votes. The Pennsylvania U.S. Senate race doesn't seem particularly close. There are four possibilities: (a) the Romney campaign sees a real "undertow" election, and legitimately thinks it can get meaningful coattails in Pennsylvania; (b) the Romney campaign is panicking, and throwing a Hail-Mary in Pennsylvania because it doesn't think it can get to 270 without it; (c) the Romney campaign has more money than it can spend efficiently, and is throwing money at Pennsylvania as an expensive feint to divert Obama campaign resources; (d) the Romney campaign doesn't know what it is doing or inefficiently hoarded money. If one assigns Bayesian probabilities to each of those scenarios, that doesn't look good for Romney.

(6) Finally, the way that Romney (and American Crossroads) are running campaigns suggests some problems as well. The Romney campaign feels that it has to play defense on things where Republicans are correct (such as the Lilly Ledbetter Act); it is affirmatively trumpeting protectionism instead of defending free markets. American Crossroads is blanketing Virginia with advertising attacking Democrats from the left for Medicare and education spending cuts. Romney hasn't made the Supreme Court an issue at all in the campaign. I'm clearly not the swing voter who is being targeted by these ads, and perhaps they reflect an attempt to dampen Democratic turnout. But it's hard not to think that Romney doesn't think he can win the election by selling conservative and free-market ideas. That has longer-term consequences even beyond what it says about the 2012 election.

We'll find out on Tuesday night or late Wednesday morning. That said, it's important to realize that this election is only one data point, and in the absence of an unexpected 55-45 landslide one direction or the other, the election will not be proof or disproof of any particular model of forecasting elections.

My swing-state predictions:
Likely Romney: FL, NC
Lean Romney: CO, VA
Too close to call, slight lean Obama if I have to choose: OH
Lean Obama: IA, WI
Likely Obama: MI, NH, NV, PA
Solid Romney: The other McCain 2008 states, IN, Nebraska 2nd District
Solid Obama: The other Obama 2008 states

Thus: Either 281-257 Obama or 275-263 Romney. Note, though, that the electoral-college scenarios generally favor Obama. Obama can lose WI or IA if he wins OH; if Obama wins IA and WI, he only has to win one out of CO, OH, and VA to get to 270. Note further the small chance of a Romney popular victory and Obama electoral college victory, especially if New York/New Jersey turnout is depressed.

Because of this electoral-college firewall, if the leaning states were really independent toss-ups, Obama would have a much better than a 50-50 or 60-40 chance of winning. In fact the errors are going to be correlated, it's unlikely that Obama wins Virginia and Colorado but loses Wisconsin and Ohio, and my 60-40 estimate reflects a certain chance that Silver/Wang is completely right, a certain chance that I'm right or partially right, a small chance that Rasmussen is completely right and I'm being overconservative, and a very small chance that the state polls are completely wrong and we're seeing an undertow election like Barone and Domenech think.

(Updated to add links, fix typos, and add specific swing-state predictions.)

Update, November 4: One more reason to be a bit more skeptical of the polls.

More Fact Checking That You Won't See Elsewhere - PointOfLaw Forum

As Ted Frank pointed out in his recent post, the self-proclaimed "fact checkers" in the media seem to have no interest in correcting the president's distortions regarding the Ledbetter Act.

Here's another whopper that has escaped the media's attention. When discussing Arizona's immigration law (SB 1070), Obama said: "Part of the Arizona law said that law enforcement officers could stop folks because they suspected maybe they looked like they might be undocumented workers and check their papers." In fact, the law allows police officers to request papers only upon "reasonable suspicion" -- a well-established standard -- and specifically states that police may not consider "race, color, or national origin" in forming a reasonable suspicion. At oral argument before the Supreme Court, Chief Justice Roberts asked the Solicitor General Donald Verrilli: "No part of your argument has to do with racial or ethnic profiling, does it?" And Verrilli replied "that's correct, Mr. Chief Justice."

