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July 2005 Archives

"Always my first stop..."

"Always my first stop for civil legal reform news and discussion..." -- Amy Ridenour of the National Center Blog, describing Point of Law.

Jonathan stands firm, but I have to, also, because I believe his point is inconsistent with the history he wishes to rely upon.

In the spirit of a lively debate, I must admit that I'm as confused by Ted Frank's reply to my earlier post, as he says he is by my post.

Of course the Constitution does not prohibit the Gang of Seven from publishing their AskJohnRoberts website. I never meant to suggest that it did.

My point, on which I'm sure Ted will agree, is that this "meaningless publicity stunt" is unprecedented and inconsistent with the intent of the drafters of the Constitution. I've prepared a more fullsome reply here.

Well, that's one possibility

"Do we have to follow Nan Aron off a cliff?"

The Court after Rehnquist

Jonathan Rauch cautions us not to expect all that radical a shift. He quotes Ted, too.

My co-blogger, Jonathan Wilson, questions the constitutionality of soliciting public questions for the nomination process. This skepticism is mysterious to me. Surely, nothing in the Constitution prohibits individual senators from consulting with advisors in developing questions to put to a nominee. Why is opening that circle of advice to the public any different? At the end of the day, it's still the individual senator who is choosing to ask the question. Criticize it for being an empty and meaningless publicity stunt, to be sure, but there doesn't seem to be a legitimate constitutional objection to this innovation.

As expected, the Senate today easily passed a comprehensive energy bill, as long sought by the Bush administration. Also as one would expect, the Congress added significant giveaways into the already hefty pricetag of the legislation, which now comes to a total of $12.3 billion.

And, disappointingly but unsurprisingly, the approved bill stripped out provisions to deal with the growing problem of litigation over alleged harms caused by the federally mandated fuel additive methyl tertiary-butyl ether (MTBE). Why is this issue so important? Well, in a Bloomberg story Monday on New Hampshire's similar failure to deal with MTBE claims, the U.S. Chamber's Bruce Josten laid out the case: "Defective-product lawsuits tend to treble damages. You're looking here at a legal exposure, if you go that way, that would equal or exceed the $375 billion asbestos legal exposure." A sum that makes the price of the energy bill itself pale in comparison...

Sarbanes-Oxley is 3

...years old tomorrow, and Larry Ribstein has "celebratory" suggestions.

It seems that a group of Senators (including Mikulski, Boxer and Clinton, among others) are not content to ask their own questions of Judge John Roberts, but have also seen fit to publish a website whereby members of the public may pose their own questions to the nominee.

Politics aside, this is truly quite remarkable. Never before in the history of Supreme Court nominations has a group of Senators so openly solicited input from the public. While it's hard to imagine that this group, in combination with other Democratic members of the Senate Judiciary Committee (Sens. Schumer, Kennedy and Leahy come to mind) will be at a loss for words once the TV cameras are on, do these Senators really need help from the public in finding a question for the nominee?

Obviously, this is a publicity stunt, but as stunts go, is this one very helpful? Does it have any Constitutional basis?

While the Constitution itself has little to say on the rationale behind the Senate's prerogative to "advise and consent", one of the Constitution's architects, Alexander Hamilton, provided a great deal of insight through the Federalist Papers.

Today, our friends at the Washington Legal Foundation are releasing five new papers, each focusing on a distinct civil justice issue or court ruling. The papers can be accessed from WLF�s website here. Of particular note is a paper analyzing the Michigan Supreme Court�s July 13 ruling rejecting medical monitoring as a remedy, written by our sometimes-guest-blogger Leah Lorber of Shook, Hardy & Bacon (for more on the Michigan medical monitoring case, see Walter's and my earlier posts). The other four papers focus on the timely topics of class action litigation and reform at the federal and state levels; the use of consumer protection laws to sue food companies and restaurants; and the abuse of the bankruptcy process by asbestos lawyers. These papers are short, accessible, and highly informative; I encourage all our readers to give them a look.

In trials corporate defendants have to fight fair, or even fairer than fair, because of the risk of gigantic sanctions if they are even perceived to have crossed the line, as recently happened to Morgan Stanley (OL May 18). This puts them at a disadvantage in courtrooms where plaintiffs' attorneys suffer from no such constraints. The coroner's report indicated that Roger Ernst died of an arrhythmia rather than a blood clot; Ernst's attorneys didn't disclose that they intended to call the coroner as a witness or that they had any evidence that the coroner's report was anything other than correct and complete; so Merck attorneys assumed that they could rely upon a coroner's report at trial. Instead, the coroner is being called as a surprise witness, and, if allowed to testify Monday (as the trial judge has indicated he will do), Dr. Maria Araneta will clarify her report to speculate that Ernst really did die of a heart attack, though she admits that she has no recollection of her original report. Meanwhile, the jury will remember Merck's opening statements (OL Jul. 15) that relied on that report. And rest assured no judge would allow a corporate defendant to introduce an undisclosed star witness at the last second.

House passes HEALTH Act

Following up on its Wednesday passage of the Patient Safety and Quality Improvement Act, the House yesterday passed H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2005. The HEALTH Act, a staple of the President's tort reform agenda, passed on a largely party-line vote, 230-194. Its major provisions are summarized here:

This morning, President Bush will be signing into law the Patient Safety and Quality Improvement Act of 2005, which passed the House on Wednesday. The bill encourages doctors and other medical workers to disclose medical errors confidentially--allowing patient safety organizations to analyze the data and work toward safety improvement but keeping the information legally removed from our friends in the trial bar. Senate Majority Bill Frist, himself a surgeon, noted, "If you have a mistake that is made, you need to be able to share it with people so you can develop systems to prevent those mistakes from happening in the future. In hospitals there's a tendency not to do that because if you share your mistake there will be a predatory trial lawyer."

The full text of the bill is here (PDF). The American Medical Association has a brief explanation of its terms here. My colleague Bob Goldberg, director of the Manhattan Institute's Center for Medical Progress, will be attending the signing ceremony.

Headline juxtaposition of the week

Courtesy NRO "The Corner", who got it from Clay Waters:

"An Advocate for the Right" -- N.Y. Times front-page headline on John Roberts yesterday.

"Balanced Jurist at Home in the Middle" -- NYT headline (page 20) on Ruth Bader Ginsburg, June 27, 1993.

Former Solicitors General of both political parties disagree with Sen. Leahy's view of the question, and Bill Dyer sure does too.

Sued for bodily injury

But that doesn't mean you're entitled to examine the claimant's relevant medical records or anything, according to some new decisions from the Colorado Supreme Court (via CCJL).

Donna Rovito med-mal blog

The Liability Update newsletter of Pennsylvania-based physician advocate Donna Baver Rovito -- must reading for those in the malpractice trenches -- is now available in its own AOL-based blog format.

Spitzer and payola

The New York attorney general is veritably shocked that "artistic merit" doesn't account for radio station owners' willingness to keep Jennifer Lopez songs in constant rotation. Daniel Gross at Slate, and Larry Ribstein before him, decline to ladle the expected adulation on Spitzer's latest initiative. More: Todd Zywicki points out this analysis by Joshua Wright.

One of the things that impresses me most about Judge Roberts is how his writings show a clear understanding of the limited role of the judicial branch in the Constitutional scheme. Through his opinions, he shows respect for precedent, doesn't substitute personal preference for law, explains his reasoning in a manner that appropriately gives guidance to lower courts, and otherwise follows the rule of law. These are qualities lacking in a majority (and some might argue all) of the Justices of today's Court.

There's an impressive article by Benjamin Wittes in the September issue of The Atlantic. Wittes interviews several lower-court federal judges who proceed to give frank criticisms of today's Supreme Court. Judges Richard Posner and Laurence Silberman even go on the record with their comments. Many of the comments suggest that the problems are more institutional than judge-specific. If so, perhaps we'll be criticizing Justice Roberts on the telepathic version of blogs that will be introduced in 2025—but I'm still young and optimistic enough to hope that he's going to move the Court in the right direction. The article's an absolute must-read. (Benjamin Wittes, "Without Precedent", The Atlantic, Sep. 2005 (subscription required)).

Temporary setback in Pennsylvania

In 2002, Pennsylvania legislators voted to abolish joint and several liability in cases where the defendant is found less than 60% responsible. Commonwealth Court yesterday struck down the law on a technicality. The decision is likely correct, but does not prohibit the legislature from enacting a new (and identically worded) law that passes procedural muster; such passage seems likely. (Tom Dochat, "Court strikes law changing liability rules", The Patriot-News, Jul. 27).

The war on Wal-Mart

Nope, nothing political about it, notwithstanding all those musical chairs as activists keep hopping around between unions, anti-Wal-Mart groups, and Democratic campaign outfits:

Soon after Joe Hansen took the UFCW helm a year ago, the union decided to freeze its Wal-Mart organizing activities altogether and take what, in many ways, is the mirror-image approach. Instead of disparate, store-specific drives, it would concentrate its efforts in Washington, using Internet-age campaign tactics and drawing staff from the city's abundance of savvy politicos. In April, the union announced Wake Up Wal-Mart, a Washington-based campaign led by Blank, Howard Dean's former political director. (Chris Kofinis, the former deputy policy director for Wesley Clark's primary campaign, is its communications adviser.) Meanwhile, at the same time Wake Up Wal-Mart appeared, the Service Employees International Union (SEIU) helped to launch another effort, Wal-Mart Watch. Like Wake Up Wal-Mart, Wal-Mart Watch has attracted a coterie of bold-faced campaign names, including John Kerry's former campaign manager Jim Jordan (officially a partner at the lobby shop Westhill Partners), former Democratic Senatorial Campaign Committee Executive Director Andrew Grossman, and the former deputy director of research at the Democratic National Committee (DNC), Tracy Sefl. (The AFL-CIO, which is the umbrella organization for both UFCW and SEIU, has its own Wal-Mart operation, run, until recently, by Ellen Moran, a DNC veteran.)

More on Wal-Mart and public policy here.

California labor law

Bookworm offers a horror story on which she worked as a lawyer. One-way fee-shifting -- that is to say, the kind that's nearly always unfair -- plays a role.

Hillary's move to the center?

Mickey Kaus is skeptical that Hillary Clinton's speech to the moderate DLC is evidence of a real move to the center. Her nod to the medical malpractice issue doesn't provide much grounds for optimism:

[We can] lower[] the costs of doctors� malpractice insurance through large self-insured pools, alternative dispute resolution models, and reductions in errors.

The absence of caps, which some Democrats have endorsed elsewhere at the state level, is notable. Instead, we see three proposals, none of which does anything to fix the malpractice liability crisis. Most doctors are already covered through "large self-insured pools"; their rates continue to rise in response to malpractice litigation costs in states that have rejected caps. "Alternative dispute resolution models" is an empty phrase that could mean anything as radical as Common Good's proposal for medical courts to something as ineffectual as encouraging non-binding arbitration that would be inadmissible as evidence at trial. "Reducing errors" is a platitude everyone can agree upon, sort of like "reducing nun-beating," but the disconnect between error levels and malpractice litigation costs, even when errors are dramatically reduced, doesn't hold out much hope for doctors seeking relief.

Compare and contrast her husband Bill's apparent statement to an audience at the Aspen Institute that "the Democrats are wrong to deny that malpractice suits don�t drive up medical costs." (Kurt Andersen, "Centrist Mountain Time", New York Magazine, Jul. 25). One hopes Bill meant more with this statement than the thin gruel offered by Hillary.

Kaus suggests that Hillary needs to prove herself by standing up to a traditional Democratic constituency. Might I suggest the trial lawyers? That's win-win: Hillary gets her Sister Souljah moment for speaking truth to power, the Dems neutralize an issue popular for Republicans, and the country is better off for getting bipartisan support for legal reform.

Tort Reform Record

ATRA's semi-annual Tort Reform Record, detailing the status of state-level tort reforms, is now available.

Tech problems at Overlawyered

Readers who follow my other site, Overlawyered.com, may have noticed that it hasn't been updated in the past 24 hours. That's because of a newly arisen technical problem that is blocking the update function as well as other site functions such as search (although most of the contents of the site are available). I'm working to fix the problem. Update 11 p.m. EDT: fixed, at least for the moment.

