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July 2006 Archives

Mississippi med-mal measures

Katrina doctor, nurses indicted

Kevin Pho has in-depth coverage of the Louisiana Attorney General's decision to indict ear, nose and throat specialist Dr. Anna Pou and nurses Lori Budo and Cheri Landry on four counts apiece of second-degree murder. See this follow-up and this one, too. And: the New York Times covers the mounting controversy.

"Caregiver discrimination"

Oh joy, here comes another whole sector of employment discrimination law developing without any clear legislative charter and imposing unpredictable obligations on employers: "family responsibilities discrimination". �Discrimination based on caregiving is not an expressed category,� said Joan C. Williams, executive director of [the Center for WorkLife Law at Hastings College of Law]. �It�s a reflection of the creativity of lawyers who have set up a new subcategory of litigation within existing workplace discrimination laws.� More here, too.

Journalistic accounting

Business journalists have been flogging backdating of stock options, in part because it hides the cost of executive compensation. But one of the main critics is not averse to using her own funny numbers. As I discuss, the NYT's Gretchen Morgenson argues that the cost of options should be, in effect, "front-dated" by looking at companies' later costs of repurchasing the optioned stock. In other words, she'd like to inflate the costs of options to bolster her attack on executive compensation. Do we need accounting rules for journalists?

At Empirical Legal Studies blog, Bill Henderson summarized (scroll to third entry) an unfortunately linkless paper on the subject presented at the ALEA [American Law and Economics Association] conference:

Ronen Avraham & Max Schanzenbach, "An Empirical Study of the Impact of Tort Reforms on Health Insurance Coverage," which was a very clever time-series analysis that showed a relation between tort reform legislation and higher rates of insurance coverage (i.e. fewer uninsured). Although the effect is not large, it does corroborate the idea that fewer successful lawsuits = less defensive medicine = lower insurance costs = more people with insurance.

Spitzer methods

Prof. Bainbridge has more, none of it flattering.

Church abuse: suing the laity?

In Spokane, Wash., where the local Roman Catholic diocese has declared bankruptcy under the pressure of sex-abuse lawsuits, a recent ruling by a federal judge deemed individual church parishes "unincorporated associations" that could themselves potentially be sued. Now plaintiffs in the cases are talking about suing the local parishes "and might even explore the legal liability of individual churchgoers". (John Stucke, "Abuse victims may sue parishes", Spokane Spokesman-Review, Jul. 27). More: May 5, etc. (cross-posted from Overlawyered)(& welcome readers of Prof. Bainbridge, who writes, "I hold no brief for the hierarchy's mishandling of the scandal, but it is starting to look like some folks are determined to use the scandal as a weapon to destroy the Catholic Church.")

Plaintiff-side securities firms are steadily moving to strengthen their ties with pension funds and other institutional investors based in Europe, Canada, Australia and elsewhere. Washington, D.C. lawyer Adam Savett has plenty of details (Jul. 10) on his blog, launched in March under the title Lies, Damn Lies, and Forward-Looking Statements (via Roberts).

We were distracted at the time and failed to take due note of a report put out by the Pacific Research Institute in May which, per PRI's press release, "ranks all 50 states in terms of relative tort burdens and relative tort reforms." The authors are Dr. Lawrence J. McQuillan and Hovaness Abramyan, both of PRI. Here's more from the press release:

In addition to Texas, the top five states were Colorado, North Dakota, Ohio, and Michigan. At the bottom were Vermont, Rhode Island, New York, Pennsylvania, and Maryland. The higher-ranking states tended to be in the Rocky Mountains and Great Plains, with some top performers � New Hampshire, Ohio, Texas, and Virginia � distributed across the country. The poorest-ranking states tended to be clustered in the Northeast and southern border. The Deep South and parts of the Southeast also ranked poorly.

The report received extensive media coverage and can be read here.

The study, released in May, found that approximately 40 percent of medical liability claims did not appear to arise from negligent injury. By contrast, the earlier and far-famed "Harvard study" of New York hospitals had indicated that the proportion of such claims in which no negligent injury can be identified is more like 80 percent. Specialty Insurance Blog published a useful overview of press reactions to the new study and points out that no little confusion may have arisen because Harvard's own press release, as well as many in the press, put a spin on the study that may not be justified by its actual findings.

Florida Supreme Court

It's embarked on an "activist journey", according to a new report by Colleen Pero for American Justice Partnership. A PDF of the full report is here.

Trans Fats, Ctd.

[Thanks to the Heartland Institute for this tip]

In 1988, the Center for Science in the Public Interest demanded McDonald's cease using beef tallow to cook its French fries and instead substitute partially hydrogenated cooking oils that contain trans fat. CSPI contended partially hydrogenated oils are relatively innocent compared to beef tallow. CSPI's Web site still claims this as one of its food police victories.

But on the same Web site, CSPI touts a class-action lawsuit it has filed against KFC demanding it stop using oil containing trans fat, which it alleges kills 50,000 Americans a year. CSPI seeks damages of $74,000 per class member, plus punitive damages and attorney fees.

The complaint alleges that in 2003, a panel of the National Academy of Health's Institute of Medicine concluded the only safe level of trans fat in the diet is zero, and in 2004 a Food & Drug Administration advisory panel concluded trans fat is even more harmful to humans than saturated fat.

The CSPI complaint alleges KFC's use of these oils is "outrageous and performed with evil motive, intent to injure, ill will" and that KFC is acting "without regard for the health and well being" of its customers.

From the Chicago Tribune, www.AmericanHeart.org, and the CSPI complaint at http://www.cspinet.org/new/pdf/final_complaint.pdf

If there weren't already enough reasons to take a jaundiced view of the ABA's record on judicial nominations, the association's shabby handling of the Michael Wallace nomination (5th Circuit) would be reason enough. (Disclosure: I've known this particular nominee for upwards of 25 years; based on that acquaintance the WSJ editorialists seem to me if anything to have understated their case.) More: Todd Zywicki, TheHill.com, PowerLine, John Kalinger (pointing out that various ABA worthies have in the past attached the "not qualified" label to such later stars of the federal appellate judiciary as Frank Easterbrook, Richard Posner, John Noonan, and Stephen Williams).

Last week at the American Legislative Exchange Council national meeting in San Francisco, the Pacific Research Institute released a new book entitled What States Can Do to Reform Health Care: A Free Market Primer, which included a chapter I wrote called "Malpractice Liability: Thoughtful Tort Reform Is Good Medicine." Much of the data and many of the arguments will be familiar to those of you who have followed our writings on the subject at Point of Law, or who have read the Manhattan Institute's Trial Lawyers, Inc.: Health Care report or the recent study we published by Alex Tabarrok and Amanda Agan, "Medical Malpractice Awards, Insurance, and Negligence: Which Are Related?".

The book is intended as a primer for state legislators and policy advocates who want to understand key issues central to reforming state health care systems in a market-oriented direction. Other chapters cover a variety of topics including Medicaid (by Nina Owcharenko, Heritage Foundation), health insurance (by J.P. Wieske, Council for Affordable Health Insurance), prescription drug piracy (by Brett Skinner, Fraser Institute), and hospital certificate-of-need laws (by Roy Cordato, Locke Foundation). The book is available here (PDF).