But perhaps the strangest assertion from the president was this: "You know a major difference in this campaign is that Governor Romney feels comfortable having politicians in Washington decide the health care choices that women are making." That is, of course, an odd assertion from somebody who believes that the 15 members of the Independent Payment Advisory Board should be empowered to "decide the health care choices" for an entire nation, men and women. But then, by way of explanation, Obama stated that Romney would allow employers to decide what sort of health coverage to provide their employees -- even giving employers the freedom to choose health plans that don't cover contraception.

Apparently, Romney's refusal to impose a national contraception mandate on employers puts power in the hands of "politicians." Obama never attempted to back up his preposterous claim about "health care choices" -- and you can bet that the media will never challenge him.

Ledbetter again - PointOfLaw Forum

It's frustrating that in all the media fact-check frenzy, no one ever calls out claims that the Lilly Ledbetter Act, which does nothing but transfer wealth from working-class employees to wealthy attorneys, has done anything for women other than increase their unemployment rate. Hans Bader further points out that Ledbetter herself has nothing to complain about other than her lawyers' performance.

A Lilly Ledbetter reminder - PointOfLaw Forum

As we've repeatedly pointed out over the years, not only did Lilly Ledbetter deservedly lose her lawsuit, the bill passed in her name has cost jobs and done nothing to reduce the gender gap in wages, which, in the 21st century, is a result of phenomena other than discrimination. Heaven forfend all the fact-checkers incorrectly calling out the Romney campaign on welfare do their jobs in this particular instance.

Ed Whelan demolishes the self-parodic sputtering of E.J. Dionne calling for Justice Scalia's resignation, which in turn is no doubt a preview of the Left's planned attack on the Court should they decide that the Commerce Clause means something and strike down the Affordable Care Act.

To Whelan's fine points, one might note that Dionne wasn't calling for Justice Ginsburg's resignation when she used the occasion of the Ledbetter decision to attack the majority and call for Congressional action in a vituperative and misguided attack.

Lilly Ledbetter Act, job creation, and inequality - PointOfLaw Forum

Before the Lilly Ledbetter Act was passed, there were already federal laws on the books prohibiting sex discrimination in pay. The only thing the Ledbetter Act does is make it easier for employees to bring bogus fair-pay claims accusing long-gone or dead managers of discrimination. (One such bogus fair-pay claim is Lilly Ledbetter's own lawsuit, yet the media regularly buys into the portrayal of her as a victim.) This raises the expected litigation expense of hiring or retaining employees—which in turn reduces hiring and wages, kills jobs, and transfers wealth from the middle class to the wealthy—and male-dominated—legal profession. The law is a golden example of President Obama and a Democratic Congress favoring a wealthy special interest at the expense of everyday Americans and the economy.

So when Mitt Romney's campaign is asked about the law, why can't they say that? Instead of making an argument against the Obama presidency, they let themselves be mau-maued into implausibly claiming support for a Democratic bill. It's hard to imagine the pander gaining them any votes; and it's hard to imagine how Romney is going to win in November if he can't or isn't willing to construct a coherent argument for how Obama is hurting the economy.

More: Stuart Taylor @ NJ; Bader @ Examiner; Overlawyered. Earlier.

The National Association of Manufacturers just released its congressional ratings for the 111th Congress, and noticeable by their absence are key votes on civil justice reform issues. In years past, high-priority pieces of tort reform legislation (think Class Action Fairness Act) were included the NAM's Key Vote Committee rankings, but in 2009-2010, no separate tort reform bills were rated.1 Neither did bills to expand liability reach the point of a floor vote.

We covered some of the flurry of legislative action in the last week before recess. Here's Part II, highlighting the inaction.

