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October 2006 Archives

New Jersey's school-finance-suit debacle

For 25 years, the New Jersey Supreme Court has used the vehicle of a school-finance lawsuit known as Abbott v. Burke to drag the students, teachers and families of the state through an "ambitious court-ordered social experiment to narrow the achievement gap between rich and poor students, whites and minorities". Yesterday the New York Times surveyed the wreckage that has resulted. In some poor cities, spending has skyrocketed but achievement is still dismal: Asbury Park spent $18,661 per student in the 2004-5 school year as against a statewide average of $10,509. The Camden school district is wracked with scandal, as local officials have apparently helped themselves to some of the money sloshing around. Meanwhile, a contrasting "success story" under the lawsuit is by no means free from ambiguity: residents of Garfield have repeatedly voted down school taxes over the years, but court-ordered payments from Trenton have come to the rescue, and now the schools have improved courtesy of statewide taxpayers, who get to shell out for both their schools and Garfield's. Quoth Bastiat: "The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else."

More on school finance lawsuits here.

Trans fat panic

The American Council on Science and Health has a new report out on "Trans Fatty Acids and Heart Disease", cautioning against some of the hype spread on the topic by groups like the Center for Science in the Public Interest. The proposed New York City ban on restaurant use of the sinister lipids has overshadowed discussion of the companion proposal floated by Nurse Bloomberg's health department, namely compulsory calorie labeling in chain restaurants; the New York Times's Thomas Lueck has more on that problematic proposal. And Ken Shepherd of the Business and Media Institute was kind enough to mention me, quoting my comments on ABC Evening News, in an article on the subject late last month.

Tomorrow we kick off our next featured discussion, a four-day round-robin on the election and its implications for legal reform. It won't be a debate format, more like a free-for-all of commentary and reporting that will tackle such topics as:

1) Races around the country where law and litigation have been an issue, or a motivating force;

2) Activist state attorney generals on the ballot, or running for higher office;

3) Ballot propositions to watch on election night;

4) Implications for lawsuit reform and other legal issues if one or both Houses of Congress turn Democratic.

Ted Frank, Jim Copland and I will all be participating, and we also expect surprise guests to stop by for one or more days. In fact, if you've got something interesting to say about the legal politics of Election '06, we invite you to send any of us an email (my address is editor - [at] - this-domain-name - .com) to ask about contributing.

NY Times on future reforms

The New York Times article has some remarkable good news: the Bush administration is looking into sweeping moves to reform securities law, including paring Sarbanes-Oxley (Mar. 6); limiting the aggressiveness of the Thompson memo; federal limits on overzealous state attorneys general; and, notably, ending the judicially-created civil enforcement of 10b-5, which has led mostly to strike-suit mischief and left-pocket-to-right-pocket wealth transfers taxed by attorneys (e.g., Jun. 26). But the headline tells it all: "Businesses Seek New Protection on Legal Front." As even the left-leaning Slate notes, "The story has the usual he said-she said, with several experts pointing out that scaling back regulations would be a mistake. But what it lacks is a good analysis of Sarbanes-Oxley's effect on business and the economy. While it may be tempting to toss this all off as the Bush administration seeking to help out buddies in the business world, there's a lot more at stake here." That analysis is present in the Wall Street Journal, where Glenn Hubbard and Brookings Institute chair John Thornton discuss rationalizing securities regulation.

Update, Oct. 31: See also Larry Ribstein today.

More on Philip Morris v. Williams

Bloomberg's Greg Stohr notes the stare decisis issues of the case. Legal Times's Tony Mauro provides the best press summary of the case so far. The Legal Times also has a debate between Roy T. Englert Jr. and Daniel R. Walfish and Deborah Zuckerman and Elizabeth J. Cabraser. Cornell Law provies a preview. About half of the briefs can be found on the Supreme Court Times site; Findlaw also has the certiorari briefs. Howard Bashman found the Williams brief "surprisingly persuasive." Blogger Tim Sandefur was one of two counsels of record on the interesting Pacific Legal Foundation brief. Somehow ATLA managed to file two briefs, one on behalf of Mayola Williams through its Center for Constitutional Litigation, and one on behalf of itself as amicus. We covered the case earlier on Oct. 26; see also links therein.

Connecticut: Contract? What contract?

Williams and Mona Raymond ran a horse farm in Connecticut. Before offering a horseback riding lesson to Jessica Reardon, they had her sign paperwork, where she represented that she was an experienced rider, that she had ridden horses frequently, and that she would not turn around and sue the Raymonds for negligence. So assured, the Raymonds agreed to give Reardon a lesson; Reardon was thrown from a bucking horse; Reardon went ahead and sued. The Connecticut Supreme Court held that the waiver was "unconscionable," and, while Jessica Reardon is perhaps better off because she'll get to try to persuade a jury that it was the Raymonds' fault that she fell off a horse, the rest of Connecticut consumers are now considerably worse off. Vendors of goods and services can no longer offer Connecticut customers goods and services that they could only afford to offer with the promise that the customers would not sue. Other Connecticut vendors will raise their prices to account for the risk that their contracts, too, will be called "unconscionable" after the fact because of this sort of ex post instead of ex ante analysis.

Nor could the Raymonds defend themselves by pointing out that the experienced Reardon had assumed the risk. The court's reasoning, as reported by the Insurance Journal, is appalling:

The court acknowledged that there are certain risks that are inherent to horseback riding as a recreational activity, one of which may be that horses move unexpectedly. However this "does not change the fact that an operator's negligence may contribute greatly to that risk." For example, the defendants may have negligently paired the plaintiff with an inappropriate horse given the length of time since she last had ridden or negligently paired the plaintiff with an instructor who had not properly been trained on how to handle the horse in question. The court said both of these scenarios "present factual questions that, at trial, may reveal that the defendants' negligence, and not an inherent risk of the activity, was to blame for the plaintiff's injuries."

("No Horsing Around, Conn. High Court Tosses Liability Waiver", Insurance Journal, Oct. 26; Reardon v. Windswept Farms LLC). Such questions are expensive to determine, but the Raymonds did not charge their customers for the expected price of having to litigate; Reardon took advantage of these lower prices and then demanded the extra service anyway, and the court rewarded her disingenuousness. I wrote about this basic unfairness in a recent washingtonpost.com column.

McCarran-Ferguson and liability insurance

With so many trial lawyers claiming that they're innocent for recent increases in insurance rates, and that the rates actually reflect problems with the insurance industry that can be solved only by ending their antitrust exemption, and so many policymakers apparently listening, it's worth revisiting this 1992 Regulation article by Wharton Professor Patricia M. Danzon:

I have a discussion of some interesting moves on the securities regulation horizon -- including getting rid of the private remedy under 10b-5 and revising SOX 404.

Welcome Wall Street Journal readers

Welcome to Wall Street Journal readers who have arrived because of my column today on lawsuits against banks over terrorist checking accounts. Click around here for coverage on various legal issues including the Vioxx litigation, or for academic debates on these subjects. I also have a site at the AEI Liability Project, and write for another reform-related website, Walter Olson's Overlawyered.com. There are many more reform-related links on the site.

