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November 2007 Archives

George Will on the Akaka bill

We've criticized this tribalization measure at length over the past couple of years, and columnist George Will doesn't have any higher opinion of it than we do:

Today, the Native Hawaiian Government Reorganization Act, when accurately described, is opposed by a large majority of Hawaiians and supported by only a bare majority of the approximately 240,000 Native Hawaiians in the state. ...

Reparations? We shall see. Independence -- secession? "That could be," [Sen. Daniel] Akaka, 83, has said, depending on "my grandchildren and great-grandchildren."

Michigan med mal

Insurance rates are dropping from a level already lower than that in nearby states. (Detroit News, Crain's Detroit Business). "For instance, in 2008, an obstetrician in Wayne County will pay about $120,000 for malpractice insurance, compared with nearly $300,000 in Illinois and more than $150,000 in Ohio." (Detroit Free Press).

Around the web, November 30

  • "Like it or not, physical beauty matters to jurors" and so does the emotional wrench of gory or gruesome evidence [Anne Reed first, second posts]
  • Sebok and Zipursky on Vioxx settlement [FindLaw]
  • Who says crooks never prosper? Lerach may see $50 million in Enron fees [WSJ law blog]
  • "They always settle": bus accidents have brought Connecticut lawyer millions [CLT via ABA Journal]
  • RICO in insurance coverage disputes? [Venditta, WLF]
  • Deals continue to flee US public markets [Ribstein]

Latest on Dickie Scruggs indictment

David Rossmiller has a giant post here on new developments, and I've got one here.

It's not just Mississippi where you can find these sorts of entanglements: The Missouri Supreme Court has reprimanded four local lawyers for lending money to former Kansas City municipal judge Deborah Neal, who needed it for her gambling problem. The lawyers often practiced before Judge Neal, though no quid pro quo is alleged. Judge Neal was eventually convicted of mail fraud over gambling-related transactions. (MissouriNet via Chamber's Legal NewsLine).

Breastfeeding accommodation

In the much-discussed recent case of Currier v. National Board of Medical Examiners, Sophie Currier prevailed in the Massachusetts courts on a claim that the National Board of Medical Examiners (NBME) had not allowed her sufficient break time to pump breast milk during a medical licensing exam. At Concurring Opinions, visiting guestblogger Sarah Waldeck (Seton Hall) gets into the details of the case, and expresses concern "that Currier�s legal victory will ultimately undermine the goal of widespread accommodation of breastfeeding employees".

ABA Journal "Blawg 100"

The ABA Journal has named Point of Law to its inaugural "Blawg 100", one of thirteen sites labeled "Generally Speaking", i.e., generalist law sites. In fact, you can vote for us here as best of category if you like. Note also that another of the thirteen is my and Ted's other site, Overlawyered. Howard Bashman's ever-popular How Appealing at Law.com is currently leading in the balloting, but our sites are at present doing well in the competition, with Point of Law at #4 position and Overlawyered at #2.

As I said in a post earlier today, just when you think things in Mississippi Katrina litigation can't possibly get any stranger, there's something new that tops all the rest. According to the Jackson Clarion Ledger, well-known attorney Dickie Scruggs has been indicted for alleged involvement in a conspiracy to bribe a judge in a dispute over how to divide some $26.5 million in attorney fees. The fees were received as a result of mass settlements of Hurricane Katrina litigation earlier this year. Yesterday, you may recall, the FBI and federal prosecutors raided Scruggs' law offices. I'll be posting updates as the story develops at Insurance Coverage Law Blog.

Thomas Geoghegan's "See You in Court"

(Updated from original November 18 post.)

Thomas Geoghegan's See You in Court: How the Right Made America a Lawsuit Nation was, as Peter Lattman notes, reviewed favorably by Adam Liptak this weekend.

A working paper of my rebuttal is available on SSRN.

Other popular reviews that are more sympathetic than mine: Stephanie Mencimer and Chicago Reader.

Daubert strikes again, as a Texas federal judge throws out a test video relied on by the plaintiffs' expert in a case against Ford. Of the video, produced by an accident reconstructionist and styled as a "sanity test" of rear sensors intended to prevent collisions with children while backing up, the judge commented (PDF, via Hutchinson): �It wasn�t at all the quality experiment that I would expect� and �to say I wasn�t impressed is an understatement�; it �is, in my estimate, an embarrassment to the scientific community.� A Fifth Circuit panel has upheld the exclusion.

The Mess in Mississippi keeps getting messier, and just when you think Hurricane Katrina litigation can't get any stranger, something comes along to prove you wrong. Yesterday FBI agents and federal prosecutors served a search warrant on the Oxford law offices of tort baron Dickie Scruggs, who has been in the thick of Katrina litigation of all stripes, including a criminal contempt of court prosecution aimed at him by a federal judge. Once the feds invited themselves in, they stayed all day. Exactly what they were looking for, whether they found it and what case this is connected to, no one is saying. Scruggs' attorney denies any involvement by Scruggs or his firm in wrongdoing, and appears to deny any connection of the search to the criminal prosecution. More at Insurance Coverage Law Blog.

Annals of legal academia

A Yale Law School clinic sues Yale-New Haven Hospital. Is that why they call it "collegiality"?


Apparently one is guilty of helping prolong the Broadway stagehands' strike if one so much as allows a certain word to pass one's lips or keyboard.

The Ontario Court of Appeal held this week that a plaintiff class may be certified under the Canadian Class Proceedings Act even if damages in the case must be determined individually at a cost that could dwarf the amounts of the claims themselves.

Chief Justice Warren Winkler wrote, "It would hardly be sound policy to permit a defendant to retain a gain made from a breach of contract simply because the defendant estimates its costs of calculating the amount of the gain to be substantial." But is it sound policy to address such issues through the class-action mechanism at enormous cost rather than through the regulatory process?

Under a law passed in Michigan in 1996, product-liability suits against pharmaceutical manufacturers are barred if the product was approved by the FDA and there was no FDA finding of fraud. Thus, no Michigan resident claiming to be injured by Vioxx had a valid claim against Merck.