Employees charged with crimes

Sued-if-you-do, sued-if-you-don't files: "'I think companies are concerned that if they take action against the employee, the employee may bring a claim. And if they don't take action, others who are injured may bring a claim,' said employment attorney Jonathan Segal of Wolf, Block, Schorr and Solis-Cohen in Philadelphia. Segal noted that companies are increasingly dealing with employees who miss work because of criminal offenses like drunk driving or assault charges." (Tresa Baldas, "When Employees Face Criminal Charges, Employers Face a Dilemma", National Law Journal, Jul. 20)(cross-posted from Overlawyered).

The landmark reform measure applies to cases pending at the time of its enactment, the California Supreme Court has ruled unanimously. However, the court ruled that pending suits that would otherwise have been invalidated by the proposition, because the lawyers had put forward no client who suffered injury, would be allowed to continue if the lawyers could recruit such a client. Coverage and reaction: Associated Press, Oroville Mercury-Register, UCL Practitioner, Civil Justice Association of California.

One of the pending actions, reports the L.A. Times,

is a case against Visa International Inc. and MasterCard International Inc. A man who didn't own a credit card from either company alleged the card issuers weren't properly disclosing foreign currency conversion fees. A judge ordered the companies to issue refunds, which some attorneys have estimated could reach $800 million. The ruling was later reversed by an appeals court, and that decision has been appealed.

What are the odds that a Californian with the time and inclination to prosecute an $800 million lawsuit over foreign currency conversion fees would himself not own either a Visa or Master Card credit card? Is there actually some tactical advantage to be had in such litigation (such as, perhaps, avoidance of discovery) by not being a bona fide member of the enormous class of consumers affected by the action?

Because of a Texas Supreme Court decision in a case called Hyundai v. Vasquez, it won't be as easy for trial lawyers in the Lone Star State to get prospective jurors dismissed for cause, or on grounds of prejudice, through the use of trick questions designed to get them to state that they cannot be fair in handling facts unfavorable to the lawyer's position. In the case at hand, "this line of voir dire questioning in fact eliminated not one but two complete panels of prospective jurors, reports Hugh Rice Kelly of Texans for Lawsuit Reform, who hails the Hyundai decision as "a major step toward restoring the integrity of the jury system".

Peacocks in the barnyard

Los Angeles Times reporter Molly Selvin wanted my opinion of class-actioneer Bill Lerach for this profile, so I gave it. Holding up the other end of the discussion are Lerach fans Jamie Court, of Harvey Rosenfield's outfit, and actor/humorist/ expert-economic-witness-in-Milberg-cases Ben Stein ("Unsettling Days for King of Class Actions", Jul. 23)(cross-posted from Overlawyered).

Damages scholarship

A little while back Prof. Childs linked (here and here ) two new pieces of scholarship of potential relevance to debates over damages:

* According to Randy Picker at the University of Chicago Faculty Law Blog, (May 29), Daniel Gilbert's new book Stumbling on Happiness argues (among other things) that: "Able-bodied people are willing to pay far more to avoid becoming disabled than disabled people are willing to pay to become able-bodied again because able-bodied people underestimate how happy disabled people are (p. 153)." One implication may be that finders of fact, typically able-bodied themselves, systematically overestimate the likelihood of injuries to devastate their victims, end their chances of normal happiness, and so forth.

* In "Two Conceptions of Tort Damages: Fair v. Full Compensation", Vanderbilt lawprof John C.P. Goldberg argues that "the prevailing notion of tort damages was until the late Nineteenth Century one of "fair" rather than "full" compensation. [Historical materials] also suggest that the modern tendency to equate tort with the idea of making whole rests on a subtle but critical re-characterization of the concept of injury, which once predominantly referred to a doing - a wronging of the victim by the tortfeasor - but now predominantly refers to an outcome - a loss suffered by the victim." (SSRN)

That's what one career lawyer, Sharon Eubanks, has claimed in the press. Michael Siegel takes a look at the allegations (Jul. 20).

Week after week the New York Times financial columnist Gretchen Morgenson delivers one-sided, poorly reasoned but colorful attacks on American business. Although she addresses arguably significant problems, such as executive pay and defects in monitoring, she is much less interested in analyzing the precise nature of the problems or in proposing specific solutions than using in charges of specific misconduct to leverage up her broadsides. This week, for example, she says that stock options are "one of the biggest wealth redistributions ever fobbed off on American investors." Whether or not one takes Morgenson seriously, she undoubtedly helps create the regulatory environment that business must deal with. And so I follow Morgenson's Sunday strolls, trying to clean up her mistakes. Today I discuss Morgenson's implication that stock options cause criminal behavior.

Following an eight-day bench trial, the case is now in the hands of federal judge L. T. Senter Jr. of Gulfport, Miss., who has promised a quick ruling. Although the exclusion of flood damage from homeowners' policies had been shouted from the rooftops for decades, Scruggs has produced witnesses who aver that their Nationwide Insurance agent assured them that floods were covered or that flood coverage was unnecessary; for example, a local chiropractor (whom the New York Times seems to be impressed by) says he remembers the agent saying this in a manner that was admittedly "roundabout" and not "directly", yet still somehow "emphatic". David Rossmiller at Insurance Coverage Blog writes, "I have a hard time believing that any agent along the Mississippi coast would believe or say that, but I suppose anything is possible." (Jul. 10)(more from Rossmiller here and here). Insurance Journal summarizes meteorologists' testimony about whether Katrina's winds would have been enough to destroy the home of Paul and Julie Leonard before storm surge arrived, thus triggering a risk covered by the policy. AP quotes Dickie Scruggs as saying of the case, "If you win it, it's a huge win. If you lose it, you spin it the best way you can."

Milberg disclosure

Much more of it could be on the way if an Indiana judge's order prevails.

Resource for researchers: the New Jersey court system maintains a highly organized website it calls the Mass Tort Information Center with copious information about various product liability and other mass tort cases currently or recently the subject of much litigation in the Garden State. Categories active as of this writing: Accutane, Asbestos, Bextra/Celebrex, Ciba-Geigy water pollution claims, Diet Drug (fen-phen, Redux), Hormone Replacement Therapy, Long Branch Manufactured Gas Plant pollution claims, Lead Paint, PPA (phenylpropanolamine), Tobacco, and Vioxx.

Jay Angoff, cont'd

Martin Grace appears to see merit in the article we linked the other day about the former Missouri insurance commissioner, but Ray Lehmann definitely doesn't.

Not all "Eliot Spitzer wannabes"

For some reason we missed linking the National Law Journal's survey article on state attorney general controversies, "Activist AGs Go After Business", when it appeared back in April. So here it is now.

The SEC's charges in the Brocade case start the criminal phase of the backdating so-called scandal. Since much of corporate America has been implicated in this practice, we may be looking at a significant ratcheting up of the practice of criminalizing agency costs -- we're now criminalizing executive compensation. Where might it end? I have some thoughts here and here.

"Public health's credibility crisis"

As much of the organized public health profession moves toward a stance of uncritical cheerleading for the litigation campaigns of the moment, is its public credibility going to suffer? Elizabeth Whelan suspects it is.

