May 9, 2008

Litigation slush funds, cont'd: $8 million windfall for W.V. law school

Charleston Gazette: "West Virginia University's College of Law received the biggest gift in its history on Friday, $8 million of unclaimed money from a settlement of a nationwide class-action lawsuit against H&R Block Inc." It was all very cozy and convenient since the judge presiding over the case had suggested the law school as a beneficiary, and the money seemed to be, you know, just sitting there.

Ted has a very fine article in the new issue of the Federalist Society's Class Action Watch on the dangers of cy pres disposition of unclaimed class action funds, and how they can magnify the unaccountable power of the lawyers and other participants in such cases. Our earlier coverage -- including a case where Vanderbilt's law school got $2.9 million -- is here.

May 6, 2008

Silberblatt v. Morgan Stanley: seeing through class action recovery claims

At the Federalist Society's Class Action Watch, Jack Park analyzes (and praises) a judge's ruling cutting attorney fees in a class action suit over precious-metal storage fees. Among other grounds for its action, the court discerned that the plaintiff's expert had manipulated assumptions so as to maximize the apparent value of the class's nonmonetary recovery.

May 4, 2008

Around the Web, May 4

• The May issue of "Trial," the monthly magazine of the American Association for Justice, includes an article on In re Seroquel Prods. Liab. Litig., 2008 WL 215707 (M.D. Fla. Jan. 24, 2008). While the magazine is reserved for members, a summary of the article has been posted online: "The U.S. district court overseeing multidistrict litigation against the manufacturer of the atypical antipsychotic drug Seroquel held that documents reviewed by witnesses in preparation for depositions are not protected by the work-product privilege." Here's an article on the litigation last year at Law.com.
• Apropos the AAJ, the trial lawyers group is sponsoring is a teleseminar Wednesday, "Using the McKinsey Documents in Your Bad Faith Case." The reference is to management consultant McKinsey & Co.'s documents recommending how Allstate Corp should challenge automotive insurance claims. One of the AAJ presenters is David Berardinelli, Santa Fe trial lawyers and author of the book, "From Good Hands to Boxing Gloves." Business Week covered Berardinelli and his book in May 2006.
• Last month, All State decided to post the McKinsey documents online in response to a judge's order and fines. The 150,000 pages are available here. The decision prompted news reports, including this New Orleans Times-Picayune story, which notes that the documents do not include information about catastrophic claims, of potential use in Hurricane Katrina litigation. David Rossmiller at the Insurance Coverage Blog has more.
• This line in the registration materials for the AAJ teleseminar caught our eye. "Note: Eastern Indiana and parts of Arizona--no daylight savings -- Please be sure to note correct time for the teleseminar you register for." Nope. Indiana went all Daylight Saving Time effective April 2006, an initiative of Gov. Mitch Daniels. So if you miss the seminar because of bad info, can you sue?
• Via The Volokh Conspiracy comes news of the action by Swiss Federal Ethics Committee on Non-Human Biotechnology. Finding: Plants have rights. "The Committee members unanimously consider an arbitrary harm caused to plants to be morally impermissible. This kind of treatment would include, e.g. decapitation of wild flowers at the roadside without rational reason."
• From the Wall Street Journal's Law Blog: "Just days before the first Bextra trial was to begin, Pfizer has struck tentative settlements with some plaintiffs who alleged that painkillers Celebrex and Bextra caused heart attacks, according to lawyers at three plaintiff firms involved in the litigation." More from Bloomberg.
• A column by Ken Connor, Chairman of the Center for a Just Society in Washington, D.C., challenging the U.S. Chamber of Commerce's "Lawsuit Climate 2008: Ranking the States." By its sample -- corporate attorneys -- the survey is inherently biased and does not reflect a good knowledge of the court system, Connor argues: "As a trial lawyer for thirty-five years, I am among the first to admit that the civil justice is imperfect. But access to the court system is a constitutionally protected right, and at a time of rampant corporate misconduct it is a right that needs to be zealously defended. Conservatives who believe in the Constitution and the need for checks and balances in our public life should agree." Connor's column is a rebuttal to a pro-survey column by Lindsay Boyd of Townhall.com
• Three-hundred-and-twenty five new laws go into effect in Utah on Monday. The Deseret News has a round-up. Many new opportunities for litigation. Here's one: The estate of a person killed by illegal drugs can sue the person who provided or administered the lethal drugs.
• A post mortem in the Orlando Sentinel of the Central Florida commuter train debacle in the Legislature: "TALLAHASSEE - Central Florida's commuter-rail project failed in the Florida Legislature because its backers didn't heed a cardinal rule of politics: Know your enemy...They thought their main opponents were residents of Lakeland, angry that the state's deal with CSX Corp. would run more freight trains through their city. They didn't realize until too late that the state's trial lawyers were grimly determined to defeat the deal."

