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April 2009 Archives

Freelance journalist Dan Slater in the NYT's "Dealbook" (via Above the Law) spies a "bailout for the plaintiff's bar":

...settlements resulting from the scores of shareholder suits against TARP entities will stretch into the stratosphere.

Sure, through TARP, taxpayer money may be used to pay off mortgages and fund bonus pools. But, in what will amount to a far more expensive proposition, TARP money will also be used to line the pockets of allegedly aggrieved shareholders and the lawyers who, wrapped smugly in the flag of corporate governance, are in the process of making a billion-dollar cottage industry out of filing strike suits.

(cross-posted from Overlawyered).

Paul Karlsgodt wonders how we arrived at a system in which consumer behavior that would ordinarily be considered eccentric at a near-Grey-Gardens level -- such as saving receipts from the purchase of supermarket chicken years in the past -- becomes an important determinant for entitlement to compensation. More on water-in-chicken class action: March 15.

More worries about Americanization of European law, this time in the context of antitrust and consumer-law proposals: "Business groups accuse the Commission's competition department of encouraging a US-style litigation culture in Europe."

Return of comparable worth?

Sen. Specter's party switch might make it more likely that Congress will enact one of the truly bad ideas of our time, according to Manhattan Institute fellow Diana Furchtgott-Roth.

Blawg Review #209

John Hochfelder at New York Injury Cases builds the weekly roundup of best legal posts around a remembrance of his father, J. Gene Hochfelder, a veteran of World War II's Battle of Iwo Jima.

Dissatisfied with some element of U.S. foreign policy? Worried that a direct court challenge to it might not succeed, given judges' tendency to defer to the executive branch? Sue private actors instead:

The lawsuit was filed by the ACLU on behalf of five men who say they were subjected to the government's extraordinary rendition program -- that they were kidnapped and sent to overseas prisons [in their home or other countries] where they were tortured. The suit was brought not against the U.S. government, but against a San Jose-based Boeing subsidiary called Jeppesen Dataplan, which was accused of participating in the flights.

The Bush administration said such a trial would result in the revelation of state secrets, and the Obama administration declined to rebuke that position, but a Ninth Circuit panel said the danger to state secrets had not been adequately demonstrated.

More: Obama clarifies administration's position.

So what are the chances that in a conventional bankruptcy-court proceeding, a judge would have handed over a mere 10 percent interest in the revamped General Motors to actual creditors, and 39 percent to the United Auto Workers union?

A big new report on the topic (PDF) is out [American Lawyer]

Formaldehyde, readying the plot

Since we previewed the Senate Commerce subcommittee's hearing on formaldehyde in textiles and consumer products, a brief follow up. Judging from the testimony, yesterday's hearing remained factual and non-exploitative, but still provided more
foundation for litigation as well as legislation modeled on the Consumer Product Safety Improvement Act.

So Senate Specter just had to overshadow the President's 100th day commemorations ( figuring that his switch to the Democrats is indeed a good two-day news story).

The Senator's statement (available at Politico) makes it clear he does not intend to change his opposition to the Employee Free Choice Act. For purposes of a legal blog, we just wonder what happens on the Senate Judiciary Committee, where Specter is ranking Republican.

Federal District Court Judge Donald W. Molloy dismissed all charges against one of five former W.R. Grace executives facing criminal prosecution allegedly covering up the health effects of asbestos from a vermiculite mine in Libby, Montana. Molloy also tore into prosecutors for their handling of the case at a hearing in Missoula Monday.

Prosecutors responded weakly, or mildly, or lamely. From The New York Times, "Judge in Asbestos Case Angrily Lectures Prosecutors":

Judge Molloy responded with strong statements about their judgment, ethics and tactics. He wondered aloud about his options, from declaring a mistrial to throwing out the testimony of the star witness, Robert H. Locke, a former Grace executive who testified that the executives had known of the dangers and were actively involved in covering them up.

Judge Molloy said that he believed almost nothing Mr. Locke had told the jury, and that he also doubted the good faith of the prosecutors, whose members sat stone-faced before him.

When you're ratcheting up civil matters into criminal prosecutions, you should probably make sure to be extra conscientious.


UPDATE (3:35 p.m.): The judge rejects defense motion for dismissal and allows trial of other four defendants to continue. AP story.

On Friday, April 24th, President Obama announced his intention to nominate two members to the National Labor Relations Board: Craig Becker, SEIU counsel; and Mark Gaston Pearce, a Buffalo union lawyer. Their full bios are available in the news release, "President Obama Announces More Key Administration Posts." (Note to White House: The NLRB is NOT statutorily part of the Administration. It's an independent federal agency, for which the President gets to appoint the majority of board members, three out of the five.)

Seth Borden, an attorney with McKenna, Long and Aldridge and a blogger on the Employee Free Choice Act, has done a rundown on rulings that may be reconsidered once the NLRB switches to a Democratic-dominated, pro-labor board. He observes:

Employers wondering what decisions might be considered high priority for such attention should look to the many Board decisions issued during September 2007.  Issued in the closing weeks of then Chairman Battista's term, many of these decisions split as 3-2 votes.  Each modified existing Board law, and each contained a strong dissent by the current Chairwoman.  They provided fodder for highly critical congressional hearings to condemn what some saw as a partisan anti-labor shift by the Board.  Chairwoman [Wilma] Liebman testified at one such hearing, and provided her insight on some of these cases.

The potential cases Borden cites are:

Follow-up post: What To Expect From President Obama's NLRB (Part 2)

Over at Shopfloor.org we've noted that Becker was a member of the Obama transition team (the major unions all got a person) who apparently drafted one of the President's first, pro-labor executive orders. A union lawyer doing the White House's work? Why wouldn't that be a news story? 


"File case in Texas. Take plaintiff deposition. Dismiss case, and refile in California." That's how some plaintiff's lawyers manage to get around both protections that Texas accords defendants in asbestos litigation, and (different) protections that California affords to them. And the courts are apparently powerless to stop this gamesmanship -- which Bruce Nye calls "indefensible" -- without help from the California legislature.

It's a long, high-powered and decidedly left-leaning list, with a concentration especially of figures prominent in the "new" international law (via Adler).

The Houston law firm has been going around the country lining up contracts to sue drugmakers on behalf of states, and it hasn't been shy about donating generously to state politicians involved in the process. So we may expect that today's WSJ editorial about New Mexico AG Gary King, like its editorial earlier this month about Pennsylvania Gov. Ed Rendell, will be just two installments in an ongoing series. Our earlier coverage: Aug. 19 and Dec. 15, 2008 (Penn.), Oct. 9, 2007 and March 13, 2008 (Ark.). We noted last March that BPB founding partner Don Bailey has been among the most generous contributors to the Democratic Attorneys General Association (DAGA).

Obama fills two NLRB vacancies

With union lawyers.