Hevesi ethical meltdown

Why are we somehow not surprised? (PoL May 26, 2006 and Oct. 25, 2004; OL May 14 and Dec. 10, 2004 and Apr. 14, 2005). More: The New York Sun's extensive coverage is here.

The "shareholder democracy" scam

In today's WSJ, Arthur Levitt, who helped bring us SOX, has an another in a long string of arguments for what he calls "shareholder democracy." As I discuss, Levitt and his ilk have politics on their minds, but it's not about shareholders and it's not about democracy -- it's about unions and the federal government controlling corporate governance.

Former Clinton administration Acting Solicitor General Walter Dellinger: "This practice is one that every bank in California, and every bank in the United States, engages in every day ... and has done so for as long as anyone can remember." Judgments to date thanks to a friendly trial judge: over $1.3 billion plus attorneys' fees yet to be determined. Plaintiffs are seeking $1000 penalties per class member for the standard practice of internal account balancing through a creative interpretation of a California statute and 1974 case on a different issue, and have already filed further class actions. (Pam Smith, "Banking Industry Faces High Stakes in BofA's Appeal of Class Action", The Recorder, Oct. 27).

Update: Roy Meadow

Prof Sir Roy Meadow, the paediatrician whose statistical error in the Sally Clark murder case led to her wrongful conviction, was not guilty of serious professional misconduct, the [UK] Court of Appeal has confirmed. But the court allowed an appeal by the General Medical Council against a High Court ruling that experts who give evidence in court are immune from disciplinary proceedings initiated by anybody but the trial judge.

(Joshua Rozenberg, "Both sides welcome Meadow ruling", Telegraph, 27 Oct.) (h/t F.R.). Also: Independent; Times; BBC. Previously: Mar. 5 and links therein.

Op-eds by Jim

Our own Jim Copland has been on New York City op-ed pages twice in the past week. Last Friday he was in the New York Post on the subject of lawsuits against the city over dust inhalation by 9/11 rescue workers. And on Wednesday he commented in the New York Daily News on a scheme in the City Council to ban aluminum baseball bats.

Eliot Spitzer and excessive compensation

It happens that Judge Charles Ramos in Manhattan has presided over more than one dramatic legal proceeding touching on questions of excessive compensation for high-paid wheeler-dealers: the Grasso/NYSE case, and an inquiry into the mega-legal fees awarded in New York's portion of the giant tobacco settlement. And New York Attorney General Eliot Spitzer also turned up as a key protagonist in both cases, too. It's just that -- as Roger Parloff notices -- Spitzer's role was to assail the excessive compensation in the one case and to defend it in the other. Parloff links to a profile of Judge Ramos by Reynolds Holding on the new and promising-looking website JudicialReports.com, which covers the New York judiciary and is published by the Institute for Judicial Studies.

Four views on Philip Morris v. Williams

I have written a piece on the Philip Morris v. Williams case for the Business and Media Institute. For other views, see Anthony Sebok (Brooklyn Law), Alan Morrison (Public Citizen), and Adam Cohen (New York Times). Morrison argues that the federal courts have no role in reviewing state-court decisions, which makes one wonder what his position is on habeas corpus. Cohen's op-ed misstates what happened in Andrade, which was a case of collateral (and thus limited) review, rather than a direct appeal, like Williams, where a civil defendant does not even have the option of collateral review.

Earlier: Oct. 12; May 30; Feb. 2.

Update: The American Constitution Society press briefing on Philip Morris v. Williams (in which I participated with Peter Rubin, Neil Vidmar, and Bill Schultz) is now online.

Global warming lawsuits, cont'd

Business Week (via Lattman) discerns the onset of

an ambitious legal war on oil, electric power, auto, and other companies whose emissions are linked to global warming. ... the ultimate goal for environmentalists isn't necessarily to win cases but to ratchet up the pressure on business and politicians to impose mandatory curbs on greenhouse gas emissions....

As with tobacco, plaintiffs are trying out a variety of legal theories, some quite speculative. ...Stanford University and others plan symposiums on legal responses to global climate change. And Stephen D. Susman, one of the nation's top trial lawyers, is making the issue a personal crusade.

Law.com/The Recorder covers the growth in global warming as a subject of corporate legal practice (Jonathan Adler comments). The big firms might even want to involve their criminal defense and media law specialists if we're really in for Nuremberg trials for climate change deniers. Earlier coverage here.

"Spitzer is good for business"

Don't say we don't link to a range of different views around here: "When it comes to fashioning sound public policy in areas where legitimate business interests are at stake, Mr. Spitzer has demonstrated on many occasions that he is neither anti-business nor a knee-jerk reactor. He placed New York among the states that supported the Bush administration's consent decree ending the Microsoft case, rather than among those states that opposed it. He has long been a supporter of and also an advocate for sound reforms in the area of tort law." (sub-only WSJ at the moment, but a search on the name of Donald G. Kempf Jr., formerly executive VP and chief legal officer of Morgan Stanley, may turn it up as a reprint soon). P.S.: Jane Genova thinks it's a Halloween stunt -- "Activist AG Dressed As Good for Business".

Did the PSLRA help shareholders?

That's certainly what the data suggests in Professor Michael Perino's paper "Institutional Activism through Litigation: An Empirical Analysis of Public Pension Fund Participation in Securities Class Actions."

In the Private Securities Litigation Reform Act of 1995, Congress created the lead plaintiff provision in the hope that institutions would closely monitor class counsel and thereby curb the agency costs that typically plague securities class actions. This paper uses a random sample of 627 pre- and post-PSLRA settlements to examine the efficacy of this provision. Specifically, the paper analyzes whether there is any correlation between the participation of one kind of institutional investor, public pension funds, and settlement outcomes, attorney effort, or attorneys' fee requests or awards. The paper finds that cases with public pension lead plaintiffs have larger settlements, recover a greater percentage of the stakes at issue in the case, have greater attorney effort, and have lower fee requests and awards than cases with other types of lead plaintiffs. These findings suggest that public pensions do in fact act as effective monitors of class counsel.

Of additional interest to our readers: auctions substantially reduce fees, ceteris paribus, and, even controlling for the different client mix and case mix it had, Milberg Weiss's fee requests are statistically significantly higher than those of other firms, which is a data point supporting the idea that they financially benefited from the alleged kickback scheme described in the government's indictment of them.

The broad reach of civil RICO

The New York Times headline—"No Mob Bosses in This Legal Strategy"—says it all. When I researched the question thirteen years ago, civil RICO had yet to be used against violent organized crime. I don't think that's changed. The latest attempt: the French company Vivendi is suing the German Deutsche Telekom over a Polish telecom deal gone bad after an Austrian arbitration ruled in favor of Deutsche Telekom. Why this is filed in Seattle? "The latest legal step is based on Vivendi�s contention that American phone networks were used to send e-mail messages as part of an organized scheme to defraud the company." (Ken Belson and Kevin O'Brien, New York Times, Oct. 25) (via Bashman). Earlier on Point of Law: Jun. 19 and links therein.