The secret handshake

It's a huge blunder that the White House (and perhaps also Judge Roberts) manufactured a controversy where there was none by so forcefully trying to distance the judge from the Federalist Society; as David Bernstein correctly notes on Volokh, being a Federalist Society member tells you nothing about an individual other than that he's not on the left. Instead, the result has been to make something innocuous seem shameful, as if it needed to be denied to avoid scandal. (Charlie Savage, "Conservatives defend Roberts's link to law group", Boston Globe, Jul. 26). In reference to Judge Roberts, and the mystery over his Federalist Society membership, the New York Times editorial board writes about "cloistered clubs who know the secret handshake." This is a sinister and unfair smear of a characterization. Here's the "secret handshake": a $50 check ($25 for non-profits or government employees). For this, I get a free subscription to the (publicly-available) Harvard Journal of Law & Public Policy, and $5 off on (publicly-available) Federalist Society events, and sometimes not even the discount. (That last event was so cloistered, it was broadcast on C-SPAN.)

At Southern Appeal, "Verity" takes note of a pattern among the seven sitting GOP Justices on the Court, calling it the "abode predictor": the three Justices who've proved most conservative on the high court (Rehnquist, Scalia, Thomas) all lived in and about Washington, D.C. before their elevation, while those who've emerged as moderates and liberals (O'Connor, Stevens, Souter, Kennedy) were picked from the rest of the country. The pattern may extend back to some earlier members of the Court as well (for example, moderate Powell and liberal Blackmun hailed respectively from Richmond, Va. and Minnesota). If the "abode predictor" shows itself to be accurate, nominee John Roberts will prove a strong conservative, having sunk deep roots in the capital with his family.

"Verity" offers an unsatisfying explanation for the pattern, positing that Justices who arrive fresh in Washington (but not those who come to town earlier in their careers) adjust their views leftward to win favor with new social circles. Whether or not it is fair to charge members of the Court with the weakness of mind implied by such an analysis, this would seem to overlook an obvious sociological fact about Washington, D.C., which is that for at least twenty years it has been easy for new Republican arrivals to lead a life more or less completely surrounded by conservatives if they wish.

No, the most noteworthy aspect of the "abode predictor" is simply the way it turns on its head one of the standard tropes of American political thinking, namely that "Beltway thinking" and true conservatism stand in antithetical opposition to each other. We will all have to learn a new stock of truisms if it turns out that inside-the-Beltway thinking is the surest guarantor of conservative rigor, while such unspoiled and authentic locales as small-town Minnesota, rural New Hampshire and the ranching sections of Arizona are dangerous sources of squishiness, compromise and modernism.

Pennsylvania departing-docs study

...gets covered in the Pittsburgh Post-Gazette. Martin Grace covered it for us last month.

On NBC's Meet the Press, moderator Tim Russert pressed White House nomination chief Fred Thompson on the kinds of questions nominee Judge John G. Roberts should expect.

Thompson, a lawyer, former Senator and former minority counsel to the Senate Judiciary Committee, rightly noted that Justice Ginsburg and other past nominees had drawn "a line that should not be crossed". On the question of the propriety of Roe v. Wade, Thompson said that it would be inappropriate for Senators to expect the nominee to answer squarely the question of whether that case was properly decided.

Russert pressed further, however, noting that Justice Ginsburg had made some very specific statements in her nomination hearings on the subject of arbortion. Russert said:

MR. RUSSERT: But Ruth Bader Ginsburg, who appeared in 1993, said this. "[A decision on abortion] is something central to a woman's life, to her dignity. It's a decision that she must make for herself. And when government controls that decision for her, she's being treated as less than a fully adult human responsible for her own choices."

That's a very specific comment on the issue of abortion at her hearing.

Thompson's response was adequate, but missed an important point. As I noted last week, and as more ably referenced in Jay Jorgensen's paper, the issue is not whether some nominees have made statements on abortion, the issue is whether a nominee may decline to answer a question because it would betray the nominee's thinking on a possible future decision or because it more properly relates to generlized propositions as opposed to the discrete fact patterns on which judges may properly rule.

In other words, it doesn't matter if former nominees have chosen to make specific statements on the subject of abortion (or NASCAR or the designated hitter rule, for that matter). What matters is that a nominee may properly decline to answer certain questions that press too far into the nominee's thinking on specific issues.

Consider for example, Justice Ginsburg's response to this (fairly innocuous) question:

Senator Thurmond: What are your views on the constitutionality of some form of voucher system, so that working and middle-class parents can receive more choice in selecting the best education available for their children?

Judge Ginsburg. Senator Thurmond, aid to schools is a question that comes up again and again before the Supreme Court. This is the very kind of question that I ruled out.

Senator Thurmond. Would you prefer not to answer?

Judge Ginsburg. Yes.

Substitute "Senator Schumer" for "Senator Thurmond", "Judge Roberts" for "Judge Ginsburg" and "Roe v. Wade" for "aid to schools" and you can an idea of how the the current nominee may respond and remain in line with prior precedents.

Justice Ginsburg, of course, was confirmed by a vote of 96-3.

Sen. Arlen Specter writes, on today's NYT op-ed page:

Some legal scholars attach special significance to what they call superprecedents, which are decisions like Roe v. Wade that have been reaffirmed in later cases.

If this notion of "superprecedents", as well as the word itself, seems entirely novel to you, you're not alone. (Not only novel, but arbitarily invoked: why should Roe be accorded "super" status, but not the free-speech holdings of Buckley v. Valeo, which crumbled when Justice O'Connor decided to change her mind?) Beldar and Althouse (and their respective readers) carve up the poor Pennsylvania Senator, leaving only Specter tartare.

Dahlia Lithwick's Roberts smear

As if she needed to epitomize my critique, Dahlia Lithwick (Jul. 8) substitutes easy snark for legal analysis regarding Judge Roberts' decision in the famous Hedgepeth v. WMATA "french-fry case":

[Judge John Roberts] doesn't appear to be crusading for a wholesale national retreat to the good old days of executing miscreant 'tweens (although he seemingly finds arresting them for French-fry possession to be a cornerstone in good parent-child relations).

In fact, Roberts wrote, in a masterful display of the correct understanding of the role of the judiciary:

No one is very happy about the events that led to this litigation. A twelve-year-old girl was arrested, searched, and handcuffed. Her shoelaces were removed, and she was transported in the windowless rear compartment of a police vehicle to a juvenile processing center, where she was booked, fingerprinted, and detained until released to her mother some three hours later � all for eating a single french fry in a Metrorail station. The child was frightened, embarrassed, and crying throughout the ordeal. The district court described the policies that led to her arrest as "foolish," and indeed the policies were changed after those responsible endured the sort of publicity reserved for adults who make young girls cry. The question before us, however, is not whether these policies were a bad idea, but whether they violated the Fourth and Fifth Amendments to the Constitution. Like the district court, we conclude that they did not, and accordingly we affirm.

[...] The district court had and we too may have thoughts on the wisdom of this policy choice—it is far from clear that the gains in certainty of notification are worth the youthful trauma and tears—but it is not our place to second-guess such legislative judgments. See City of New Orleans v. Duke, 427 U.S. 297, 303 (1976) (per curiam) (rational basis review does not authorize the judiciary to sit as a "superlegislature").

William "Beldar" Dyer calls Lithwick on it, and proceeds to tear apart Lithwick's questionable excuse.

Bruce Reed's Roberts smear

Slate blogger Bruce Reed sneers that Judge Roberts did a poor job vetting judges when he was associate White House counsel for President Reagan from 1982 to 1986. His evidence? "Reagan ended up appointing the lowest percentage of appellate judges with an 'exceptionally well-qualified' or 'well-qualified' ABA rating of any administration except Ford's brief term." However, this says far more about the ABA than it does about the Reagan administration or Judge Roberts. Far too often, the ratings reflected ideological bias on the part of the ABA. The two judges widely considered, by all objective measures, to be the most accomplished and influential Reagan appointees to the appellate bench, Seventh Circuit Judges Richard A. Posner and Frank H. Easterbrook, both flunked Reed's ABA test, with "qualified/not qualified" ratings. Years later, liberal academics with similar resumes appointed by President Clinton got high marks from the ABA; such biased discrepancies were what led the most recent Bush administration to abandon the ABA rating system.

Reed does relay an interesting exchange from Roberts' 2003 confirmation hearing:

Requiem for the Fifth

Douglas Kern describes a future 1L Con Law class struggling to understand what the 20th century ever found of value in the Fifth Amendment. Humorous and enlightening.

Community Rights Counsel

The Capital Research Center has published a critical profile (PDF, scroll to p. 5) of the left-wing Community Rights Counsel, "probably the most pro-government public interest organization in the country", with which it confusingly shares an acronym; the latter group has earned mention in these pages for its hardball campaign against economics-oriented seminars for judges, and has also been diligent in pressing for an expansive view of government's eminent domain powers. The profile is written by Institute for Justice attorney Scott Bullock, who crossed swords with the organization in Kelo v. New London.

Welcome washingtonpost.com readers

In the paper's "Campaign for the Supreme Court" blog, which is an excellent resource for those following the nomination battle, reporter Fred Barbash links to Richard Epstein's comments kicking off our featured discussion and also to Jim Copland's Newsday piece.

Roberts and the arroyo toad

With so few opinions in his two years as a junior member of the D.C. Circuit, there is a lot of focus on Judge Roberts' dissent from a denial of an en banc review in Rancho Viejo, LLC v. Norton, with opponents seizing on this decision in an effort to tar Roberts as anti-environmentalist and worse. I was interviewed on this topic in a front-page article in my old hometown paper. (Bill Walsh, "'Hapless toad' case fuels fears of Roberts' foes", New Orleans Times-Picayune, Jul. 22). I noted, but didn't seem to persuade the writer, that Judge Roberts' dissent did not necessarily indicate that he intended to strike down the Endangered Species Act as unconstitutional, but rather asked the D.C. Circuit to revise its jurisprudence on the question in a manner consistent with Supreme Court precedent. Tom Goldstein makes the same point in more detail today on the Supreme Court Nomination blog.

As I told the Times-Picayune, Justice O'Connor, along with Justice Thomas, was the justice who most consistently applied the Commerce Clause narrowly to restrict federal power. Even if Roberts is in the Thomas/O'Connor mode on this question (something that's likely, but far from certain), last term's decision in Gonzales v. Raich shows that there are still six justices on the Court who have a broad view of the Commerce Clause power, and a Roberts confirmation is unlikely to move the Court to the right on federalism.

The National Law Journal covers asbestos reform legislation in Pennsylvania, and the usual suspects comment pro and con. A similar reform takes effect in Texas in September—if the Specter bill in the Senate doesn't override state reforms with a weaker nationwide program. (Peter Geier, Jul. 22).

School finance suits

Now there's one in Colorado, aimed at securing a hoped-for billion dollars in court-directed tax moneys; it's being unabashedly backed by grabby provider groups including the Colorado Education Association, the Colorado Association of School Boards and the Colorado Association of School Executives. More: Jul. 9, Jun. 30, etc.

He isn't a member of the Federalist Society after all. It's not safe to infer that he agrees with the positions advanced in the briefs he prepared. President Bush's strange facial expressions while introducing him the other night have been explained. He's done pro bono work on behalf of welfare recipients challenging eligibility restrictions. His replacement of O'Connor might shift the Court's jurisprudence on affirmative action, church-state separation, election law and the regulation of late-term abortion. He's apparently never made a ruling on a Daubert issue. Florida plaintiff's lawyer Dean Colson, a fellow Rehnquist clerk, was best man at his wedding. He's unlikely to start spouting off to Senators at hearings. One of his law school classmates recalls him saying "to me a long time ago there was no case he had been on where he couldn't have done the other side."

"Grab a sick bag" advises the Washington Examiner as it weighs in on the manufacture of lawsuits on behalf of unharmed claimants; quotes at length from both Prof. Brickman and The Rule of Lawyers.

Separated at birth?

From the Silly Files: I knew I'd seen Judge Roberts before.

I'm also thrilled to announce that Professor Epstein, with his Wall Street Journal column hot off the presses, has agreed to contribute here to our featured discussion on the future of the Court in light of Roberts' appointment. He'll be exchanging views with Northwestern's Stephen Presser.

Professors Epstein and Presser are both among the top thinkers in issues of interest to those of us at Point of Law. Professor Epstein is undoubtedly one of the most distinguished scholars in the field of civil justice: he edits one of the top torts casebooks. He's long been attuned to the problems of the litigation explosion; his critiques in Modern Products Liability Law, first published in 1980, still ring true today. More recently, Professor Epstein has authored a paper for the Manhattan Institute focusing on the problems of the modern class action.