Around the web, April 28

  • Watch out Colorado, there's a push in the state legislature to expand employment-law damages [one-page summary, PDF, from Colorado Civil Justice League]
  • Showdown: can California cities and counties hire contingency-fee lawyers? [Genova, more, yet more]
  • Q&A about legal blogging with securities law expert Kevin LaCroix of D & O Diary [LexBlog]
  • Penn Journal of Constitutional Law has symposium on prison and corrections litigation with contribution from Sarah Vandenbraak Hart, well known advocate of prisoner-suit reform [Prawfsblawg]
  • Let's have our lawyers jump up and down with cleats on the vaccine business, not as if we might need it some day or anything: "Polio Victim's 30-Year Crusade Garners $22.5 Million Award" [NYLJ]
  • In road to GOP revival, lawsuit reform should fit in naturally as an issue [Denis Calabrese, Newsweek]

Lawyers organized suits against Dole, Dow Chemical and other defendants on charges that pesticides on banana plantations had caused sterility -- but many of the clients had never worked on plantations and were not in fact sterile. According to Judge Victoria Chaney (transcript, PDF, courtesy American Lawyer), attorneys were the brains of what Ben Hallman of American Lawyer calls "the most egregious plaintiffs lawyer extortion and fraud allegations we've seen this side of criminal indictment":

After several days of testimony on defense allegations of Dominguez's misconduct [Los Angeles plaintiff's lawyer Juan Dominguez], Chaney tossed the tort cases before her. "I find that there is and was a pervasive conspiracy to defraud American and Nicaraguan courts, to defraud the defendants, to extort money from not just these defendants -- but all manufacturers of DBCP and all growers or operators of plantations in Nicaragua between 1970 and 1980," she said from the bench. Her ruling puts in doubt $2 billion in pending judgments Dominguez won in dozens of similar suits. Chaney also said she would refer the matter to state bar associations and to prosecutorial agencies. ...

The court testimony that led to Chaney's ruling detailed how a group of Nicaraguan lawyers, in apparent collusion with local officials, judges and lab technicians, rounded up 10,000 men whom they coached to claim sterility -- and to blame that sterility on Dole's chemicals.

When Dole attempted to investigate the claims, its representatives were harassed and some plaintiff's lawyers even put out a bounty seeking the identity of witnesses. Chaney said that she did not suspect a Sacramento law firm that also represented the plaintiffs of being involved with the fraud. [cross-posted, and slightly adapted for clarity, from Overlawyered; earlier coverage there.]

Via Workplace Prof, Prof. Mitch Rubinstein has some proposals on an oft-neglected area of labor law. Abstract of his SSRN article:

One of the best kept secrets in American labor law is that duty of fair representation jurisprudence simply does not work. It does not work for plaintiff union members because they must satisfy a close-to-impossible burden of proof and have a short statute of limitations window in which to assert their claim. It does not work for defendant unions because they are often forced to file pointless grievances in order to avoid the cost of litigation. It does not work for defendant employers because they are often brought into these lawsuits because they have the "deep pockets."

This Article makes two proposals to reform duty of fair representation jurisprudence. First, this Article posits that putative plaintiffs should be required to have their claims adjudicated before internal union review tribunals as opposed to courts. This internal tribunal system, if procedurally and substantively fair, would provide unions with a complete defense to duty of fair representation claims. This would move most duty of fair representation disputes from the ex-post stage (after a court dispute has arisen) to the ex-ante stage (before a court dispute has arisen) and reduce unnecessary litigation. Second, this Article argues that the current system needs to be "tweaked" to return to the original Vaca v. Sipes, 386 U.S. 171 (1967), intent of utilizing rearbitration as a remedy, as distinguished from money damages, when a breach of the duty of fair representation is found.

The history of American labor law, of course, is very much one in which labor union advocates rejected absolute notions of a "right to a day in court" -- since their opponents were so often wont to insist on that right -- instead settling on arbitration as a more practicable and flexible substitute for courtroom procedure. Yet the trial lawyers' current campaign to demonize arbitration has drawn favorable lip service from at least some unionists, few of whom would probably be eager for a world in which labor arbitration itself was ousted from the scene in favor of universal rights to days in court.

The University of Chicago selected Professor Omri Ben-Shahar this year's annual Ronald H. Coase lecture for first year law students, and the theme of his talk was "The Myths of Consumer Protection Law" -- the myths in question being that consumers are necessarily better off with more information, that they need broad and wide-ranging rights to sue, and that they should be accorded enhanced damages when they do sue.

Charleston lawprof Sheila Scheuerman, familiar to readers as a mainstay of TortsProf, on SSRN (forthcoming Missouri Law Review; via Mass Tort Prof):

This article analyzes the due process problem that arises when two litigation mechanisms converge: statutory damages and class actions. Individually, the class action device and statutory damages serve a similar function: encouraging litigation by offsetting disincentives to suit where the alleged wrongdoing involves nominal financial harm. When combined, however, they create the potential for unintended bet-the-company liability. Courts have struggled with how to address these statutory damages class actions because the prevailing legal framework is jurisprudentially flawed and ignores the realities of modern class action litigation. This article assesses the current due process jurisprudence in this area, and proposes an analytical framework drawn from the Supreme Court's punitive damages jurisprudence. Indeed, the article shows that the modern due process standard for punitive damages - known as the BMW guideposts - in fact evolved from a test developed in early Supreme Court precedent analyzing the constitutional limits on statutory damages. Thus, the article argues that the BMW guideposts should apply to aggregate statutory damages awards, and furthermore should be considered before, not after, class certification.

Be on guard when Congress decides to review a U.S. Supreme Court decision with an eye toward "correcting a mistake" or "restoring the law" prior to the decision. You wind up with brand new law, expansive and expensive, like the Lilly Ledbetter Fair Pay Act. (See earlier post on Ledbetter..)

So while we haven't seen any bill yet, the upcoming hearing Tuesday certainly draws our attention. The House Judiciary Committee, Subcommittee on Courts and Competition Policy has scheduled, "Bye Bye Bargains? Retail Price Fixing, the Leegin Decision, and Its Impact on Consumer Prices." The hearing will examine the 2007 Supreme Court decision in the antitrust case, Leegin Creative Leather Products, Inc. v. PSKS, Inc. (Opinion here.) The issue facing the court was whether resale price maintenance should always be considered a violation of the antitrust laws (and subject to treble damages), or whether legitimate business and procompetitive justifications for such provisions. As David Rossmiller wrote following the court's opinion:

When the only tool in your toolbelt is a hammer, every problem looks like a nail. The Supreme Court has increasingly recognized this in its recent antitrust jurisprudence by moving away from inflexible per se rules of anticompetitive conduct that fail to differentiate between truly anticompetitive acts that hurt consumers and acts that merely hurt competitors: they are not the same thing....[The Leegin antitrust case] marked another step in the court's walk away from per se standards toward a more flexible case-by-case analytical standard.

My employers at the NAM filed an amicus brief in the Leegin case that aligns with the shift away from per se. (See the Legal Beagle entry for the brief and more.)