FDA pre-emption update

As we noted on Mar. 21, the much ballyhooed FDA statement on pre-emption in the preamble of its warnings regulations had no more force of law than the amicus briefs it had been filing for several years, and thus could continue to be disregarded by judges indifferent to the public policy implications. Attorney Stephanie A. Scharf, writing for Law.com, notes that that is precisely what has happened in several cases, as courts disagree on whether to apply the FDA position. The matter could go to the Supreme Court, as the differing positions percolate up the appellate ladder. The first appellate court to rule, the Second Circuit, decided against applying the FDA standards in Desiano v. Warner-Lambert et al.


John Goff in CFO magazine on the boom in overtime litigation: "Some of the trouble stems from a common misconception that if an employee is salaried, overtime pay goes out the window. Given that many employees ask to be salaried (perceiving it as a status-booster) and managers are often happy to comply (seeing it as a way to save money), a potential problem may balloon until a lawsuit comes along to pop it. ... 'The federal overtime law is confusing for many employers,' says Penny Morey, managing director at CBIZ Human Capital Services. 'Even HR professionals don't always understand it, so line managers are even less likely to follow it correctly.'" (via WorkplaceProf Blog).

Another Vioxx plaintiff drops her case

Texan Sharon Rigby

...had alleged her use of Merck's Vioxx painkiller caused her heart attack. Merck was prepared to argue other risk factors played a role, including her smoking and a family history of heart disease. ...

Rigby's trial was set to begin Nov. 8 before Texas state judge Randy Wilson, but it has been canceled, according to Merck. It was to be the first case among hundreds of Vioxx lawsuits in Texas to be tried in coordinated proceedings before Judge Wilson, Merck said. Two previous Vioxx trials in Texas state courts - both of which Merck lost - were held before the Texas Vioxx lawsuits were grouped together under Wilson's oversight.

"This one was handpicked by plaintiffs (attorneys) as a case for trial," said Ted Mayer of the law firm Hughes Hubbard & Reed, Merck's outside counsel in the Vioxx litigation. "They made the unilateral decision they didn't want to go forward with it."

(Peter Loftus, Dow Jones Newswires, Oct. 24).

AAJ: not easy to shake that stigma

Op-ed contributor John Fabian Witt, in the New York Times, gives a brief history of the several name changes undergone by the present Association of Trial Lawyers of America, soon to become the American Association for Justice. He concludes: "At KFC (n� Kentucky Fried Chicken), the chicken is still fried. At Altria (n� Philip Morris), the cigarettes still cause cancer. And at the American Association for Justice, some will say that the trial lawyers are still chasing ambulances." More, at OL, here and here.

David Egilman on asbestos screenings

Not new, but an evergreen worth memorializing: in 2002 the American Journal of Industrial Medicine published a letter from David Egilman MD, of the Brown University Department of Community Health, on the consequences of mass attorney-directed asbestos screenings. Dr. Egilman, who himself has testified extensively for plaintiffs in asbestos and other toxic tort litigation, was critical of attorneys who paid x-ray readers if they obtained desired results but not otherwise, "shopped around" x-rays until they found a radiologist willing to play ball, and in other ways massaged the files of unimpaired claimants so as to develop asbestos lawsuits. The result was to divert huge sums from the coffers of bankrupt companies to unimpaired claimants, even as genuine victims of mesothelioma and other asbestos-related ills were sent away with inadequate sums. Dr. Egilman's letter -- cited by, among many others, by Sen. Hatch, by plaintiff's lawyer Steven Kazan in Senate testimony, by Eddie Curran of the Mobile Register in that paper's landmark series -- is available here. Incidentally, for what it's worth, Egilman has since then come in for criticism from Ted, here and here, on unrelated issues.

Litigation Day, coming up?

John Fund in the Wall Street Journal: "Control of Congress may be decided in the courts, starting Nov. 8".

Reports Marcia Coyle in the National Law Journal: "The Class Action Fairness Act of 2005 has had a swift and significant impact on the nature of class actions filed in, or removed to, federal court -- including a sharp increase in contract and tort class actions, according to a recent report by the Federal Judicial Center." The report is here in PDF format, and the Federal Judicial Center's site is here.

Parloff on Vioxx litigation

Roger Parloff's new blog has a great entry on the latest Vioxx litigation developments; Parloff is the first reporter I've seen to note both that (1) "23,800" lawsuits really reflects 41,750 sets of plaintiffs; and (2) many of the lawsuits are completely meritless by any standard. He has an interesting quote from Kent Jarrell, a spokesperson for Merck's outside law firm, Hughes Hubbard & Reed:

Fascinatingly, WashingtonPost.com's "Think Tank Town" column, for what I believe is the first time in its history, gave up its space for a lobbyist, Jon Haber of ATLA, to "respond" to a column—my column—written by a think tank fellow. That would be an interesting choice in and of itself if the response were actually a response, but it's not: it's a collection of ad hominems and insults and non sequiturs. Let's match up one set:

Tag is no longer "it"
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Officials at an elementary school in Attleboro, Mass. have banned kids from playing tag, touch football and any other unsupervised chase game during recess. The school’s principal instituted the rule, citing the risk of injury and litigation. Here’s the story from the Boston Herald and the AP.

Recess is “a time when accidents can happen,” said Gaylene Heppe, the Willett Elementary School Principal in Attleboro, Mass., who approved the ban. She claims the rule is nothing new. It is part of a broader playground rule that has been in effect for five years banning hitting and inappropriate touching. Famous early American torts cases actually sanctioned "unapproved touching" on school playgrounds, but fear of suits by parents of injured children has obviously filtered down to insurers of school systems, and through those firms to the school boards themselves.

Elementary schools in Cheyenne, Wyo., Spokane, Wash., and suburban Charleston, S.C., have apparently also recently banned tag during recess.

Eliot Spitzer, derivative plaintiff

As Eliot Spitzer carries on his costly and complex litigation against Richard Grasso, I wonder when the people of the state of New York will wake up to the fact that substantial public funds are being spent on behalf of the shareholders of a privately owned stock exchange.

The shocking Grasso decision

I have an analysis of Justice Ramos' questionable decision on Dick Grasso's receipt of supplemental retirement payments from the NYSE, with excerpts from the opinion. Justice Ramos decided to rule summarily now, before the election involving the plaintiff in the case, rather than waiting for a trial on facts regarding the board's knowledge and Grasso's good faith.

The Lynne Stewart Story
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Slightly off topic, perhaps -- I discuss here the lamentable Lynne Stewart case, a tragic example of what happens when lawyers' "zealous advocacy" inflicts terrible externalities on society.

They come off as somewhat Swiss-cheese-like in this Roger Parloff analysis.

The Center for Individual Freedom has just published what it calls a special investigative report by Cary Cardwell on Garcia v. Ford Motor, the notorious Crystal City, Texas case in which a jury's award of $31 million against the automaker following a rollover emerged from a tangle of undisclosed personal connections and interests, including a juror's having been romantically involved with the plaintiff's attorney and having herself helped recruit clients to file the suit. Overlawyered gave the case considerable coverage in 2005: Mar. 7, Mar. 22, May 29, etc.