The Vioxx settlement (Nov. 13; etc.) applies only to eligible claimants with pending suits. Those who have not filed suit as of the date of the settlement are ineligible to latch on; those who had their suits dismissed with prejudice and do not have a pending appeal are ineligible. (See Section Michigan residents who did not file suit—and many with ethical lawyers did not file suit—do not get to participate in the settlement.

Other Michigan residents had more brash attorneys who made frivolous arguments that the suits should be brought under New Jersey, rather than Michigan, law, notwithstanding the standard conflict-of-laws practice that the law of a tort suit is the place of the alleged injury. An unknown number of these cases are pending in the federal and New Jersey MDLs, and perhaps even in some other state courts.

The settlement has several dozen factors modifying the settlement amount: age, severity of alleged injury, type of alleged injury, time and amount of Vioxx taken, other contributing risk factors, all of which either augment or discount the eventual settlement amount. See Exhibit 3.2.1; cf. also the plaintiffs' steering committee mock calculator of settlement value (via Sebok/Zipursky). But nowhere in the calculation is there a discount for being a Michigan resident. Thus, a Michigan resident with a pending suit will get the same settlement as if he or she lived in New Jersey—the catch being that he or she had to have a pending suit.

There are two ways to look at this. One is that the settlement unfortunately rewards Michigan residents with unethical attorneys who filed meritless lawsuits and managed by the luck of the draw to keep them alive while settlement negotiations were pending. The other is that the settlement doesn't treat Michigan residents differently than the residents of any other state because all of the lawsuits are equally meritless, and the settlement is purely one to get out from under the nuisance of litigation and the random lottery award.

Since we've had numerous occasions to note plaintiff's lawyers' propensity to forum-shop product liability (as well as intellectual property) cases into the courts of Marshall, Texas, it's only fair to point out that a recent opinion by a Fifth Circuit panel may slow that trend. Texas Lawyer has details of the Oct. 25 mandamus opinion In Re: Volkswagen of America Inc., in which the panel ruled that U.S. District Judge T. John Ward abused his discretion by not granting a motion by Volkswagen to transfer venue to another district in the suit, which arose from an accident in Dallas, but was filed in the Eastern District of Texas, 150 miles away. More on Marshall and auto suits here, here, etc.

Problem teachers dig in; NYC lawyers up

How many lawyers does it take to eject an underperforming teacher from a Gotham classroom? Apparently quite a few:

The Bloomberg administration is beginning a drive to remove unsatisfactory teachers, hiring new teams of lawyers and consultants who will help principals build cases against tenured teachers who they believe are not up to the job. ...

At the center of the effort is a new Teacher Performance Unit of five lawyers, headed by a former prosecutor fresh from convicting a former private school principal who had a sexual relationship with a student....

The plans, at a cost of $1 million a year [including five additional consultants whose job includes documenting underperformance], are described in a memo and an accompanying letter to principals from Schools Chancellor Joel I. Klein. In the letter, he urged principals to help teachers improve but added, �When action must be taken, the disciplinary system for tenured teachers is so time-consuming and burdensome that what is already a stressful task becomes so onerous that relatively few principals are willing to tackle it. As a result, in a typical year only about one-hundredth of 1 percent of tenured teachers are removed for ineffective performance.

�This issue simply must be tackled,� he wrote. ...

Randi Weingarten, the president of the city�s teachers union, the United Federation of Teachers, called the lawyers a �teacher gotcha unit� and said she found it �disgusting� that the Education Department would issue such a memo after the release of new school report cards that bluntly grade schools A through F.

New contributor Marie Gryphon

We're delighted to welcome Marie Gryphon, a senior fellow with the Manhattan Institute's Center for Legal Policy, as a new contributor to Point of Law. As an attorney in private practice, Marie worked on ERISA, securities, class action, commercial contract, legal malpractice, and constitutional law cases. She has also been a legal and policy analyst with the Cato Institute, working on issues related to education policy. Her articles have appeared in Business Week, the Washington Post, the Dallas Morning News, the Star-Ledger, Forbes, FoxNews.com, National Review Online, and the Orange County Register. She holds a J.D. from the University of Washington School of Law and is a Ph.D. candidate in public policy at Harvard University.

The TJ Hooper, set to verse

Stuart Buck recalls verses he wrote in law school encapsulating one of the most famous of all liability opinions, Learned Hand's in The T.J. Hooper:

Defer to custom? No sirree.
The PL here was more than B.
As any idiot would find,
The industry had lagged behind

We summarize Richard Epstein's seminal article on the case here, and an early version of the article itself can be found here (PDF).

In Marsh v. Valyou, the Florida Supreme Court (1)reiterated that Florida follows the Frye general acceptance test; (2) held that Frye doesn't apply to a medical expert's "opinion" testimony regarding causation; (3) held that even if Frye did apply, it should be applied only to the issue of whether the technique of "differential diagnosis" is generally accepted in the medical community, regardless of whether the technique was used in a generally accepted way; and (4) implicitly rejected the notion that Florida Rule of Evidence 702, modeled on the federal rule that led to the Daubert Supreme Court opinion, provides a "backup" reliability test for causation testimony.

Naomi Wolf: Second Amendment Enthusiast?

Naomi Wolf's eulogy for American democracy in today's Washington Post contains the following, very curious passage:

"Few young Americans understand that the Second Amendment keeps their homes safe from the kind of government intrusion that other citizens suffer around the world; few realize that "due process" means that they can't be locked up in a dungeon by the state and left to languish indefinitely."

Has the third wave feminist and former Gore campaign consultant suddenly discovered the importance of the right to keep and bear arms? I suspect subversive editing from a lowly WAPO copywriter excited about the Supreme Court's decision to hear District of Columbia vs. Heller.

California class actions

More than a thousand a year are filed in the nation's largest state, according to a new survey (leads to PDF) by lawyers at O'Melveny & Myers for the Civil Justice Association of California. The largest categories are employment (47 percent) and consumer (36 percent) class actions, and just over half (51 percent) were filed in Los Angeles County.

A Vioxx settlement question

Can an Illinois family qualify as beneficiaries even though it lost a jury verdict in its suit against Merck? Does it make a difference that the family has moved for a retrial?

"New N.Y. Law School in Binghamton?"

Because you just know that more lawyers is what New York needs (more).