Stephen Presser is one of the leading scholars in the field of corporations, with a particular emphasis on shareholder liability for corporate debts. He too is the author of a leading casebook in the field, An Introduction to the Law of Business Organizations. And Professor Presser has also written a recent monograph for the Manhattan Institute, his exploring features of European products liability law that Americans should import.

On top of their expertise in civil justice, Professors Epstein and Presser are two of the nation's leading constitutional scholars. Professor Epstein, with a series of books on the subject dating back to his classic Takings: Private Property and the Power of Eminent Domain, has long argued that "judicial activism" is a misnomer, and that courts should readily use judicial review to overturn overreaching government action. Professor Presser, who edits the preeminent legal history casebook, is perhaps best known for making what historian Forrest McDonald has called "a compelling case that the original understanding of the Constitution was that religion, morality, and law were inextricably connected" (see his Recapturing the Constitution), but he also relies on natural law jurisprudence to defend a strong role for courts in striking down government action. Both Epstein and Presser defend the Supreme Court's infamous Lochner decision, which struck down a state maximum-hours regulation. So, notwithstanding Professor Epstein's reputation as a "libertarian" and Professor Presser's as a "traditionalist," they share a lot of common ground.

I hope our readers will enjoy the coming exchange between these highly distinguished scholars.

Roberts commentary

Among the many commentaries about Judge Roberts' nomination to the Supreme Court, I wanted to alert our readers to two. First, I have a column in today's Newsday, "Supreme Court's new glue?" I argue that the modern confirmation process unfortunately makes it difficult for a president to nominate jurists with a long paper trail -- like some of our favorites, Edith Jones, Frank Easterbrook, Mike McConnell, and Janice Rogers Brown -- but that given what we know, Roberts is unlikely to be "another Souter." Specifically, I focus on Roberts' background representing businesses, which we've touched on some here. And I note that his personal disposition could be critical in helping construct Supreme Court majorities, a key attribute of Roberts' mentor the Chief Justice but not a strength of the forceful Scalia and doctrinaire Thomas.

I'd also like to highlight a lengthy column in The Wall Street Journal by our friend Richard Epstein of Chicago. Professor Epstein praises Roberts' nomination and takes Senator Chuck Schumer to task for his ideology-based line of attack. Epstein answers Schumer's question to name three recent Supreme Court decisions that were wrongly decided -- and quite sensibly targets Raich (Commerce Clause--medical marijuana), Kelo (Takings Clause--public use), and McConnell (First Amendment--campaign finance). I heartily agree with Epstein on all counts, and I also agree with his insistence that nominated jurists shouldn't have to answer the question Schumer poses.

With the sterling credentials of Judge Roberts and with the relatively thin record available due to his short time on the bench, the left has little ammunition to use to derail this nomination. The only approach the left will be able to muster has two parts: (1) ask the nominee unfair questions, designed to showcase his personal or political opinions and (2) attack the nominee either on the basis of his answers or on his refusal to answer.

There can be no doubt that this is the approach some partisan members of the Senate will take, goaded on by certain advocacy groups, as illustrated by this exchange last night between PBS� Gwen Ifill and New York Senator Charles Schumer (referring to Schumer�s earlier vote against Judge Roberts):

GWEN IFILL: Would that same lack of candor at that time, if it were expressed again in this setting, would that be a disqualifying characteristic for you?
SEN. CHARLES SCHUMER: More so. I'm hopeful that Judge Roberts will realize that when you're being nominated for the Supreme Court, you have a responsibility, an obligation to the nation to fully express your views. I mean, after all, a Supreme Court nominee has huge powers over the lives of average Americans. With the flick of a pen, that Justice can change lives dramatically, tens of millions of lives, one decision.
And to hide your views, not express your views when that is the number one criteria that many of us are using and I think most Americans would use as to whether you should be on the court would not be living up to your obligation. I'm hopeful that Judge Roberts will understand that and answer the questions fully. No one's trying to trick him or play "gotcha."

Schumer is clearly playing to his partisan base, as expressed by groups like People for the American Way and NARAL.

His reasoning, however, is utterly inconsistent with the history of past Supreme Court confirmation hearings and the statements of others in his party have made in past confirmation contexts, as outlined in an excellent paper by Sidley, Brown, Austin & Wood partner Jay T. Jorgensen.

According to a recent NERA study, the annual probability of a company facing a securities suit that survives a motion to dismiss is 1.2%—only slightly lower than it was before the PSLRA passed. One difference is that nuisance settlements have gone down: more companies are fighting, and getting their cases dismissed. Plaintiffs have apparently responded to the reform by filing more lawsuits and by bringing more lottery-style cases: gigantic multi-billion dollar suits against deep-pocketed outside co-defendants, such as banks in the WorldCom and Enron cases. The ten largest settlements have all taken place since 2000. (via Roberts).

Thanks to Lyle Roberts

(Belated) thanks to Lyle Roberts for his guest contributions to the site last week. For more of his work, check out his outstanding weblog on securities and class action law, the 10b-5 Daily.

The Kirkendall endorsement

Judge Roberts has it (more). And Bill Dyer's, too.

Update: Popcorn flavoring suits II

We reported on March 28 about the problem of fraudulent joinder and its use in the popcorn flavoring product liability suits to keep cases out of federal court. Sometimes the good guys win: on Monday, Judge Richard E. Dorr dismissed plaintiffs' claims against Missouri doctor Rick L. Scacewater, and rejected plaintiffs' attempt to remand the case to state court. "Plaintiffs have no real intention of prosecuting the action against [Dr. Scacewater and] there is no colorable claim against this resident defendant." Arthur v. International Flavors & Fragrances, Inc., No. 05-5011-CV-RED (W.D. Mo.).

Meanwhile, in state court, Kenneth Moenning won about $2.75 million from the manufacturers of the popcorn flavoring, who protest that they adequately warned Moenning's employer about the need for ventilation and worker protection. Unlike other popcorn plaintiffs, there was dispute over whether Moenning actually had bronchiolitis obliterans. (Jeff Lehr, "Jury favors popcorn worker", Joplin Globe, Jul. 20). And a new case has been brought in Montana. (Chelsi Moy, "Yatsko widow sues for 'popcorn lung'", Great Falls Tribune, Jul. 17).

Roberts on business litigation

CNN/Money has a roundup here of John Roberts' role in business litigation. He argued before the Supreme Court that a Toyota factory worker with carpal tunnel syndrome was not entitled to claim the protections of the Americans with Disabilities Act; his position on that will be hard for opponents to demonize, however, since the Court endorsed it 9-0. And while at Hogan & Hartson he argued unsuccessfully on behalf of state governments suing Microsoft on behalf of a breakup remedy. This probably indicates that he is not a member of one particular subset of right-of-center lawyers, namely the type that 1) disapproves of the states' Microsoft stance on libertarian principle and 2) though working at a big Washington law firm, manages to avoid handling all ideologically uncongenial matters or clients. Given the nature of big Washington law-firm practice, however, it is not clear that the set of lawyers who meet the second criterion is very much larger than the empty set to begin with.

A New York Times article seems to indicate so:

Recently filed court documents show that federal prosecutors in Manhattan may have begun to investigate the conduct of three law firms.

The documents - which surfaced in the bankruptcy case of G-1 Holdings, formerly the GAF Corporation, a manufacturer of roofing material - show that lawyers for G-1 have met with prosecutors from the United States attorney's office in Manhattan in recent months. The documents also show that the company's lawyers have turned over records of extensive interviews with former employees of the three plaintiffs' firms in which some employees described coaching potential claimants and noted efforts to influence doctors' diagnoses.

Two of the firms are Baron & Budd and Ness Motley, who we've had occasion to criticize in the past; our editor previously wrote about an earlier Baron & Budd asbestos scandal that sounds similar to this one. (Jonathan D. Glater, "Lawyers Challenged on Asbestos", NY Times, Jul. 20 (via Kirkendall)).

Justice Ginsburg and family law

Manhattan Institute senior fellow Peter Huber, who clerked for Ruth Bader Ginsburg, is in the Washington Post today with a letter correcting some misapprehensions about her pronouncements before joining the bench on marriage and social issues. More: NRO's Edward Whelan responds.

More broadcast appearances

I was a guest on WABC radio's John Gambling show this morning, discussing the Roberts nomination. During the 10-11 a.m. Pacific hour I'll be talking on KPCC, public radio in Southern California. At 3:30 Central I'll be on the Carl Wigglesworth show in San Antonio. And circa 5:30 Eastern this afternoon I'll make another appearance on WCBS-TV in New York, which also had me on yesterday afternoon. Last night I also joined host Chris Core of Washington, D.C.'s WMAL-AM. [cross-posted at Overlawyered]

Another broadcast appearance

I'll be discussing the Judge Roberts nomination on one of the BBC's news shows (presumably "The World" on BBC4), sometime around 7 pm UK time.

I'll also be on Los Angeles's KPCC radio (89.3 FM) between 10:06 and 10:40 AM Pacific Wednesday morning.

The AJC tells of the insurance and liability woes of local governments in Georgia. Last year the new Sheriff of Clayton County Georgia, upon taking office, fired a number of deputies subject to civil service protections.  The story is the sheriff had the deputies driven from the jail house in vans used for prisoner transport while snipers watched from the jail’s roof top.

The deputies were reinstated by a state court judge, but after being reinstated the deputies then claimed they were subjected to retaliation. The deputies then filed a federal discrimination lawsuit against the county.  As a result of these shenanigans (and maybe others), the county’s insurer changed the policy terms at renewal. The county’s new insurance policy has a higher deductible (it went from $150K to $1 Million) and it no longer covers actions by elected officials. Only one other insurer was willing to cover the county’s elected officials — It demanded a $250K deductible for every one but the Sheriff who had a $500K deductible. The article bemoned the problems local governments were having obtaining insurance, but the fact that insurers are saying the governments have to share more of the costs of their actions is a benefit to taxpayers.  Next:  Candidates for public office campaigning based on the size of their personal deductible.

The nominee is John Roberts

Last night, President Bush nominated D.C. Circuit Judge John Roberts for Sandra Day O'Connor's seat on the Supreme Court. Though Roberts was first nominated for the D.C. Circuit in 1992, he was not confirmed until he was nominated a third time in 2003, when he was voted in by unanimous consent after being approved by the Judiciary Committee by a 16-3 vote. I've uploaded his 2001 responses to a Senate questionnaire at the Liability Project website. Roberts is a well-respected appellate litigator, considered by some to be the best Supreme Court oral advocate of the last fifteen years. He won 25 of his 39 Supreme Court cases.

His short time on the bench hasn't left much of a paper trail. But it's promising that, when he was in private practice, Roberts was a Legal Advisory Board Member of the National Legal Center for the Public Interest, an organization sympathetic to liability reform. If confirmed, Roberts would join Justice Stevens as the only justices with experience litigating on behalf of businesses, and would be a leading contender to replace Justice Rehnquist as Chief Justice. The Rehnquist Court, which only grants certiorari to about eighty cases a year, half that of its predecessor, has tended to avoid critical questions in issues such as antitrust, securities law, class actions, and civil procedure; the addition of a former corporate litigator can only improve that record.

The definitive story on Roberts is probably Tony Mauro's February 22 Legal Times piece.

Edith (Joy) Clement

Speculation is running rampant that at a 9 pm press conference tonight, President Bush will announce Edith (Joy) Clement as his nominee to replace Justice O'Connor on the U.S. Supreme Court. Clement is a 2001 appointee to the Fifth Circuit Court of Appeals in New Orleans who had previously served for ten years as a U.S. District Court in the Eastern District of Louisiana. Born in 1948, Judge Clement also had over 15 years' private law practice prior to her appointment to the bench.

Various blogs are already collecting information on Judge Clement's record, notably The Supreme Court Nomination Blog, where Tom Goldstein has already listed a number of her notable appellate decisions (to be a rolling list). A couple of items caught my eye:

Bratcher v. Nat'l Standard Life Ins. Co. (In re Monumental Life Ins. Co.), 365 F.3d 408 (5th Cir. 2004) (dissenting from panel decision authorizing class action to challenge racial discrimination in sale of life insurance policies).