Around the web, April 25

A hearing has been scheduled for Tuesday by the Senate Commerce Committee, the Consumer Protection, Product Safety, and Insurance Subcommittee, "Formaldehyde in Consumer Products/Textiles." This is the subcommittee chaired by Sen. Mark Pryor (D-AR) that oversaw consideration of the Consumer Product Safety Improvement Act last year.

Last year, House Oversight Committee Chairman Henry Waxman held accusatory hearings about formaldehyde in travel trailers supplied by FEMA to Katrina victims. The industry is concentrated around Elkhart, Ind., where the economy has since collapsed, turning it into a stage for President Obama to promote his stimulus policies.

The travel trailer hearings came amid lots of litigation against the industry, although a federal judge refused to certify a Katrina-related class action suit against the industry. (Interesting. FEMA says opening the windows is a big help.)

(UPDATE: The plaintiff's lawyers have hired a D.C. lobbyist to lobby for a health care fund for "families exposed to formaldehyde.")

As for the hearing on formaldehyde in clothing, one factor is lingerie litigation. From AP, April 8:

NEW ORLEANS -- Women in several states claim Victoria's Secret bras gave them rashes and other skin problems, and a group of lawyers sought Wednesday to consolidate their cases against the lingerie chain.

Federal lawsuits filed in Louisiana, Florida, New Jersey and New York accuse Victoria's Secret and its parent company, Limited Brands Inc., of negligently designing undergarments and misrepresenting the safety of their products.

This will be a well-covered hearing.

Yes, yes, not a joking matter. But neither are Congressional hearings that serve to further speculative litigation over overreaching legislation targeting an industry. We'll count on there being a good, substantive discussion of all the important issues.

Forum-shopping in coastal Texas

The Beaumont Enterprise carries a report on the fame of the local courts as a destination for forum selection. Alas for local prosperity, changes in Texas rules in recent years have made it harder to have a suit heard in Jefferson County "if the basis of the claim did not originate here and neither of the parties live here".

Cincinnati Enquirer columnist Peter Bronson notes (h/t ShopFloor) that in a Pennsylvania organizing campaign, the UNITE HERE union invaded workers' privacy "by illegally using license plates to track them down... just a taste of what non-union workers will face if the Senate passes 'card check'". In many cases the unions obtained identities of the workers' family members and friends as well. The campaign included uninvited appearances at the homes of Cintas employees. Earlier this month the U.S. Supreme Court declined to disturb a verdict against the union over the tactics.

The same Senators who favor tough regulation of bonuses for financial execs seem to believe that when it comes to the bounties made available to relators under the False Claims Act, $50 million (carved out directly from taxpayer recovery) just isn't enough to incentivize them:

The Senate rejected a bid Thursday to impose new limits on whistleblower awards as it moved toward passage of legislation to beef up the government's ability to combat financial fraud.

By 31-61, the Senate rejected an amendment by Jon Kyl, R-Ariz., that sought to set a $50 million maximum on the amount that a whistleblower could receive through a False Claims Act lawsuit to recoup taxpayer funds lost to fraud. Currently, awards can reach 30 percent of the total recovered for the federal government, if a judge approves that much.

Max Kennerly offers a different view.

More: Recent House Judiciary testimony (predominantly supportive, of course) on qui tam expansion.

The Wall Street Journal is editorially critical of Rhode Island Senators' pick of Motley Rice partner Jack McConnell, Jr., for a federal district judgeship. Our earlier coverage is here.

Philip K. Howard profiled by Quin Hillyer in the Examiner, with a companion piece focusing on the politics of litigation.

Chuck Moellenberg of Jones Day, and Trent Taylor of McGuire Woods, weigh in on failure-to-warn food safety preemption at Law and More.

A peek under the Hood?

Mississippi blogger Alan Lange (YallPolitics) has filed to unseal court records in the politically explosive case of State Farm Insurance vs. Attorney General Jim Hood.

The federal criminal trial of former W.R. Grace executives in Missoula, Montana, reached another stage this week with the prosecution calling their final witness. The lack of national attention to this noteworthy trial continues to surprise: The Justice Department going after corporate executives for allegedly covering up the health dangers of asbestos contamination from vermiculite mining in Libby. Doesn't that play into a classic storyline of business greed and oppression and why isn't there a big budget movie starring Julia Roberts?

One reason is dead and dying newspapers. The Libby contamination story was driven by the no-longer-printing but still a website Seattle Post-Intelligencer, a true newspaper campaign later turned into an anti-Grace book, "The Air That Kills." Making no pretense toward balance, lead reporter Andrew Schneider now publishes a website, AndrewSchneiderInvestigates popular with public health activists. The Missoulian is covering the story, but it tries to maintain a level of journalistic fairness, a balance that undermines efforts to turn the case into a cause celebre. A healthy, print PI would be flogging this case shamelessly.

There is some movement among the activists, though.

Discontent continues to rage in Britain's legal system over the results of the 1999 introduction of U.S.-style contingency fees.

Anne Layne-Farrar's article, "An Empirical Assessment of the Employee Free Choice Act: The Economic Implications", has lately been the number one download at SSRN in the employment and labor law field. Number four on the same list: Richard Epstein's The Case Against the Employee Free Choice Act. More: Reason.

Under the controversial theory, as readers will recall, courts are asked to award damages to otherwise uninjured plaintiffs so as to provide for future medical surveillance. Beck & Herrmann survey its current status in each of the fifty states.

Precautionarily yours

Who's winning plaudits for sensible, balanced coverage of the precautionary principle, chemical regulation, and related matters? Did you guess NPR?

And vice versa? One does hear that line an awful lot, but a new study by Eric Helland and Jonathan Klick (The Relation Between Regulation and Class Actions: Evidence from the Insurance Industry) suggests it might not be so (via Lahav, Mass Tort Prof).

Around the web, April 23

International law/international human rights edition:

Took a while, but this week President Obama finally nominated Harvard Law professor Cass Sunstein to be head of the Office of Information and Regulatory Affairs in the Office of Management and Budget. Sunstein is a sharp thinker, especially good (in our view) in his analysis and skepticism of the precautionary principle.

The nomination was accompanied by an unusually personal statement from the President:

As one of America's leading constitutional scholars, Cass Sunstein has distinguished himself in a range of fields, including administrative law and policy, environmental law, and behavioral economics. He is uniquely qualified to lead my Administration's regulatory reform agenda at this crucial stage in our history. Cass is not only a valued advisor, he is a dear friend and I am proud to have him on my team.

Sunstein has his opponents among the activist right and Second Amendment supporters, and he has been attacked from left by advocates of the all-powerful regulatory state. We interpret President Obama's statement to be a message, especially to the latter group, that "This is my guy. Leave him alone."

As we noted in a post last month, the White House is re-evaluating regulatory review across the Administration. It's good Sunstein goes into the process with the confidence of the boss.

"The Supreme Court seemed skeptical on Monday about holding the current Iraqi government responsible in American courts for the acts of Saddam Hussein's regime." [AP; SCOTUSBlog] A 2003 federal law abrogating sovereign immunity for foreign states that support terrorism was promoted by its backers at the time as if uncontroversial, but we now discover the potential of private lawsuits to disrupt American relations with some of our most sensitive allies.