Chrysler: this time, we need a jury

Q. In what sounds like an otherwise garden-variety crashworthiness case against Chrysler, when is one somehow not surprised to learn that the automaker defendant -- and not just the plaintiff, as would be the usual order of events -- is insisting on its right to a jury rather than bench trial?

A. When the case is filed in the Marshall Division of the Eastern District of Texas and has landed in the court of federal judge John T. Ward, of recent automotive-suit fame.

More background on U.S. District Judge (and civil justice reform celebrity) Janis Jack, from the Chamber-backed Southeast Texas Record. P.S. And the related Madison County Record (tale of how Judge Jack "found an honest silicosis suit among 10,000 phony ones, but attorneys for the honest plaintiff torpedoed his case and no other silicosis attorney would take him for a client.")

Alabama: "A state contract hiring trial lawyers to sue drug companies over allegations of overpricing will be submitted to the Legislative Contract Review Committee this week, nearly three years after it was signed," the Birmingham News reported late last month. "Medicaid Commissioner Carol Steckel signed the Jan 6, 2005, contract hiring Birmingham firm Hand, Arendall" at a 14 percent contingency to file the pharmaceutical pricing suit, which could bring the state hundreds of millions. By Alabama law the legislative panel is supposed to oversee such contracts, though it has little formal power and cannot cancel them. The state says it submitted the contract for the panel's review but never heard back; "Contract Review records do not reflect the committee ever receiving the contract."

Medical liability screening panels

Two years ago New Hampshire adopted such a system, following the lead of neighboring Maine. Doctors in both states are strongly supportive, but critics among lawyers say the panels are slow and costly. The Manchester Union-Leader (courtesy Chamber's ILR) has details.

More: Eric Turkewitz responds with an account of his experience with screening panels under New York's now-discontinued system.

Around the web, November 21

  • "Remarkable consensus ...in legal academia today" that most securities suits don't benefit investors [Parloff]
  • Daniel Solove's new book The Future of Reputation: Gossip, Rumor, and Privacy on the Internet, reviewed [Anne Reed, first and second posts; Amber Carson]
  • A doc's apology [Memphis Commercial Appeal via Day on Torts]
  • EU ministers promise: consumer laws "won't go US route" [Scotsman]
  • An introduction to employer liability for violence in the workplace [George Lenard, first and second posts]
  • One year on, Calif. bar still grappling with whether to require lawyers who lack malpractice insurance to tell clients [The Recorder; earlier]

State Court Docket Watch November 2007

Some interesting articles in this month's State Court Docket Watch from the Federalist Society:

  • Missouri and New Jersey Courts Reject "Market Share" Liability for Lead Paint Manufacturers by Brian P. Brooks
  • Court Bars California Governments from Retaining Private Contingency-Fee Counsel in Nuisance Suits by Tom Gede

There are also a number of articles about judicial selection processes.

Federalist Society 25th anniversary

Justice Scalia: ""We thought we were just planting a wildflower among the weeds of academic liberalism and it turned out to be an oak."

Georgia's Daubert reforms under challenge

Plaintiff's lawyers are trying to get the Georgia courts to strike down as inconsistent with the state constitution the legislature's 2005 enactment of rules mandating court gatekeeping of scientific evidence along the lines of the U.S. Supreme Court's Daubert decision. The Fulton County Daily Record has details.

Product redesign in the New York courts

Modern "design defect" doctrine invites courts to redesign products, and results can vary wildly depending on how enthusiastically jurists rise to the bait, per this paper by Patterson Belknap's Steven L. Vollins (PDF) for the Washington Legal Foundation (summary via):

Two opinions in New York focusing on the same critical product liability law issue, highlight the starkly different ways that state and federal courts can view their roles in our democracy. The issue in both court cases is whether tobacco products are defectively designed because their producers have failed to create a �safer� cigarette. The state court�s finding that cigarettes are defective, amounts to judicial lawmaking. The federal court, by contrast, correctly applied product liability principles and left it to national policy makers in Congress to determine whether tobacco should remain a lawful product.

Epstein lunch Dec. 6 in NYC

On Thursday, December 6, visiting scholar (and U. Chicago lawprof) Richard Epstein will be speaking to a Manhattan Institute audience on "The New Antitrust: Reexamining Microsoft and Other Consent Decrees". Details of the event are here.

Note that the proposal here is not to provide free lawyers in cases where careful case-screening establishes a fair argument that the eviction is in some way legally wrongful or unjustified. It's to use taxpayer money to make sure that tenants who've trashed the apartment or stiffed the landlord on months of rent are also assigned a lawyer who will predictably use all the procedural leverage available to stall things out further, extract a payment as a condition for the tenant's leaving, and so forth. NYU's Brennan Center is pushing the scheme, which has 22 sponsors on the New York City council. (Manny Fernandez, "Free Legal Aid Sought for Elderly Tenants", New York Times, Nov. 16). For more about "Civil Gideon" schemes, see this post (scroll) and this one (David Giacalone: "Attorney Employment Assurance Plan")(cross-posted from Overlawyered).

P.S.: To clarify matters: for now, the program would apply to elderly tenants (which doesn't mean all the occupants of the apartment will necessarily be elderly).

Vioxx settlement roundup

* The provision requiring lawyers representing some settling clients to push the settlement on others, and to withdraw representation from those who don't go along, continues to spur much controversy, as at WSJ law blog and Legal Ethics Blog (John Steele).

* Judges pressed for settlement (Star-Ledger via Pharmalot);

* Joseph Nocera in the Times:

There are many problems with viewing product liability lawsuits as a means to right wrongs, which is how we see them in this country. They often make lawyers rich while the people who say they were hurt wind up with very little. The legal system gives corporations zero incentive to step forward if there is evidence that a drug might have a harmful side effect � because, after all, they�ll get sued as soon as they make such an admission. Third, even the smartest lawyers aren�t the Food and Drug Administration, which is charged with making decisions about which drugs should be allowed on the market and how their risks should be disclosed. Mass torts have become a rogue form of regulation, and not necessarily in the public interest. And finally, when you get right down to it, litigation is a crapshoot, and it can be cruelly unfair.