I'll be speaking at an American Constitution Society event in Washington October 24:

More on the Fraser mold decision

The New York Law Journal has a lengthy piece on Justice Shirley Werner Kornreich's opinion in Fraser v. 301-52 Townhouse Corp. (Mark Fass, "Plaintiffs Fail to Meet Burden in Residential-Mold Case", Oct. 19), which Walter covered Oct. 17. The critical moment will be what the appellate division does with it, but, unless reversed, it will be a significant nationwide precedent.

A left-leaning group succeeded in winning a harassing deposition of former Associate Attorney General Robert McCallum to see if he inappropriately interfered with the tobacco litigation, and found... nothing, according to Michael Siegel (Oct. 17), who criticizes Americans for Nonsmokers' Rights and the Campaign for Tobacco-Free Kids for their baseless attacks on McCallum. Earlier: Jul. 24.

ABA Journal on qui tam expansion

Last year, as part of the Deficit Reduction Act of 2005, Sen. Chuck Grassley (R-Iowa), patron saint of qui tam/False Claims Act lawyers from coast to coast, inserted a provision "to prod states into passing their own false claims acts with incentives to increase their share of recoveries in Medicaid fraud cases. The inducements would allow states to up their takes by 10 percentage points, provided their false claims acts follow the federal model. By involving more states and more lawyers, supporters hope to increase recovery amounts across the board." The ABA Journal has now published an article surveying the early results. Janet L. Goldstein, a plaintiffs lawyer from Washington, D.C., tells the journal �I think you'll see a real shift in focus toward state cases. We've got state attorneys general who are very excited about these cases.�

In addition to quoting supporters of the expansion, the ABA Journal also gives some space to the less enthusiastic "tort reform arguments from some quarters" concerning the new developments. For example, "Washington, D.C., defense lawyer John T. Boese, author of one of the leading texts on the federal act and co-chair of this past June�s ABA national institute on qui tam enforcement", is heard from:

Boese says that qui tam plaintiffs lawyering in recent years has come to resemble what he describes as the �franchise model� of the highly criticized 1990s state tobacco litigation, where the handful of plaintiffs firms in control spread their costs and made billions of dollars in fees by farming out much of the actual work to local counsel.

Boese says he regularly encounters plaintiffs lawyers in false claims cases who appear to use a similar tag-team approach. �Will this become tobacco?� Boese asks. �It already has.�

...[Also of] concern to Boese is a separate provision in the Deficit Reduction Act that requires nearly every provider to conduct employee education programs on fraud and how to file false claims complaints. Besides their potential for increasing the number of new cases, Boese says such programs also undermine the stricter internal company compliance plans and financial controls that have become hallmarks of post-Enron corporate self-accountability.

Worker training in the False Claims Act could become the functional equivalent of a company hiring a plaintiffs lawyer and suing itself, Boese complains.

More on qui tam here and here, and, at Overlawyered, here and here.

Bruce Carton at Securities Litigation Watch (channeling BNA Securities Law Daily) writes that an expert committee (the "Paulson Committee") may be filing a report next month with the U.S. Treasury proposing alterations to securities class action litigation. In particular, Columbia lawprof Jack Coffee says the panel is considering at least two noteworthy ideas: to quote Carton, "[1.] The SEC could 'dis-imply' a private cause of action under Rule 10b-5 against corporations, leaving enforcement of that rule to the government, not private plaintiffs," and "2. 'Stock drop' cases could be moved out of the courts and into the arbitration arena.

"The Paulson Committee's recommendations are due out by the end of November 2006. If either of these ideas are among them, look for a barrage of deafeningly loud disapproval from the plaintiffs' bar and consumer groups".

Trial Lawyers, Inc.: Illinois

This afternoon, the Manhattan Institute released Trial Lawyers, Inc.: Illinois, A Report on the Lawsuit Industry in Illinois 2006. The first comprehensive look at litigation in the Prairie State, the report synthesizes work done by the Illinois Civil Justice League, American Tort Reform Association, and U.S. Chamber Institute for Legal Reform, among others. The report also includes new information, such as the percentage of 2004 contributions to the Illinois State Democratic Party that came from plaintiffs' lawyers and their firms (78 percent) and Illinois' quantitative rank in terms of its medical-malpractice liability as a percentage of gross state product (49th of the 50 states) and its corporations' self-insured liability as a percentage of GSP (48th).

The Madison County Record has already reported on the new study here.

Nina Totenberg has a piece on National Public Radio's Morning Edition today on the South Dakota initiative known as "Jail for Judges" that we covered earlier. (Nov. 15, 2005) At the time, I called the initiative "one of the worst reform ideas ever."

It seems I'm not entirely alone. Among the sources cited by Totenberg, one is a blogger, DakotaWarCollege, who has exposed some of the nuttier ideas behind the proponents of the Jail-for-Judges initiative.

While the Jail-for-Judges initiative seems to be headed for defeat, recent polls show the initiative failing by a little more than ten points. From where I sit, that's still a little too close for comfort, especially on an initiative that is so far outside of the mainstream.

State Data Privacy Legislation

NBC news is carrying the results of a nationwide survey on attitudes towards data privacy. The results are conflicting: while a majority claim to have concerns regarding data privacy (both as to corporations and the government) a majority also claim to be willing to sacrifice what some privacy advocates claim are "personal" items of data for greater convenience, savings and personal security.

For example, forty percent would submit to fingerprinting at a local police station. Sixty percent would carry a driver's license with an embedded ID chip or biometric device. Nearly 20 percent of respondendents would be willing to have a microchip implanted under their skin that could be used to identify the owner and access his or her medical history in the event of a medical emergency.

And yet the conflict between privacy concerns and the efficiencies and convenience that can come from data-sharing have not prevented many state legislatures from adopting data privacy legislation, as outlined in a white paper I recently co-authored (with C. Celeste Creswell) for the Edison Electric Institute, available here.

There is an argument that these many and conflicting state laws make compliance unnecessarily difficult for service providers and that federal preemption is needed to provide a single, national standard.

Causes of autism

The Federalist Society is sponsoring a panel discussion next Wednesday, Oct. 25, in midtown Manhattan on "The 2006 Mid-Term Elections: How They Will Influence Law and Public Policy in America". Panelists include John Fund and James Taranto, both of the WSJ, and Ellis Henican and Jim Pinkerton, both of Newsday. Details are here.

"Whimsical Punishment"

Via Childs, Boalt Hall 3L Jenny Miao Jiang has an interesting proposal for a sentencing-guidelines-style approach to punitive damages. One can certainly quibble with the particulars (the hypothetical Jiang uses is awfully loose with upward adjustments), and there is a danger that the framework Jiang proposes would be obviated in a world without non-economics damages caps, but the idea is intriguing for its pursuit of uniformity in what has been a random-number-generating process to date.

A business coalition is supporting a bipartisan slate of state attorney general candidates across the nation in an effort to discourage plaintiff-bar-funded activist attorney generals. (Jonathan D. Salant, Bloomberg, Oct. 16).