Legislation Congress Did Not Pass

  • The Medical Device Safety Act, meant to overturn the Supreme Court's decision in Riegel v. Medtronic. (H.R. 1346, S. 540)

  • The Motor Vehicle Safety Act, introduced as a reaction to the Toyota recalls. Turns out that truth - in this case, the reality of operator error - helped discourage passage of the expanded regulatory control and liability applied to automakers. (H.R. 5381)
  • Expansion of liability under maritime law proposed in the wake of the Deepwater Horizon accident.2 Here's a list of the 95 bills, resolutions and amendments introduced in the 111th Congress with the term "oil spill" in them.

  • The Discount Pricing Consumer Protection Act, S. 148, meant to overturn the U.S. Supreme Court's decision in Leegin Creative Leather Products, Inc. v. PSKS, which held that resale price maintenance agreements were not per se illegal under federal antitrust law. The bill by Sen. Herb Kohl (D-WI) was reported out of the Senate Judiciary Committee, however.

  • Bills sponsored by Sen. Arlen Specter (D-PA) and Rep. Artur Davis (D-AL) to allow trial lawyers to deduct expenses from contingency lawsuits. (S.437 and H.R.2519)

  • Sen. Specter's federal media shield legislation, with the potential to weaken protections of corporate trade secrets and confidential personnel records. (S. 448)

Yes, it is possible that Congress will act on some of these bills in the lame-duck session, which convenes Nov. 15. You would think that extending the tax 2001 rates would come first, but who knows what might happen? November promises to be an unsettled period full of recriminations and last gasps -- an environment that invites legislative excesses.

Perhaps Senators will give expression to their warm feelings of affection for Sen. Specter and pass all his bills as a final tribute. If the winds of change have been especially scouring, the litigation lobby may call on their congressional supporters to use their last opportunity to enact all sorts of liability-expanding legislation.

1 The NAM rated two bills in the area of employment law, the Lilly Ledbetter Fair Pay Act and the Paycheck Fairness Act. The first, which became law, removed statutes of limitation on employment discrimination suits. The second, which passed the House, lifts caps on punitive damages.

2 No legislation, plenty of litigation. The Washington Post today reports: "METAIRIE, LA. - The BP oil spill cleanup is winding down, but the lawyers are just warming up. The gusher of litigation might not be capped for years."

One last push for the misnamed Paycheck Fairness Act - PointOfLaw Forum

Senate Majority Leader Harry Reid on Monday, Sept. 13, introduced S. 3772, the Paycheck Fairness Act, giving new, election-season impetus for the bill that would encourage lawsuits against employers.

The House passed its own version, H.R. 12, in January 2009 in tandem with the Lilly Ledbetter Fair Pay Act, which removed statutes of limitations on employment pay suits. Reid's bill supplants the one introduced by Sen. Hillary Clinton (D-NY), S. 182, before she became Secretary of State.

Free market advocates oppose the bill for government's interference in supply and demand and contracts, well summarized by Hans Bader of the Competitive Enterprise Institute as "[forcing] employers to pay some people equal amounts for doing unequal work." (Washington Examiner, Aug. 4, "Paycheck Fairness Act would mandate equal pay for unequal work, triggering flood of lawsuits.")

Business groups also object to the legislation's provisions that would encourage more lawsuits against employers. As the National Association of Manufacturers' "key vote" letter opposing the House bill summarized:

By removing all limits to punitive and compensatory damage awards on claims made under the Equal Pay Act (EPA), the Paycheck Fairness Act (H.R. 12) would expose employers to increased threats of litigation - even when unintentional pay disparities may have occurred. Its passage would likely prompt many employers to purchase additional legal liability insurance, increasing their costs and decreasing their ability to raise wages, increase benefits or hire new U.S. House of Representatives workers. In fact, it is difficult to imagine a scenario in which the bill would not lead to lower wages and fewer jobs.

The White House has stepped up its advocacy for the bill, with adviser Valerie Jarrett having an op-ed published in The Washington Post promoting the bill, "Closing the wage gap: It's a matter of survival for working families" adding some "it's a matter of life or death!" hyperbole to the usual "women only make 77 cents for every dollar a man makes" misrepresentation. Thankfully, Diana Furchtgott-Roth is always prepared with a factual refutation as in this letter, "After almost 50 years, the gender gap in pay still resonates."