Brad DeLong takes an opposing view, and elsewhere somewhat cryptically endorses "the comprehensive socialization of product liability risk".

* Class-action securities lawyers are hoping their payday from Merck will come soon.

Our newest featured column is Jim Copland's on the stakes in the recent elections in the Magnolia State. For how those elections turned out, see our Nov. 7 post.

Greenwich, Ct. public schools

Apparently when you've got that affluent a public school system you can afford to spend district funds (PDF) on "diversity" consultants with highly, highly dubious track records.

Scruggs, Renfroe, and a bench recused

David Rossmiller:

In yet another of the increasingly bizarre twists and turns in Katrina-spawned litigation, in USA v. Scruggs, the prosecution of Dickie Scruggs for criminal contempt of court, Scruggs filed a motion asking all federal judges in the Northern District of Alabama to recuse themselves, and they did.

David has more on developments here, here, and, especially, here, as well as a post on a more or less separate instance of Scrugg-duggery in which the hard drive of one of his adversaries somehow found its way into his hands. The WSJ law blog also comments.

Plus: For those with WSJ subscriber access, the peerless James Q. Wilson, one of the pre-eminent social scientists of our era (and also -- who knew? -- a former director of State Farm) tackles the Katrina litigation: "A Real Insurance Fraud".

At the Federalist Society 25th anniversary convention in Washington this weekend, I'll be on a panel discussion tomorrow morning (Friday) with lawprofs Ted Eisenberg (Cornell) and David Vladeck (Georgetown) and famed reformer Victor Schwartz (Shook, Hardy & Bacon). Do come up and say hi afterward if you're in the audience. Look for others associated with Point of Law who'll also be attending.

Energizing California's sue-your-boss law?

Employers were alarmed this summer when a California appeals court ruled that workers can file actions on behalf of other workers under the state's Labor Code Private Attorneys General Act ("PAGA") without meeting class action requirements. The controversial law, which was enacted with union and trial-lawyer support and then scaled back somewhat following an outcry from employers, allows plaintiffs to sue over alleged employer infractions affecting other workers' interests -- a "bounty hunting" approach, as some have called it. Now the California Supreme Court has agreed to hear the case. Coverage: Epstein Becker & Green, Wage Law and earlier, UCL Practitioner and earlier, Class Action Defense Blog, Lord Bissell, BlogCabin CA.

Around the web, November 15

The "public nuisance" template

Novel tactics and theories that states and cities are employing against former lead paint makers may serve as a model for aggressive global warming lawsuits, predicts Richard O. Faulk of Gardere Wynne Sewell. Details at Law & More.

"AGs Gone Wild"

The WSJ (sub-only) takes an editorial look at the frequent overreach of state attorneys general, a topic much discussed on our Regulation Through Litigation page. More from John Carney at DealBreaker.

Illinois judge strikes down med-mal caps

A right under the state constitution to unlimited damage awards, permanently and forever, no matter what elected state lawmakers may have to say about the matter? This is the third go-round in Illinois, where judges have been especially disdainful of legislators' attempts to limit liability law, and the issue is headed on appeal to the state high court. (Chicago Tribune, Sun-Times; opinion in PDF format and many more links at CapitolFaxBlog)

Manhattan Institute podcast page

It's new, and it lets you listen to and download audio segments to hear the views of such figures as MI fellows Heather Mac Donald and John McWhorter, Cornell lawprof James Henderson, economist June O'Neill, and L.A. police chief William Bratton, not to mention our own Jim Copland and Richard Epstein.

First cracks appear in Vioxx settlement

Some follow-up to my earlier post:

  • The settlement is on-line at Merck's website.

  • The settlement does not affect any pending class actions against Merck.
  • Merck does not admit liability; plaintiffs do not admit lack of merit. (� 13)
  • The settlement does not cover cases brought after the settlement: thus, no feeding frenzy or incentive for attorneys to advertise for more claimants to join the settlement. Merck is relying upon the statute of limitations (three years or less in 42 states) to preclude further litigation. (I have some thoughts on this, but because I did statute-of-limitations analysis for Merck as an attorney in private practice, I withhold comment. Needless to say, I do not speak for Merck or its attorneys.)
  • Individual plaintiffs who agree to settle will receive points depending on how much Vioxx they used and the degree of their injury. Administration costs will be funded from interest from the settlement fund. As a closed fund, the Vioxx settlement should not suffer the same problems as the fen-phen settlement did, but that assumes that plaintiffs' lawyers will not pursue claims of latent injury. There is no scientific basis for a theory of latent injury, but that has not stopped a number of claims going forward. Mark Herrmann has a good analysis of why Merck can settle Vioxx cases with more comfort than Wyeth/American Home Products could with fen-phen.
  • The settlement has strong provisions requiring claims to be proveable: evidence of actual Vioxx usage, evidence of actual injury, etc. The fraudulent plaintiffs will not receive much, if anything, and the claims administrator has the power and obligation to audit and investigate fraud (� 10). The question then becomes whether the Leonel Garzas of the world, who were bringing suits against Merck on a lottery basis in the first place, will agree to settle. (The Garza case itself is on appeal, and Merck has not discussed settlement with Garza's attorneys. The Garza case, like the Ernst case and other Merck losses on appeal is excluded from the settlement.)
  • Various plaintiffs' attorney administrative committees have the ability to petition the court for common-benefit fees and costs. (� 9.2)
  • For the settlement to go through, 85% of each of four classes of plaintiffs have to agree to settle; any substantial number of opt-outs among, say, wrongful death plaintiffs, has the potential to crater the settlement. (� 11)
  • Merck tried to contain the number of opt-outs by requiring plaintiffs' attorneys agreeing to the settlement to agree to recommend settlement to all of their clients and attempt to withdraw if they refuse. The provision is problematic under current ethical rules, as suggested by Erichson, Zipursky and Rhode: an attorney's first duty is to his client, and it is unclear how such an attorney can agree with the client's adversary to recommend a particular course of action or to withdraw from the case. But, more realistically, plaintiffs' attorneys, as Nathan Koppel reports, are simply going to ignore the provision. Section 1.2.8 forbids attorneys from cherry-picking: if an attorney submits one client to the settlement program, he or she has to agree to have recommended all of his or her clients, and to withdraw otherwise. But Merck has no realistic means to enforce the provision other than effectively cratering the entire settlement. (Sections 1.2.8 and 1.2.9 permits Merck to "enforce" the provision, but with what remedy, other than forbidding client participation, and making the opt-out problem worse?) And one can imagine some plaintiffs' attorneys gaming the system by referring subsets of their clients to the settlement program through referrals to law firms that act as settlement attorneys (with private agreements to share resulting fees), while cherry-picking the ones they wish to continue to bring suit on. If enough of them do this, the 85% threshhold will not be met, and Merck will have to back off the settlement. Moreover, the severability provisions of the agreement (� 16.4) may end up invalidating the withdrawal provision entirely, as it creates conflicts of interest for attorneys with multiple clients, some with weak cases that should settle, others with stronger cases where the clients might prefer lottery litigation. (Update: Exhibit 1.1, which, if adopted by the courts, would require attorneys to disclose clients in which they have a financial interest, would appear to close the loophole of cherry-picking. An attorney thus must submit all or none of his clients to the settlement. Again, however, this does not solve the underlying problem of conflicts of interest, and it remains unclear how the "recommendation" provision of the settlement would be enforced; I continue to strongly suspect that many clients are mysteriously going to decide to decline the recommendation, and enforcing withdrawal will become problematic. What really stops Mark Lanier from showing up as trial counsel for a new batch of plaintiffs in 2010 once the settlement money has been paid out? What stops another attorney from refusing to submit his clients to settlement, but giving them the option to apply for settlement through another "Enrolling Attorney" while retaining a lien on the recovery?)
  • Regardless, even if the settlement goes through, one can expect Merck to still end up defending hundreds, and more likely thousands of suits, as well as the pending class actions. Merck's press conference indicated that it would continue to fight these.
  • Speaking of class actions, in late October Merck argued for reversal of Sinclair v. Merck, which contemplated the possibility of a medical monitoring class certification. [New Jersey Law Journal]
  • Update: Eric Turkewitz writes to remind us that this is a USA settlement, rather than a global settlement, so there are many unsettled cases pending, including at least a thousand in Australia. Of course, the plaintiffs' Vioxx claims are sufficiently weak that most judicial systems would not countenance them, and it is only the US system's lack of loser-pays, more lenient evidentiary rules, and possibility of unbounded damages that gives them any value here.

