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May 2006 Archives

By Walter K. Olson

(Reprinted from City Journal, Winter 2006)

Get ready for the next mass-tort crusade: protecting our kids from the ravages of Big Cola. According to news reports, a group of lawyers is gearing up to file lawsuits that will seek to blame Coke, Pepsi, & Co. for obesity, tooth decay, and other childhood health ailments. An article in the Boston Globe magazine has already hailed what it calls a "national legal movement to make soft drinks the next tobacco." Instead of tar and nicotine, we'll be hearing about corn sweeteners and caffeine; maybe Dr. Pepper can stand in as the new Joe Camel.

Ridiculous? More like inevitable. For some time, a noisy campaign has been under way to portray the food and beverage industry as the villain in America's ongoing battle with the waistline. Without the snack hucksters' machinations, it seems, we'd all eat raw bell peppers and be reed-thin. Backed by "progressive" foundations, nutrition advocates in and outside the universities now regularly appear in the press, demanding a national obesity policy aimed at changing our collective diet, by force of law if necessary�or quite possibly by force of litigation. As one advocate, Michael Jacobson of the Center for Science in the Public Interest, put it: "If someone is saying that a 64-ounce soda at 7-Eleven contributed to obesity, that person should have his day in court."

That brings us to Northeastern University law prof Richard Daynard, point man in the forthcoming courtroom onslaught against fizzy drinks. Long quoted in the press as a cheerleader for tobacco lawsuits, Daynard has now set out to assemble a legal strike force to file actions blaming big business for obesity. He wants to duplicate the success of the tobacco campaign, whose strategies included invoking "the children" at every turn, portraying smokers as passive addicts, and�on a more practical level�launching scores of suits on novel legal theories in hopes that one would stick. The litigation culminated in the giant 1998 settlement that saw cigarette makers agree to alter marketing practices, pay oodles to state governments (financed by hiking cigarette prices), and�not incidentally�fork over upward of $10 billion to the lawyers who'd organized the suits.

The first of the new soft-drink suits�set for filing in Massachusetts over the sale of soda in school vending machines�has been delayed, for a comical reason. Daynard says that it's taken longer than expected to line up the right Bay State family to serve as client, even though his group has placed newspaper ads asking parents to step forward. (Shouldn�t he be pretending, at least, that aggrieved victims of Big Cola are pounding on his door, eager to sue?) But such difficulties are temporary: at some point, the plump plaintiff will be safely on board, and it'll be off to court.

So should we laugh at these lawsuits? Take them seriously? The case for laughing is clear enough. After all, Round One of this kind of litigation�the suits by obese customers against McDonald�s and other burger chains�drew derision from the general public, an overwhelming 89 percent of whom in one poll opposed letting people sue over fattening foodstuffs.

This time around, though, the lawyers have selected targets more shrewdly. Unlike many other ideas floated by nutrition activists, that of restricting soda sales in schools has proven popular with the general public, and politicians have taken notice. Most big-city school systems have banned soda, as has California in public schools statewide, and other states are likely to follow�all without anyone needing to sue. You might even suspect that the lawyers are positioning themselves to "front-run" a social trend already in progress and then later take credit (and claim fees) when it advances further.

The bans might not make much difference in the problem of childhood obesity, it's worth noting. Most soda (99 percent) sells outside schools. Fruit juice (a typical replacement) is itself anything but slenderizing, moreover, especially compared with the diet soft drinks popular among teens.

Still, the lawyers might well coax a settlement out of the soft-drink firms, the terms of which wouldn't necessarily depend on the strength of the actual legal case. The real leverage that this kind of litigation affords, after all, often lies in the threat of obtaining, under court order, reams of internal documents from the opponents' files. The next step is for the lawyers to pluck selected bits out of context and feed them to a cooperative press, which then casts them in the worst possible light. It happens that two huge companies dominate the soft-drink industry, both extremely sensitive about their reputations, which are vulnerable to damage, both at home and abroad, should articles begin appearing regularly in the U.S. media vilifying their marketing practices.