The City of London pension fund said it didn't realize until after the fact that it had become a plaintiff in securities litigation against a pillar of the UK business scene, British Petroleum, seeking to force D&O insurance to cough up for corrosion problems in the oil giant's Prudhoe Bay operations. However, the pension fund had given permission for funds manager ABN AMRO Mellon to sign up for class action suits in its discretion, so it wound up as a client of William Lerach. Lyle Roberts links to coverage in the Times Online and Evening Standard.

Separately, Adam Savett (Lies, Damn Lies, and Forward-Looking Statements) reports that Cohen Milstein Hausfeld & Toll has upped the ante in the transatlantic recruitment of institutional investors as securities plaintiffs by opening a London office.

Sounds like reasonably major news from a Manhattan courtroom:

After a review of more than 1,000 pages of testimony and more than 70 scientific articles and books, Justice Shirley Werner Kornreich concluded that there was insufficient evidence to support the contention that mold or a damp indoor environment causes illness.

�This throws a lot of cold water on the notion that mold is the cause of personal injury,� said Eva Talel, a Manhattan real estate lawyer. �And while this isn�t going to be the last word on the subject, the decision is so comprehensive and well thought out that other judges are not going to be anxious to rule differently.�

Colin and Pamela Fraser had sued their East Side co-op saying mold had caused their family a variety of health problems; Justice Kornreich held a so-called Frye hearing to examine the scientific evidence in the case.

"Legal Pad": new Roger Parloff blog

Veteran legal journalist Roger Parloff, currently legal correspondent for Fortune, has started blogging; highly recommended, like all his writing.

Ted had a good piece last month in the Washington Post, which we've reprinted as the latest in our featured column series.

Milberg "radioactive"

Like Arthur Andersen before it, the firm is finding it hard to wriggle out of its ethical difficulties by merging with a less troubled firm.

Gretchen Morgenson on pay consultants

Gretchen Morgenson today blames pay consultants for excessive executive compensation. She's not troubled by little questions like whether pay really is excessive, where consultants get their influence, and what we should do about it. I discuss these issues and find, among other things, that Morgenson herself may be part of the problem.

The trend noted here gets a major boost:

A federal judge has ruled that workers can file a class-action suit against Tyson Foods Inc. for depressing wages by hiring illegal aliens.

Howard W. Foster, a Chicago lawyer for the Tyson employees, described the ruling in Winchester, Tenn., as a "very big step," allowing him to seek damages for thousands of workers at eight plants -- including one in Glen Allen, Va. -- instead of just the four original plaintiffs.

Foster is suing under the Racketeer Influenced and Corrupt Organizations Act (RICO).

A federal judge in Texas has dismissed a lawsuit against Halliburton Co. brought by survivors of those killed when a fuel convoy was assaulted by insurgents outside Baghdad in April 2004.

The suit had claimed Halliburton bore responsibility because the company knew the proposed route was a dangerous one. U.S. District Judge Gray H. Miller agreed with Halliburton that the Army had sent the convoy, and that it was not a court's place to second-guess the Army's decision.

Here's a link to the Washington Post story.

Connecticut AG Richard Blumenthal

The American Tort Reform Association has issued a sharply critical report on his activities, and in particular his alliances with the private contingency-fee bar. Past coverage of Attorney General Blumenthal here, here and here, as well as many entries at Overlawyered.

"Rogue Jurors"

Reports the ABA Journal: "Jurors With an Agenda Can Batter Justice, and Experts Fear There Are More Than We Suspect".

Double-standard for judicial seminars?

Edward Whelan makes a persuasive case of the disingenuousness of the Community Rights Counsel and Senator Leahy's criticism of judicial seminars.

John Stossel on obesity litigation

"I have a question for federal Judge Robert Sweet: If your own children blamed McDonald's for making them fat, would you buy it? I don't think so."

Matt Bowman finds questionable coverage by the New York Times in the case of whether a court can tell a religious institution who it can hire and fire as a minister.

Anthony Sebok at FindLaw examines the issues in Philip Morris v. Williams, the punitive damages case the high court will soon be reviewing.

Steve Jobs: backdating criminal?

Holman Jenkins points out in today's WSJ that Jobs was just doing the same thing that the so-called backdating criminals at Brocade and Comverse were doing -- aggressively recruiting top talent in a difficult market. I discuss what this says about the perils of criminalizing agency costs.

The WSJ reports that the Justice Department is investigating possibly collusive bidding by private equity firms. I wonder if this isn't about using the antitrust laws to threaten today's most powerful force against incumbent managers of large corporations.

"The Growth of Erroneous Removal"?

On Bill Childs's TortsProf Blog, I've been debating Trevor Morrison in the comments section about his paper with Theodore Eisenberg, "Overlooked in the Tort Reform Debate: The Growth of Erroneous Removal," 2 J. Empirical Leg. Stud. 551 (2005):

Bloomberg's french fry grab, cont'd

Elizabeth Whelan says Nanny doesn't necessarily know best on trans fats. See Sept. 29, etc.

Securities litigation receding

So says a new research report from Sanford C. Bernstein & Co., which also argues that the regulatory climate for corporate governance is getting less awful. (Lattman)

Parade of new blogs

Cities on a Hill is a new project on urban issues published by the Manhattan Institute and featuring a weblog written by former City Journal editor and esteemed author/commentator Fred Siegel. Welcome! Mass Tort Litigation Blog, part of the Law Professors Blog Network empire, is written by lawprofs Byron Stier (Southwestern) and Howard Erichson (Seton Hall). And two lawyers are doing a blog on New York no-fault auto law (via Sui Generis).

Fordham Law Film Festival

It's running Oct. 20-26 in New York City. "All festival films were chosen because of their connection to legal issues, the legal system, and the moral longings for justice," says Fordham lawprof and forum director Thane Rosenbaum. Details here.

"Drug Dilemma"

AEI's Jack Calfee gives Richard Epstein's new book Overdose a sterling review in the New York Post.

Epstein hits just about every issue in today's intense debate over the pharmaceutical industry: patent rights, prices and price controls, drug importation at bargain-level foreign prices, R&D incentives and the role of government, FDA regulation (including drug-safety oversight), drug marketing and its many critics and tort liability.

"Anthrax and Lawyers"

The difference Daubert makes

GMU lawprof (and occasional contributor to this site) David Bernstein finds hope in a Massachusetts judge's ruling on mold-causes-autism testimony.

Blawg Review #78

It's at Human Law, its first UK-based host, and has a British emphasis this week.

"Banks� $30bn Enron question"

Via Schaeffer, the London Times reports on the extortion of the Royal Bank of Scotland: risk that a Houston jury out for blood will accept Bill Lerach's entreaty that the foreign bank be held responsible for an alleged $30 to $40 billion in Enron losses, or settle for pennies on the dollar, which would still be a high nine or low ten digits. Andrew Fastow, the mastermind of the Enron scam, has agreed to testify on behalf of the plaintiffs (and was rewarded with their successful filing on his behalf asking for a lighter sentence). Lerach recognizes that he has RBS in an impossible position:

Armed with Fastow�s deposition, Lerach said the British banks are �doomed to lose�. �If they want to be smart and pay up, we are happy to settle. If they want to go to the gallows in front of a Houston jury, they can be my guest,� said Lerach.