Asbestos and the federal fisc

As has been noted on more than one occasion, there are some not-implausible arguments to be made for the federal government's shouldering the cost for a goodly chunk of the asbestos litigation mess, simply because exposure to asbestos during the building and use of World War II Victory Ships accounts for such a big share of later asbestos illness. As is equally well known, the general sense in Washington is one of unwillingness to shoulder any such responsibility, leaving the financial burden instead to fall on private companies whose degree of guilt on the matter varies considerably, to say the least.

Do not imagine, however, that the feds have managed to dodge the financial fallout entirely. A news item from the Lancaster, Pa. New Era (courtesy Chamber's ILR) discusses one of the consequences of the bankruptcy of locally based Armstrong World Industries, a long-celebrated name in flooring and other building supplies, which was forced into Chapter 11 in 2000 by asbestos suits. By creating a trust valued at $1.8 billion, the firm handed over a majority stake in itself to asbestos claimants and their legal representatives. "The expense of funding the trust pushed Armstrong into tax net operating losses, which it could carry back over 10 years, triggering $180 million in tax refunds from those years." In addition, it expects further federal tax write-offs to come. Multiply those sorts of sums by dozens of large firms on the bankruptcy lists, and it turns out after all that the federal government is probably worse off by at least many billions from the litigation, in the form of forgone and refunded tax revenues. All of which would be one thing, of course, if the costs consisted mostly of payments to claimants seriously ill from asbestos exposure, and is quite a different thing given the central role in the litigation of 1) middlemen of various sorts, and 2) claimants with little or no impairment reasonably attributable to asbestos.

EU funding of political "NGO" causes

The European Union paid about $1 million to the American Bar Association to promote opposition to the death penalty. John Rosenthal has details on this and other European-taxpayer-funded leftist and anti-American activity on World Politics Review.

Vioxx as the Modern Bendectin? II

Following up on Michael's point, we have new evidence of the positive difference Vioxx was making on healthcare outcomes. Dr. Gurkipal Singh, previously a harsh critic of the FDA and Vioxx, released a new study to the American College of Rheumatology annual meeting, finding a 21% increase in the gastrointestinal events Vioxx was designed to avoid:

In 2004, the last year in which all three cox-2 drugs were still on the market, the incidence of serious ulcerations hit an all-time low of 357 cases per 100,000 NSAID prescriptions filled.

But a year later -- after the Vioxx/Bextra withdrawals and attendant controversy -- those levels had already climbed to 434/100,000, a 21 percent increase, the study found.

Experts said they aren't shocked by the findings.

"With decreasing use of gastroprotective therapies, it comes as no surprise to see a substantial increase in NSAID-related GI adverse events," said Dr. Mark Fendrick, a professor of internal medicine at the University of Michigan School of Medicine. He has followed the cox-2 saga closely, co-authoring a commentary on the drugs' risks and benefits for The Lancet earlier this year.

According to Fendrick, it's unclear whether the cardiovascular health gains achieved by removing Vioxx and Bextra from the market have now been outweighed by a surge in serious gastrointestinal events.

"What's always bothered me as a general internist is that every study that you ever read on this either looks at the GI side or the cardiovascular side -- never both," he said. A study that compared both aspects in the same population might provide real guidance, he said.

"Then I might be able to say 'Oh, if we saved 1,000 lives from heart disease by increasing GI adverse events by X percent, then maybe we are doing the right thing,'" Fendrick said. So far, no such study has been done, he added.

Vioxx as the Modern Bendectin?