Blanks v. Southwestern Bell Communs., Inc., 310 F.3d 398 (5th Cir. 2002) (finding that plaintiff's HIV was not a disability within the meaning of the ADA, even though HIV was a physical impairment, because plaintiff had not established the requisite interference with a major life activity).

For those interested in liability issues, these two opinions would, at first blush, offer promise, because they suggest that Judge Clement has a fairly tight view of class certification standards and employment discrimination claims. (For my own critique of large employment discrimination class actions, see my discussion of the Wal-Mart gender discrimination class last July.)

An earlier post on The Supreme Court Nomination Blog also points us to Judge Clement's majority opinion in Vogler v. Blackmore, 352 F.3d 150 (5th Cir. 2003), "reducing a jury verdict for pain and suffering damages to the estates of a mother and three-year old daughter killed when an eighteen-wheel tractor trailer crossed the highway center-line and ran over their car. The damages to the mother were reduced from $200,000 to $30,000 and the pain and suffering award for the daughter was eliminated entirely based on the lack of specific evidence about the daughter's 'awareness of the impending collision.'"

On first blush, then, from the perspective of those interested in civil justice reform, Judge Clement seems quite a solid pick.

Cass Sunstein is blogging on Lessig Blog and has asked an interesting question that compares Wikipedia to Hayek's description of the marketplace.

Sunstein says that, unlike the marketplace, (1) Wikipedia "doesn't rest on economic incentives . . . there are no trades" and (2) Wikipedia works on a last in time rule. On this latter point, he writes, "The last editor. and hence a single person, can do a lot. But in the price system, the last purchaser usually can't have a huge effect." (For the uninitiated, here is how Wikipedia works).

While PointOfLaw is primarily a legal forum, as opposed to an economic one, it does tend to advance free market principles (especially in the context of legal reform), so this is probably not entirely out of order.

I came up with a number of other similarities and differences:

(1) Centralization - There is only one Wikipedia, but there are many markets. Markets are created, disappear, reappear, combine and fragment, but there is, and can only be, one Wikipedia.

(2) Mode of Communication - Wikipedia exists on a series of web pages. In other words, Wikipedia is a collection of written communications. Markets are comprised of communication in a multiplicity of formats. Communications can be written, oral and non-verbal (i.e., a trader who shorts a stock may not communicate anything verbally, but his action - i.e., the short - may communicate various things to the stock market).

(3) Motivation - Participants in Wikipedia may have a number of motivations: scholarly intent, self-promotion, curiosity, etc. Participants in the marketplace are presumed to have a self-interested profit motive. In fact, markets can become dysfunctional when participants cease to act according to a profit motive (i.e., during a labor strike, for example, striking employees act to their short-term economic detriment in the hopes of achieving some other goals).

I'm sure there are other comparisons as well.

How can these lessons relate to legal reform?

In Out of Balance, I examine a number of proposals to reform the American litigation system, including proposals to change lawyers' obligations regarding contingency fees. While there are undoubtedly many abuses in this area, and it would be well for legislatures to examine the problem, I ultimately conclude that a uniform, nationwide reform of contingency fees rules would be very difficult to implement.

Any reform of contingency fees is, in essence, a change to the marketplace for legal services. As this discussion demonstrates, marketplaces are extremely diffuse, decentralized, multi-modal and ephemeral creatures.

In the marketplace for attorneys, what information do clients use to evaluate their alternatives? Where do potential clients get this information? What motivations do clients have? What motivations should clients have? Do potential clients actually act in their own self-interests? In an area as complicated as the law, are clients actually capable of acting in their own self-interests without the objective and professional advice of an attorney?

Given the complexity of these questions, and the complexity of the marketplace, reform based upon a regulation of that marketplace is extremely difficult.

Food for thought on a Tuesday morning.

Wisc. high court on med-mal, cont'd

The "baldly activist" decision (as Ted called it the other day) striking down damage caps draws blog comments from David Bernstein, Ann Althouse, Christine Hurt (provoking comments-section ripostes from both Ted and me) and Will Baude.

Okla. AG vs. Ark. chicken farms

An AP story sheds light on another cozy AG-trial lawyer alliance flying largely under the national political radar:

...Decades of spreading chicken waste on the Ozark Mountains have turned the region [northwest Arkansas] a lush green, but a federal court lawsuit filed by Oklahoma's attorney general could stop the practice and, according to [farmer Gene] Pharr, gut an industry that over 75 years helped transform an isolated region into a vital part of the economy....

Oklahoma Attorney General Drew Edmondson last month sued 14 poultry producers, including several owned by Tyson, alleging their waste is polluting scenic rivers across the state line. ...

Edmondson is using the same South Carolina law firm that handled lawsuits against tobacco companies....

[In a previous chicken-pollution case filed by the city of Tulsa,] the city received only $200,000 of the $7.5 million settlement, with the bulk going to lawyers. Edmondson says Oklahoma's contract with lawyers in the latest case states that fees and expenses won't toll more than 50 percent. ...

The Arkansas growers question why Oklahoma sued rather than seek more regulatory standards.

For some political reaction within Oklahoma against Edmondson's activities, see our Mar. 21 report.

Merck doctor testimony

The Wall Street Journal has an article today discussing today's testimony from Merck researcher Nancy Santanello in the company's first wrongful death suit from Vioxx. Ted covered the trial's opening on overlawyered, here. (For our other past commentary on the Merck Vioxx cases, see July 15 (juror selection); June 22, 24 (Michigan attempt to change laws for Vioxx suits, with commentary); Feb. 18 (FDA panel determines Vioxx safe enough for market); Jan. 27 (Tabarrok and Surowiecki on risk-benefit analysis and FDA/tort law regulation systems); Jan. 5 (links to other writings of leading analysts, including Richard Epstein); Nov. 18 (cross-posting from Medical Progress Today, with comment).)

To me, the key point of emphasis is this: is our system of unpredictable, often unethical, ex post mass tort litigation for pharmaceuticals more likely to encourage aggressive testing for, and open disclosure of, potential drug side effects? My instinct: no. A system that sought to fairly and quickly compensate the legitimately harmed, similar to the federal program for children's vaccines, without costly inquiries into motives, fault, and punitive damages, would likely lead to much more openness, in addition to lower costs and more effective deterrence.

The full text of the opinion is here (PDF). The amicus brief prepared in part by Leah Lorber's firm, on behalf of the American Tort Reform Association, U.S. Chamber of Commerce, National Association of Manufacturers, American Chemistry Council, and the Coalition of Litigation Justice, Inc., is here (PDF). Leah also points us to three articles written by her and her Shook Hardy colleagues, all cited in the decision:

Michigan rejects medical monitoring

In a case arising from charges that Dow Chemical polluted the Tittabawassee River, the Michigan Supreme Court has ruled that the state's law affords no cause of action by which residents showing no physical harm can sue Dow for the costs of future "medical monitoring". (Detroit Free Press/Saginaw News). Attorney (and occasional PoL guestblogger) Leah Lorber, whose law firm of Shook, Hardy & Bacon filed an amicus brief on behalf of various business groups, writes as follows (excerpt):

This is the fourth case in a row in which a state supreme court has rejected medical monitoring. The earlier rulings came in Nevada, Kentucky and Alabama...

(1) The Court ruled that it was for the Michigan Legislature, not the Court, to decide whether to allow a cause of action for medical monitoring absent physical injury, a claim the Court termed "fundamentally different from any other negligence-based claim now cognizable under Michigan law." The Court said: "the people's representatives in the Legislature ... are better suited to undertake the complex task of balancing the competing societal interests at stake."

(2) The Court recognized that a cause of action based solely on exposure would create a potentially limitless pool of plaintiffs, "drain[ing] resources needed to compensate those with manifest physical injuries and a more immediate need for medical care." The Court ruled that "[i]n our tort jurisprudence, actual harm -- an injury that is manifest in the present -- is required in order to state a viable claim."

(3) The Court noted the huge burden on court finances and employees that would stem from administering a medical monitoring trust fund.

See also Mar. 8. The 5-2 decision (Justices Michael Cavanagh and Marilyn Kelly dissenting) was written by Justice Maura Corrigan, who's being mentioned as a possible nominee for Sandra O'Connor's seat on the U.S. Supreme Court.

The 11th Circuit has approved (PDF) a trial judge's ruling allowing a civil suit to proceed that charges carpet maker Mohawk Industries with federal racketeering based on its practices in hiring (knowingly, say the plaintiffs) illegal aliens as workers (see Jul. 12, 2004). Because the 7th Circuit last year refused to allow a RICO suit over the hiring of illegals to go forward, the ruling may signal a split between circuits that could attract the eventual attention of the Supreme Court, according to Law.com. Update: Supreme Court grants review, see Overlawyered, Jan. 5, 2006.

Tax Protester Silenced

The Third Circuit has upheld an injunction, prohibiting a professional tax protester from maintaining a website and advertising his tax-dispute services.

In United States v. Bell, the Third Circuit overruled First Amendment arguments advanced by famous (or is it notorious?) tax protester Thurston Bell.

The trial judge, U.S. District Judge Christopher C. Conner of the Middle District of Pennsylvania had found that Bell's web site, www.nite.com, advocated violating the U.S. tax code and offered for sale products and advice on how to do it. Bell was one of several tax protestor who advanced the so-called "Section 861 argument" to avoid taxation. The article describes Bell's approach:

According to the U.S. Sources argument, domestically earned wages of U.S. citizens are not taxable because such wages are not specifically mentioned in � 861's list of items of gross income that "shall be treated as income from sources within the United States."
Following Bell's instructions, his clients would file zero-income tax returns with an "asseveration of claimed income" attached, disputing the gross income indicated on their W-2 forms. Court records show that several of Bell's clients succeeded in obtaining unwarranted tax refunds by filing returns according to his methods.
Bell's site invited visitors to pay a $195 annual fee for membership, which would give them access to tapes and documents to instruct them how to use the U.S. Sources rationale to file zero federal income tax returns.
Justice Department lawyers said Bell also recruited apprentices, known as "Senior Fellows," who, for a $3,500 fee, could receive training on how to market the U.S. Sources strategy to their own clients.

What might be surprising to some readers is how numerous professional tax protestors are. As an in-house lawyer, it is not unusual to get a letter, once a year or so, from a former employee who writes with the benefit of one of these scam artists to tell you why the company should not have issued him a W-2. The last one I received, for example, claimed that the money the employee was paid by the company was "remuneration" and not "income" and hence was exempt from withholding, etc. Helpfully, these letters are usually accompanied by several hundred pages of utterly irrelevant and ridiculous briefs and magazine articles purporting to "prove" the accuracy the protestor's position. (My last letter even included a transcript of a hearing in which a tax protestor was arguing with a judge over whether he violated the terms of his parole; I still haven't figured that one out).

The tax protestors are not only numerous, but brazen. One organization, the Save-A-Patriot Fellowship, offers its members a contract of insurance whereby the organization agrees to provide up to $10,000 in reimbursement for attorneys' fees and costs in defending the member if the member is prosecuted for income tax violations after following SAPF's process for avoiding taxes.

To be clear, the SAPF doesn't actually take or disburse "money" but rather only FRNs. If you're not familiar with FRNs, the SAPF explains that they are "the proper term for the fiat currency that most Americans commonly refer to as "dollars.""

Although they advertise openly, law enforcement has strangely permitted many of these groups to continue. For more background, this website contains a rogue's gallery of tax protest organizations and their exploits.

Ebbers sentence

Bernie Ebbers was sentenced to 25 years in prison on the grounds that, as prosecutors posited, his crimes caused $2.2 billion in losses. But prosecutors' methodology for calculating that loss is questionable. As Tom Kirkendall points out, it contradicts the Supreme Court's recent decision in Dura Pharmaceuticals v. Broudo. The $2.2 billion figure even includes the decline in value of Ebbers's stock—requiring one to posit that Ebbers defrauded himself! The prosecution brief took the further unseemly step of arguing that the court could rely upon a class-action plaintiffs' expert allegation that the loss was $24 billion.

These issues probably doesn't make a difference in Ebbers's case, because the � 2.B1.1(a) of the 2002 Sentencing Guidelines' enhancement of sentencing level maxes out at $100 million. But the government has used similar tactics in its sentencing proposal for Daniel Bayly in a questionable transaction that was uncovered after Enron already went bankrupt. The Chamber of Commerce filed an amicus brief in the Bayly case.