HIPAA and employment litigation

Via Workplace Prof Blog, here's the start of the SSRN abstract of a Penn State Law Journal article (by Brian K. Powell and Richard A. Bales, both of Northern Kentucky U. College of Law) on how the federal health-privacy law, HIPAA, in addition to its many other untoward consequences, is influencing the handling of employment litigation:

Plaintiffs in many litigated employment cases hire medical or psychological experts to buttress their claims of physical or mental injuries. Prior to HIPAA's 1996 enactment, many jurisdictions explicitly permitted a defendant-employer to engage in various degrees of ex parte contact with a plaintiff-employee's treating physicians. Such informal discovery was much faster and cheaper than formal discovery by deposition and expert reports, and arguably helped dampen the overall cost of litigation. However, HIPAA changed this dynamic profoundly: the statute sets a high standard of privacy protection, and broadly preempts contrary state law. Moreover, while plaintiff-employees can use HIPAA to thwart informal discovery by defendant-employers, defendant-employers cannot use HIPAA's privacy shield to thwart discovery by plaintiff-employees of the defendant-employers' human resource records. In this way, HIPAA acts as both shield and sword in favor of plaintiff-employees....

Illinois Justice Blog

The Illinois Civil Justice League (not to be confused with the AAJ f/k/a ATLA) has a new blog.

Katie Couric dodges the bullet

It looks like the so-called "Katie Couric rule" -- the infamous part of the SEC's executive compensation disclosure rule that would require companies to disclose the pay of the three highest paid non-executive employees -- is going down, as the WSJ reports. Now, as I discuss here, let's talk about the rest of the rule.

Family physician Edward Zurad, in the American Academy of Family Physicians' Family Practice Management, talks about how physicians can reduce the risk of being sued. Scroll down for links to more AAFP articles about malpractice (via KevinMD).

Per the New Jersey Law Journal: "A winning plaintiffs lawyer in a whistleblower suit -- who then had the whistle blown on him for creatively augmenting his fee -- is fighting a court order to give some of the money back. A New Jersey judge called 'presumptively unreasonable' an agreement that gave John Donnelly not only statutory fees under the Conscientious Employee Protection Act but also a 50 percent share of damages recovered. Donnelly said he crafted the arrangement to finance a long-shot case."

Libby, Montana

Andrea Peacock is guest-blogging at Torts Prof Blog about the vermiculite mine in Libby, Montana; her conclusions can be gleaned from the title of her book, "Libby, Montana: Asbestos and the Deadly Silence of an American Corporation." For those wishing the other side of the story, W.R. Grace has a website with actual data and a timeline of what happened after it purchased the mine from the Zonolite Company. Litigation is also pending against the State of Montana; a 4-3 Montana Supreme Court decision in 2004, Orr v. Montana, held the state potentially liable, and provides additional background. The federal Agency for Toxic Substances and Disease Registry study on Libby showed an increase in mortality, but not the 200 deaths claimed by Peacock in her link to the report.

In a win for litigation reformers in California, the California Court of Appeals in Pfizer v. Superior Court has enforced the Proposition 64 voter initiative so that all plaintiffs in a class action under California's UCL 17200 must have actual damages in fact (and not just the lead plaintiff, as the trial court had held).

The Court of Appeals noted:

The Unfair Competition Law (UCL) (Bus. & Prof. Code, � 17200 et seq.) was enacted to protect consumers as well as competitors from unlawful, unfair or fraudulent business acts or practices, by promoting fair competition in commercial markets for goods and services. (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) The false advertising law (FAL) (� 17500 et seq., added by Stats. 1941, ch. 63, p. 727, � 1) likewise prohibits consumer deception, and any violation of the FAL necessarily violates the UCL. (Kasky, supra, at pp. 949-950.)

Over the years, the UCL was an integral part of California law. As the Supreme Court observed in Stop Youth Addiction, Inc., v. Lucky Stores, Inc., supra, 17 Cal.4th at page 570, �whenever the Legislature has acted to amend the UCL, it has done so only to expand its scope, never to narrow it.�

However, in recent years, the UCL became prone to the sort of abuse �which made the Trevor Law Group a household name in California in 2002 and 2003. The abuse [was] a kind of legal shakedown scheme: Attorneys form[ed] a front �watchdog� or �consumer� organization. They scour[ed] public records on the Internet for what [were] often ridiculously minor violations of some regulation or law by a small business, and sue[d] that business in the name of the front organization.� (People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th 1315, 1317.)

Proposition 64, an initiative measure approved at the November 2004 general election, was a response to abuse of the UCL and the FAL by certain lawyers, who were bringing �frivolous lawsuits against small businesses even though they had no client or evidence that anyone was damaged or misled.� (Ballot Pamp., General Elec. (Nov. 2, 2004) Ballot Argument in Favor of Prop. 64, p. 40.) Proposition 64 imposed new restrictions on private enforcement under the UCL and the FAL.

The opinion includes an informative history of UCL 17200 and the Proposition 64 reform, concluding that the initiative amended the law to require standing for all class members. The Civil Justice Association of California filed an amicus brief in the case.

Major incentive effects dept.

Loser-pays, some have argued, doesn't send a powerful enough signal to big companies that they should behave responsibly in court. After all, with all their money, they can afford to ignore the incentives, right? Or maybe they can't:

Liquidators for the collapsed Bank of Credit and Commerce International, which failed in its $1.8 billion lawsuit against the Bank of England, agreed Wednesday to pay costs of $137.6 million.

BCCI tried unsuccessfully to sue the central bank in one of the longest running -- and most expensive -- cases in British legal history.

Of course, the other way of looking at it is that even with loser-pays, you get some pretty appalling overuse of the litigation process -- a view fully explored in this London Times piece. But imagine -- or rather look at the U.S. to see -- how much worse it would be without the incentive structure of loser-pays.

The many hats of Jay Angoff

The much-quoted "insurance expert" is attracting some rather more skeptical press attention than has often been the case in the past. Reactions: here.

Milberg partners plead not guilty

From the Agency for Healthcare Research and Quality newsletter:

A new AHRQ study in the American Journal of Public Health indicates that state laws limiting malpractice damage awards reduce overall state health care expenditures. The report estimates that the average reduction in health expenditures for states with caps on malpractice damage awards is $92 per capita (or 3 percent to 4 percent) over the period of time that the cap has been in place. The study specifically examines noneconomic damage caps�that is, damage caps for pain and suffering as opposed to economic caps that limit awards to cover direct economic outlays in a malpractice suit. The study, entitled, "The Impact of State Laws Limiting Malpractice Damage Awards on Health Care Expenditures," was conducted by AHRQ researchers Fred Hellinger, Ph.D., and William Encinosa, Ph.D. The final recommendations of the study state that future studies should expand the analysis to focus on whether the level of damage caps relates to health care expenditures; the variation of the effectiveness of these laws across States; and whether or not malpractice tort reform law is related to poorer health outcomes.

Class action lawyers were suing Ford Motor claiming to represent Illinois municipalities that regretted buying the popular police model. Then Ford announced that it would decline to sell the car to towns that were suing over it. Now, according to the Illinois Civil Justice League, close to 1,000 municipalities have elected to opt out of the action -- one sign among several that it was ill-conceived from the start. More here, here and here (cross-posted on Overlawyered).