The Merck proposed settlement (see Ted's summary) comes, amazingly, just as the Manhattan Institute organized a one-day study session here at George Mason Law School on fee-shifting rules.
Arguably Merck offered to pay out sums it believes it does not owe in substantive law, just because such sums are less than litigation fees it would otherwise have to pay under the "American rule" (which declines to transfer the winner's court and lawyer costs to the losing party). Arguably many of the thousands of pending suits against Merck due to Vioxx would not even have been filed had a "loser pays" rule been in effect. Arguably the four judges administering 90% of Vioxx litigation (in the federal, Texas, California and New Jersey courts) would not have twisted Merck's arm to settle (avoiding a multi-year clogging of their dockets as Merck fought and won suits one-by-one) had a loser pays rule been in effect, since their dockets would not have been so clogged. Arguably Vioxx is the modern Bendectin -- a valuable product removed from the market because of the lack of fee shifting. [Bendectin is apparently still available in Canada, where it is marketed as Diclectin, by the way. No outbreak of birth defects in the great white north...]

Back in August the Wall St. Journal health blog observed that, in a pure repetition of the Bendectin scenario, many people still swear by Vioxx and complain to Merck that nothing else on the market works for them. Not to fear: a skeptic from Consumers Union responds: �A person�s conviction that something is helping them or that only one thing will help them is often erroneous. The impact may be exaggerated.� Gee, might that apply to a person's conviction that a drug is hurting them?


It's not surprising the archetypical hypothetical example of chutzpah is a legal one: the child who kills his parents and begs the court for mercy because he's an orphan.

We might have to replace it with a real-life example: William Lerach, who has pled guilty to ripping off his shareholder clients through paying millions in illegal kickbacks, complaining in the Washington Post that "the legal system is a lot tougher on shareholder lawyers than it appears to be on Wall Street executives"—even though he doesn't identify a single illegal act those executives have committed in his pathetic op-ed. (Lerach is unapologetic about his crimes incidentally, characterizing it as "stepp[ing] over the line" in his "zeal to stand up against this kind of corporate greed." Never mind that his crime was one of his own greed, and had nothing to do with who he sued, which was at least as often the innocent as the guilty.)

Back in July Michael posted about the indictment of Texas attorney Warren Todd Hoeffner and two former employees of Hartford Insurance on charges that Hoeffner paid $3 million to the adjusters, and bought them BMWs, in connection with settlements of silicosis suits that grossed $34 million for his clients and brought more than $5 million in fees for himself. Hoeffner has now filed an answer and cross-claim (PDF) which lays out his side of the story. The WSJ law blog summarizes some of the high points of the answer, which depicts Hoeffner as himself the victim of extortion by the Hartford and its employees.

Vioxx settlement, cont'd

I round up some more reactions this morning at Overlawyered.

New Epstein podcast

Distinguished visiting scholar Richard Epstein has recorded the second in his series of podcasts for the Manhattan Institute, once again interviewed by our own Jim Copland. The topic this time: Epstein's lecture entitled, "Neither Liberal Nor Conservative: A Maverick's View of the Supreme Court." Check it out here. The earlier podcast on the Stoneridge securities case is here.

BREAKING: Merck settles Vioxx suits?

The reported settlement (which has not been officially confirmed), expected to be announced tomorrow morning in federal court, requires approval from the courts, and can crater if too many plaintiffs opt out. And it is unclear from the press coverage what protections Merck will have against fraudulent claims.

The $4.85 billion settlement for 27,000 cases (and 47,000 plaintiffs), astonishingly works out to not much more than the nuisance value to Merck of defending themselves against the cases, which had largely proven to be meritless. But doing so cost Merck $600 million in attorneys' fees (plus countless hours of executive time wasted) a year, and this is an extortionate insurance payment against having to continue to do so plus the small risk that there would be a set of outlier courts that chose to bankrupt Merck.

The settlement can be seen as a vindication of sorts of Merck's hard-line stance against an early settlement, given some Wall Street analysts' claims that the mass tort litigation could be bankrupting—but, with a nearly $2 billion payday for plaintiffs' lawyers, it can also be seen as a vindication to the trial bar, which will be rewarded despite the extensive fraud they engaged in in bringing meritless cases. Individual plaintiffs themselves won't be receiving much in the way of money, but, then, they weren't legally entitled to anything. It's unclear how much Carol Ernst will be collecting of her original $253 million verdict of $26 million judgment, but that plaintiffs agreed to settle for so little per case suggests that they were not anticipating positive rulings from federal, Texas, or New Jersey appellate courts. [NY Times; WSJ]

Local governments and liability reform

Their voices can be influential in the debate, notes Ed Murnane in a report from Illinois.

Putting the mort in mortgage

New York AG Andrew Cuomo may have helped spook Wall Street by suddenly focusing his prosecutorial attentions on the appraisal/mortgage sector; commenters at Calculated Risk, reading between the lines, think Cuomo may be targeting appraisers first with the expectation of developing a case against the big mortgage lenders. More from WSJ law blog. Meanwhile, the Barney Frank legislation previously discussed by Ted in this space does not meet with a favorable reception from Gregg Easterbrook (scroll a lot):

Frank's bill -- an obvious valentine to trial lawyers, who want new openings to sue banks and firms such as Merrill Lynch -- would make it the lender's legal responsibility to determine whether borrowers can repay, not the borrower's responsibility to be honest to the lender. Your Honor, the mortgage company is to blame for not stopping me from lying on my loan application.

Katrina litigation is still hot

Katrina-related legal developments are happening fast and furious. A sampling: a federal magistrate extended State Farm's injunction against Mississippi AG Jim Hood's criminal investigation of the insurer, while State Farm has filed court documents with explosive allegations of illegal collusion between Hood and prominent attorney Dickie Scruggs; a Louisiana jury returned a bad faith verdict against State Farm yesterday and a juror speaks out on their reasons; the Attorney General of Louisiana has filed yet another of those lawsuits alleging insurer collusion in Katrina claims adjusting; and outgoing Mississippi Insurance Commissioner George Dale says a Fifth Circuit Court of Appeals decision upholding State Farm's anti-concurrent cause language vindicates his approach to insurers and shows that insurance companies actually paid claims money they did not owe because of prior adverse legal rulings at the trial court level.

As the Daily Business Review (via Law.com reports, Florida's very good 3rd District Court of Appeals has overturned a 2006 $60 million jury wrongful death verdict against Ford, where the decedent fell asleep at the wheel while driving his Explorer.