May 3, 2008

How the Supreme Court's Recent Punitive Damages Decisions Affect Class Actions

New paper on SSRN by Sheila B. Scheuerman of the Charleston School of Law (via):

This article examines the intersection between two controversial areas of the law - punitive damages and class actions - and argues that the Supreme Court's recent jurisprudence clarifying the due process limits on punitive damages has broad implications on the procedural laws governing the types of cases that can properly be certified as a class action. Specifically, the article discusses the Supreme Court's evolving approach to punitive damages from one that considered the harm a defendant's conduct caused to society as a whole to one that now focuses almost exclusively on the harm to the specific individual bringing the lawsuit. This shift, which recently culminated in the Court's 2007 decision in Philip Morris USA v. Williams, constitutionally requires that the amount of a punitive damages award relate to the amount of harm suffered by the party bringing the suit. That requirement is at odds with class action practices that treat punitive damages as a common, class-wide issue and that have allowed juries to assess a punitive damages award before evaluating the harm to the individual class members. The article argues, therefore, that where injuries are not uniform among class members, punitive damages cannot be pursued as a class-wide remedy.

This is similar to the point made by Beck and Herrmann and Marc Moller, but ostensibly different: Scheuerman claims she is arguing for a narrower view than Beck and Herrmann do, but never delivers on her footnoted promise to address the argument in Part III of her paper.

May 1, 2008

Oregon Supreme Court Requires Harm in Tobacco Suit

From the AP:

PORTLAND, Ore. (AP) -- The same Oregon court that slapped Big Tobacco with a huge punitive damages award has handed the industry a victory by rejecting a class-action lawsuit for medical monitoring costs.

The Oregon Supreme Court ruled unanimously Thursday that smokers must show actual harm to make a negligence claim against cigarette manufacturers -- not the mere possibility of harm in the future.

A woman had sued on behalf of 400,000 Oregonians, claiming the companies "knew or should have known that their cigarettes contained toxic and hazardous substances likely to cause lung cancer."

The case is S054378 Lowe v. Philip Morris USA, Inc.; the state Supreme Court's ruling is available here. RJR Reynolds news release is here.

Class Action Fairness Act, Under Attack

This e-mail from just came over the transom here at NAM HQ, delivered by our vice president for litigation and deputy general counsel. How Quentin found the transom is beyond us, but anyway, it seemed relevant.

CAFA Problems in the Seventh Circuit. Class action suits alleging violations of state consumer protection laws are being filed with increasing frequency, even though many members of the purported class of plaintiffs suffer no injuries and do not rely on the challenged marketing statements in making their purchasing decisions. These no-injury, no-reliance class actions expand liability beyond traditional limits and threaten to undo the benefits of the Class Action Fairness Act of 2005. The NAM joined with the Association of Home Appliance Manufacturers in an amicus brief 4/28 urging the Seventh Circuit to overturn a district court order that certified a class of plaintiffs from 29 states. We argue that courts should not undermine state consumer protection laws by lumping together claims under different state laws and ignoring the substantive differences between the applicable statutes. Liberal class certifications will make courts in the Seventh Circuit magnets that will unfairly expose manufacturers to extortion by litigation. Our brief in Thorogood v. Sears, Roebuck and Co. is online here .

Speaking of transoms, the English term is "fan light" and the French term is "vasitas." From the German: "Was ist das?"

April 28, 2008

Worthwhile Canadian Initiative -- Really!

From The Financial Post:

An Ontario judge has taken the extraordinary step of ordering a Toronto man and his lawyer to pay $80,000 in legal costs to a pair of the world's biggest vitamin suppliers. The judge also barred the pair from launching a lawsuit over allegations stemming from the largest price-fixing settlement in Canadian history.

Ontario Superior Court Justice Paul Perell told Lars Ingmar Soderstrom and his lawyer, J. Perry Borden, to knock it off -- stop the legal maneuvers against Hoffman- La Roche Ltd. and BASF Canada Inc. Judge Perell: "There has been repeated re-litigation of causes of actions, of issues, and of arguments, and there have been collateral attacks and circumventions of court orders. It is time for all of this to stop."

Justice Perell's ruling is available online, here.