UPDATE (4:40 p.m.): The head lobbyist for the Association of American University Women had a meeting with Senate Majority Leader Harry Reid this afternoon on the issue, or so her Twitter report has it.

Removal jurisdiction and corporate headquarters - PointOfLaw Forum

Forum-shopping annals: New York citizens sue a pharmaceutical company in state court in Philadelphia; defendants remove to federal court based on diversity jurisdiction.

In the case of Monroe v. Smithkline Beechem Corp., the district court erroneously ordered remand back to state court on June 25 because it decided the citizenship of a limited liability corporation using the legal standard for regular corporations. LLCs are treated like partnerships for purposes of determining citizenship, and the sole owner of the LLC in question is in Delaware. The LLC headquarters are in Pennsylvania, however, and, using the Hertz Co. v. Friend "nerve center" test for corporate citizenship rather than the test for LLCs, the district court remanded; a defendant may not remove a case on diversity jurisdiction grounds when it is brought in the defendant's home state. (The Legal Intelligencer story mentions this issue, but is too polite to note how badly the judge screwed up, and how frivolous the Kline & Specter claim to the contrary was.) This isn't a case where the removal was sloppy, either: I looked up the removal papers, and they plainly set out the GSK corporate structure and the standard for determining citizenship; at worst they can be faulted for not adding a legal citation to that standard, but they shouldn't need the belt-and-suspenders approach (though I bet those attorneys will use it in the future). Remands of removals are not appealable (except in the limited circumstances of Class Action Fairness Act jurisdiction), so unless Judge J. Curtis Joyner decides to correct his appalling legal error on the motion to reconsider, GSK is out of luck.

The Hertz decision raises interesting issues of "voting with one's feet." GSK is based in Philadelphia, where the state courts are notoriously plaintiff-friendly. It seems to hope to avoid removal jurisdiction problems by restructuring as an LLC based in Delaware, and that should work when courts apply the correct legal standards. If LLCs are eventually held to the "nerve center" test, corporations should give serious consideration to whether they should be based in states where the legal systems value the interests of trial lawyers over the public good. One problem tort reform advocates always have is the difficulty of demonstrating benefits from reform. While trial lawyers can always parade telegenic victims (even when, like Lilly Ledbetter, they're not actually victims), it's harder for reform advocates to point to the lives not saved, the drugs not developed, the jobs not created from the expenses of litigation abuse. Business needs to do a better job of publicly tying its decisions to the public-policy considerations involved. Pennsylvania might be much more inclined to rein in its abuses if it knew that thousands of jobs at GSK headquarters were about to decamp to Houston. If the issue of tort reform isn't significant enough to entice a company to vote with its feet, why should legislators care?

(Earlier on the issue of erroneous remands.)

The Senate Health, Education, Labor, and Pensions Committee on Thursday, March 11, holds a hearing, "A Fair Share for All: Pay Equity in the New American Workplace." The hearing marks the re-emergence of the Paycheck Fairness Act in Congress, in this case, S.182, to amend the Fair Labor Standards Act of 1938 (FLSA) known as the Equal Pay Act to increase liability and penalties for gender-based wage discrimination. For example, the bill:

  • Makes employers who violate sex discrimination prohibitions liable in a civil action for either compensatory or (except for the federal government) punitive damages.

  • States that any action brought to enforce the prohibition against sex discrimination may be maintained as a class action in which individuals may be joined as party plaintiffs without their written consent.

  • Authorizes the Secretary of Labor (Secretary) to seek additional compensatory or punitive damages in a sex discrimination action.

The House passed its own version, H.R. 12, along with the Lilly Ledbetter Fair Pay Act on Jan. 9, 2009. The House sponsor, Rep. Rosa DeLauro (D-CT), is the first witness at Thursday's hearing, which also includes testimony from an economist from the Center for American Progress, as well as Deborah Frett, CEO of the Business and Professional Women's Foundation, who contends women are underrepresented in "green jobs." We hope to hear the employers' perspective from Jane McFetridge, the managing partner of Jackson Lewis' Chicago office.