In particular, it seems they've got some sort of unhappy history over there with the practice of having anonymous informants denounce people to the authorities -- they won't even go for it when it's renamed "whistleblowing". Imagine that!

The Associated Press reports that the Georgia Court of Appeals, in a 6-1 decision, threw out the portion of the Georgia tort reform package requiring that med-mal plaintiffs waive medical records privacy rights to file a claim. The court reasoned that the provision was trumped by the federal Health Insurance Portability and Accountability Act (HIPPA). Readers may remember that the Georgia Supreme Court earlier reversed other portions of the tort reform package, as Jonathan Wilson described in detail here.

Workplace defamation verdicts

Michael Fox at Jottings of an Employer's Lawyer has details on two recent jury awards, of $3 million in Maine and $1.5 million in Texas, against employers alleged to have defamed their employees by accusing them of wrongdoing. In the Maine case, Fox thinks defendant Merrill Lynch may have been placed in a "classic Catch-22" because federal securities regulations required it to report on the purported broker misconduct.

A Florida appeals court has ruled that the state medical association and three doctors can be sued over efforts to discipline a doctor who had according to his critics given "false testimony and false theories" for "the sole purpose of propagating a frivolous lawsuit for financial gain". Plaintiff's malpractice lawyers applauded the ruling: Robert Boyers of Hannon & Boyers in Miami, for example, suggested that such testimony, no matter how erroneous and damaging, should never carry consequences outside the courtroom (or at least such would be a reasonable reading of his quoted remarks). More here, here, here, here, here, etc.

Gretchen Morgenson writes today about the exemption from the Securities Act of 1933 for sales to pension funds and other big institutional investors. As I do every Sunday, I explain what she artfully leaves out.

Chicago Tribune on overtime suits

It's the "nation's fastest-growing legal battlefront between workers and companies. ... Experts say the increase in overtime lawsuits across the country resulted from a lack of clarity in federal law" (via Internet and Class Action Law Blog). More here, here, here, here, here, here, and earlier entries in our employment law archive.

The options scandals

What started with an enterprising journalistic coup on options backdating is now developing into the sort of hairball story business journalists seem to love, which grows as more stuff gets stuck to it. The latest version is options awarded just after 9/11, when corporate managers supposedly knew that stocks were going to go back up. As I discuss, the story says as much about how journalists construct scandals as it does about executive compensation practices. The next step, as I discuss here, may be director liability for awarding compensation that looks bad.

More embarrassment for vaccines-cause-autism campaigners such as, for instance, Robert F. Kennedy, Jr.

Ben Zycher of the Manhattan Institute notes that proposals to forcibly equalize rates in California represent "a wealth transfer from those in suburbs and rural areas to urban areas."

Yesterday's House health hearing

Covered by UPI here. Common Good has this information about a Senate hearing last month. And Jonathan Wilson has some skeptical thoughts about the health courts idea at his site.

The Baltimore Examiner decries the costs of litigation to the City of Baltimore defending itself against hundreds of cases every year and concludes that a loser-pays rule would protect the City's coffers. The piece quotes Walter at length. More here.

The same Jack Coffee article in the National Law Journal that we quoted last week has the following analysis of the similarities and differences between the indictment of Arthur Andersen and that of Milberg Weiss:

Clearly, professional services firms -- law or accounting -- are fragile. Both clients and then partners may flee to competitors if the firm becomes stigmatized. Already, this process has begun at Milberg, as some clients and partners have departed. But does this mean a law firm should not be indicted? Here, the contrasts with the Arthur Andersen case are more striking than the parallels. Only one relatively low-ranking partner at Andersen, a firm with many thousands of employees, was charged with ordering the destruction of documents. The entire episode lasted only a few days, and no involvement by senior management was alleged. The public injury from Andersen's demise was also self-evident becuase it reduced an already concentrated industry to the current Final Four.

In contrast, the Milberg Weiss indictment alleges a conspiracy extending from 1981 through 2005, during which the defendants "agreed to and did secretly pay kickbacks to named plaintiffs in class actions and shareholder derivative actions in which Milberg Weiss served as counsel." Kickbacks were alleged to have been made over this period with regard to approximately 180 lawsuits to three professional plaintiffs and their relatives. Also unlike the Andersen case, the highest-ranking partners of Milberg Weiss were either indicted or described in coded terms in the indictment that suggest the government is still actively seeking their indictment. Finally, dominant as Milberg Weiss has been in securities class action litigation, the barriers to entry are much lower in the case of plaintiffs' litigation than in the case of global accounting, and the firm is not irreplaceable.

You Knew It Was Coming

Valerie Plame has filed a lawsuit in U.S. District Court against Dick Cheney, Karl Rove, and Scotter Libby for their alleged role in outing her undercover CIA status. One wonders if Republicans so casually dismissive of concerns about litigation interfering with executive branch operations when Paula Jones sued Bill Clinton will still be singing the same tune.

UPDATE: The complaint is here. George Conway disses it at NRO here.

Via Lattman, the seven-person jury found for Merck on all counts. It's not a complete victory for Merck; the jury found that Merck failed to warn Ms. Doherty of risks, but held that the Vioxx did not cause her heart attack. The jury also found no consumer fraud violation.

Against Arbitration

Today Lou Whiteman of GC South has a long piece up at Law.com on the decline in the use of arbitration in favor of other means of settling legal disputes. The first paragraph relates the experiences of one Jonathan B. Wilson, whose name readers of this site may recognize.

Doherty v Merck, ctd.

Health Law 360 [paid subscriptioin required, but free trial available online] publishes today an interview with yours truly on the potential ramifications of the Doherty v Merck case, about which Ted Frank has ably written in these pages.

Richard Epstein on OT 2005

In yesterday's Wall Street Journal (via Bainbridge):

The court's two wings share one trait: They defer only to the government officials they trust. Otherwise, they read a statute carefully to rein in the authority of officials they don't trust. The two factions don't differ in their philosophy of language, or in their on-again, off-again adherence to the rule of law. Rather, the court's liberal wing profoundly distrusts this president, but has great confidence in the domestic administrative agencies that regulate matters such as the environment. The conservative wing of the court flips over. It willingly defers to the president on national security issues while looking askance at expansionist tendencies of the administrative agencies. ...

Our Constitution starts out with a presumption of distrust of all government actors, which is why it drew a sharp line between the legislative and executive branches. We can argue until the cows come home whether national security or environmental protection presents the greater threat of executive or administrative misuse. But that ranking really doesn't matter, because there is no reason why the Supreme Court has to defer to overaggressive public officials in either context. Justice Stevens rightly chastised the president for flouting the rule of law in Hamdan. But he was tone deaf on the easier question of statutory construction when blessing the Corps' extravagant reading of the statute in Rapanos. We will get consistent and reliable statutory construction only when all justices put aside the na�ve fantasy that they lack expertise and information to read the common language found in congressional enactments.

Health courts hearing today on Hill

From Common Good:

On Thursday, July 13th, the Health Subcommittee of the House Committee on Energy and Commerce will hold a hearing entitled �Innovative Solutions to Medical Liability.� At the hearing, Common Good General Counsel Paul Barringer will testify in support of health courts as a viable alternative to the current medical justice system. He will speak to the failings of the current system and how health courts can ameliorate these problems. Other witnesses will include Professor Michelle Mello, Harvard School of Public Health, and Professor Jeffrey O'Connell, University of Virginia School of Law.