Banning fast food near schools

Councilman Eric Gioia from Queens wants to make New York City a pioneer in the limitation of choice on what and where to eat -- grown-ups' choice, too, of course.

The defense and health-care industries are already to some extent battle-hardened to the False Claims Act and its bounty-hunter-driven whistleblower provisions. As for numerous other sectors now being swept into a relationship with federal money through the financial crisis and bailout, well, they're not going to know what hit them.

Reviewing the American Association for Justice's 1st Quarter lobbying disclosure report -- $1.15 million! -- submitted last week, we spotted a bill AAJ has lobbied on that merited further exploration. In the category of LBR (Labor Issues/Antitrust/Workplace), the trial lawyers cite H.R. 635, to establish the National Commission on State Workers' Compensation Laws.

Workers comp issues are always hot and heavy in the state courts and legislatures, but rarely does the issue surface in Congress. So what's this? In his news release announcing the bill's introduction, Rep. Joe Baca (D-CA) said:

More than 35 years have passed since our government took a serious look at the effectiveness of workers' compensation laws. Access to proper benefits and medical care after on the job injuries is a right every American worker deserves. I am hopeful this legislation will bring us closer to updating and modernizing our state workers' compensation laws to ensure they remain effective in this new century.

One suspects "updating and modernizing" means different things to different constituencies, as in workers comp lawyers who might sense an opportunity for "updating and modernizing" their summer homes.

We note AAJ has a CLE session devoted to workers comp scheduled for its national convention this July in San Francisco. On the agenda:

  • How to Maximize Your Recovery - Andrew J. Reinhardt, VA
  • Direct Claims Against the Employer - Michael A. Galpern, NJ
  • Stress Claims - Deborah G. Kohl, MA

AAJ's quarterly report is accessible at the Senate's House's lobbying disclosure site here.

A new study by Richard L. Vining Jr., Amy Steigerwalt, and Susan Navarro Smelcer, confirms that, yes, ABA evaluations of federal judicial nominees tend to tilt toward more politically liberal candidates (it's discussed in a WSJ editorial today). Jonathan Adler @ Volokh has many more links, including to a NY Times editorial which concludes, ever-so-Timesishly, that the bar raters aren't being liberal enough. Earlier here (among many other mentions).

Taft-Hartley and the secret ballot

A bit of relevant background for the card check debate from Hans von Spakovsky:

The provisions for secret ballots in union representation elections are outlined in Section 9 of the National Labor Relations Act, codified at 29 U.S.C. 159 and first passed in 1935. The original language stated that the National Labor Relations Board (NLRB) could provide for "a secret ballot of employees, or utilize any other suitable method to ascertin [sic] such representatives."

This provision was amended by the Taft-Hartley Act of 1947 to delete the "other suitable method" language after Congress found that "the American workingman...has been cajoled, coerced, intimidated, and on many occasions beaten up, in the name of the splendid aims set forth in section 1 of the National Labor Relations Act."

Good thing that would never happen now!

P.S. Some more on the history of Taft-Hartley, from historian John Steele Gordon.

"International human rights" treaties

As Eugene Volokh points out, what you see with them may turn out to be quite different from what you get.

Around the web, April 21

  • Entire fleet maintenance crew of Boston fire department -- about 20 in number -- file asbestos exposure claims on same day [Boston Herald/FireRescue1]
  • West Virginia considers extending to pharmacists its curb on med-mal liability [Beckley Register-Herald]
  • No one has used North Carolina's new option to arbitrate med-mal claims, lots of dispute over whose fault that is [Asheville Citizen-Times]
  • Furor after reports some Oklahoma comp claimants didn't know a percentage of their awards went to lawyers' political group [USA Today]
  • Florida House committee clears bill to restore effect to parent's recreational liability waivers [Florida Today]
  • Top City Hall lawyer: why let injured NYC public employees double-dip through benefits + liability claims? [Albany Times-Union]

In Missoula, defense attorneys are aggressively attacking the prosecutors in the criminal trial of W.R. Grace executives. From Bloomberg, "W.R. Grace Will Seek Acquittal, Claims Misconduct":

W.R. Grace & Co. lawyers told a judge that prosecutors' misconduct has irreparably tainted a criminal pollution trial against it and five former executives and they will ask next week for the case to be dismissed.

The lawyers said during a hearing yesterday without the jury present that they will ask U.S. District Judge Donald Molloy in Missoula, Montana, to find the defendants not guilty of all charges related to asbestos contamination in Libby, Montana.

The defense attorneys contend that the prosecution withheld evidence and, again Bloomberg, "that a key prosecution witness, former Grace executive Robert Locke, lied on the witness stand and had an improperly close working relationship with the prosecution team."

Now doesn't that sound like the arguments successfully waged by Sen. Ted Stevens' attorneys, albeit after the conviction? The judge seems to be taking them seriously.

More from The Missoulian, "W.R. Grace defense: Justice Department out of control": "Defense lawyers in the W.R. Grace & Co. trial on Friday said the purported misconduct of federal prosecutors is symptomatic of an errant, win-at-all-costs Justice Department, and urged the presiding judge to dismiss the case."

Asbestos and AAJ lobbying

Last week we remarked at the lack of asbestos-related legislation in Congress this session, just a few years after a proposed asbestos settlement was a major bill. In the 111th, the only legislation with the word "asbestos" is S.Res. 57: "A resolution designating the first week of April 2009 as 'National Asbestos Awareness Week.'"

Discussions must be continuing behind the scenes. After all, we note this entry in the American Association for Justice's First Quarter 09 lobbying report, filed last week, under the category, Consumer Issues/Safety/Products: "Lobbying related to issues pertaining to the use of the product asbestos."

The only other issue AAJ lists under the consumer category is: "Lobbying related to draft legislation to provide for service of process over foreign nationals in cases involving defective products causing injury in the United States." No lobbying on the Consumer Product Safety Improvement Act or any of the bills to amend it? UPDATE (8:48 a.m.): The Consumer Safety and Products reporting category ran across several pages, so we missed an important related area that AAJ is lobbying on, arbitration:

  • H.R. 1020 (Arbitration Fairness Act); to prohibit mandatory binding arbitration in consumer contracts.
  • H.R. 1237/ S. 512 (Fairness in Nursing Home Arbitration Act); relating to the use of arbitration agreements to resolve disputes involving nursing home care and nursing home contracts.

Despite the predominant failure of campaigns to use public nuisance law as a surrogate for product liability in areas like guns and lead paint, plaintiffs are finding courts willing to entertain sweeping applications of nuisance doctrine in more conventional environmental-law settings, according to Steven R. Williams and R. Trent Taylor of McGuire Woods and James T. Lynn of duPont, in the NLJ. Taylor also has an article in BNA (PDF) sounding the alarm about a January federal decision in favor of North Carolina in its nuisance suit over Tennessee Valley Authority utility emissions, which he says could foreshadow advances for global-warming litigation -- though Chuck Moellenberg of Jones Day contends that the TVA case does not present as much novelty as all that, at least as to its nuisance-law angle.