Ford successfully argued that Miami-Dade Circuit Judge Roberto Pineiro erred by allowing testimony alluding to hundreds of Ford Explorer "rollover" accidents without requiring the plaintiffs to establish similarities between ordinary rollovers and cases where the driver falls asleep....

Docs' apologies

Shield law being debated in Massachusetts.

So Kathy Ricketts, vice president at Swiss Re, told insurance execs at a Toronto seminar:

She noted the Supreme Court of Canada has capped general damage awards at roughly Cdn$100,000, indexed to inflation. [Today, the value would be roughly $320,000.]

Ricketts added that Canadian court awards, while they are getting higher, would never approach those in the U.S. for the following reasons:

* Canadians, unlike U.S. citizens, have universal health care and are thus less likely to be ruined by medical claims (and are therefore less likely to have to sue to recover their medical costs);

* Canadian judges are appointed, not elected, and therefore Canadian courts are somewhat insulated from pressure to make decisions that will appeal to the electorate (i.e. policyholders).

* The outside limit for punitive damages against an insurer in Canada is thus far about Cdn$1 million. To approach this kind of award, the defendant�s conduct would have to be demonstrably �vindictive,� �reprehensible,� and �malicious.�

* There is more of an emphasis on bench trials in Canada, as opposed to jury trials in the United States.

"Carbon Neutral Government Act of 2007"

U. of Illinois lawprof Andrew P. Morriss calls it a "astounding invitation to interest groups and lawyers to help themselves to taxpayers' money":

[One part of the bill] makes sure the agencies buy the [carbon] offsets by authorizing virtually anyone to sue the government for "harm" caused by any "federal agency's failure to reduce its greenhouse gas emissions" as required by the law.

The bill defines harm extraordinarily broadly: "any effect of global warming, currently occurring or at risk of occurring, and the incremental exacerbation of any such effect or risk that is associated with relatively small increments of greenhouse gas emissions, even if the effect or risk is widely shared."

What do you get if you win? Cash, which can "be used for a beneficial mitigation project recommended by the plaintiff or to compensate the plaintiff for any impact from global warming suffered by the plaintiff."

"It�s easy to build new housing in Dallas. Not so in Los Angeles. There, increased demand generates little new supply. Even within zoning rules, it�s hard to get permission to build." Both Dallas and Los Angeles are prosperous cities, but they're prosperous in extremely different ways. Virginia Postrel has been writing about the subject of late and has a new Atlantic column that'll be briefly visible before going back behind its pay screen.

Common Good's Monday Washington conference is now online in webcast form.

Election results

Governorships: Haley Barbour (R-Miss.), nationally prominent as a backer of lawsuit reform, easily defeated trial lawyer/social conservative Democrat John Arthur Eaves.

Attorney generalships: Mississippi incumbent AG Jim Hood, who is as popular with the litigation lobby as Barbour is unpopular, crushed a Republican challenger (who, as noted earlier, is a successful plaintiff's lawyer himself). In Kentucky, Democrat Jack Conway easily defeated socially conservative Republican Stan Lee, who had tried to raise Conway's closeness to trial lawyers as a campaign issue.

Judgeships. Democrats are on the way to capturing two open seats on the Pennsylvania Supreme Court, after a hard-fought struggle in which trial lawyers donated munificently and a pro-business group from out of state then responded in kind.

Other contests. By a fairly broad margin, Washington state voters gave their approval to Referendum 67, the trial-lawyer-backed measure to permit triple-damage suits by policyholders against insurance companies. As will be recalled, Dickie Scruggs engineered the defeat of longtime Mississippi insurance commissioner George Dale in the Democratic primary because Dale was insufficiently cooperative with Scruggs's wishes on Katrina policy litigation; Magnolia State voters have now proceeded to elect the GOP candidate in the race, Mike Chaney. [Revised and updated as of 11:30 a.m. Eastern]

Things are probably pretty jolly around State Farm headquarters these days: nemesis attorney Dickie Scruggs is being prosecuted for alleged criminal contempt, the insurer is suing Mississippi Attorney General Jim Hood, and today the Fifth Circuit handed the company a decisive win in the appeal of a lower court decision that had declared invalid a key provision of State Farm insurance contracts -- its anti-concurrent cause language. Do you suppose State Farm has put a few cases of champagne on ice in case Hood loses today's general election in Mississippi?

More on FACTA

Randy Maniloff has a take on the emerging insurance issues related to FACTA litigation. And Richard M. Hoffman and Katherine K. Ivers write on the subject for WLF. Earlier: Oct. 31.

The publication notes that fee shifts could pose a significant deterrent to the record industry's litigation onslaught against file-sharers: "Defendants with strong cases may be more willing to go to trial and to stand up to the RIAA if they believe they will recover their legal fees."

Today's Mississippi elections

Jim Copland explains what's at stake (and more, from Ted).

Defense verdict in Thomas case

The jury in the widely watched Milwaukee case decided that Steven Thomas had ingested lead pigment, but that it was not the cause of his mentally backward state. "Thomas received about $156,000 from other defendants who settled before the case went to trial." A plaintiff's lawyer vowed appeal and said that he and colleagues had lined up thirty more local cases which they intended to go on trying against former paint makers. Notes the Journal-Sentinel: "The case drew national attention because it was on trial in Wisconsin, which has a different and lower threshold than other states on what plaintiffs must prove to win damages." (Thanks, Wisconsin Supreme Court.) Jane Genova as usual has extensive coverage including here, here, and here.

Around the web, November 6

Doctors vs. lawyers special edition:

Long regarded as more conservative than the U.S. on matters of litigation ethics, Great Britain may soon bid to out-Americanize the Americans:

[German-based international insurer Allianz] is launching a new business dedicated to investing in British legal disputes.

The insurer is the first mainstream institution to join the UK�s fledgling market for third-party litigation, where investors offer to pay legal fees upfront, in return for a share of the winnings.

More here and, from a Times writer who can't imagine any dangers arising from the practice, here.

R.I./duPont lead pact, cont'd

More on the controversy covered here and here, about the terms reached by duPont in its pact with Rhode Island attorney general Patrick Lynch and many-tentacled law firm Motley Rice. Were earmarks of $2.5 million to a Boston hospital and $1 million to Brown University designed to advance the private interests of the law firm and the AG, respectively? Sherwin-Williams, which cut no deal with the state and remains a defendant, has now asked a judge to undo the two donations. LegalNewsLine and Jane Genova cover the story. (More: Hans Bader).