Nor would Coke and Pepsi necessarily be averse to granting some of their critics' demands. In fact, a settlement that let the two cola giants reduce the vast sums they spend on marketing and promoting might be in their mutual interest, conferring a collusive benefit otherwise unobtainable without violating antitrust laws. Some economists believe that the various curbs that the tobacco settlement placed on cigarette ads have actually boosted tobacco firms' profitability.

So maybe there'll be some money for Daynard after all. And it'll be hard for him to pretend, this time around, that he isn't interested in it. Back in the heyday of tobacco litigation, hundreds of news reports portrayed Daynard as an academic well-wisher of the suits, breathing not a word about his monetary stake in them. After Richard Scruggs, Ronald Motley, and other tort kingpins brokered the $246 billion settlement with the states, however, Daynard popped up to claim that he had an oral agreement with the lawyers that entitled him to 5 percent of their fee haul�a claim that, if accepted, would have brought him a cool $150 million or more. No such luck: Scruggs and Motley said they�d made no promise of the sort. The dispute, later settled on private terms, got rather heated. Scruggs deemed Daynard "a bit more mercenary than people think he is," while Motley described as "stupefying" his claim to have masterminded the litigation.

Some reporters felt betrayed at learning after the fact of the professor's undisclosed role as a bettor in the litigation horse race he was handicapping. But it didn't seem to bother the higher-ups at Northeastern, who gave the university's imprimatur when Daynard launched his more recent obesity-suit venture. In fact, a second Boston-area university, Tufts, has also sponsored his litigation-promoting Public Health Advocacy Institute.

Who needs Coke and Pepsi to bring commercialism to the schools, anyway? It looks as if Daynard is doing a decent job of that all by himself.

By John E. Calfee

(Reprinted from The New York Sun, April 12, 2006)

On April 11th, 2006, a New Jersey jury added $9 million in punitive damages to $4.5 million in compensation it had awarded to John McDarby, a 77-year-old man who had sued the drug manufacturer Merck after suffering a heart attack while taking the pain reliever Vioxx. That verdict did not tell us much about Vioxx, Merck, and even the Food and Drug Administration, but it certainly provided a lot of unpleasant news about the tort system.

Essentially, the jury had to decide three things. One was whether Vioxx was a substantially contributing factor to the heart attack suffered by an elderly ex-smoker with diabetes and coronary artery disease. Unfortunately, science can't give us a good answer. Mr. McDarby was clearly at great risk for a heart attack. But there is no way to know which of a multitude of precipitating factors tipped the balance on that terrible day. We don't even have reliable data indicating an extra probability of a heart attack in the relevant circumstances. The plaintiff lawyers simply dismissed the fact that after combing through a massive literature, the FDA concluded that traditional anti-inflammatories like Advil and old prescription drugs (called nonsteroidal anti-inflammatory drugs), as well as Vioxx and its modern competitors (like Celebrex), all probably involve a heart attack risk which remained largely undiscovered until large-scale clinical trials were run on Vioxx and its competitors.

The jury simply had no way to determine whether the plaintiff would have had a heart attack if he had used a different pain reliever. Relying on an unpredictable mix of intuition and emotion, the jury simply guessed.

The second issue was failure-to-warn. The plaintiff argued that in addition to complying with all FDA regulations about warnings, Merck should have specifically warned the doctor not to prescribe Vioxx to this patient. What warning, we should ask, and to what effect? Here, the jury had even less foundation than when deciding causation. The most important data about Vioxx and heart attacks had long since been published and widely discussed in medical circles. Moreover, Vioxx was a lifesaver for patients with a propensity toward fatal ulcers, which every year kill thousands of patients taking older drugs that Vioxx replaced. Whether more warnings would have pushed the patient toward more safety or just rearranged Mr. McDarby's numerous various risk factors was something the jury could not possibly discern. No scientifically based warning could have said something like "there is a so-and-so percent extra chance of a heart attack." A warning would presumably have said something like "don't prescribe this to patients with a high risk of heart attack," but what good would that have done in the absence of information about whether the obvious alternative treatments were better?

Again, the jury had to guess. And again, there is no reason to think its guess would have been better than the FDA's own expert assessment.