Full details, including links, are at the Common Good site.

Slate's Med-Mal Hack Job

While Ted and Peter are engaging in a very thoughtful discussion on medical malptactice liability, the online magazine Slate today published a not-so-thoughtful piece by American Prospect writer Ezra Klein. Essentially, Klein hypes a proposal by Senators Barack Obama and Hillary Clinton to reform medical malpractice (S. 1784) by offering grants to care providers who agree to participate in a medical-error reduction program. Rather than build much of a case for the Clinton-Obama bill, Klein attacks the "Republican" approach--damage caps--by tackling that straw man argument, namely that caps have to do with medical malpractice lawsuits being frivolous. To argue his case, Klein regurgitates arguments made by Tom Baker and points to a few studies, including the comprehensive Harvard Medical Practice Group study of 15 years ago, the recent Studdert-Mello Harvard study, and a RAND study. He makes a mess of it.

First of all, let's look at what Klein draws from the RAND study:

A recent RAND study looked at the growth in malpractice awards between 1960 and 1999. "Our results are striking," the research team concluded. "Not only do we show that real average awards have grown by less than real income over the 40 years in our sample, we also find that essentially all of this growth can be explained by changes in observable case characteristics and claimed economic losses."

One big problem: Klein's claim to the contrary, the RAND study quote is not talking about medical malpractice awards but all tort awards in Cook County, IL and San Francisco County, CA over the time period (Klein doesn't cite to the actual study, but it's published on the first page of the first volume of Ted Eisenberg's Journal of Empirical Legal Studies (March 2004)). The study shows in essence that average real tort awards haven't gone up by as much as it would seem once you account for the fact that the number of low-dollar automobile accidents, and awards, has fallen dramatically. But that's certainly not what the RAND authors find when it comes to medical malpractice:
[W]e observe two primary changes in the distribution over time: a drop in the share of verdicts involving automobile cases and an increase in the share involving medical malpractice. The percent of verdicts involving auto cases falls from a high of about 60 percent in the 1960s to just 46.3 percent in the 1990s. The fraction involving medical malpractice increases fairly gradually over the first three decades in the sample, rising from 2.1 percent in the 1960s to 6.7 percent in the 1980s, and then increases sharply to 14.7 percent in the 1990s.

So the RAND study actually finds that the rise in high-dollar med-mal claims is part of what has driven overall average tort awards up over the last 40 years. Perhaps Klein was merely sloppy, rather than intentionally misleading; the RAND study is quoted out of context to the same effect elsewhere (see, e.g., here and here), and Klein may not have bothered to look at the actual article itself. But the fact remains that the RAND study doesn't back up Klein's argument that medical malpractice liability isn't a problem; it undercuts it.

Homeless, stinky man strikes again

New Jersey For Change has a nice report on Robert Kreimer, the enterprising homeless man. Lawyers among us will recall that in 1991, the man won $230,000 from the Morristown New Jersey public library, and entered Constitutional Law casebooks nationwide, after the library ejected him because of his overwhelming body odor. Now he has sued the New Jersey Transit authority, city of Summit, New Jersey and others for $5 million for the same reason. I guess his Morristown money ran out.

Even the American Civil Liberties Union, which represents him, says he is "driven, difficult" and manipulative. Here's what bus driver Robert Begbie who evicted him from his bus and is a named defendant along with his employer, New Jersey Transit, had to say:

"[H]e is a real problem child. He annoys other passengers and tape records all conversations and most of all being homeless, he smells very bad and it's not fair to me or the passengers that we have to put up with the smell ... We really would be happy not seeing him anymore."

And the greenies wonder why we prefer to drive our own cars to work....

The mail fraud charade

"Mail fraud is the most commonly used criminal charge today in federal white-collar prosecutions," writes Stetson lawprof Ellen Podgor. It's also a crucial factor in the ongoing federal criminalization of what would otherwise be at most state-level offenses. Yet the activities being criminalized often have no more than an incidental nexus to mail transactions or postal delivery. Wayne State lawprof Peter Henning has said, "maybe it should just be called federal fraud."

"A walking conflict of interest"

The New York Post is again wondering how New York Assembly Speaker Sheldon Silver harmonizes his legislative role with his day job as of counsel to personal-injury powerhouse Weitz & Luxenberg. Per the Post's editorialists, "he's never disclosed what he does for W&L."

The trial, which began June 5, had been delayed because of the New Jersey government shutdown. Elaine Doherty was 68, a heavily overweight diabetic with high cholesterol and a family history of heart attacks, and had four arteries that were 90% blocked, but blames her mild heart attack on Vioxx. (Merck changed the Vioxx label while Doherty was taking the drug, but the plaintiffs claim that they should have done more to publicize the VIGOR study, and then she wouldn't have taken it.) Doherty was well enough to take three overseas trips last year, so the plaintiffs' claims for damages will be interesting. The seven-person jury will begin deliberations tomorrow. (AP, Jul. 11; Merck press release, Jun. 2).

Feature discussion begins

Peter Nordberg and I will be discussing the idea of creating immunity for medical professionals akin to the immunity for business professionals and others this week as a Point of Law Feature. I've made my first post. Peter's a thoughtful advocate, so the discussion should be good.

Is it illegal insider trading just because an informed and disinterested board grants options at a price that does not reflect material inside information? I don't think so.

Is it illegal insider trading just because an informed and disinterested board grants options at a price that does not reflect material inside information? I don't think so.

The New York state courts are proposing new rules that would significantly tighten up on lawyers' freedom to chase potential clients, including injury cases, in the Empire State. In particular, lawyers would be forbidden to solicit disaster victims in most situations for 30 days after a disaster. As for advertising, "Significant restrictions would be imposed on the use of fictionalization, and lawyers would be banned from using nicknames or monikers -- such as 'heavy hitter' or 'dream team' -- that imply an ability to obtain results....lawyers would be prohibited from using current client testimonials, from portraying judges, from re-enacting courtroom or accident scenes and from using courthouses or courtrooms as props. They would also be barred from using paid endorsements, and from using the recognizable voice of a non-attorney celebrity to tout the lawyer's skills." Beyond that, they would have to be prepared to substantiate ad claims and keep ads on file for three years. (John Caher, "New York Courts Back Expansive Lawyer Ad Restrictions", New York Law Journal, Jun. 15). For critical reaction, see Dennis Kennedy, Between Lawyers, Jun. 15 ("a shocking number of draconian and micro-managing rules "), and Robert Ambrogi, LegalBlogWatch, Jun. 16)(cross-posted from Overlawyered).

Naming peripheral medical defendants

In the comments section at Sebastian Holsclaw's, following a long discussion of the recent Mello-Studdert study on medical malpractice, talk turns to the practice of naming every doctor in the vicinity as a defendant when filing a medical liability claim. A couple of trial lawyer advocates defend that unsavory practice, and Holsclaw responds (via Rovito):

The problem is that extraneous defendants are often not dropped quickly. In many complex cases you can't possibly get through the discovery phases without plunking down huge amounts of money. Maybe I've just been remarkably unlucky, but when I've worked on the defense side the vast majority of cases involved defending people who were just tack-on defendants. In all of these cases $30-60,000 (in fees) was spent before the defendants could get out of the case. Often an additional sum (usually in the $5-10,000 range) was paid to stop the bleeding even though everyone (including/especially the plaintiff's attorney) that the defendant would never be found liable. One plaintiff's attorney was well known to push for largish settlements from innocent parties -- if you refused he would drag you until the day of trial (throwing up just enough smoke to avoid summary judgment) and then drop you without comment on the morning of the trial (after you had incurred all the expense of expert retention, expert testing and all of the trial preparation). It is the kind of thing that gives lawyers a bad name, but it happens in every city.