Ellen Podger and Larry Ribstein also comment on the Ebbers sentence. (Ann Woolner, "How Ebbers Lucked Out With a 25-Year Sentence", Bloomberg, Jul. 15; John R. Emshwiller and Kara Scannell, "Business World Tells Government: Back Off", Wall Street Journal, Apr. 21 ($); Berman blog entry on Bayly).

AGs rebuffed on greenhouse-gas suit

The publicity value of the action may have been top-notch, but the legal content wasn't, according to a D.C. Circuit panel. The states that sued the federal government "were California, Connecticut, Illinois, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington, along with the U.S. territory of American Samoa and the cities Baltimore, New York and Washington, D.C."

Baron & Budd's MTBE piggy bank

Duane Freese think it's likely to be filled by involuntary contributions from the motorist at the pump. More on the MTBE controversy: Jan. 28, Dec. 29, etc.

Silicosis doctors testify: denouement

(Earlier entries in the series: Dec. 21; Feb. 17; Feb. 27; Mar. 2; Mar. 14; Mar. 16; Mar. 21.)

Readers here have been following the scandal revealed in the silcosis multi-district litigation hearings in Corpus Christi. Doctors, in cahoots with lawyers, farmed clients with hundreds of bogus silicosis diagnoses a day. Though silicosis kills perhaps 200 people a year, somehow there were 20,000 silicosis lawsuits being brought in Mississippi alone. Judge Janis Graham Jack, in a blistering 249-page opinion, held such evidence inherently unreliable.

"These diagnoses were about litigation rather than healthcare. It is apparent that truth and justice had very little to do with these diagnoses—otherwise more effort would have been devoted to ensuring they were accurate. Instead, these diagnoses were driven neither by health nor justice: they were manufactured for money."

Though that decision is not binding on state courts that will eventually handle the cases after a jurisdictional remand, one hopes it will be influential. An even bigger scandal might be the fact that this is the first time a court has inquired into the mass screenings fraud in asbestos and silicosis suits. More than 65% of the silica plaintiffs had previously sued over asbestos. Ray Harron, criticized in Corpus Christi, has made 52,000 asbestos diagnoses.

Judge Jack singled out O'Quinn, Laminack and Pirtle (OL Jun. 18, 2004 and links therein) for criticism:

"The clear motivation for O'Quinn's micro-management of the diagnostic process was to inflate the number of plaintiffs and overwhelm the defendants and the judicial system. This is apparently done in hopes of extracting mass nuisance-value settlements because the defendants and the system are financially incapable of examining the merits of each individual claim in the usual manner."

Judge Jack's sanctions, however, were limited to about eight thousand dollars in attorney's fees (not $825,000, as the Wall Street Journal reported), in part because the defendants were unable to meet the restrictive standards for proving fraudulent joinder (cf. Mar. 28 and OL Jul. 11), which meant that she also held that she did not have jurisdiction over the vast majority of the cases that were removed by defendants from state court to federal court. Unless criminal prosecutors move in, there may not be much deterrence of this fraud. A federal grand jury in New York has been issuing subpoenas. (Neal Falgoust, "Judge: Cases about money, not justice", Corpus Christi Caller-Times, Jul. 2; Mary Alice Robbins, "Silica Order Could Affect Future Mass Tort Litigation", Texas Lawyer, Jul. 12; Wall Street Journal, "The Silicosis Sheriff", Jul. 14 ($); Neal Falgoust, "Judge may sway other silicosis suits", Corpus Christi Caller-Times, Jul. 6; Mike Tolson, "Attorneys behind silicosis suits draw U.S. judge's wrath", Houston Chronicle, Jul. 2).

The trial in Ernst v. Merck got underway a few days ago, and prospective jurors are now being reviewed to ensure they are free from bias. (Overlawyered; Kirkendall) Or so one would hope.

It seems, though, that many of the questions on the voir dire questionnaire are gauged to poll jurors on their political views and, in particular, their attitudes towards toward reform.

According to the Houston Chronicle:

The 120 members of the jury pool sat in Brazoria County's largest courtroom and filled out a 21-page questionnaire telling lawyers, among other things, how much they agreed with statements such as "Corporate executives may lie under oath to protect the company's profits and to increase their personal salaries and bonuses," and "Corporations should be held to the same standards of conduct as an individual as far as ethics are concerned."

They were also asked if they think "jury verdicts are too high, too low or just about right," if "our system of lawsuits needs to be changed" or if they "agree with the use of punitive damages to punish a corporation for outrageous conduct."
* * *
The questionnaire asked would-be jurors what books they read, movies and television shows they watch, what newspapers and magazines they read and if they had ever heard of Vioxx or Merck.
It asked which of 31 different personal traits they think apply to them, ranging from analytical to suspicious, pretty to overweight, compassionate to controlling.
It also asked their religious, educational and political backgrounds, their occupations and those of people close to them.

Perhaps I'm being naive, but questions like these lead one to wonder how attorneys will use the answers provided. Presumably, plaintiffs' attorneys would try to strike jurors whose answers suggested an inclination toward litigation reform.

If parties are able to strike jurors, not for actual bias but for incliations and political views, is the jury really representative of the people?

Or, to put it another way, how outrageous would it be if the questionnaire asked these questions:

"In a lawsuit involving a manufacturer's liability for a drug it sold, should the plaintiff have to prove that the drug was the cause of the plaintiff's injury?"

"Do you believe it is fair for individuals to sue corporations just because corporations have money?"

"Do you believe that individuals who file lawsuits somtimes lie in order to increase their likelihood of recovering money?"

Another Scruggs hospital suit down

This one was in Michigan, and was tossed by Judge Avern Cohn of the E.D. Mich. The Michigan Medical Malpractice blogger has details. For more on these cases, see Apr. 12, 2005 and Oct. 25, 2004. Some of the views of lawsuit organizers can be found here. More: HIPAABlog has some information on the dismissal of a similar suit (though not by Scruggs) filed in Beaumont, Texas.

Business Week has a "news analysis" on the impact, or lack thereof, of the Supreme Court on the business community. The article notes that under Chief Justice Rehnquist the Court has rarely taken cases in "vital areas such as antitrust, environmental, intellectual-property, securities, and tax law." The most glaring omission may be in the area of class actions, where the Court has "refused to put substantial hurdles in the way of plaintiffs' attorneys who file these cases."

Two possible causes of the justices' reluctance to take on these cases are their lack of business law experience and their preference for issues that involve constitutional, as opposed to statutory, interpretation. Will one (or two) new justices make a difference? We will find out soon.

Jim Copland interviewed

The American Justice Partnership has launched a series of audio interviews with legal reformers. Among those facing the microphone: our own Jim Copland, who discusses his and the Manhattan Institute's "Trial Lawyers Inc. -- California" project. Others interviewed in the series, which has its own page, include Tiger Joyce of the American Tort Reform Association on "judicial hellholes", Cam Crawford and Shannon Goessling on litigation reform in South Carolina and Georgia respectively, and Marshall Manson of the Center for Individual Freedom on the asbestos trust fund. (Fixed 7/14 a few hours after posting to correct an error regarding the interview medium.)

Site disruptions

No, it's not your imagination: Point of Law has been suffering serious server disruptions for the past couple of weeks, resulting in periods where the site is knocked offline, new posting is made impossible, or both. Please bear with us as our technical staff work to get the site onto a firmer footing.

Wisconsin strikes down med-mal caps

In a baldly activist move, the Wisconsin Supreme Court decided this morning that it was really a legislature with the power to veto statutes it doesn't like, and voted 4-3 to strike down the non-economic damages cap in medical malpractice actions as violating "equal protection."

[W]e conclude that the $350,000 ceiling adopted by the legislature is unreasonable and arbitrary because it is not rationally related to the legislative objective of lowering medical malpractice insurance premiums.

This is the thinnest of fig leaves, because the court acknowledges that the General Accounting Office found that "medical malpractice suits are one of the leading costs for insurance carriers." Judge Prosser's and Judge Roggensack's dissents dismantle the lead opinion, though that's little consolation to the voters of Wisconsin. (Ferdon v. Wisconsin Patients Compensation Fund (Wis. Jul. 14, 2005); Stacy Forster, "State Supreme Court strikes down pain and suffering caps in malpractice lawsuits", Milwaukee Journal-Sentinel, Jul. 14).

The Journal-Sentinel coverage leaves unrebutted the following defense of the verdict: "[Plaintiffs' lawyer Vincent] Petrucelli said that in the eight years the caps have been in effect, only eight jury awards have exceeded the limits." Press coverage frequently makes the mistake of assuming that only trial verdicts impose costs, when, in fact, the threat of a large judgment can drive up settlement costs as well as the likelihood of long-shot "lottery" litigation.

CJD's Med Math Part II

James Copland took the Center for Justice and Democracy to task earlier this week for its recent report by Jay Angoff.  Mr. Angoff is a former Insurance Commissioner for the State of Missouri and he seems to have particular problem with the med mal insurance industry as evidenced by an interview he gave published in Trial Magazine.  I discussed this interview earlier this year

James Copland has commented on a number of logical problems with the study and I thought I’d do a quick look at the data and provide a bit more information.  The first chart shows the number of companies selling malpractice insurance, as well as the US average loss ratios over this period 1995–2004.  (I excluded those companies that sold less than $10,000 in a given year because they are not likely really in the med mal business).  As we can see, the number of companies decreases over the period and only recently increases. This recent increase reflects alternative companies formed, in part, to deal with the med mal crisis. Entry may also be occurring as it looks like industry is becoming more profitable for the first time in recent years. 

Two other items to note are explored in this same chart.  Mr. Angoff’s conclusion that the loss ratio (shown in pink on the chart) is now quite favorable to insurers is an accurate statement as far as it goes.  The loss ratio is the ratio of losses incurred to premiums earned and does not include expenses.  We see that starting in 2000 the ratio is steadily falling (thus less of the premium dollar is going to pay claims and incurred losses).  What is truly amazing, however, about the report is its absolute failure to consider expenses.  The second loss ratio (shown in green) suggests a very different picture.  If we include loss adjustment expenses (which include legal fees, witness fees, and the like) we see that while the loss ratio including the expenses has decreased since 2000, it is still greater than 1. Thus, on average, a case costs $1.20 to close for each dollar of premium paid.  This does not sound like the insurance industry is “profiteering” to use the words of Connecticut AG Blumenthal.  To be fair this apparent loss is likely to be reduced somewhat as one must also include investment returns which may make the line profitable next year if the projections hold.  However, we still are not talking profiteering as profits will signal others to enter the industry. This is an appropriate competitive reaction.

Health-care whistleblowers

They're cashing in millions in qui tam recoveries in league with the semi-autonomous Health Care Fraud Unit, which operates within the U.S. Attorney's office for Massachusetts. According to renowned Boston attorney Harvey Silverglate, however, the success in white-collar enforcement is based in part on "in terrorem misuse of some of the nation's broadest -- and vaguest -- criminal statutes and regulations". It hasn't always met with success:

Last July, the U.S. Attorneys lost a prosecution in Boston when 10 employees of TAP Pharmaceuticals refused to plead guilty and instead went to trial contesting the unit's claim that their discounted sales and promotional practices--common in the industry--constituted illegal kick-backs and bribes.

The employees' case initially seemed doomed: The company itself had pled guilty and agreed to pay a then-record $885 million. TAP agreed to cooperate with prosecutors, waived its attorney-client privilege, and provided prosecutors with statements made by employees to company lawyers during an internal investigation.

Topping that, both the government's star witnesses, a former TAP employee and a physician in a managed-care practice that bought TAP drugs, had received "whistle-blower" bonanzas of $77 million and $17 million (the latter split with the HMO), respectively. The former TAP employee banked $47.5 million more for whistle-blowing in a related federal prosecution of drug maker AstraZeneca.

A jury wasn't impressed and acquitted the defendants.

P.S. More from the American Spectator.

New Junk Fax Law

Everyone hates junk faxes, myself included, but the Congressional ban on fax advertising in the Telephone Consumer Protection Act is a cure that may have been worse than the disease. An amendment to the TCPA, which became law on July 9, may be just a little of what the doctor ordered.

Since the early 1990s, the TCPA has prohibited the transmission of unsolicited commercial advertisements by fax, authorizing the courts to award damages of $500 per violation (trebled for a finding of willfulness). Two developments, however, conspired to make the enforcement of this law both complicated and a cottage industry for some plaintiffs' lawyers.