The third question was whether to award punitive damages, something never before done to a pharmaceutical manufacturer liability case in New Jersey. Under New Jersey law, the jury had to find that Merck had withheld information from the FDA in a "wanton and willful" manner. Again, a problem for the jury was the FDA itself. As a former FDA staffer testified, the FDA was satisfied that Merck had turned over all the information it needed. How did the jury reach a conclusion so different from the FDA's own? Here lies one of the most unsettling parts of this trial. Merck, like all responsible manufacturers, massaged the Vioxx data as it arrived, trying to get a fix on the true heart-attack risk and other matters in a diverse mix of patients. The FDA has to know that firms do that kind of analysis all the time. The jury said Merck should have shared its own preliminary assessment of the data with the FDA even though the FDA famously makes up its own mind about such things and the underlying data had in fact already been given to the FDA. Had Merck not undertaken its analysis, there would have been nothing to keep from the FDA. The lesson for Merck and the rest of the industry is that mulling over safety data can get you in legal trouble even when the FDA has no interest in the hundreds of spreadsheet calculations that necessarily arise.

Now, if we ask a jury to do the impossible, we're asking for trouble. And if we ask it to do the impossible with tens of billions of dollars in the balance, we're asking for big trouble. Yet that's what we did last week in that New Jersey courtroom. Does this mean we should junk the liability system, at least for pharmaceuticals? Not at all. The system works reasonably well for outlier situations such as intentionally hiding essential information from the FDA and others, or marketing drugs that clearly fail a cost-benefit test while withholding exactly the information that would have disclosed that fact. But today's system cannot work well for close calls, at least not when the stakes are in the billions or tens or hundreds of billions of dollars. Analysts expect tens of thousands of cases roughly similar to Mr. McDarby's. Juries will continue to guess at the central issues, getting it wrong as often as right but charging Merck $10 million or $20 million or $40 million every time they're wrong. A thousand mistakes is $10 billion to $40 billion. And a lot of states make it easier than New Jersey does to award punitive damages.

Nor is Vioxx the only drug where this perverse logic could play out. The liability plaintiff bar is honing the same methods for other drugs where similar imponderables can generate $10 million guesses.

What to do? There is a simple way to keep these questions out of the reach of juries. The states can do what the FDA has already suggested they do: Stop letting plaintiff lawyers seek huge awards for behavior that actually complies with the FDA's regulations and findings of fact. With lawyers bringing thousands of cases before juries that read about the evils of the drug companies every day and then have to decide the central issues through guesswork, we are now creating a monster. It is time to rein that monster in.

By Henry J. Stern

(Reprinted from New York Civic, February 9, 2006)

Recently, in a case that had been pending for several years, federal judge John Gleeson issued a rather remarkable decision. On January 27th, 2006, he wrote a 77-page opinion holding that the State of New York's constitutional provision for selecting Supreme Court Justices by judicial convention was in violation of the United States Constitution in that it deprived the people of the state of meaningful participation in the selection of judges.

Judge Gleeson ruled, as a finding of fact, that these conventions are tightly controlled by a small group of political leaders (the county bosses) and that judicial candidates not recommended by these bosses have no chance to be chosen for their party's nomination. Judge Gleeson directed the legislature to reform the system by this summer, when petitioning would need to begin for Supreme Court candidates, if primaries are to be held. In political and judicial circles, the decision is considered momentous. If upheld, it will result in substantial change in the way judges are chosen.

On Tuesday, Chief Judge Judith Kaye presented her annual State of the Judiciary message to the State Legislature. Part of her remarks dealt with the selection of judges. She presented a number of proposals to improve the existing system of judicial conventions, which had been developed by a commission headed by John Feerick, the dean of Fordham Law School. The proposals are meritorious and should be adopted, but they should not exclude the abolition of the grossly unfair system of judicial conventions. If they can be abolished, the reforms will have even greater effect, since voters are more likely to heed professional evaluations than party bosses, for whom a judgeship can be a commodity of value.