Deja vu: In another 4-3 decision, the Wisconsin Supreme Court struck down another legislative enactment on the scope of medical malpractice liability in that state, reversing a decision it made just two years prior. (AP, July 8; Bartholomew v. Wisconsin Patients Compensation Fund). One of the four, Justice Patrick Crooks, is running for reelection unopposed this year.

New Featured Discussion

Beginning tomorrow, Tuesday 7/11, Ted Frank and Peter Nordberg of Daubert on the Web and Blog 702 continue their thought-provoking disucssion on medical malpractice litigation. For the run up, see here, here, here, and here. Enjoy!

No Sanctions for O'Quinn

In a disturbing but not surprising turn of events, Judge Isadore Patrick, of Vicksburg, Mississippi, denied motions for sanctions against a firm that relied on thousands of suspect diagnoses in its silicosis litigation.

Mary Alice Robbins reports in Texas Lawyer that

On June 27, Circuit Court Judge Isadore W. Patrick of Vicksburg, Miss., denied motions for sanctions against the former firm of O'Quinn, Laminack & Pirtle, now called the O'Quinn Law Firm. In March, a dozen of some 72 defendants in McDuff, et al. v. Aearo, et al. and Braxton, et al. v. Aearo, et al. filed motions in the Circuit Court of Sharkey and Issaquena counties, seeking about $165,000 in sanctions from O'Quinn Laminack for allegedly pursuing frivolous claims on behalf of clients and submitting allegedly unreliable diagnoses to support those claims.

The 12 defendants argued in their motions that Patrick should apply findings that U.S. District Judge Janis Graham Jack of Corpus Christi made in the MDL proceeding and sanction O'Quinn Laminack. The Mississippi circuit court need not engage in independent fact-finding to recognize that O'Quinn Laminack's conduct in the silicosis litigation necessitates sanctions, the defendants argued.

Read the whole thing here.

Hearings on H.R. 5491

Back on June 28th our own Ted Frank testified in hearings before the Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee of the House Financial Services Committee on H.R. 5491. At the time, he noted that the bill had received little media attention.

That seems to be changing, as popular pundit Robert Novak noted over the weeked the partisan fireworks that erupted at that hearing when the Democratic members (Barney Frank and Paul Kanjorski) tried to move the hearing into executive session in order to keep the debate out of the public spotlight.

H.R. 5491 would change the law governing securities class action litigation by (a) creating a quasi-loser-pays rule in which a prevailing defendant's attorneys' fees could be shifted to the plaintiffs' counsel if the plaintiff's position was not "substantially justified", (b) requiring plaintiffs and their attorneys to sign conflicts-of-interest disclosures that could lead to the disqualification of some plaintiffs' counsel and (c) authorizing courts to impose a competitive bidding process for the selection of lead plaintiffs' counsel.

One can only guess why Frank and Kanjorski would want to stifle a public debate on this subject. As Novak noted, in recent years, Milberg Weiss donated $2.78 million to Democratic candidates and $22,000 to Republicans.

Perhaps Ted's persuasive testimony was the kindling that sparked the firestorm.

California Judge Vaughn Walker's also spoke in support of the bill, but Duke Law professor James Cox voiced a contrary opinion.

Litigation slush funds, cont'd

Reader Skip Oliva of the Voluntary Trade Council writes in an email:

Recently, a state court in New Mexico gave preliminary approval to a class action settlement against several manufacturers of "flavor enhancers", such as MSG, who were accused of antitrust violations. The proposed settlement fund is about $37 million. Apparently, not one dollar will go the actual plaintiffs -- "indirect purchasers" of flavor enhancers -- and the entire fund, minus costs and attorney's fees, will be distributed to charitable organizations selected by the plaintiff's counsel, roughly apportioned according to the states where the plaintiffs reside.

I have been interested for some time in the use of class action antitrust settlements to fund various academic and non-profit groups. One of the more prominent pro-antitrust groups regularly obtains funds this way. But for an entire settlement to go to non-profits? Is this common? And has anyone ever tried to track and calculate the non-profit windfall from class action settlements?

More on litigation slush funds here, here, here, here and here.

The U.S. Supreme Court has lately put a crimp in the momentum of lawyers who'd like to use the federal RICO (racketeering) law to sue companies that allegedly employ illegal aliens (see Jun. 19, etc.). However, ingenuity springs eternal: report Dan Walters in the Sacramento Bee reports that Orange County lawyer David Klehm is rolling out lawsuits against alleged employers of illegal construction and building-maintenance workers under California's unfair business practices act, s. 17200. Although Proposition 64 curbed lawyers' ability to use that statute for sheer bounty-hunting without proof of injury, Klehm says the requisite injury is that suffered by competitors of the employers involved. "The prospect of hurting employers of illegal immigrants excites anti-illegal immigration groups, which have allied themselves with Klehm and are urging their members to hunt out and report rogue employers. The goal, they say, is to substitute lawsuits for the inability or unwillingness of federal immigration authorities to crack down on employers of illegal immigrants."

I continue my analysis of the work of NYT business columnist with a discussion of today's column about a recent Business Roundtable report on executive pay. As usual, Morgenson prefers questionable muckraking to solid reporting.

Dubious documentaries, cont'd

We've had a couple of occasions already (here and here) to be critical of the business-bashing documentary entitled "The Corporation". Now John Sugg, writing in Reason, takes a skeptical look at a character who figures with some prominence in the documentary, maverick TV reporter Steve Wilson.

Manne on Measure 37

Geoff Manne posts a persuasive defense of property rights initiatives like Oregon�s Measure 37.

Lawyers' Obnoxious Fees, Ctd.

In stark contrast to what a Miami federal judge gave away to the lawyers in the Exxon case, consider this lengthy broadside from Judge Frank Easterbrook in Szopa v. US, _ F.3d _, 2006 WL 1816017 (7th Cir. July 5, 2006) (brief comments follow):

Frivolous litigation is sanctionable. Fed. R.App. P. 38. Twenty years ago we set $1,500 as the normal sanction for an appeal resting on tax-protest arguments. See Coleman v. CIR, 791 F.2d 68 (7th Cir.1986). Ten years ago we upped the ante to $2,000 in light of inflation. See Cohn v. CIR, 101 F.3d 486 (7th Cir.1996). These numbers roughly reflected the sums that, according to the Justice Department, had been required to respond to frivolous tax appeals in 1985 and 1995.