Always on the lookout to right the wrongs of the world, crafty plaintiffs' lawyers had used the TCPA to assemble putative classes of fax recipients, turning what Congress had envisioned as a small claims action for $500 into multi-million dollar claims. Because of the difficulties of disproving the elements of a TCPA claim, many businesses that used fax advertising with their existing customers were forced to settle cases like this, even though many of the putative class members were perfectly happy to have received the fax in question.

The second complicating development under the TCPA, as Eric Sinrod explains is his column today, was the FCC's adoption of regulations that permitted businesses with an "established business relationship" to send faxes to their customers without violating the TCPA.

In 2003, however, following a rule-making, the FCC reversed itself, issuing an order that would have eliminated the "established business relationship" exemption. The FCC's reversal, however, was never implemented as the FCC delayed the implementation date several times, as recently as June 25, 2005.

In the June 25th Order, the FCC noted pending legislation in Congress that would have statutorily created an "established business relationship" exception and determined that this pending legislation merited a delay in the regulation.

Congress came through, in the form of S. 714, which was adopted by both houses in late June and signed by the President on July 9, becoming Public Law No. 109-021.

This amendment should go a long way towards eliminating the confusion that surrounded the FCC's "established business relationship," reducing suits against companies that use facsimiles to communicate with their customers.

When the patient is a lawyer

Does she get better medical care as a result? Or worse, because of defensive concerns? (via KevinMD).

An Ounce Of Prevention

How do you limit the potential legal liability for conduct that is inherently risky, but generally beneficial to society? One way is to create regulatory safe harbors that shield individuals from liability if they abide by certain restrictions.

The Washington Post had an interesting article in yesterday's paper on a safe harbor created by the SEC for corporate insider trading. Under SEC Rule 10b5-1, put into place in 2000, a person's purchase or sale of securities is not "on the basis of" material nonpublic information if, before becoming aware of the information, the person enters into a binding contract, instruction, or trading plan (as defined in the rule) covering the securities transaction at issue. The article discusses how the corporate executives of Trex Co, a Va.-based maker of composite deck boards, are likely to benefit from this safe harbor.

"Trex stock plunged more than $10 a share the day after the earnings shortfall was announced June 22, costing stockholders roughly $150 million in the value of their shares. By selling their shares before the problem was revealed, Trex chief executive Robert G. Matheny and directors Anthony J. Cavanna and Andrew U. Ferrari together got almost $1 million more for their stock than they would have if they had waited to sell after the announcement. Insider trading records compiled by Thomson Financial show that in the first three weeks of June, Cavanna sold Trex stock worth $1.4 million, Matheny sold $968,000 and Ferrari sold $381,000. Ordinarily, big insider sales just before bad news is announced would trigger outcries from shareholders and probably an investigation by the Securities and Exchange Commission. That hasn't happened because the Trex officials acted under an SEC rule that allows corporate officers, directors and other insiders to sell stock at any time, under almost any circumstances, without running afoul of insider trading regulations -- so long as the sales are 'pre-arranged.'"

The use of these stock trading plans may also assist Trex in defending against the securities class action that has been brought against the company. Plaintiffs often allege that a company's officers were motivated to engage in securities fraud so that they could profit by selling their company stock at an artificially inflated price. Some courts have begun to cite the existence of stock trading plans as negating any such inference, making Rule 10b5-1 an example of a regulatory safe harbor spilling over into private tort litigation.

This morning, President Bush met with key GOP and Democratic leaders in the Senate about his upcoming nomination to fill Justice Sandra Day O'Connor's seat on the U.S. Supreme Court. According to The Washington Post, Minority Leader Harry Reid said "that he was confident that a 'consensus' candidate satisfactory to both parties would emerge from the process." Money quote: "Several in the meeting between Bush and the Senate leaders said as well that they had urged Bush to appoint a justice who is not sitting on any U.S. court of appeals in the interest of getting someone with practical experience."

Of course, those who read our editor's column in last week's Wall Street Journal may, like me, take that "advice" with a bit of concern. (See also my posting here.) As Walter noted, Senator Reid had suggested four incumbent GOP Senators as potentially appropriate nominees who share one common trait: friendliness toward the plaintiffs' bar.

As the Supreme Court nomination events progress, I'd like to alert our readers to our separate "Supreme Court Vacancies" page. There, we've collected not only our recent postings on the Supreme Court vacancy but also back postings of relevance, including our editor on Jeffrey Rosen's notion of a "Constitution in Exile" movement; recent Supreme Court decisions of interest; and postings that might be relevant for potential nominees.

I expect to fill in more interesting back-posts over time. Moreover, in addition to our regular contributors, I've asked Manhattan Institute scholars--with expertise ranging from terrorism to affirmative action to school choice--to comment if they so desire. While we will of course continue to keep our site focused on tort issues as a general matter, we think that this unique moment, with such far-reaching legal implications, warrants our bringing in additional viewpoints.

State AG blogs

Countering the weblog of James Tierney, there are now two other blogs out there specializing in coverage of a frequent topic on this site: overreaching state attorneys general. Michael Greve's AEI Federalism Project sponsors AG Watch; more specifically, there's Spitzer Watch, a blog about the New York Aspiring Governor (via Kirkendall).

Lessons From The PSLRA

Thanks to Walter Olson for inviting me to guestblog and to Jonathan Wilson for posting today about my practice area.

As noted, I am a securities litigator and publish The 10b-5 Daily, a blog devoted to news and analysis related to securities class actions. Jonathan's post raises the question: how do you eliminate the causes of "easy money" litigation? In the area of securities litigation, however, Congress has already tried to do just that.

The Private Securities Litigation Reform Act of 1995 ("PSLRA") was designed to deter abusive lawsuits and encourage the voluntary disclosure of information by corporate issuers. To that end, Congress established heightened pleading requirements for securities fraud, an automatic stay of discovery in securities fraud cases pending the resolution of a motion to dismiss, a system for selecting a lead plaintiff in a case brought as a class action, and a safe harbor from liability for forward-looking statements. Yet "easy money" litigation, in the form of speculative securities class actions alleging fraud and brought on behalf of investors, continues.

It is surprising that tort reformers do not talk more about the PSLRA, because it illustrates the difficulties of reforming the civil justice system. For the moment, let's just look at the lead plaintiff/lead counsel provisions. The PSLRA provides, in a nutshell, that the lead plaintiff in a securities class action shall be the investor who applies for the position and has the largest financial loss. The selected lead plaintiff gets to pick who will act as lead counsel for the proposed class of investors.

The idea was to create an incentive for institutional investors to put themselves forward as lead plaintiffs. In turn, these institutional investors would have the resources and legal sophistication to closely monitor and run the cases. So what actually happened?

First, the only institutional investors that proved to be really interested in acting as lead plaintiffs were union/public pensions funds. A PricewaterhouseCoopers study of securities class actions filed in 2004 found that (a) institutional investors made up about 50% of all lead plaintiffs, but (b) 72% of these institutional investors were union/public pension funds. Whether most union/public pension funds (as opposed, for example, to investment banks) have the legal resources to closely monitor a complex civil litigation is debatable.

Second, the plaintiffs' bar sensibly reacted to the PSLRA by developing close relations with union/public pension funds (some have suggested a bit too close relations), thereby creating a stable of potential plaintiffs. This was much like the lawyer-driven practice, involving individual investors, that Congress had wanted to stop.

Finally, institutional investors naturally gravitated to the best cases (i.e., the cases with the most pre-filing evidence of fraud), leaving more tenuous cases to be led by individual investors. In this sense, the PSLRA's lead plaintiff provisions arguably made good cases even better (by putting in place stronger lead plaintiffs), but had no effect on the potentially frivolous cases that troubled Congress.

In sum, Congress' good intentions suffered from an unwillingness to simply spell out what it wanted and give the courts the power to effectuate it. The "largest financial stake" was probably a poor proxy for "an investor with both the incentive and the means to closely monitor and control the litigation."

Thoughts on the Litigation Lottery

Clay Conrad disputes the idea of a litigation lottery; his argument consists of quoting a Nancy Marder law review article:

Indeed, if one were to read only newspaper accounts of civil jury trials, one would conclude that most juries award excessive damages, and that they do so because they sympathize with the plaintiffs at the expense of corporations. Coverage of cases involving tobacco, asbestos, and other types of product liability paint this picture. Yet, empirical studies indicate otherwise.

The claim that media coverage of trials is stilted against plaintiffs is ludicrous (see today's Overlawyered on the pending Texas Vioxx case or Larry Ribstein's website on how business is portrayed in the movies), but, more relevant to the discussion of a "litigation lottery," the passage misses the point. No liability reformer is claiming that "most juries award excessive damages": citing the empirical studies attacks a strawman.

The nature of a litigation lottery is that the availability of potentially huge damages justify bringing a meritless claim, so long as there is some small chance that the combination of an outlier judge and an outlier jury will produce a jackpot that compensates for the risk that the judge/jury combination will get it right.

For example, as documented in Overlawyered on June 3, 2004, it does little good that Ford won thirteen straight cases regarding the design of its Ford Explorer if in the fourteenth case, the jury votes 9-to-3 to award $368.6 million in damages (reduced by the court to "only" $150 million on Sep. 3). Thirteen out of fourteen juries did not award excessive damages, which is what the empirical studies measure—but the average case awarded over $10 million. And this last number actually understates the real economic costs to American defendants given the substantial sums it costs a Ford to defend a trial.

When defendants are facing a Russian roulette game where the plaintiffs get to fire multiple shots at them, it's irrelevant to note that the median chamber of the gun is empty. It's furthermore disingenuous to complain that the media regularly talks about the McDonald's coffee case when the plaintiffs' bar holds up Stella Liebeck not as an aberration, but as an example of someone who should have recovered punitive damages for spilling coffee on herself.

"There is no relationship," baldly asserts the head of the trial lawyers' association of Washington, D.C., "between caps on jury awards and insurance rates." The Washington Examiner's editorialist David Thomasson knows better. More: Feb. 24.

Cardozo Law Professor Lester Brickman writes in the Hofstra Law Review about what he calls "clear and systematic violations" of ethics rules in asbestos cases by both plaintiffs' and defense attorneys—violations that are largely unredressed. See 33 Hofstra L. Rev. 833 (2005). I suspect Brickman overstates the ethical concerns against defense attorneys; because of transactions costs, it will often be economically efficient for a rational defendant to waive the sorts of conflicts of interest he describes relating to joint representation. The discussion of the behavior of the plaintiffs' bar builds off of his earlier must-read article on the subject ("On the Theory Class's Theories of Asbestos Litigation: The Disconnect Between Scholarship and Reality", 31 Pepperdine L. Rev. 33 (2004) (SSRN)).

Over the weekend, the Wall Street Journal carried an editorial making the case that the possible indictment of the firm, or some of its partners, for illegal kickbacks made to one of its frequent plaintiffs would become the "Enron" of the plaintiffs' bar. (Past coverage here).

For many reasons the comparison is not apt. The Enron story, so far as it is known, involved corporate managers manipulating accounting records to inflate the company's revenues. The Seymour Lazar/Milberg Weiss story, so far as it has been reported, involves allegations of kickbacks from the firm to one of its clients. The former situation involved fraudulent conduct, intended to bilk public markets, the latter allegedly involves wrongful conduct intended to manipulate the justice system.

One parallel between the cases that commentators have not yet discussed is the problem of ensuring just behavior when participants believe they can get "easy money". The culpable parties at Enron believed they could make easy money through a stock market Ponzi scheme where their manipulated earnings resulted in a climbing stock price. The allegations in the Lazar/Milberg Weiss case are that the plaintiffs' attorneys believed they could get quick settlements, netting them easy contingent fees, if only they could capture the role of lead counsel through a pliable named plaintiff.

The real scandal in the Lazar/Milberg Weiss situation is that our civil justice system has countenanced this "easy money" attitude amongst officers of the court.

If the public response to Enron was the Sarbanes-Oxley Act, the public response to this latest scandal should be to eliminate the causes of "easy money" litigation.