The 2008 presidential and congressional campaigns featured impassioned activism tied to the Ledbetter legislation, and the new push for the Paycheck Fairness Act comes just as that kind of political enthusiasm is needed for the 2010 elections.

My last post showed some of the major legislative efforts that trial lawyers have successfully pushed through Congress in the last 2 years. But as Carter's post last month on the trial lawyers' legislative "agenda" shows, they're hardly slowing down. Trial Lawyers, Inc.: K Street focuses on five of the most significant efforts currently underway to increase the litigation industry's profits: loosening pleading standards, expanding securities litigation, rolling back federal preemption, limiting private arbitration, and cutting taxes on plaintiffs' litigation.

  • Pleading standards. Point of Law readers are already familiar with the Supreme Court's recent decisions to limit the outer boundary of notice pleadings in Ashcroft v. Iqbal (2008) and Bell Atlantic v. Twombly (2006) (see postings for each, here and here, respectively), as well as the Congressional effort to reverse the two decisions. What's most important to keep in mind about the legislation purportedly designed to overturn Twombly and Iqbal (S. 1505, H.R. 4115) is that it would do far more; as the K Street report notes, it "would likely interfere with statutory pleading requirements well beyond the scope of the Court's recent decisions." (See also Michael Dorf's comments here; Gregory Garre's testimony here).
  • Securities litigation. In another bill designed to overturn a Supreme Court decision, Arlen Specter's Liability for Aiding and Abetting Securities Violations Act (S. 1551) would undo the Supreme Court's 2007 decision in Stoneridge v. Scientific-Atlanta. In Stoneridge, as our readers will recall, the Supreme Court considered a class action lawsuit filed by a cable company's shareholders against other companies that had done business with their own and thus, the shareholders alleged, "aided and abetted" the company's accounting frauds. Finding no evidence of Congressional intent to authorize third-party securities through private rights of action, the Court determined that to do so would "expose a new class of defendants," raise "the costs of doing business," deter "[o]verseas firms . . . from doing business here," "raise the cost of being a publicly traded company under our law," and "shift securities offerings away from domestic capital markets." Senator Specter's bill would do just that.
  • Federal preemption. A fourth Supreme Court decision in the trial-lawyer lobby's crosshairs is Riegel v Medtronic (2008), in which the Court, by a vote of 8 to 1, determined that the 1976 Medical Devices Amendments to the Food, Drug & Cosmetic Act expressly preempted state tort lawsuits for Class III medical devices that had gone through the FDA's extensive premarket approval process. (For an extensive discussion of the preemption issues in this and related cases, see this report that I authored with my Manhattan Institute colleage Paul Howard last spring.) As the K Street report notes, the proposed legislation (H.R. 1346, S. 540) would "permit suits to proceed that stem from injuries that originated long before the law's effective date, if otherwise valid under state law."
  • Private arbitration. As I noted in my last post, discussing the Franken amendment, the trial lawyers are doing their best to push federal legislation that broadly bars private arbitration agreements in hosts of contexts. Pro-litigation legislators have introduced bills that would limit or eliminate arbitration clauses in nursing home agreements (The Fairness in Nursing Home Arbitration Act, H.R. 1237, S. 512), for mortgage loans or home-equity lines of credit (The Mortgage Reform and Anti-Predatory Lending Act, H.R. 1728), for payday loans (The Payday Loan Reform Act, H.R. 1214), for tax-refund loans (The Taxpayer Abuse Prevention Act, S. 585), in consumer contracts (The Consumer Fairness Act, H.R. 991), and in all employer, franchise, and consumer contracts (The Arbitration Fairness Act, H.R. 1020, S. 931).