The demise of judicial conventions would not automatically lead to the selection of better judges. It would be, however, a healthy first step toward a merit-based judiciary. Primaries, especially borough-wide contests in Brooklyn and New York counties, are very expensive, the costs running into hundreds of thousands of dollars, and possibly more if there is a deep-pocketed aspirant.

If the candidates try to finance their campaigns by soliciting funds from litigants who may appear before them, they will create relationships that may interfere with their objectivity and impartiality. Rule 28-C: "Don't accept cigarettes in prison." You may incur obligations that you are unwilling to meet.

We should be aware that it requires honest, intelligent and fair-minded people to select good judges. The governor may appoint his out-of-town cronies to the Appellate Division, as has occurred in the First Department (Manhattan and the Bronx). The electorate may select the candidate who has spent the most money trying to reach them. The county bosses may select candidates based on a negotiated sale, since a public auction would appear unseemly, as well as be illegal.

It is possible, maybe even likely, that the payoffs would be less costly than the printing, polling, media buys and walking-around-money which comprise a great deal of the cost of political campaigns today. If judges must buy their robes (synecdoche), should they not be sold to the most worthy customers, not to the richest or the best connected?

The situation was summed up by Alexander Pope in 1734 in his "Essay on Man," where he wrote:

For forms of government let fools contest;
Whate'er is best administered is best:
For modes of faith let graceless zealots fight;
His can't be wrong whose life is in the right.

Judge Gleeson's decision has opened the door to reform of a self-serving practice in which mediocre insiders are elevated to the judiciary while far better qualified outsiders are excluded. We should do what we can to see that this unusual opportunity is not lost. There are many honest and able lawyers who would make fine judges. The bench should not be chosen from among ward-heelers, time-servers, sycophants, and rich lawyers seeking a hobby while in retirement from the hurly-burly of private practice. Let us be clear: there ARE decent, honest, and intelligent judges serving today. They deserve particular credit for beating the system and making their way to the bench.

The case of Brooklyn Judge Victor Barron, sentenced to prison for taking bribes, is cited both as an example of a corrupt judiciary, and as an indication of an honest one, since he is the only judge, out of many, who committed this particular crime. We should know, however, that the only way this case was made is that the victim of the shakedown complained to the district attorney, and wore a wire to trap the judge. The great majority of bribery cases are consensual, with the briber relatively satisfied with the result, and, if he had made a payoff, unwilling to complain lest he be disbarred himself. There is a thin line between bribery and extortion, and some cases have elements of both.

In our view, there are a good number of judges who either take money or gifts, side with their friends out of loyalty, don't understand the cases before them, or are too lazy to read the briefs. These vices appear to a greater or lesser extent in different individuals, and judges' performance can change over the years, as senility sets in, or as personal problems cause distress. That is human nature.

Our object is to find a system in which the wisest and fairest men and women will sit on the bench. This will elevate not only the reputation of the courts, but the quality of justice dispensed. The parasites in robes would have to content themselves with patronage from the surrogates, until the tide of reform reaches that barnacle-encrusted office.

Reform is always an uphill struggle. The system is the way it is because the people who live off it want it that way. But an opening has been created. We need a Prague Spring to take advantage of it. The cause will have to be championed by the MSM (mainstream media). The case for reform was first brought to public attention several years ago by the Daily News, and the Post joined in with enthusiasm. It is time to reactivate the Fourth Estate to clean out the Augean stables, and to try to find better horses.

Judicial reform is possible, even in Brooklyn. By the way, two other counties, Queens and the Bronx, are somewhat better, if only because they conduct the shabby business more decorously and discreetly. Staten Island is constantly being dragged down by Brooklyn, because they have been placed in the same judicial district. Manhattan is different; there the test is not so much money as ideology, ethnicity, gender and sexual orientation. Guess, in each category, which side is favored by the cadre composed of the activists in the New York County Democracy.

Henry J. Stern is president of NY Civic. In the last four years, he has written almost 300 articles on public issues, which are available on the group's website, Stern was New York City Parks Commissioner for fifteen years under Mayors Koch and Giuliani. He was elected to the City Council twice on the Liberal Party line. He is a graduate of the Bronx High School of Science, the City College of New York, and Harvard Law School.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.