In other news of lead paint litigation, the Thomas case in Milwaukee has now gone to the jury. Update: defense verdict.

Pennsylvania Supreme Court races

Law.com's Legal Intelligencer reports a "contributions spree" by the state trial lawyers association, which has funneled a hundred thousand or more apiece to two Democratic nominees, Seamus P. McCaffery and Debra Todd, and one Republican, Maureen Lally-Green. The only candidate not to receive trial lawyer money is Republican Mike Krancer, who perhaps can go it alone because he is a member of the wealthy Annenberg family. More coverage of the contests here.

State Farm sues Mississippi AG Hood

I've been following Hurricane Katrina litigation and politics for quite some time, and have seen many odd twists and turns, but this is the most unusual development yet: State Farm, which has been criminally investigated and civilly sued by Mississippi Attorney General Jim Hood, has taken the fight to Hood and has filed its own suit against him, alleging bad faith criminal investigations, unethical collusion with attorney Dickie Scruggs and violations of State Farm's constitutional rights. Read all about it at this post at Insurance Coverage Law Blog, including pdfs of the pleadings. This comes, of course, just days before Mississippi's general election, in which Hood is running for re-election.

"Facing Mother Nature"

Political attacks on insurers post-Katrina won't prevent the next hurricane and could very well make its devastation worse, argue Prof. (and PoL contributor) Martin Grace and his Georgia State colleague Robert W. Klein: "any legitimate insurance arrangement, public or private, must manage its catastrophe exposure so that it can afford to pay its claims obligations if a disaster occurs. State and federal legislators do not appear to acknowledge this reality." The article's in the new issue of the Cato Institute's Regulation (PDF)(via).

The Legal Intelligencer [Via Law.Com] reports on Wawrzynek v. Statprobe Inc., where, a federal judge has refused to dismiss negligence and fraud claims against a research firm that allegedly conspired with a drug manufacturer to mislead the Food and Drug Administration.

U.S. District Judge Gene E.K. Pratter rejected defendant research firm Gliatech, Inc.'s argument that it owes no duty of care to a patient who was later harmed by a drug that won FDA approval as a result of test results it helped falsify. Pratter found that a research firm that oversees clinical studies and is aware of the drug's potential side effects but conceals them may be held liable to patients.

Gliatech Inc., has already pleaded guilty to criminal fraud charges.

Riegel v. Medtronic

First impression? Look at the facts (br. at 8-9). This is a borderline ridiculous product liability case. The device, a cardiac balloon catheter, was misused � and we�d have to say abused. It was inserted into a patient with a �heavily calcified� (from the medical records) coronary artery despite an explicit warning not to use this particular catheter on �calcified� blockages. Reading between the lines, we�d guess that the reason for that warning is that calcifications tend to be hard and have sharp edges. The business end of the device, after all, is still a balloon. On top of that, the surgeon then overinflated the device by two atmospheres.

The result? Predictable. The balloon burst.

From what the highly abbreviated facts indicate, we can see that there might be a malpractice case on such facts. That only a product liability suit was filed in Riegel speaks volumes about how out of control product liability truly is.

Beck and Herrmann give a phenomenal analysis of the preemption issues at stake and the defense-side briefs in Riegel v. Medtronic.

...And you all may be professors in the legal academ-ee (Prof. Daryl Levinson @ HLRecord, w/apologies; Kerr, Buck, Moss, Steele, Chen, other reactions)

Around the web, November 2

  • Sued if you do dept.: electronic discovery obligations imposed in U.S. litigation may force targets to violate other countries' privacy laws [IP Mag/Law.com]
  • Washington Post article on political struggle over state court races draws much blog comment [via Technorati]
  • "He's not a lawyer, call us if he's represented you": hardball TV ad [ABA Journal, Texas Lawyer]
  • With claims experience improving, Maryland's biggest med-mal insurer no longer needs subsidies -- but should it pay back the ones it got? [Baltimore Sun]
  • Illinois's Lakin Law Firm and Freed & Weiss have battled each other in court all year, which doesn't mean they can't team up to sue insurer [MC Record]
  • Juries sometimes side with defendants in "take-home" asbestos cases blaming cancer on family members' dusty clothing [Belleville (Ill.) News-Democrat]
  • When it comes to the (somewhat misnamed) issue of mandatory retirement, European law isn't as Utopian/interventionist as ours in the U.S. [Fox]

Wacky Tobacco

A frequent theory seen in tobacco litigation is the concept that manufacturers could have introduced an uninhaleable nicotine- and tar-free cigarette that tasted repellent and no one would have wanted to buy, and therefore all cigarettes sold are "defective." Steven L. Vollins writes for WLF about two New York cases coming to opposite conclusions on the matter. The more sensible of the two, Mulholland v. Philip Morris USA, Inc., No. 05 Civ. 9908 (S.D.N.Y. July 24, 2007), noted that the �vast majority of courts have been markedly unreceptive to the call that they displace markets, legislatures, and governmental agencies by decreeing whole categories of products to be �outlaws.��

Manhattan Institute visiting scholar and Chicago law professor Richard Epstein, who needs no introduction for most of our readers, will be speaking next Thursday, November 8, on Manhattan's East Side. His topic: "Neither Liberal Nor Conservative: A Maverick's View of the Supreme Court". The event is free of charge but requires advance registration, which can be done here.

"Family responsibility discrimination"

It isn't going to enter the California law books just yet as an officially recognized basis for employment suits, thanks to a veto by Gov. Schwarzenegger (via Employer's Lawyer). Earlier here, here, etc., etc.

Mel's Milberg mistakes

Considering the skill Milberg Weiss has shown at chasing other people's assets into every hidey-hole where they may be found, it's remarkable that the partnership made the kind of mistakes it did in leaving itself structurally vulnerable to liability -- that is, unless it believed it led a charmed life and would never get caught. Justin Scheck at the Recorder explains. P.S. PoL contributor Larry Ribstein has also now posted his take.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.