Around the web, April 20

  • Advice for lawyers: "Dealing with the Difficult Adversary" (and in particular the "Bully"). [Day on Torts]
  • "Judicial Council of California Report on Class Action Trends Released" [Karlsgodt]
  • Cessna wins ruling that plane crash in Italy should be sued there [Legal Times]
  • Consumerists who bash insurers don't seem to have very clear idea what they want from the industry [Martin Grace, RiskProf, first and second posts]
  • Case against actual Brooklyn gangster could help set boundaries on civil RICO as weapon against legitimate businesses [Forbes]
  • Wisconsin Gov. Jim Doyle at forefront of efforts to undo state's liability limits [Carter @ ShopFloor]

NYU preemption symposium

It's online (via B&H).

Top 100 employment-law blogs

As compiled by Molly DiBianca of Delaware Employment Law Blog (via Schwartz).

More liveblogging of DRI conference

Bruce Nye at Cal Biz Lit concludes his liveblogging of a Defense Research Institute West Coast conference by summarizing several more sessions, including one on the sophisticated user defense, and another in which Dean Erwin Chemerinsky discussed pre-emption at the Supreme Court; Nye concludes with some thoughts about the distinctiveness of California product liability and toxics law. Earlier here.

In Newsweek: yes, the Senate should defer to Presidents in the run of their subcabinet picks, and yes, Harold Koh is exceedingly well qualified in all the obvious and some less obvious ways. But it's also fair to take a close look at the "transnationalist" school with which his career has been associated -- which seeks to superimpose on U.S. jurisprudence "international legal norms [which] by and large reflect the values of Social Democratic Europe and liberal American academics" -- and to ask whether those ideas are now going to start finding their way into official policy.

Jim Copland in the Washington Examiner:

The bill specifies that if management and labor were unable to agree to a contract after 120 days, the government's arbitrators would step in and mandate labor terms under "contracts" that would be binding for two years. ... The arbitrators' decision would be final, with no possibility for judicial review.

Card Check places no limits on the Labor Department's discretion, so nothing prevents the mandates drawn up by arbitrators from deviating far and wide: Business might be barred from outsourcing processes or from merging with other companies, and they might be compelled to support "community" groups or meet "green" targets. The difficulties in government involvement in business decisions, made obvious in the financial- and auto-industry bailouts, would be magnified throughout the private economy.

Lest one think that the Democrats backing Card Check are favorably disposed to arbitration in general, realize that another of their top legislative priorities - at the behest of a different special interest, the trial lawyers - is to gut the Federal Arbitration Act to prevent consumer arbitration.

The same legislative leaders, then, are supporting legal changes that would prohibit businesses and consumers from agreeing to arbitrate their disputes but would require businesses and labor to submit to arbitrators' decisions.

"The Frontiers of Tort Law"

A Loyola/L.A. Law Review symposium with contributions from, among others, John Fabian Witt, Jules Coleman, and Anita Bernstein. [Markel/Prawfsblawg]

The venerable learned-intermediary doctrine protects drugmakers from a great deal of ill-founded litigation alleging failure to warn, by making clear that they've discharged their duty if they adequately warn the doctor who prescribes the compound. But as Beck & Herrmann warn, some folks in Albany would like to change that. A05201/S 3157 is sponsored by Assemblymen Richard Brodsky (D-Westchester) and Harvey Weisenberg (D-Nassau).

Card-check "compromises" that aren't

Tinker with the loaf a bit, then relabel it "half a loaf"? Carter @ ShopFloor, Jennifer Rubin at Commentary and Mickey Kaus have thoughts on some of the EFCA-light ideas being promoted out there.

Asbestos in Austin

A flurry of asbestos news this week (see below), which now includes action Thursday by the state Senate in Texas. From AP: "Handing a rare victory to personal injury trial lawyers, the Texas Senate has passed legislation that would make it easier for certain people to recover damages after being exposed to asbestos. ...The bill, which passed 20-11 on a preliminary vote Thursday, would only apply to lawsuits involving mesothelioma, a rare form of cancer usually caused by the inhalation of asbestos fibers."

The bill is SB 1123, and its legislative history is available here. The Southeast Texas Record has more. Texans for Lawsuit Reform has a four-page sheet laying out the arguments against bill, noting that it undermines the key Texas Supreme Court ruling in Borg-Warner Corp. v. Flores.

Around the web, April 17

  • Hearing discloses that Coughlin Stoia provides suit-sniffing "portfolio monitoring services" to potential big lead plaintiffs. "Shocking conflict of interest", as Judge Rakoff contends? Routine, standard practice for firms in securities class action biz? Both? [Kevin LaCroix, D&O Diary; David Bario, AmLaw Daily]
  • California legislature nixes interlocutory appeal of class certification [Calif. Civil Justice]
  • One trial lawyer's riposte to Philip Howard's health courts proposal [Kennerly]
  • Leverage for complainants dept.: EPA will now require grant recipients to disclose pending civil rights lawsuits [Chris Horner, American Spectator]
  • Officials in Spain signal displeasure at prospective prosecution of Bush lawyers [WSJ law blog, NRO "Corner"]
  • Lawmakers in Oregon, Nevada move to raise some liability-suit limits [TortsProf and again]

The Illinois Supreme Court today reversed its 1987 Lipke rule that prohibited defendants in asbestos cases from introducing evidence about other exposures the plaintiffs may have experienced. The Madison County Record (Ill.) has the details about the 5-1 opinion in the case, Nolan v. Weil-McLain, in "Illinois Supreme Court strikes long-time asbestos evidence ruling." (The opinion is here as a .pdf file).

The original plaintiff was a plumber-pipefitter who worked many years in jobs exposing him to amphibole asbestos, which can cause mesothelioma, but only 20-25 times in 38 years to chrysotile asbestos, which studies show do not cause mesothelioma. But the defendant company was not allowed to introduce evidence of the plaintiff's exposure to amphibole asbestos.

Ed Murnane of the Illinois Civil Justice League remarks: "By striking down the arbitrary provisions of Lipke - the ruling that made it impossible for Illinois judges to grant a fair trial to defendants - the Supreme Court is improving the legal environment in Illinois and, finally, allowing defendants to actually present their side of the case at trial." The ICJL and my employers at the National Association of Manufacturers joined other business and legal-reform groups in filing an amicus brief, which you can access at the NAM's Legal Beagle here. And there's more background from the Record in this story.

Out in Missoula, meanwhile, the criminal trial continues in U.S. District Court of former W.R. Grace executives accused of covering out the health consequences of asbestos exposure from vermiculite mining in Libby, Montana. Strange how little national attention this CRIMINAL case for obstruction and violation of the Clean Air Act is receiving.