(Dominic Rushe, Oct. 8). Every settling defendant, many of whom lost millions in the Enron affair, has settled for less than five cents on the dollar, but with a scattershot complaint and a judge that has generally refused to dismiss defendants, Lerach has extorted $8 billion to date. One exception is defendant Barclays, which successfully fought off the suit against it in a July 20 ruling; Lerach is appealing.

[Apologies if this has already been posted: I just found out about it, and am leaving for the airport for a speaking enagement so cannot check past postings. MK]

A Federal jury has just found for Merck In a post-warning Vioxx Case. [subscription to Lexis required]

The suit against Merck was taken by a 56-year-old Kentucky man, and was the first trial involving Vioxx prescribed after an April 2002 change to the product label to include information about cardiovascular risk. (In Re Vioxx Products Liability Litigation, MDL No. 1657, Robert Garry Smith v. Merck & Co. Inc., No. 05-4379, E.D. La.; See August 2006, Page 10).

A source told Mealey's Publications that the jury answered "no" to these special verdict questions - whether Merck, by a preponderance of the evidence, failed to adequately warn the plaintiff's treating physician of a risk created by Vioxx; and whether Merck, by clear and convincing evidence, knowingly failed to disclose a material fact to Smith's treating physician in a circumstance in which it was required to do so.

No British Vioxx litigation tourism

An attempt by fifty British plaintiffs to bring their claims in New Jersey instead of the UK was denied by Judge Higbee. (Peter Loftus, Dow Jones Newswires/Marketwatch, Oct. 6). British taxpayer-funded Legal Aid refused to fund the suits last year on grounds that the claims lacked merit, a problem that hasn't stopped lawyers from seeking relief in the US.

Update: Professor Erichson has more details, including links to Judge Higbee's memorandum and order.

Sherwin-Williams strikes back

The large paint company isn't just sitting around providing target practice for Motley Rice & Co. and the local-government entities it enlists as plaintiffs in its suits; it's filing pre-emptive litigation against a group of Ohio municipalities who've filed lead-paint actions, and even one that hasn't but is thinking about it. Jonathan Adler leads a discussion, Camera Lucida applauds the action, and Jane Genova provides extensive coverage and links here, here, here and here.

Municipal liability in the news: Boston

Beantown's $7-million-plus annual payouts for municipal liability ($23 million over three years) are minuscule compared to New York City's -- and are held down by state laws capping damages in suits against the city -- but they're still high enough to raise controversy, especially since cases currently in the pipeline are expected to boost the sums sharply when resolved. This Boston Phoenix article also cites figures for "cities with similar-size budgets, such as Denver ($3 million of a $1.9 billion budget) and Austin ($2 million of a $2 billion budget)". More here (Rochester and other upstate New York cities).

Gretchen Morgenson writing in today's NYT continues to see a scandal in how mutual funds vote. Unfortunately she continues to ignore the evidence on mutual fund voting, some of which was gathered specifically in response to her earlier accusations. I have the whole story.

With a great deal of controversy having mushroomed up about the proposals to curb lawyers' advertising in New York -- including, though not limited to, worries that it will restrict blogging by lawyers -- the comment period has been extended to November from last month. The New York Sun has some editorial comments. Earlier coverage here, here and here.

More: National Law Journal coverage of lawyer blogging ethics controversies around the country.

Commentators have lately aimed much criticism at the conduct of Great Britain's most expensive trial ever, resulting from a lawsuit waged by the liquidators of the collapsed Bank of Credit and Commerce International against the Bank of England; it ended when BCCI withdrew the suit after vast expense to both sides. Bank of England governor Mervyn King condemned the action as "the most expensive fishing expedition in history". Now The Times reports that "judges are hosting a top-level summit with the City [i.e. the leadership of the financial sector] to thrash out reforms that will prevent lengthy trials" such as the recent one.

The hope is that a blueprint for reform will emerge that will cut drastically the length of such cases and prevent their recurrence.

The judges and City businessmen are expected to focus on procedural reforms: active case management, time limits on opening and closing speeches, as well as on cross-examination and possibly a bar on cases going to the House of Lords when both the High Court and the Court of Appeal have ruled one way.

The idea of moving to a more inquisitorial system has also been floated but is not likely to be popular with judges.

To put it very mildly indeed, it's hard to imagine any summit even remotely resembling this one taking place in this country. Perhaps one reason is that the American legal profession is more apt to assume that questions of civil procedure and court reform are matters for the profession to decide among itself, with outside assistance not much welcomed.

Supreme Court clerks redux

Lockyer flayed on automaker suit

It's "kooky" and "trivializes a serious problem", editorializes the Los Angeles Times: "California shouldn't be in the business of filing meritless suits to gain leverage in other cases". "It's not his job to make law through frivolous lawsuits," opines the San Jose Mercury News (via Wilson). It's "reprehensible... little more than a political stunt," adds the Orange County Register. Veteran political columnist Dan Walters of the Sacramento Bee terms the suit "Lockyer's bid to become the champion of cheesiness". One who does like the suit, curiously enough: an environmental adviser to Gov. Schwarzenegger named Terry Tamminen. And the San Francisco Chronicle investigates: what do state lawmakers drive? More here, here and here.

New ACS journal

The American Constitution Society, the liberal/progressive counterpart of the Federalist Society, has launched the Harvard Law & Policy Review, a super-confusing title given that the Federalists' long-established flagship journal is called the Harvard Journal of Law & Public Policy. Orin Kerr at the Volokh Conspiracy welcomes the new venture (check out comments too).

The Dunn indictment

A Mississippi appeals case is a poster child for ethics sanctions against a plaintiff's lawyer and his paid "expert" witness.

In 1993, defendant was passing on the left when plaintiff made a left turn into a driveway and was struck by defendant. Plaintiff was treated for minor injuries. She later asserted that she suffered from post-traumatic stress disorder and that she no longer enjoyed sex, had no friends and her grades had suffered.

A Bolivar County Circuit Court jury awarded Ireland $1 million in 2000 despite the lack of any real physical injury. The Court of Appeals reversed that judgment and remanded for a new trial, finding that a deceased doctor's letter should not have been admitted. A mistrial was declared in the second trial after it was learned that plaintiff had been untruthful about her medical history and psychological condition.

Plaintiff claimed not to have an interest in sex, yet she had been treated for sexually transmitted diseases 41 times and took birth control pills for six years. She also had been pregnant twice. She had sexual relations on the same day she testified as to her loss of sex drive. She also visited a casino 89 times, including once nine days before trial.

At the third trial, plaintiff's expert, Dr. Rodrigo Galvez, opined that plaintiff suffered from post-traumatic stress disorder. The trial court found that plaintiff could no longer pursue claims under which she had given untruthful testimony and failed to comply with discovery. However, the trial court did not impose any sanctions and permitted Galvez to testify despite his reliance on plaintiff's previous false statements.

Even after Galvez learned of the misstatements, he did not change his diagnosis. Rather, he opined that the misstatements were part of the post-traumatic stress disorder.

The appeals court found that Galvez's opinion was not based on sufficient facts or data because it was at odds with the facts introduced at trial about plaintiff's sexual activity and improving grades. Galvez also admitted that he had nothing but plaintiff's word as a basis for his judgment of her pre-accident psychological condition.