Around the Web, April 28

• Supreme Court Justice Antonin Scalia's interview with "60 Minutes" is online at the CBS News website. A 4,200-word story AND video. The major revelation: Scalia's an originalist. NPR's Nina Totenberg also had an interview with Scalia on "Morning Edition" today.
• Business Week celebrates the successes of Tanya Andersen, who has back pain and a quiet voice, "Yet this woman is behind a fierce assault on the music industry and its tactics for combating music piracy on the Internet." Relevance, your editor! Andersen is suing the Recording Industry Association of America for conspiracy, committed while it pursues music pirates. The article in the April 24th issue is entitled, "Does She Look Like a Music Pirate?" The class-action lawsuit is Andersen v. Atlantic, filed in the U.S. District Court, Portland (OR) District.
• In New York, the AP reports: "A federal appeals court on Friday reinstated a lawsuit by credit card holders that claimed some of the nation's biggest banks joined forces to prevent class-action suits...The 2nd U.S. Circuit Court of Appeals in Manhattan said lawyers for the credit card holders might prove the banks agreed to make it harder for individuals to make legal claims by requiring them to go to arbitration.
The case, a class-action antitrust suit, is Ross v. Bank of America N.A. (06-4755-CV), and the court's order is here. The plaintiff's counsel is Merrill G. Davidoff of the Philadelphia firm, Berger & Montague.
• An editorial in the Memphis Commercial Appeal, "Only a baby step": "Supporters of tort reform in Tennessee are touting a measure approved by the General Assembly as a step toward eventual passage of comprehensive legislation that will revolutionize medical malpractice litigation...That's an optimistic assessment that might be borne out in the future, but it's far from a certainty."
• Is Rex Morgan from Tennessee? Anyway, from the Sunday Rex Morgan comic strip, dialogue in a storyline about an outbreak of methicillin-resistant Staphylococcus aureus (MRSA) and a dead boy. That nice Dr. Reed was just served in a malpractice lawsuit. "Dr. Morgan: Isn't Max Mallory one of those lawyers who advertises on TV? June Morgan, R.N: That's right. He's Max the Ax, Legal Warrior."

Update (4 p.m.): The Comics Curmudgeon website notes something we overlooked: Max the Ax can't spell subpoena.

April 27, 2008

Obama Cites His Tort Reform Credentials

Walter signed us to a second, 10-day contract, so here we are again. One more contract and he has to keep us on the roster for the rest of the season.

Sen. Barack Obama appeared on Fox News Sunday today (after weeks of digging from Fox for declining the program's invitations). Relevant passage from his interview with Chris Wallace (transcript): "WALLACE: "And so people say, do you really want a partnership with Republicans or do you really want unconditional surrender from them?" OBAMA: "No, look, I think this is fair. I would point out, though, for example, that when I voted for a tort reform measure that was fiercely opposed by the trial lawyers, I got attacked pretty hard from the left." He's no doubt referring to his February 2005 vote for S. 5, the Class Action Fairness Act, which passed 76-26. Ted Frank analyzed Obama's CAFA vote and tort reform record in this December 2006 post, concluding, "As a reform supporter, I'm far from convinced that this makes him someone willing to cross the plaintiffs' bar." Senator Clinton voted no.

April 20, 2008

U.S.-style antitrust class actions? Nein danke, non merci, gracias no...

Per the WSJ, Europe's moves toward expanding the scope of antitrust litigation are very much informed by a view of the U.S. experience as cautionary:

The European Union proposed rules that would make it easier for businesses and consumers to sue for price fixing and other forms of antitrust abuse, but the measures would fall short of U.S.-style class-action litigation. ...

Taking direction from a 2001 ruling by the EU's highest court, the European Commission has tried to construct a system that would let victims of anticompetitive behavior seek damages. But it has been something of a reluctant effort given deep reservations in Europe about litigation. ...

...the EU shied away from the most aggressive aspects of the U.S. system: Plaintiffs should be able to seek compensation for damages, the commission proposed, but only once over -- no triple damages. And while groups of plaintiffs can sue jointly, the European system should be opt-in, unlike U.S. class actions, where individuals are assumed to be members of a class unless they opt-out.

Having plaintiffs' lawyers bring cases representing broad classes is "not our cup of tea," said Neelie Kroes, the EU's antitrust chief. Mrs. Kroes also proposed allowing "qualified" organizations, like consumer groups, to sue -- but in practice few groups would have the resources to take on multiple cases at once.

Indeed, while proposing a system that would make it easier to sue, Mrs. Kroes appeared acutely concerned with not going far. In a news conference, she referred several times to worries over "excessive litigation" and said that to prevent "procedural abuses" courts should have firm control over discovery.

The paper, which attempts to harmonize the disparate approaches of the 27 EU nation members, is open for public comment through mid-July; no doubt U.S. plaintiff's-bar interests, which have sought to encourage the expansion of litigation across the Atlantic, will find ways to make their views known.