Now the Department proposes a big increase-to $8,000, somewhat less than the $11,042 that it says represents �the average expense in attorney salaries and other costs incurred by [the Tax Division] in the defense of frivolous taxpayer appeals in which sanctions were awarded during 2004 and 2005�. (A footnote tells us that the Department �eliminated from consideration instances in which significantly greater amounts of attorney time were devoted ��� than are typically reported for such cases.�) The Department does not give details, however, or explain why the expense of briefing frivolous appeals has shot up. Adjusting for inflation using the Consumer Price Index, $1,500 in 1985 dollars comes to $2,722.58 in 2005 dollars. How is it that the Department now spends in real dollars four times as much per frivolous appeal as it did 10 and 20 years ago?

A tax lawyer in grade GS-15 earns between $91,000 and $143,000 a year, depending on tenure and locality adjustments that reflect the higher cost of living in large cities. Let us suppose that the average is $125,000 a year-though this seems high, as much of the work in frivolous appeals should be assigned to junior lawyers. Let us suppose as well that indirect costs (fringe benefits, the expense of secretaries and fact-checkers, etc.) double the effective cost. Then the federal government pays $250,000 to support one year's work by a tax lawyer. If federal lawyers work 220 days a year (a figure that allows for a month's vacation plus all federal holidays), that comes to $1,136 per day for legal services. The Tax Division's assertion that it costs $11,042 to respond to a frivolous appeal implies that each case occupies a senior tax lawyer for ten full days. (Frivolous cases are not argued in this circuit or most of the other circuits; there is no need to consider travel time and expenses.) If this is really how the Department of Justice staffs these cases, it needs to rethink its assignment practices.

The Tax Division's brief in this appeal is 16 pages long, much of it formulaic and doubtless straight from the glossary function of a word-processing program. Less than half of the brief is specific to Szopa's situation; the rest describes in general terms the pre-levy hearing program and the way � 3660(d) divides review between the Tax Court and the 94 district courts. The record is short; the district court's opinion is one page long; an appellate lawyer would not have needed more than a few hours to track down all pertinent details about Szopa's circumstances. Why would it take 10 days to produce a brief at the glacial rate of 1.6 pages a day? Other cases may require more work, but it is hard to imagine that any frivolous tax-protester appeal would entail a brief exceeding 25 pages. To use more is to show that the appeal is not frivolous after all. Yet by the Department's calculation the appellate lawyer generates less than three pages a day in frivolous appeals.

*3 Something must be wrong in these numbers-though other circuits have accommodated the Department's request. See, e.g., Kyler v. Everson, 442 F.3d 1251 (10th Cir.2006) ($8,000 sanction, exactly as Tax Division proposed); Stearman v. CIR, 436 F.3d 533, 538-39 (5th Cir.2006) (adopting $6,000 presumptive sanction on Tax Division's request). At least four more circuits have made similar awards in unpublished orders. None explains, any more than the Department itself has done, why these are appropriate sanctions.

An adjustment to keep this circuit's sanction constant in inflation-adjusted dollars is appropriate, so the presumptive fine now is $2,700. It may be, however, that the Department has more to say on behalf of a larger number. So we will allow it 14 days after this opinion's issuance to explain how many days of legal time the Tax Division devotes (on average) to each frivolous appeal, how the $11,000 figure was calculated, and why there has been such a substantial increase since 1995. Szopa will have 10 days to respond. (She ignored the Department's Rule 38 motion; she would do well to use this renewed opportunity to address the subject.) We then will either stick with the inflation-adjusted sanction of $2,700 or make a further change if one has been justified.

One additional adjustment is apt. Repeat offenders are more culpable, not only because they must know better (and because the risk of mistake is lower) but also because they have demonstrated resistance to specific deterrence. Szopa is a recidivist, having been told by our decision of 2000 that she owes and must pay income taxes. That she is still in denial mode six years later, for another set of tax years, demonstrates the need for sterner action. The presumptive sanction for second or successive frivolous tax appeals will be set at double the norm ($5,400 unless adjusted after the supplemental briefing). This much, at least, is payable immediately to the Clerk of Court, and if it remains outstanding after 10 days we will enter an order under Support Systems International, Inc. v. Mack, 45 F.3d 185 (7th Cir.1995), blocking Szopa from conducting further civil litigation as a plaintiff in the courts of this circuit until full payment has been received.
The judgment of the district court is affirmed, an interim sanction of $5,400 is imposed, and the United States is invited to file within 14 days further justification supporting a higher award.

The point of this long posting is that it's interesting how a 7th Circuit Judge will publish an opinion microscopically parsing a demand for a couple of thousand bucks -- by the Government, on the public's behalf, merely seeking its costs of defending a frivolous appeal by a repeat tax protestor -- while a federal judge in Miami gives away almost a quarter billion to counsel without any close examination of what they ask for?

Thanks to my good friend Richard Jacobus for the tip.

Million dollar employment verdicts

Mike Fox of Jottings of an Employer's Lawyer has a listing of some recent ones, including $1.3 million to an insurance agent who said he was terminated because of his bipolar disorder, $2.4 million to a suburban Detroit teacher who said she got in trouble with the principal because being of Chinese descent she was uncomfortable patting people's backs, $1.75 million in a racial harassment case, and $9 million and $2.8 million in two separate whistleblower disputes. All in all, writes Fox, the "million dollar verdict seems to be alive and well."

Two Miami law firms were awarded more than $300 million Thursday in attorneys fees for their work in a suit against Exxon Mobil Corp. [See the AP report here.]

The Miami firm Stearns Weaver Miller Weissler Alhadeff & Sitterson will receive about $247.3 million, while the firm of Pertnoy, Solowsky and Allen will get about $53.2 million. Three other law firms in the case were awarded a measly $8.6 million.

The suit was a run-of-the-mill class action -- Exxon was blamed for not providing discounts on gasoline prices that it had allegedly promised 10,000 stations. Exxon lost at trial (how surprising), and last year the Supremes rejected its appeal. Interest accruing during its appeal process more than doubled the amount due by Exxon. [Maybe there should be an expedited process whereby the Supremes tell tort defendants "sorry, we're not going to intervene in the case, go ahead and pay quick."]

Gas station owners are now in for a bonanza of about $65K each on average. They will be waiting for their payments to be determined by a special master (also presumably paid out of the proceeds). Of course, the lawyers' payment is 428,600% of the gas station owner payout.

U.S. District Judge Alan Gold Gold dismissed protests about the amount of the fees, noting the "length of the firms' involvement in the case, the extensive appeals and the risk the firms faced if they lost at trial or on appeal." There was no calculation of the hourly worth of the lawyers' time.

I've been working at George Mason Law School for 19 years now. I'm at tremendous risk if I lose this job. I'm giddy at the prospect of what Judge Gold thinks my next renewal contract should be worth.

The prominent Columbia corporate law professor has a good column on the indictment in the Jun. 19 National Law Journal, unfortunately not online. A couple of snippets:

Of course, all defendants are entitled to a presumption of innocence. The defense of Milberg Weiss and its partners is that they only paid referral fees to other law firms or lawyers and did not know that the referral fees were being passed through to the clients. This issue is for the jury to decide, but defense counsel had best be prepared to answer one obvious question: Does a law firm need to pay referral fees to another law firm 70 or more times to obtain the same plaintiff over and over? Could it not have simply asked its client, after the first several cases, if it could contact him directly about future cases? If he refuses, the issue of willful blindness begins to surface....