"Consequently, the record fails to contain any information that could tend to show [plaintiff] suffered any psychological injury stemming from the accident, aside from her verbal representations, which even her expert witness stated were not factually accurate," the appeals court said. "Therefore, the circuit court erred in denying Gilbert's motion for directed verdict or JNOV."

The Federalist Society "has launched a bibliography of important scholarship, noteworthy cases, and timely law review articles for state supreme court justices and others interested in state courts issues." Assembled at this page, the project thus far includes analyses of five state supreme courts (Alabama, Illinois, Kentucky, Mississippi, Ohio, all PDF) and law review articles, op-eds and conference proceedings grouped into several topical areas including separation of powers, judicial elections and education litigation, among others.

"Hostility to litigation"

Via Federal Civil Practice Bulletin, the Texas Law Review has lately published an article by U. of South Carolina lawprof Andrew M. Siegel (84 Tex. L. Rev. 1097 (2006)) arraigning the Rehnquist Court for the presumed sin of systematic "hostility to litigation". The article's title is "The Court Against the Courts: Hostility To Litigation as an Organizing Theme in the Rehnquist Court's Jurisprudence". It almost seems from that title that to oppose the endless multiplication of lawsuits and litigation is to be "against the courts", but surely the author could not have intended so simplistic a reading.

The AMA has a comprehensive review of the economic literature on the subject of the effect of caps, and finds:

The impacts from caps summarized in this report are average effects found in analyses that have implemented statistical controls for other factors (or potentially competing explanations) for the changes being studied. They measure the average impact of caps that were set at different levels and implemented in states with different pre-cap payment (loss) distributions. The actual impact of a cap in any particular state may be higher or lower than the impacts found in this literature.

Clearly, the body of research on the impacts of tort reform shows that caps have resulted in lower growth in medical liability losses in states that passed caps than in states that did not. The more recent literature on premium effects has found that caps result in lower premium growth. And, two very recent papers based on sufficiently many years of the AMA�s Masterfile data have found that non-economic caps and direct tort reforms more generally have a positive effect on the number of physicians per capita in a state.

Judge Pryor on judicial independence

Eleventh Circuit Judge William Pryor has a must-read WSJ op-ed on the question of judicial independence brought up by Justice O'Connor in recent days.

New column: foiling dishonest lawyers

Boston attorney Peter Morin and I have collaborated on a new column, posted at right, about a simple way to discourage bad-apple lawyers from exploiting vulnerable clients.

...The simple fix is a rule that goes by the name "payee notification". It would require insurance companies to notify a claimant when they forward a settlement check to claimant's counsel. At a single stroke, the client is made aware of the timing and size of the settlement, taking away most of the leeway a dishonest lawyer has to withhold the client's funds.

Several other states, including California, New York, and Connecticut, have already instituted payee-notification rules, and they have worked well. ... So who would oppose it? Interesting that you should ask. ...

As longtime readers of this site are aware, courts in the United Kingdom have issued a number of ringing statements in defense of the principle of assumption of risk, citing it in particular as a bulwark of "the liberty of the citizen" to enter into life and its hazards fully. Recently Alex Wade at the Times Online law blog reported on the British courts' dismissal of a private prosecution action aimed at three men, including a mountaineering guide and a climbing expert, whose lack of due care allegedly helped contribute to the death of climber Michael Matthews on Mt. Everest. Although precedent indicated that mountaineering guides could be held liable for substandard practice which lead to injury, the court dismissed the criminal proceeding in "no uncertain terms," writes Wade.

"It is not the purpose of the criminal law to stifle the spirit of adventure or inhibit personal ambitions," Judge Rivlin, QC, told Southwark Crown Court. The judge was firmly of the view that Mr Matthews' death was "one of the many tragic accidents for which Mount Everest� has become deservedly notorious."

This one's a real head-scratcher...

MetroTimes, the Detroit "alternative" newspaper, has a very one-sided article concerning a defamation suit launched by Morton Grove Pharmaceuticals, Inc. against the Ecology Center of Ann Arbor. The Center has been blasting Morton Grove for its legal sale of Lindane for head lice.

Lindane has been banned for agricultural use by the EPA, and is also banned in many other countries for this use. But for the treatment of persistent lice it remains authorized by the FDA. The latter, in a public health advisory, has emphasized that "Lindane is approved as a second-line treatment for topical treatment of pediculosis and scabies in patients "who have either failed to respond to adequate doses, or are intolerant of, other approved therapies." Second-line therapy is defined as:

1) The patient cannot tolerate the first-line drug of choice or;
2) The patient has used the first-line drug of choice as instructed and the treatment has failed.

For second line treatment Lindane has proven safe and effective. The majority of adverse events occurred in patients with contraindications to the use of Lindane, in patients who used the medication in excessive amounts, or in those who misused the Lindane product. Of the adverse event cases in the FDA database with a serious outcome (hospitalization, disability or death), only a small used Lindane according to the directions in the label. Other patients did not use Lindane according to directions in the label. Most commonly, patients often reapplied Lindane because of continued itching after the treatment, either on their own volition or at their doctor�s negligent recommendation, contrary to the explicit instructions on the package.

Three deaths due to Lindane use have been confirmed by the FDA, although many more deaths have been reported by those who attack Morton Grove. The three confirmed deaths all included use of Lindane not in accordance with the label, including multiple topical applications or oral ingestion. Lindane toxicity was confirmed by autopsy in a child, and was diagnosed before death in one adult. The third death occurred in an adult who ingested Lindane for suicide purposes.

Morton Grove produces a legal product that is the last resort for thousands of people (mostly school-children) suffering from head lice. In 12 years, Morton Grove reports just 22 complaints of adverse reactions and just one lawsuit.

This has not stopped the likes of the Ecology Center screaming that "After more than a half century of use and thousands of reports of illness and deaths blamed on the pesticide, the federal government has banned all uses of lindane -- except by those who rub it on their scalps and bodies to kill lice and mites."

This will be an interesting torts suit to follow.

On Thursday of next week the Federalist Society will be sponsoring a lunchtime panel discussion in Washington, D.C. on the policy issues posed by alleged fraud in mass-tort areas such as asbestos, silicosis, fen-phen and mold. Panelists include Cardozo lawprof (and friend of this site) Lester Brickman; Duke lawprof Francis McGovern; and attorneys Patrick Hanlon of Goodwin Proctor and Joseph Rice of Motley Rice. Details are here.

How FDA drug safety costs lives

According to a doctor quoted in the New York Times, in Italy, it is considered "malpractice" to let a heart attack survivor go home without a prescription for omega-3 fatty acids, which are shown in studies to reduce deaths from heart disease by as much as 20%. In America, however, only 17% of doctors recommend the substance to patients. Why? Because the FDA has not yet caught up with international guidelines; pharmaceutical companies cannot advertise the benefits of the supplement to American doctors or patients; and physicians can only make an off-label prescription to heart patients. (Elisabeth Rosenthal, "In Europe It�s Fish Oil After Heart Attacks, but Not in U.S.", New York Times, Oct. 3).