Bruce Nye of Cal Biz Lit has been filing reports from a Defense Research Institute event in San Diego, on such topics as "greenwashing" liability (for misrepresenting products' environmental impacts) and the possible litigation impacts of emerging environmental standards for products (EU regs, public nuisance theories, greenhouse regs, the "precautionary principle"). The latter post includes a quote attributed to attorney Chris Bell describing California's regulations on chemicals in products as "bringing the EU to the state. If it can't be marketed in Europe, it can't be marketed in California." Update/correction: Better strike that last quote, which appears to represent neither Bell's views nor Cal Biz Lit's on the state of California regulation.

A little bird told them

Even if an anonymous source counts as enough of a factual basis for launching a securities fraud action, a secondhand anonymous source may not be enough to do the trick, says the Southern District of New York [10b-5 Daily]

I am happy to see the Wall St. Journal's editorial page pick up on this item, which I featured on this site on April 8.

April 16 roundup

  • Bill being pushed in Texas legislature would pull more defendants into asbestos litigation [Legal NewsLine, Texans for Lawsuit Reform (PDF)]
  • Often assailed as fraught with hidden bias, testing of job applicants may be less biased than the alternatives [Ray Fisman, Slate]
  • Annual Clifford symposium at DePaul earlier this month does not look to signal any break from the series' reliably plaintiff-oriented reputation [Stier, Mass Tort Lit]
  • "Oregon drops punitive damages claim to save jobs" [Cal Punitives]
  • Two dubious expert evidence rulings on multiple chemical sensitivity [David Bernstein @ Volokh]
  • Public Citizen alum and Georgetown lawprof David Vladeck, known as a committed and tireless opponent of pretty much every opinion advanced on sites like this one, named to head Federal Trade Commission's Bureau of Consumer Protection [CL&P, ShopFloor]

Eugene Kontorovich is guestblogging on the subject at Volokh: "International rules make detention and prosecution so costly that even the most powerful nations prefer to let the criminals go free, leaving them to continue looting the one-third of world trade that passes through the Gulf of Aden." And for comic relief, here's Susie Madrak at Crooks & Liars (by way of a jerry-rigged Johann Hari argument involving nuclear waste dumping and mutant babies) contending that "in the big picture, the Somali pirates are acting in self-defense". Earlier here. More: Bader.

John J. "Jack" McConnell Jr. of South Carolina-based Motley Rice, considered a key architect of the close alliance between the trial bar and the Rhode Island Democratic Party that led up to the state's failed litigation against lead paint companies, has been tagged for a seat on the state's federal district court by Sens. Sheldon Whitehouse and Jack Reed (both D-R.I.). [Providence Journal via Genova] As I noted eight years ago (see also this update from David Nieporent and this summary from Jim Copland), an investigation by Forbes found that after McConnell opened a Motley branch office in Providence, the firm quickly established itself as Rhode Island's largest political contributor for the 2000 elections, and McConnell himself became treasurer of the state party (and a key donor ever since, including to campaigns of Reed and Whitehouse). Whitehouse (as state AG) then proceeded to hire the Motley firm to conduct the state's much-publicized lawsuit seeking to assign the costs of lead paint cleanup to companies that produced the paint many decades earlier. That suit would have yielded enormous returns (and legal fees) had it succeeded, but in the event proved to be too drastic a stretch of legal principles for the courts to accept. For McConnell, though, at least, if not for many of the others involved, the whole episode seems to have resulted in a happy ending.

Wondering about legislation that would grant more authority to state attorneys general to enforce federal laws, we find two bills in the Senate, neither of which appear to be Congressional priorities.

  • S. 139, the Data Breach Notification Act, sponsored by Sen. Dianne Feinstein (D-CA): To require Federal agencies, and persons engaged in interstate commerce, in possession of data containing sensitive personally identifiable information, to disclose any breach of such information. Section 9, "Enforcement by State Attorneys General." Civil penalties of as much as $1 million per violation. Here is the bill text in .pdf.
  • S. 419, the Secondary Metal Theft Prevention Act of 2009, sponsored by Sen. Amy Klobuchar (and Hatch): "To require secondary metal recycling agents to keep records of their transactions in order to deter individuals and enterprises engaged in the theft and interstate sale of stolen secondary metal, and for other purposes." Sec. 8 is "Enforcement by State Attorneys General." Text is here.

A serious problem when commodity prices were high, theft of copper and the like. So it SHALL be against federal law for a metal recycler to purchase:

(a) DO-NOT-BUY LIST.--Unless the seller establishes by written documentation that the seller is the owner, or an employee, agent, or other person authorized to sell on behalf of the owner, it is unlawful for a secondary metal recycling agent to purchase for recycling any secondary
metal that is--
(1) marked with name, logo, or initials of a railroad, an electric, gas, or water company, a telephone company, cable company, or a public utility or that has been altered to remove,

April 15 roundup

All-labor- and employment-law edition:

  • A view from some EFCA backers: leadership and labor base are marching in different directions on this thing [Michael Fox]. Senate vote count shows why labor's mulling card check compromise [same]. Constitutions of some pro-card-check unions ensure members' right to use secret ballot to elect officers [Carter @ ShopFloor on Screen Actors Guild and more, von Spakovsky @ NRO on Teamsters]
  • Circuits are split on effects of bankruptcy on union contracts, which may affect where GM or Chrysler file for protection [Bales, Workplace Prof Blog]
  • "Gearing Up for Tougher Wage & Hour Enforcement from DOL", including 250 new investigators [Michael Fox]
  • Mitch Rubinstein (St. John's, Adjunct Law Prof) on stimulus bill's provisions on labor, employment law [SSRN via Bales/Workplace Prof]
  • TARP recipients under political pressure not to use H1-B immigration program [Felix Salmon] Update: So now Wall Street firms are just relocating the hires to other countries, and everyone can be happy [WSJ]
  • 45 percent of French in poll said to find boss-napping acceptable tactic [Stuttaford, NRO "Corner"]

Somebody tell the Obama Administration!

Elizabeth Warren, bankruptcy policy guru and head of Congress's TARP Oversight Panel, and Jay Westbrook, also a bankruptcy bigwig, rebut the conventional wisdom that Chapter 11 reorganization cases drag out forever, cost too much, and rarely succeed. Quite the opposite: fully 70 percent of companies that are able to advance a reorg plan succeed in implementing it. And more than half the losers, who fail to reach that point, are booted out of court within 6 months.

The data are clear: bankruptcy need not and does not mean failure.

Is Chapter 11 perfect? Far from it. But nor is it the morass that proponents of alternatives--particularly proponents of government intervention in the private sector--claim. Of course, all bets are off when the government commandeers a bankruptcy proceeding to achieve its own political ends.

Update: And I would be remiss not to mention Kenneth Ayotte and David Skeel's excellent working paper, "Bankruptcy or Bailouts," which uses AIG and Lehman Bros. as examples to demonstrate that " Although bankruptcy is not always the optimal response to financial distress, it is more effective than is generally realized."

Connecticut law and those AIG bonuses

Whoops! According to a state official, they seem to have been perfectly legal after all. More: Ragamuffin Studies doesn't think Richard Blumenthal has much in common with Friedrich Hayek on the Rule of Law question.