  • Contingent-litigation taxation. Finally, Senator Specter has also introduced a bill (S. 437) that would give contingent-fee lawyers a $1.6 billion tax break. Traditional prohibitions against champerty and maintenance precluded what today is commonplace -- trial lawyers fronting their clients' expenses. As the K Street report explains, "the personal-injury bar's financing structure -- the 'contingent fee,' the share of the proceeds that a winning client pays his attorney, who has fronted the cost of the litigation -- runs afoul of the historical understanding of champerty. Therefore, expenses in contingent-fee cases have been treated by courts not as support of litigation per se but rather as loans to clients, to be repaid upon a winning lawsuit's resolution." Senator Specter's legislation would, for federal taxation purposes, change the status of contingent-fee litigation costs from loans to expenses -- thus allowing plaintiffs' lawyers working on contingency an immediate deduction of all costs against their taxes. Specter argues, in essence, that lawyers should be treated no different than any other business (a telling statement on the evolution of the legal "profession" into an industry). However one views this question as a theoretical matter, there's no question that Specter's legislation would pour lots of new money into the trial bar's coffers -- and lots of new lawsuits onto judges' dockets.

Those keeping count will note that the above legislation includes efforts to overturn four different Supreme Court decisions (Iqbal, Twombly, Stoneridge, and Riegel). A fifth piece of legislation (H.R. 1478), mentioned only briefly in the K Street report, would overturn a 60-year-old Supreme Court decision, Feres v. United States, 340 U.S. 135 (1950) (holding that the United States is immune from liability suits by active duty personnel under sovereign immunity principles). And of course, two of the recent bills already signed into law also reversed recent Supreme Court decisions (The Lilly Ledbetter Act, overturning Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007); and the Fraud Enforcement and Recovery Act, overturning Allison Engine Co. v. United States, 128 S. Ct. 2123 (2008)).

Trial Lawyers, Inc.: K Street -- Federal Government Relations (I) - PointOfLaw Forum

As my last installment on Trial Lawyers, Inc.: K Street, I'm scheduled to discuss the trial bar's federal efforts to expand litigation opportunities. Because the K Street report is national in scope, these efforts are extensively covered, and federal legislation comprises two subsections of the report, roughly twice as much material as is devoted to state activities. Thus, I'm breaking my posts into two parts: first, today, I'm going to go into already-passed legislation. Then, over the weekend, I'm going to do a second post with proposed/pending legislation. Finally, I'll add a brief concluding post, with a roadmap back over where we've been.

As we note in our report, the lawyers' aggressive affirmative agenda in Washington is something of a paradigm shift. "Until recently, the main purpose of Trial Lawyers, Inc.'s involvement in federal politics was to block reform legislation that would deny it various lucrative lines of business" -- such as Bill Clinton's veto of product liability reform legislation and securities class action reform legislation in the 1990s (the latter overridden and enacted), or Senate Democrats' stifling of medical-malpractice and asbestos litigation reforms during the Bush administration.

In the last two years, Congress has acted to expand consumer litigation, expand employment litigation, expand qui tam litigation, and limit private arbitration. Many of the pieces of federal legislation will be familiar to our readers, but a brief summary is still in order:

Reporting the Ledbetter case - PointOfLaw Forum

The Tampa Tribune has printed a correction of misreporting on the employment discrimination case, but, as Hans Bader notes, the New York Times appears curiously reluctant to do so.

Quin Hillyer at The Washington Times' blog, The Water Cooler, notes that Judge Sotomayor is defending her decision in a major eminent domain case, Didden v. Port Chester, because it was required by a clear statute of limitations: Didden was too late when he filed his legal challenge to the "taking" of his property. The law is clear, I ruled accordingly.