Here's what's missing from the New York Times report: if that 20% figure is correct, or even half-correct, FDA reluctance costs far more lives than Vioxx allegedly caused throughout its entire existence. The FDA, criticized with 20/20 hindsight over Vioxx, has slowed down drug approvals to a crawl. But heart-attack victims won't be able to sue Public Citizen or the plaintiffs' bar for their culpability in the deaths of thousands of Americans. The demand for no false negatives in drug safety, and the attempt to steal billions of dollars from a pharmaceutical company because it had a minor false negative in hindsight, is costing far more lives because of the increase in Type-II errors.

Arnold vetoes two bills in Sacramento

California Gov. Schwarzenegger has vetoed Senate Bill 1489 (Ducheny), "which would have let the state Attorney General get courts to order defendants to pay the Attorney General's office attorney fees and investigation costs in a wide range of lawsuits against individuals and businesses"(via Civil Justice Association of California, which cheers)(more). And, also following urgings from CJAC, Schwarzenegger has likewise vetoed a bill that would have given the state a 75 percent share of punitive damage awards, but mostly at the expense of winning plaintiffs, with their lawyers still being cut in for rich rewards (more).

Blawg Review #77

It's at Patent Baristas this week, and is particularly strong on IP and tech topics, appropriately enough.

Gov. Schwarzenegger and insurance

The L.A. Times doesn't even try to be fair on the subject. George Wallace at Decs and Excs takes a look at the journalistic wreckage.

ABA Journal on asbestos-suit trends

A topping off and subsequent decline in the number of asbestos lawsuits has been predicted many times in the past -- always erroneously -- and this new ABA Journal survey of the field (via Childs) doesn't really prove the case either way on whether it's finally happening. It does have useful tidbits on the impact or lack of same of various reform measures, including case management initiatives, legislated "medical criteria" for claims, and punitive damage limits. And this on Mississippi reforms:

As recently as 2002, says [Biloxi defense lawyer Ronald] Peresich, �we probably had 120,000 to 130,000 claimants in Mississippi�an enormous number. Today, that number is probably down to about 25,000,� he says, thanks to tort reform legislation and the election of state supreme court judges �who would not permit Mississippi to continue to be a dumping ground� for claims of dubious merit. (Peresich participated in the process of drafting the legislation.)

The editorialists of the L.A. Times take a dim view of the "light" cigarette federal class action ("Wacky Tobacco Lawsuit"): "If Weinstein isn't overruled, his decision will be a windfall for lawyers, a disaster for tobacco companies � which already have agreed to pay out billions of dollars as part of a settlement with state attorneys general � and a travesty for the cause of due process." More here, here, etc.

Gretchen Morgenson: Libertarian?

Gretchen Morgenson has decided that a federal court and the SEC inserting themselves into corporate elections represents some sort of a libertarian or market-oriented approach. I discuss this absurdity and other problems with Morgenson's latest opus on corporate governance.

For decades, plaintiffs' attorneys and labor unions have worked together to elect judges favorable to their interests, and for decades, these elected judges have systematically moved American law in a direction unrecognizable and ridiculed in the rest of the world to create a tort system that takes up a share of the economy more than twice as large as any other Western nation. In response, the business community started supporting judges who had track records of actually following the law; the electorate tended to support these judicial candidates over the plaintiffs' bar's candidates. Because these judges aren't in the pockets of the plaintiffs' bar, they don't reflexively vote for the meritless positions taken by the litigation lobby—and now the New York Times and the press suddenly finds it interesting that judges face elections where they fund-raise, and that campaign funds are more likely to be donated to candidates who are sympathetic to the funder's view of the law. (Adam Liptak and Janet Roberts, "Campaign Cash Mirrors a High Court�s Rulings", New York Times, Oct. 1).

What's amazing is that the Times focuses on a recent Ohio Supreme Court decision, Maitland v. Ford, 103 Ohio St.3d 463, 2004-Ohio-5717. (Disclaimer: I billed a handful of hours to Ford Motor on the case. The views here are my own, and not that of Ford, its co-petitioners, or its attorneys.)

Ohio, like most states, has a lemon law entitling consumers to sue to return cars to dealers for a refund. (A "lemon" is defined broadly enough under Ohio law that my Toyota Prius, which I am completely satisfied with, and has spent precisely one week in the shop waiting for parts, would qualify.)

The statute required consumers to attempt to use an "informal dispute resolution" mechanism before bringing suit. Ford, like other auto dealers, would offer to settle cases by providing a new car at the same price as the old car, minus an offset for mileage; someone who had gotten thousands of miles of use out of the car would face a larger offset than someone who had only fifty miles. Not only did the statute not prohibit such settlements, but the Ohio Attorney General explicitly approved it. Never mind, plaintiffs' attorneys argued, this is consumer fraud, entitling everyone who settled to multiples of damages and attorneys' fees. A trial court threw this out, and an appellate court bizarrely reinstated the claim without any statutory justification, arguing that defendants could only provide the full purchase price in settlement, or must litigate the case. (153 Ohio App.3d 161, 2003-Ohio-3009, 792 N.E.2d 207.) The Ohio Supreme Court took the reasonable position—by a 4-3 vote. All four majority judges took donations from manufacturers; all three dissenters took donations from the plaintiffs' bar. Guess which judges and contributions the New York Times singles out? The real scandals here are that the decision wasn't 7-0, and that the appellate court made a ludicrous decision that needed to be reversed by the Ohio Supreme Court, adding substantial litigation expenses to a meritless claim.

But at no point does the Times discuss the merits of the case. In fact, it oversells the argument of the dissent, by stating "the majority�s ruling gave the plaintiffs an impossible choice: to pursue a lawsuit that could cost more than the car itself or to accept the reduced sum." What the Times doesn't tell you is that the lemon law also permits one-sided recovery of attorneys' fees by winning plaintiffs, so the New York Times's claim is false: there's no Hobson's choice. (See � 1345.75(A).) A plaintiff dissatisfied with a settlement offer who has a meritorious claim has no financial disincentive to litigate.

The Times article entirely ignores the amount of contributions from trial-lawyer organizations to the dissenters (focusing solely on the lawyers who brought the quixotic case), and takes the word of one person without comment that the trial bar is capable of raising only $300,000 for a judicial candidate (despite nationwide evidence to the contrary). Indeed, "contributions from lawyers were excluded from the study's main findings," immediately biasing the results, even though lawyers as a class are among the chief beneficiaries of (or chief losers from) court rulings. Adam Liptak usually does much better than this when covering the judicial system, and I'm disappointed that this article ended up so one-sided.


(Update: Bernstein posts the op-ed in full.)

Occasional POL contributor David Bernstein has an editorial in this weekend's Wall Street Journal on the New York Appellate Division case of Nonnon v. City of New York, which, in a 3-2 vote, permitted the admission of speculative unscientific evidence to defeat summary judgment because to preclude the guesswork would be to prevent potential recovery. Bernstein also comments on Volokh, and draws comment from Northwestern Law Professor Stephen Lubet questioning the extension of federal rules to what are now in the state courts. I responded:



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.