No, Ours Is Better

General Electric must reimburse a competitor $8.3 million for ads it has already run and $3 million for future ads after a GE subsidiary claimed that its x-ray contrast agent was better than the competitor's--a misconstruction of a clinical study, said the court. But which is actually better? The experts were divided, and "the weight of clinical evidence," said the court, did not point either way.

Blumenthal and the Courant layoffs

Among his many other roles in bossing around the people and institutions of Connecticut, the state's attorney general has apparently assumed a role as promoter of "media diversity" and twister of arms to minimize cuts in newsroom staff.

Maryland's legislature adjourned last night, having generally passed on civil justice-related legislation during the session. The Maryland Chamber of Commerce summarizes:

Civil Liability: The 22 civil liability bills that the Chamber took positions on were put down in order. While we had favored a few short-lived tort reform bills, veteran proposals on false health claims, market share liability for lead paint and increased economic damages for wrongful death were all left stranded.

Especially welcome is the defeat of HB 1156, a market share liability bill limited to Baltimore: "Requiring specified manufacturers of lead pigment to reimburse specified persons for damages caused by lead-based paint in residential buildings in Baltimore City; establishing the types of damages caused by the presence of lead-based paint in residential buildings in Baltimore City for which manufacturers of lead pigment are liable to specified persons; creating the Lead Paint Restitution Fund; etc." More from the Chamber on the bill.

Subprime class actions, cont'd

They're often foundering on the scienter issue, notes Andrew Longstreth at American Lawyer. But here comes a wave of class actions against mutual funds slammed in the market downturn:

Of course, as in any case, the plaintiffs aren't necessarily looking to prove their theories in court. They're looking to pressure defendants into settling. "If there are plaintiffs able to get past dismissal and into discovery ... the defense cost is in the many millions," Robert Skinner of Ropes & Gray told Investor News. "I think this is what [plaintiffs attorneys] are banking on. If they can put together a complaint that passes muster, they can impose costs and receive a quick settlement."

The terms of mortgage modifications

Some commentators profess shock that lenders, as part of their consent to modify the terms of a mortgage that will not otherwise be paid in full, will require a release of liability claims. Kevin Funnell of Bank Lawyer's Blog is, well, not so shocked.

California False Claims Act

Per the Civil Justice Association of California, a pending Assembly bill would introduce some unfair new "gotchas" into the state's existing whistleblower law enabling suits against government contractors, including one undercutting the statute of limitations. Update Apr. 23: passes Assembly Judiciary.

April 14 roundup

So concludes a new article by David Hyman and several collaborators. The Texas cap reduced allowed non-economic damages in tried cases by an estimated 73 percent, allowed verdicts by 38 percent, and payouts by 27 percent. As expected, settlement payouts declined, by 18 percent.

The question is coming up more and more frequently, reports the Journal's Law Blog.

It's not so far-fetched. Increasingly, federal prosecutors are effectively deputizing company counsel, eager to avoid the catastrophe of a corporate indictment, to investigate employees' possible wrongdoing. So whether a Miranda-style warning is required now depends solely on who's doing the questioning.

The National Law Journal reports that, in the down economy, workplace defamation lawsuits are on the rise. "A bad reference, statements made in employee performance reviews, internal documents, termination meetings and conversations among managers and supervisors" are all potential grounds for defamation claims.

One former Staples manager, fired for violating the company's travel and expense policy, sued after the company circulated an email message explaining (truthfully) why he had been let go. Reversing summary judgment for the employer, the First Circuit ruled the suit could proceed.

When firing an employee, "There is no risk-free way to go," said one prominent employment attorney. Escorting a terminated employee out of the building, or locking her out of computer systems, could lead to a defamation suit. But go easy, and the result could be the loss of proprietary information or vandalism accompanied by negligence claims.

Fox is planning a recession-savvy reality TV show, "Someone's Gotta Go," in which struggling small businesses let their employees vote a co-worker out of the office.

But as the National Law Journal reports, wrongful termination suits are all but guaranteed:

Public relations fears aside, employers are exposing themselves to liability, such as discrimination and retaliation lawsuits, [employment-law attorney] Rice said. For example, what happens if the employees vote off an employee who is black, a woman or elderly, and the person claims discrimination? Just because they're on TV doesn't mean they waive their rights to sue for discrimination, he said.

"If someone ends up getting the ax, and you're a member of a protected group, you'd have to deal with the fallout from that," Rice said. "And since no one knows in advance who is going to get the ax, there's not much you can do in advance to waive these things. Employment rights can't be waived in advance."

Of course, actual discrimination is still an essential element of an employment discrimination lawsuit--nominally, anyway.

At first, it seemed like federal prosecutors in southern Florida had their case against Dr. Ali Shaygan for illegally prescribing prescription painkiller in the bag. One of Shaygan's patients had died of an overdose, two undercover agents obtained numerous scripts from the doctor, and other patients were willing to testify.

Then the case began to unravel. The dead patient had a lot more coursing through his veins than just Shaygan's prescriptions. The more they investigated, the more it seemed like Shaygan's habits--things like meeting with patients at home or sometimes at coffee shops and squeezing patients into his schedule at the last minute--did not necessarily point to any wrongdoing. Shaygan's patients described him as attentive and detail-oriented--a high-quality doctor who cared about them and their health. And the defense was poking holes in the credibility of the lead DEA agent on the case.

Washoe County (NV) School District claims it would have responded to former student Jana Elhifny's complaints if she had been able to tell school officials anything about her tormentor--gender, size, tone of voice--before she dropped out to return to Egypt and marry. But the school settled her claim--and that of Elhifny's non-muslim friend who felt "ostracized" for supporting Elhifny--for $400,000 to put an end to the "lengthy and expensive litigation."

Sentencing guru Douglas Berman, observing the fallout of the botched Stevens prosecution, says it's culture:

I cannot help but also wonder and worry if we are now only seeing the tip of the prosecutorial misconduct iceberg. I want like to believe that ugly stories of federal prosecutorial misconduct are aberrations, but maybe I need to become even more cynical about whether the supposed "good guys" in the criminal justice system really are putting a commitment to justice ahead of a commitment to winning at all costs.

The recent trend in high-profile white-collar cases is not encouraging: Martha Stewart, Jeff Skilling and Ken Lay, Joe Nacchio, etc.

Prosecutors face enormous pressure to rack up scalps, and overbroad and vague criminal statutes--the go-to offenses that get pulled out in every weak case like mail and wire fraud--take away the easiest out: that no plausible crime was committed.

The result is too many weak cases premised on shaky legal theories and tenuous facts. Should it come as a surprise, then, when exculpatory evidence is lost or disclosures to the defense never get made?

SEC Rules for Venture Capital?

Treasury Secretary Tim Geithner says that large venture capital firms present significant "systemic risk" to the economy and so should be forced into the SEC's registration regime and all the muck that comes with it--including massive civil litigation risk.

But as James Freeman points out in today's Journal, VC couldn't possibly pose any "threat to financial stability"--the entire industry amounts to about $30 billion per year, nearly all of that in equity from wealthy investors, with a small amount in secured debt.