We're delighted to announce that Lyle Roberts, who publishes the excellent 10b-5 Daily weblog on securities law, class actions and related topics, will be joining us this week with guest posts. He's an attorney at Wilson Sonsini based in Reston, Va. where his "practice consists of defending public corporations in class actions, derivative actions, merger and acquisition litigation, and SEC enforcement actions. I also counsel clients with respect to securities regulatory issues, including listing and delisting on the Nasdaq Stock Market."

New Record for Chutzpah

Judge Michael Mukasey held that attorney Jamie Scher surpassed all previous records for "courtroom chutzpah" when she sued the NASD seeking $100 million for failing to warn her that lying during her sworn statement (taken in the presence of counsel) could result in criminal perjury charges (she was later convicted of perjury and disbarred). (Story from Law.com).

According to Judge Mukasey, the previous record for legal chutzpah was set in the 1974 dismissal of a $52 million claim by one Seymour Thaler who had been convicted of trying to sell stolen bearer bonds. Thaler had sued the bank that issued the bonds for failing to warn him that they were stolen. Judge Jon Newman (then a district court judge but now a judge on the Second Circuit) wrote in dismissing Thaler's suit:

When the apocryphal child murdered his parents and then sought mercy as an orphan, he set a standard for courtroom chutzpah that has not been rivaled until the filing of this lawsuit.

Judge Mukasey found that Scher's claim went even farther than Thaler's, noting that Thaler (a former state senator and judicial candidate) had at least "been toppled from a far loftier perch than in-house counsel to a securities firm."

The article on the case's dismissal did not, however, give any indication whether Scher would be required to reimburse the NASD for the tens of thousands it undoubtedly spent in defending itself against claims that the court held were "without any merit whatsoever."

Fellow Atlantan Ken Shigley has a blog for his motor carrier liability practice and has made some interesting comments on Georgia's offer of judgment rule.

He writes:

I have begun to hear anecdotal reports of insurance companies using low offers of judgment effectively in small soft tissue injury cases. In those small cases and particularly with lawyers who handle high volumes of small cases, the intimidation factor provided by the new OCGA Section 9-11-68 can be substantial.
At the same time, I am not seeing or hearing of much use of offers of judgment by insurers in larger cases or in dealing with well established trial lawyers. In meaty cases with serious injuries or wrongful death, I am hearing rumblings that insurers and defense firms are concerned that the offer of judgment statute could cost them money, so they aren't using it much at this point.
At the same time, I am beginning to hear reports of strong, well-established plaintiffs' lawyers making well-reasoned offers of judgment early in cases, and coupling them with demands for prejudgment interest under the Unliquidated Damages Interest Act.

What makes this especially interesting is that it undercuts the doom-and-gloom claims of the plaintiffs' bar in Georgia that came out during the debate over S.B.3.

Opponents of reform went so far as to say that the passage of the tort reform bill was the "darkest day in the history of Georgia", prompting others to quip that certainly the darkest day must have been somewhere in the mid-1860s.

Even after the bill passed, the Fulton County Daily Report carried a column from a trial lawyer bemoaning an insurance company defendant's use of the offer of judgment rule to coerce his client into a settlement of a $100,000 case for only $80,000.

Claiming that "strong, well-established plaintiffs' lawyers" are able to use the offer of judgment rule to their advantage is something I predicted in Out of Balance but it's gratifying to hear a plaintiffs' lawyer say it as well.

In the same way that the rule creates leverage to settle weak cases, it also can be used to create leverage to settle strong cases. If the defendant perceives a high likelihood of liability in the range of $X and the plaintiff makes a settlement offer of N% of $X, a defendant would be foolish not to consider seriously the offer.

NRO continues its coverage of the Kansas school finance litigation (see Jun. 30, etc.).

Women's jurisprudence?

Heather Mac Donald shudders to think of such a thing, the opinions of Dahlia Lithwick notwithstanding. More: And Ted Frank has a lot to say at Overlawyered (Jul. 9).

Is Rehnquist Retiring?

Rumors are swirling about the possible announcement of the Chief Justice's retirement tonight. (Fox News reports comments by Robert Novak; JonathanBWilson.com collecting links).

As noted before, a dual nomination could change the President's calculus.

CJD's med-mal math

Back in January, I responded to a Bob Herbert New York Times column that attacked President Bush's medical malpractice liability reform plan. Herbert had relied heavily on the "Center for Justice and Democracy" (CJD), a Naderite shill for the trial bar that counts on its board of advisors such luminaries as Michael Moore and Erin Brockovich. (For more on the CJD, see Ted's dissection of their "Zany Immunity Laws Awards" at Overlawyered and my challenge to their misleading statements about the Tillinghast study here.)

Yesterday, the "paper of record" was at it again -- this time on the news page -- trumpeting the results of a new CJD study (PDF) purporting to show "that doctors have been price-gouged for several years as insurance industry profits have ballooned to unprecedented levels." Can this be right? As Ted has argued here, such claims make little economic sense: new entrants would take advantage of the abnormal profit opportunity and enter the medical malpractice market. Instead, though, what we've seen in recent years is medical malpractice insurers losing money and exiting the market. Something doesn't add up.

A look deeper into the numbers shows that, as usual, CJD is "creatively" using statistics to mislead its readers:

Dana Berliner

The indefatigable Institute for Justice attorney (and old friend of mine) who worked extensively on the property owners' side of Kelo is interviewed by FindLaw's John W. Dean here.

Last Friday, I noted that Justice Sandra Day O'Connor had been a crucial vote in the Supreme Court's decision to limit runaway punitive damages in State Farm v. Campbell (see post for more links). Today, our editor has a column in The Wall Stree Journal expanding on that theme: "The Supreme Court's first female justice is best known in tort circles for her long crusade to bring punitive damage awards under constitutional due-process scrutiny, a position for which she eventually assembled a majority that includes several of her liberal colleagues (though not conservatives Antonin Scalia and Clarence Thomas)." Walter points out that Justice O'Connor even spoke out against the trial bar's hallowed contingency fee.

But our editor also digs deeper in examining the curious comments of the Senate Minority Leader Harry Reid:

Sen. Reid . . . suggested to reporters that the president might seek compromise by picking a GOP senator for the next vacancy, and that four such senators "would be outstanding Supreme Court members." Which four? Sen. Reid named Lindsey Graham of South Carolina (who promptly said he wasn't interested), Mike DeWine of Ohio, Mel Martinez of Florida and Mike Crapo of Idaho.

As Walter notes, Crapo and Graham have high lifetime conservative ratings by the American Conservative Union, and newly elected Mel Martinez is a "combative social conservative" with close "ties to antiabortion and Christian Right groups."

What gives? Our editor explains:

It's all quite a baffling mystery if you accept the oft-noised view that today's Democratic leadership is in thrall to social liberalism and views the defense of Roe v. Wade as its No. 1 priority. One possible clue is that while none of Sen. Reid's four faves are identified with the GOP's socially liberal Chafee-Snowe wing, all four (unlike, say, Sen. Cornyn) have repeatedly broken partisan ranks to side with the Democrats and the organized bar against liability reforms. In fact, Sens. Graham, Martinez and Crapo all practiced as plaintiff's lawyers before coming to the Senate. Could it be that Sen. Reid is ready to sell out the interests of his party's social-liberal faction in order to protect the interests of its organized-lawyer faction?

I encourage all our readers to read the entire column.

U.S. District Judge Dale Kimball has refused, a second time, to dismiss SCO Group's claims for slander of title against Novell Inc.

Although SCO's case against Novell is separate from the case against IBM, and involves separate issues, the two cover much of the same ground.

Novell claimed that it still retained copyrights in certain pieces of the Unix operating system despite a 1995 agreement with a predecessor company to SCO that granted it the Unix operating system. The Unix operating system was a predecessor to the open-source Linux operating system.

SCO has sued large Linux users like DaimlerChrylser and AutoZone and, in a separate suit, has sued IBM over its distribution of Linux.

Judge Kimball has also recently ruled that SCO may not amend its complaint against IBM a third time and has set down that case for trial in February 2007.

Although much of the technical community is skeptical of SCO's claims to own copyright in portions of the Linux operating system, a ruling that upheld those claims could create significant problems for Linux users.

The cab-rank rule

John Steele at Legal Ethics Forum discusses the concept, which prevails in many other countries' legal systems but not in ours, of an ethical obligation on lawyers' part to take on all comers impartially as clients to be represented in court. He argues that the principle operates as part of a wider duty of "independence" which our system at best only vaguely demands of lawyers (but does traditionally demand of accountants). Without contradicting that view, I'd add that the cab-rank principle seems to me to work to reinforce the idea that clients rather than lawyers are "in charge" in the relationship, and, not unrelatedly, to discourage in various ways the entrepreneurial approach to legal practice so typical of the U.S.

Doctors' apologies

Another editorial by David Thomasson for the Washington Examiner: "Seventeen states have enacted legislation that prohibits apologies from being used against a doctor in court."

Ratted out by your employer

Forbes has an account of how corporate compliance culture is changing in response to the notorious 2003 enforcement policy memo by the Justice Department's Larry Thompson. Companies now routinely cooperate with prosecutions of their employees as a way of saving their own skins. Remember that seemingly friendly conversation you had with your company lawyer? Its contents can and will be used against you, because attorney-client privilege runs only between the lawyer and your joint employer, not between the lawyer and you -- and prosecutors will arm-twist your employer to waive that confidentiality. For more, see our Mar. 13 entry.

More: Skip Oliva of the Voluntary Trade Council writes to say:

Joseph R. Biden III

...is the son of the similarly-named Democratic senator from Delaware. The Madison County Record is reporting that the SimmonsCooper law firm (OL Dec. 1; Sep. 20; Sep. 28; OL Jan. 5, 2004) has affiliated itself with the 36-year-old's Delaware law firm in bringing asbestos lawsuits in Delaware, presumably because Madison County is no longer available as a blank-check venue (Jan. 3). (Steve Korris, "Delaware court seeing upsurge in asbestos filings", Jul. 1).

Update: Allen Adomite of ICJL has a much more detailed analysis of the situation that's a must-read.

Maryland Anonymity Case

A case now pending before the Maryland Special Court of Appeals may make new law in that state on the ability of a party to use civil discovery in a "John Doe" suit to identify anonymous posters who are alleged to have published defamatory statements.

In Forensic Advisors, Inc. v. Matrixx Initiatives, Inc. (No. 02621; September 2004 Special Term), plaintiff Matrixx has filed a number of John Doe suits against anonymous persons who have published statements critical of Matrixx, its management and its over-the-counter nasal decongestant.

Matrixx then served subpoenas on a number of Web publishers, including Timothy Mulligan, the publisher of the Eyeshade Report. Mulligan had republished a number of statements critical of Matrixx that he attributed to anonymous sources and Matrixx sought discovery of those sources, together with documents generated by Mulligan in reporting the critical stories.

Mulligan sought to quash the subpoena but lost before the trial court, appealing to the Maryland Special Court of Appeals.

Public Citizen, the American Civil Liberties Union of Maryland, and a number of consumer watchdog groups filed an amici brief, arguing that disclosure is prohibited by the Maryland reporters shield statute and also on the basis of the First Amendment.

In their brief, Amici argued:

"Anonymity has a long and celebrated history in the United States, beginning with the pseudonymous advocates of the United States Constitution . . . People choose to maintain anonymity regarding what they read for many reasons, including forestalling assumptions about their beliefs and associations, maintaining privacy, and avoiding harassment, threats, frivolous litigation, or social stigma."

While the issue of the Maryland shield law will be unique to the State of Maryland, the First Amendment line of thinking is interesting. Notably, Amici are arguing that there is a First Amendment right to anonymous reading -- not anonymous speaking. (While the right of anonymous speech is clearly implicated in the subpoena, Amici do not identify this as one of the two main issues in the case.)

While there is a natural tendency to root for the First Amendment in struggles like these, the interests of the corporation are also important, though perhaps less sentimental.

A corporation that finds itself a target of anonymous attacks has few weapons at its disposal. If its attackers are former employees (who may be subject to contractual obligations of confidentiality) the corporation cannot respond appropriately without identifying the anonymous speakers. Under the present law, a John Doe lawsuit is one of the few methods for the corporation to identify its attackers.

Consumer groups couch the argument in terms of the individual's right to speak and the public's "right to know", but when the speech is anonymous, the reader can have no assurances of its truthfulness. Likewise, the target of the hostile speech is unable to correct the public record: it cannot refute the speaker's sources, reasoning or qualifications.