The reason such a bizarrely stringent obeisance to a supposed statute of limitations is problematic for her liberal backers is because they keep citing the Ledbetter decision as an example of why judges should take note of "real world" effects of their decisions and show "empathy" for the victim. But the Supreme Court in Ledbetter did exactly what Sotomayor did in the Didden case, namely applied a statute of limitations -- and one that was much more clear, much more unambiguous, than the strained reading Sotomayor put on the statute of limitations in the Didden case. So if she is going to go so overboard in [mis]applying a statute of limitations in Didden, how can the lefties say it is important to have an empathetic woman on the court in order to override unimportant things such as statutes of limitations in cases like Ledbetter's? Again, I have already heard the Demo senators at least twice make reference to Ledbetter in arguing in favor of Sotomayor. How can they make that argument but still defend her Didden ruling?

Well, in politics at least, you can't spell "empathy" without "empty."

Supreme Court on mixed-motive age cases - PointOfLaw Forum

A high court divided 5-4 gives employers a surprise victory, ruling that plaintiffs cannot prevail on the same "mixed-motive" analysis under which they could win a race or sex discrimination suit. But Congress could override the Court as it did with Ledbetter and ADA rulings, and Daniel Schwartz warns that "vast majority of ADEA cases never used the mixed motive analysis anyway. If there is circumstantial evidence of discrimination, courts traditionally allow those claims to proceed to trial."

Be on guard when Congress decides to review a U.S. Supreme Court decision with an eye toward "correcting a mistake" or "restoring the law" prior to the decision. You wind up with brand new law, expansive and expensive, like the Lilly Ledbetter Fair Pay Act. (See earlier post on Ledbetter..)

So while we haven't seen any bill yet, the upcoming hearing Tuesday certainly draws our attention. The House Judiciary Committee, Subcommittee on Courts and Competition Policy has scheduled, "Bye Bye Bargains? Retail Price Fixing, the Leegin Decision, and Its Impact on Consumer Prices." The hearing will examine the 2007 Supreme Court decision in the antitrust case, Leegin Creative Leather Products, Inc. v. PSKS, Inc. (Opinion here.) The issue facing the court was whether resale price maintenance should always be considered a violation of the antitrust laws (and subject to treble damages), or whether legitimate business and procompetitive justifications for such provisions. As David Rossmiller wrote following the court's opinion:

When the only tool in your toolbelt is a hammer, every problem looks like a nail. The Supreme Court has increasingly recognized this in its recent antitrust jurisprudence by moving away from inflexible per se rules of anticompetitive conduct that fail to differentiate between truly anticompetitive acts that hurt consumers and acts that merely hurt competitors: they are not the same thing....[The Leegin antitrust case] marked another step in the court's walk away from per se standards toward a more flexible case-by-case analytical standard.

My employers at the NAM filed an amicus brief in the Leegin case that aligns with the shift away from per se. (See the Legal Beagle entry for the brief and more.)

EFCA: on to the next round - PointOfLaw Forum

"Prospects dim for labor bill", reports Politico, as Sen. Arlen Specter's withdrawal of formal support for the Employee Free Choice Act confirmed what was already considered likely given jitters among moderate Democrats. Interestingly, the Obama White House was said to be "happy (but very quietly so)" at the fading of the bill's prospects -- a theme that surfaced enough in the coverage to make it seem likely that the White House was knowingly allowing word to be put out to that effect. The Economist pronounces card check "dead for now".

A lot, however, is packed into that phrase "for now". To begin with, if the AFL-CIO is only one or two votes short of the finish line, it might not take much -- a Senator's surprise resignation or medical crisis, a swing in already volatile public opinion about the economic crisis, perhaps a string of plant occupations following the Republic Windows pattern -- to dislodge a vote or two.

For that matter, Specter himself has positioned himself to be a possible 60th vote. Michael Fox notes the Pennsylvania Republican's comment: "If efforts are unsuccessful to give Labor sufficient bargaining power through amendments to the NLRA, then I would be willing to reconsider Employees' Free Choice legislation when the economy returns to normalcy." (Similarly: Daniel Schwartz). And Fox follows up with an account of Specter's "12 revisions".