Many have long wondered as to what could motivate anyone with no real financial stake to be deposed in hundreds of cases, and the current indictment will suggest to some that under-the-table payments have long been customary. Indeed, professional plaintiffs appear to have maintained broad and inclusive stock portfolios with trivial holdings that were designed to give their law firms immediate access to court. One does not logically do this for free.

Frivolous tax-protest arguments

They get no sympathy from Judge Easterbrook, who however does take a great deal of concern that that the sanctions be calibrated (PDF)(via Bashman).

Georgetown law faculty

A bunch of them now have a group blog (via Eve Tushnet).

Tobacco Road to Victory

The WSJ reports that Florida's Supreme Court, today, upheld a decision, made by an appellate court in 2003, to toss out a $145 billion verdict against America's largest tobacco companies, made in Engle in 2000. This award was the largest single punitive award in US history. In a 79-page ruling, the court wrote:

"We vacate the punitive damages award because we unanimously conclude that the punitive damages award is excessive as a matter of law..."
Read the whole thing ($$$) here.

Speaking of Richard Epstein, he's one of several commentators my Manhattan Institute colleague Paul Howard has lined up this week on our sister site, Medical Progress Today, for an excellent 100-year retrospective on the Food and Drug Administration. Look here for Richard's excellent piece, "How Safe and Effective is the FDA?", which was published last Friday on the FDA's 100th anniversary. On Monday followed the Pacific Research Institute's John Graham with "The Cost of a Caring Leviathan: The FDA at 100"; yesterday, MI's David Gratzer with "A Tale of Two Anniversaries: The Discovery of Alzheimer's and the Founding of the FDA"; and today, the Hoover Institute's Henry Miller with "The FDA at 100." MI's Ben Zycher wraps up the series tomorrow.

Organized lawyerdom in Australia is complaining bitterly that the rate of injury lawsuits has declined steeply since the introduction of curbs on liability a few years back. The Sydney Morning Herald has more.

"Always blame the empty chair"

How to win really big jury awards? According to one who knows, one key is to put the worst possible construction on the opponents' inability to produce one or another piece of evidence:

Stephen D. Susman of Houston's Susman Godfrey was credited with last year's fifth-largest jury verdict -- $130 million trebled to a whopping $420 million in a federal antitrust case -- in large part by blaming former employees of the defendant who were not available to answer for documents that they had authored and their employer could not explain...[U.S. District Judge Mariana Pfaelzer later vacated the award].

...Susman identified a number of courtroom maneuvers that seemed to work, beginning with "blaming the empty chair" -- former Tyco HealthCare Group employees who were not available to testify -- for documents they had written that made the company look bad, but which other company employees could not explain.

"Always blame the empty chair, always blame the missing documents: the plaintiff in a case always needs to complain about the witness the defense doesn't put on the stand and criticize the defense for documents it doesn't show the jury."

Susman also showed the jury a two-minute montage of the key people on the other side, "trying to show that they were being evasive, which was very effective."

(Peter Geier, "Blame empty chairs", National Law Journal, Jun. 5, not online)

Richard Epstein on PBS

Ben Wattenberg interviews PoL favorite Richard Epstein on the PBS show Think Tank this weekend. Check your local listings.

Ken Lay's death

I have posted a quick retrospective and some additional thoughts. One hopes, perhaps vainly, that this will prompt the sort of sober reflection on justice that should have occurred years ago when this prosecution started.

Medical malpractice "safe harbors"

Vanderbilt professor James Blumstein has an interesting working paper titled "Medical Malpractice Standard-Setting: Developing Malpractice 'Safe Harbors' as a New Role for QIOs?" From the abstract:

Recent tort and medical malpractice reform has largely been directed at damages for noneconomic loss, a remedy-centric approach. This article addresses the issue of cost not from a remedy-centric perspective but from the perspective of the impact of the liability-determination process and standards on levels of utilization and therefore cost - the defensive medicine perspective.

Punting DC schools to the courts?

That's the effect of a seemingly innocuous, but pernicious, proposal before the voters of Washington, D.C. to require its schools to be "high quality" according to AEI's Rick Hess.

A gigantic series of class actions in Florida, alleging a wide-ranging conspiracy between competing HMOs to cheat doctors through sinister use of claims-processing software, was dismissed on summary judgment for lack of evidence. But the lawyers who brought the class action don't mind: they already settled with six co-defendants for about $600 million, $183 million of which will be split amongst the plaintiffs' lawyers. The settlements essentially allowed them to, as gamblers say, "play with the house's money" in continuing the case against United Healthcare and Coventry, who are still on the hook for millions (and perhaps tens of millions) of dollars for their own attorneys and expenses (including the cost of experts for analyzing millions of computerized records) in responding to the five-year litigation. $400 million will be split amongst 700,000 doctors (as well as the costs of administering the settlement). Next time the AMA complains about the costs of excessive meritless litigation, they can perhaps look in the mirror. Plaintiffs lawyers included David Boies (Dec. 1, 2003; Jan. 1; Sep. 30, 1999) Dickie Scruggs (who brought consumer class actions that were thrown out earlier) and Archie Lamb, who hasn't updated his litigation website. Plaintiffs have not yet decided whether to appeal, but, as the suit sought billions, and settled for much less, one suspects they knew all along their case was weak. (Julie Kay, "HMO Suit Brings Big Payoffs to Lawyers but Leaves Unsettled Questions", Daily Business Review, Jun. 27; John Dorschner, "Suit against insurers tossed out", Miami Herald, Jun. 20). Press coverage was diverted by an irrelevant footnote Judge Moreno left criticizing executive compensation at HMOs.

Disclosure: I represented CIGNA in an appeal of collateral litigation related to these class actions.

Alien Tort Claims Act

Police break up a union rally at a Coke bottler in Turkey? Reason enough to sue Coca-Cola in the U.S., according to the International Labor Rights Fund in Washington, D.C. What if any role the Turkish authorities will get to play in the proceedings is unclear. More Forbes coverage here, here, here, here and here.

I agreed heartily with most of what Prof. Childs had to say here last week in his excellent "tort reform for liberals" series (starting here; also see entries on his must-read TortsProf site). Maybe this means I've become a liberal (OK, maybe a "classical liberal") but I prefer to think it instead indicates that many of the issues here transcend conventional political labels.

A few observations:

New report by Richard W. Weekley and Hugh Rice Kelly for Texans for Lawsuit Reform takes a look at that state's successes.

"Unbalanced Justice"

Florida Coalition for Legal Reform has a report (PDF) making the case for litigation reform in that state.

One-way fee shifts

A bill in the California legislature would create new entitlements for the state attorney general's office -- and even in some cases private attorneys partnering with the AG -- to reap one-way fee shifts from losing opponents. Under a one-way arrangement, of course, there is no corresponding and symmetric obligation to pay fees when the opponents prevail. Civil Justice Association of California sounds the alarm.

The Lay-Skilling forfeiture motion

The Enron Task Force filed its forfeiture motion yesterday in the criminal case against former key Enron executives Ken Lay and Jeff Skilling. Inasmuch as the Task Force seeks more than the net worth of both men combined, it will be interesting to count how many attorneys from various parts of the Enron litigation landscape will descend upon the courthouse in Houston to compete with the Task Force's claim to Lay and Skilling's remaining assets. More on the motion and a download site for a copy of it are here.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.