While there have been examples of corporate executives who have arguably abused the litigation process by attacking all online critics, there is also a zone in which corporate defendants must have recourse to defend themselves.

If the goal of the First Amendment is a vigorous public debate that brings to light all pertinent viewpoints and relevant data, that goal would seem to be furthered by a civil process that permits the target of critical speech to identify its attackers.

Staying on

We're delighted to announce that Prof. Grace, who's been guest-posting for the past two weeks, has agreed to stay on in a continuing capacity with Point of Law as one of our regular contributors. Be sure to visit his RiskProf site which is a trove of information and insight on everything related to insurance, liability and risk.

Judge Loses Seat

As other blawgers have noted, New York Probate Judge (Surrogate) Michael H. Feinberg was removed from the bench by a 2003 ruling of the Commission on Judicial Conduct, as affirmed last week by the New York Court of Appeals.

According to the Court of Appeals, Judge Feinberg had appointed an associate of his in several hundred probate cases and had routinely approved fees that were two percent above the prevailing rate. Although there was no allegation that he personally benefited from the arrangement, he also routinely failed to require an affidavit from the attorney as to the renditon of legal services, a practice as to which Judge Feinberg pled ignorance.

The popular media noted that the case was remarkable for the fact that there was no allegation of personal benefit. Judge Feinberg had no venality, but merely failed to follow the law.

In the debate over litigation reform, opponents sometimes make the argument that "bad judges" ultimately are removed from office, or are reversed on appeal. But for every case like this one, there are dozens of others that never see the purifying light of day.

Feinberg's downfall was an investigative report by a local newspaper that uncovered the strange pattern in appointments and pursued the matter through the Commission on Judicial Conduct. But for the interest of the local paper, however, the matter never have been uncovered.

The beneficiaries of the estates administered through his court lacked the expertise to discover the problem. Other attorneys would have refrained from complaining by the adverse consequences they could have perceived from criticizing a member of the bench.

While New York seems to have reached the right conclusion in Feinberg's case there remains a need to strengthen our judicial system through an institutional mechanism that reviews the output, decision-making and integrity of our judiciary.

Texas: "The Doctor Is In"

"Texas, including Hidalgo and Cameron counties, has seen an influx of family and specialty physicians after medical malpractice rates plunged following the passing of House Bill 4 and Proposition 12 in the 2003 legislative session." The McAllen Monitor has details.

Just before the holiday...

Just before Memorial Day, a letter arrives for MedPundit from an unknown law firm requesting her patient's files. A quick visit to Google helps calm her fears...at least to some extent. Details here.

Terror Risk and the Trial Bar

The Secretary of the Treasury doesn�t want to reenact the Terrorism Risk and Insurance Act (TRIA) in its current form. This makes tremendous sense as the way the law was structured was that the Federal government was essentially providing free reinsurance at a relatively low attachment point. What is interesting about the Secretary's letter  to Rep Oxley introducing the report is that he takes a swing at the trial bar where he says:

It is also important to keep in mind that the program would cover damages awarded in litigation against policy holders following a terrorist attack. Current litigation rules would allow unscrupulous trial lawyers to profit from a terrorist attack and would expose the American taxpayer to excessive and inappropriate costs. The Administration supports reasonable reforms to ensure that injured plaintiffs can recover against negligent defendants, but that no person is able to exploit the litigation system.

This brings up an interesting point that follows the discussion on the ongoing discussion on tort compensation started by my Atlanta neighbor Jonathan Wilson. For example, is a terrorist attack foreseeable and what must one do before the fact to ensure that they have behaved reasonably? Under the current law and economics approach we look to set the marginal benefit of making our product/property safer against the marginal cost of the safety. Ideally, this gives us the Learned Hand Rule where we balance the benefit of the precaution against the risk. This is inherently a "before the fact" calculation. So the question arises, if terrorists use an airplane in an unforeseeable way to kill people, should the airlines or the property owners be liable if they did not act unreasonably before the fact? Evidently Congress was fearful that "unscrupulous trial lawyers" would go after domestic defendants in the 9-11 terror attack claiming a breach of some duty. The fear was so strong that Congress changed incentives to sue and set up a special compensation system funded by the taxpayers. If these types of fears of litigation are so strong when, presumably, the terroristic act was unforeseeable, we need to rethink what a compensable tort injury actually is. Should the law remedy all losses? If so, then that is an expensive proposition, as everyone becomes an insurer with the corresponding problems of moral hazard. Arguably, just tort reform would stabilize expectations about what is reasonable behavior and put constraints on Monday morning quarterbacking. Evidently, the administration is trying to leverage re-anacting a modified TRIA with some additional fixes in the litigation system.

We officially launched PointOfLaw.com in late June 2004, so the end of June marks a one-year anniversary of sorts. In the past year, we've had over 400,000 visitors and over 800,000 page views. In June of this year, we for the first time passed 1,500 visitors and 4,000 page views as our daily average. Thank you to all our readers, to all our contributors, and especially to our tireless editor Walter Olson, whose regular midnight posts ensure that we always have something thought-provoking to read in the morning.

One Supreme Court decision of foremost importance to tort reformers is State Farm v. Campbell, which placed constitutional limitations on punitive damages. (See discussion June 29, June 24, June 18, Sept. 22, Aug. 29, June 15 (2004)). Although O'Connor is not a "swing vote" for Campbell -- the Court ruled by a 6-3 majority -- she and Chief Justice Rehnquist were in the majority, while Justices Scalia and Thomas were in dissent. In other words, if President Bush makes good on his promise and nominates justices with strict originalist/textualist leanings like Scalia and Thomas, O'Connor's replacement could reduce the Campbell majority to 5 -- and place the holding in jeopardy if the Chief Justice were also to step down and be replaced by an originalist/textualist during Bush's tenure. Something pretty important to think about for the folks interested in civil justice reform who follow this blog...

In his remarks on Justice O'Connor's retirement, President Bush spoke about the upcoming nomination process:

Under the Constitution, I am responsible for nominating a successor to Justice O'Connor. I take this responsibility seriously. I will be deliberate and thorough in this process. I have directed my staff, in cooperation with the Department of Justice, to compile information and recommend for my review potential nominees who meet a high standard of legal ability, judgment and integrity and who will faithfully interpret the Constitution and laws of our country.
As well, I will continue to consult, as will my advisors, with members of the United States Senate. The nation deserves, and I will select, a Supreme Court Justice that Americans can be proud of. The nation also deserves a dignified process of confirmation in the United States Senate, characterized by fair treatment, a fair hearing and a fair vote. I will choose a nominee in a timely manner so that the hearing and the vote can be completed before the new Supreme Court term begins.

Which of the potential nominees would present the "extraordinary circumstances" that might give some members of the Senate the air cover they would need to filibuster the nomination? We can only guess.

A colleague of mine, however, raised another hypothetical: What if Chief Justice Rehnquist also announced his retirement in the next few weeks (days, hours)?

My colleague speculated that this would open the door to a "deal" in which conservatives would get one of their favorites on the court and the President could assuage liberals by putting another swing moderate on the court. (I can't help but notice that this idea tracks a storyline from an episode of "The West Wing" in which Glenn Close becomes the first female Chief Justice).

The possibility of a Supreme Court two-fer is relatively unlikely, I think, to give the nation a more "dignified" confirmation process. Interest groups on both sides are already dug in and ready to exchange fire over any potential nominee.

The stakes

Over at the Supreme Court Nomination Blog, Kevin Russell catalogs high-profile cases in which Justice O'Connor's vote has been essential to a 5-vote majority. Although the appointment of any life-tenured justice is exceptionally important, Justice O'Connor indeed represents the crucial swing vote on so many cases that the short- and medium-term implications of her retirement are enormous. O'Connor has provided the deciding vote for, inter alia, upholding affirmative action in university admissions, declaring "partial-birth" abortion bans unconstitutional, and upholding some school voucher programs. I'll chip in one more that's very important to me and with sweeping implications: O'Connor has been the deciding vote upholding "campaign finance reform" -- four other justices deem political contributions as speech afforded First Amendment protection. Little wonder that the nomination for her replacement is going to be a hot potato...

UPDATE: Russell has added to his list, which now includes as examples in which Justice O'Connor issued the deciding vote not only McConnell (campaign finance case) but also the Supreme Court's recent Booker decision, which threw into question the Federal Sentencing Guidelines -- a decision with monumental implications. Also of major significance are Justice O'Connor's federalism cases revivifying the commerce clause (Morrison and Lopez, although these cases look more like outliers in light of this year's decision in Raich) and upholding state sovereign immunity (Seminole Tribe).

A barrister's obit

Inimitably colorful, the Telegraph way (via Sullivan).

O'Connor retiring

This morning, Justice Sandra Day O'Connor announced that she would be stepping down as Associate Justice of the U.S. Supreme Court. (Text of retirement announcement here.) Hat tip to Bill Kristol, who made this call last week.

For the Wall Street Journal's take, see here; for the Washington Post's, see here. For extensive discussion of possible nominees, see The Supreme Court Nomination Blog (a sister site to SCOTUSBlog) and the Supreme Court Short List page from our own Jonathan Wilson.

UPDATE: First of all, Jonathan's post beat mine up (though I guess I'd started mine 8 minutes earlier) -- if these look funny. More links (courtesy of the tireless Howard Bashman): the Detroit Free Press on O'Connor's voting record, and her bio.

Justice O'Connor to Retire

MSNBC is reporting. Speculation on her replacement began long ago.

The ABA and Rule 11

This month's ABA Journal (July, 2005) contains an article (page 62) describing the actions by the ABA Governmental Affairs Office to oppose the Lawsuit Abuse Reduction Act.

I write a little bit about LARA in Out of Balance and in recent posts have praised its approach to reinstating the original, 1983 version of Rule 11.

Although I'm an ABA member I find myself, more often than not, disagreeing with its stance on political issues. I must reluctantly, however, grant the ABA some credit for opposing those provisions of the LARA that would seem to over-reach and violate principles of federalism.

Section 3 of the LARA provides:

In any civil action in State court, the court, upon motion, shall determine within 30 days after the filing of such motion whether the action substantially affects interstate commerce. Such court shall make such determination based on an assessment of the costs to the interstate economy, including the loss of jobs, were the relief requested granted. If the court determines such action substantially affects interstate commerce, the provisions of Rule 11 of the Federal Rules of Civil Procedure shall apply to such action.

While a state law that required the courts in that state to undergo such a process might be a healthy reform, allowing Congress to stipulate procedure in state courts would seem to run roughshod over state prerogatives.

I would be happy to be dissuaded from this view, however. If you can make the case that Section 3 of the LARA would be constitutional, please drop me a line.

Astroturf in the liability wars

While the example cited by Jonathan a while back may not properly count as astroturf, there's plenty of it around on liability-reform issues, planted by both sides; it's especially amusing when the trial bar complains about the practice, since they were way out in front in developing it. An example from The Rule of Lawyers:

In his book on a Connecticut medical malpractice lawsuit, Damages, author Barry Werth notes that prominent trial lawyer Michael Koskoff, along with a partner, "provided [Mary] Gay with a platform by recruiting her to head the Victims' Rights Association," whose agenda included doubling the number of judges so as to make it easier for lawsuits to get to trial. The group "exist[ed] largely on paper" and, in fact, was created by the state trial lawyers group. "Gay was a 'figurehead', she says, Koskoff having assured her there was no real work or responsibility involved."

And here's a letter to the editor published in the Pittsburgh Tribune-Review May 3 from orthopedic surgeon Gregg L. Goldstrohm of Greensburg:

I read with interest the April 22 letter to the editor by Dan Fee of Philadelphia, who questioned a previous letter-writer who cited statistics from the state Board of Medicine to show that thousands of frivolous lawsuits are being filed against doctors ("More statistical malfeasance?").

Most especially I was interested in the notation that identified Mr. Fee: "The writer is executive director of Pennsylvania Citizens for Fairness, a coalition of patient safety and patient rights groups."

According to the Pennsylvania Department of State Web site, "Pennsylvania Citizens for Fairness" is a "fictitious name." The "fictitious owners" are the Pennsylvania Trial Lawyers Association....

Then there's Pennsylvania's Committee for Justice for All, the Alliance for Consumer Rights in New York, and the Utah Citizens Alliance, among many others. For the scoop on several of those, consult Donna Rovito's newsletter, where we found the above letter.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.