So we're very likely going to remain for the indefinite future in a world where union-sought changes to the National Labor Relations Act are not too far from the front burner. Some ideas for compromise that fell flat in recent weeks, such as the "Starbucks skim-milk card-check" idea endorsed by a few businesses with liberal reputations to protect (Starbucks, Whole Foods, Costco) will be brought out for re-examination. Supposedly less controversial elements of labor law reform, such as drastically stiffening penalties for businesses' violations, may be pressed on their own, and will benefit from the postures struck during the card-check debate, in which many EFCA opponents more or less endorsed the penalty provisions so as not to come off as complete rejectionists. Moreover, there may be a tendency to roll over on labor issues not directly related to the NLRA's provisions on unions and their contracts -- on regulation of pay and benefits, OSHA, ERISA, even ergonomics -- on the grounds that the union side has to be given something. Indeed, in the first two months of the Obama administration the union side has already been given more than just a couple of things -- in the form of the Ledbetter act, several executive orders, Davis-Bacon extensions in the stimulus, and so forth. Much more can be expected from the NLRB itself as Obama appointees begin reversing Republican-era precedents.

One problem is that on the rhetorical level, almost everything can be made to sound moderate compared with card check and imposed federal contracts. Peter Kirsanow: "Now that card check may be off the table, EFCA opponents have lost their most effective talking point. ... Senator Specter's announcement merely concludes Round Two."

Carter at ShopFloor, I see, has been thinking along similar lines.

Sen. John Cornyn (R-TX) sponsored a Senate Republican Conference hearing (i.e., a partisan hearing) this afternoon on legal reform in the 111th Congress, "Protecting Main Street Jobs from Lawsuit Abuse." His thesis is that meritless and nuisance lawsuits raise the costs of business and jobs creation, having a disproportionate impact on small business: "Nevertheless, the leadership of this Congress seems oblivious to these facts and determined, to reward political allies and benefactors in the trial bar by passing legislation designed to not decrease but rather increase the number of lawsuits in America." (From the .mp3 file of his opening statement.)

Sen. Cornyn cited several bills already passed that will increase litigation: The Lilly Ledbetter Fair Pay Act, the stimulus bill's permitting state AGs to hire contingency lawyers to sue for HIPAA violations, and the omnibus appropriations bill's encouragement of contingency lawyers in Truth in Lending litigation.

Looking forward, Sen. Cornyn said, "There will also be efforts to undue the important reforms of the Class Action Fairness Act, reviving the class action strike suit, where trial lawyers may make millions while their clients receive nothing other than coupons as a result of their recovery."

That's the first we had heard of this disturbing possibility. For more on the 2005 legislation, we refer you to this 2007 paper by Point of Law contributor Ted Frank of the American Enterprise Institute, "The Class Action Fairness Act Two Years Later."

Ted also testified at today's hearing, addressing a wide range of civil litigation issues, including medical malpractice, asbestos and mass tort fraud. His prepared testimony is available here. From the abstract:

Our nation's tort system is substantially more expensive than that of other nations. Features unique to the United States--unbounded non-economic damages; a broader use of punitive damages; contingent fees of a percentage of recovery; the lack of loser-pays; extraordinarily broad discovery; class-action litigation; the use of speculative and non-scientific expert testimony in some state courts--raise costs tremendously. Yet, despite these increased costs, there is no evidence that the United States tort system provides marginal benefits relative to other nations. For example, New Zealand does not even offer the availability of private medical malpractice litigation, yet there is no evidence that medical care in New Zealand is of substandard quality due to the lack of fear of malpractice litigation. If anything, it is quite likely that the arbitrary nature of the American tort system has distorting effects that make it perform worse than that of other nations...

In the extended entry, more comments from Sen. Cornyn...

Ledbetter and the press, cont'd - PointOfLaw Forum

Hans Bader is still going after the shortcomings in media coverage of the employment-law cause celebre, and Prof. Obbie takes note. Earlier here, here, here, and here.

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