The real danger is not that VC investment could lead to financial meltdown, but that tight regulation and legal risk (imagine if early-stage startups faced 10b-5-style liability) would choke off the supply of capital to high-tech entrepreneurs.

A cynic might wonder whether that is the intended result. If VC collapses, the case for "strategic" government investments in young sectors--that is, industrial policy--looks all the more attractive.

Off-label prescribing of drugs

Albany Law School just hosted a symposium on the topic. Earlier here (and many other posts).

In corporate law, by Larry Ribstein et al.

I write at Overlawyered about the (only too plausible) worries that it will make life untenable for many farmers and other small food producers.

Meanwhile, at the Wall Street Journal (via Genova), Nathan Koppel looks at the current state of nutritional/obesity litigation against food makers. Groups like the Center for Science in the Public Interest, having run into much resistance from judges to their schemes for obesity damage awards, court-ordered ingredient substitutions and the like, seems to have beaten a tactical retreat to the position that they're really just trying to achieve more disclosure.

The Georgia legislature recently adopted a bill (H.B. 29) that, in addition to allowing for electronic service of pleadings via email, imposes an automatic stay of discovery in civil suits where the defendant files a motion to dismiss at or before the time when an answer must be filed.

Governor Perdue has already commented favorably on the bill, so its passage seems likely.

The logic of the bill is that it allows the defendant to avoid (or at least delay) the expense of discovery until the court has the opportunity to rule on the preliminary motion. The rationale is that defendants who expect to be dismissed at the preliminary motion stage should be entitled to avoid the expense of discovery.

The reform would not, however, do anything to reduce the expense of litigation for those cases where the plaintiff's pleadings are logically valid but ultimately non-merit-worthy. A preliminary motion does not address the ultimate merits of the case, but merely asks whether the plaintiff's complaint "states a claim on which relief may be granted."

While nearly half of all complaints are dismissed through motions for summary judgment, very few are dismissed on a motion to dismiss of the kind contemplated in H.B. 29.

HB 29 was originally coupled with a loser-pays provision that would have imposed the defendant's attorneys' fees on the plaintiff if the preliminary motion to dismiss prevailed but that provision was booted (at least in part) because lawmakers could not adequately define the term "substantial merit" (the lack of which would have triggered the payment of attorneys fees). In addition, the provision could have complicated the use of Georgia's somewhat unique "offer of judgment" rule in O.C.G.A. 9-11-68.

Fellow Atlantan Ken Shigley predicts that H.B. 29 will prompt a "rash of frivolous motions to dismiss as a stalling tactic" but will eventually become "much ado about nothing."

He reasons that defendants who file frivolous motions to dismiss will be sanctioned for doing so and that this will eventually curtail the practice, an outcome that's hard to dispute, although I seem to have missed the plaintiff's bar using that argument in favor of H.B. 29 before it was passed.

A Wall Street Journal editorial today profiles a motion by a defendant in a torts case, seeking to invalidate a contingent fee contract on the grounds that it was obtained through corrupt means.

Pennsylvania is suing Janssen Pharmaceuticals to recover the costs of Medicaid expenditures for Janssen's Risperdal, on the grounds that Janssen improperly marketed the drug for uses not approved by the Food and Drug Administration. [So-called "off-label" prescriptions by physicians are legal, common, and arguably necessary for the public health, but manufacturers are not allowed to tout such uses -- they must leave that to word-of-mouth or academic journals. Of course, if Risperdal is in fact effective and safe in its off-label use it's very hard to see how Pennsylvania is damaged ...] Janssen denies the accusation, by the way.

Pennsylvania's suit against Janssen is handled by Bailey, Perrin & Bailey, a Houston firm. Governor Ed Rendell's Office of General Counsel was, it so happens, negotiating this no-bid contingency fee contract with Bailey Perrin at the same time that the firm's founding partner, F. Kenneth Bailey, was making cash contributions and private airplane loans worth well over $100,000 to the Rendell's 2006 re-election campaign.

Bailey, Perrin & Bailey's contingency-fee contract specifies that it will receive up to 15% of any settlement or judgment. It also provides that Pennsylvania is barred from settling for nonmonetary relief "unless the settlement also provides reasonably for the compensation of [Bailey Perrin & Bailey] by [Janssen] for the services provided by the law firm under this contract." Janssen's motion to the Pennsylvania Supreme Court argues that Bailey Perrin & Bailey's contract had to be approved by the legislature, pursuant to the state constitution, and in any case "violates Janssen's rights to due process under the United States and Pennsylvania Constitutions, which guarantee that attorneys representing the Commonwealth, acting in its capacity as sovereign, not have direct financial interest in the outcome." That latter claim is one I and others have made for some time. It is good that it now has a chance to be eventually heard by the United States Supreme Court.

Museum deaccessioning

Some fine arts advocates would like the law to restrain museums from selling artworks except for purposes of raising funds to buy other artworks. George Wallace of Declarations and Exclusions has an accessible post on the controversy.

Northrop Grumman qui tam settlement

And a plaintiff "whistleblower" walks away with $48.7 million.

A burgeoning set of product claims in the construction field. More: Global Tort.

"Why Prosecutors Hate New Crimes"

Don't blame prosecutors for lawmakers' continued push of criminalization into new areas, at least not if Kyle Graham is right in this Ohio State Journal of Criminal Law piece.

"Atlanta might sue mortgage lenders"

It's unlikely that the city put up any particular objection to what was going on during the easy-money days, but now hindsight has revealed that some lending practices were excessively risky. "Other major cities suing lenders include Baltimore; Buffalo, N.Y.; Cincinnati; Cleveland, and Memphis."

Ed Whelan at NRO "Bench Memos" is really hitting below the belt now: he's reading and quoting from some of the Yale dean's articles. No fair! More at NRO "Corner" here and here.

More: Eric Posner suspects Koh's partiality for transnationalism in law extends only up to a certain prudent point. And Eugene Volokh critically examines Koh's views on the collision between transnational law views of free speech and our own First Amendment tradition.

EFCA: "I cannot support that bill"

  • In another damaging blow to the bill's prospects, Sen. Blanche Lincoln of Arkansas has become the first Democrat to come out against it [Arkansas Business]
  • More rumblings of half-a-loaf compromise: "The details aren't out, but BNA is saying that one of the compromises being floated would require the use of dual-purpose-like cards, offering the employee a choice of selecting the union or simply asking for an election. The cards could also be mailed in." [Jeff Hirsch, Workplace Prof Blog] Sen. Pryor (D-Ark.) talks of quickie-election compromise [The Hill; critique of quickie or snap elections from James Sherk and Ryan O'Donnell at Heritage]
  • Politico, which has a special section on the issue, has just finished up an online debate as well.
  • EFCA's "let's have government unilaterally impose contracts" half would seem rather to undercut its "workers really need union representation" half [Kaus; more on the imposed-arbitration provisions at ShopFloor and again]
  • St. Louis labor and employment lawyer George Lenard has been blogging EFCA and its predecessor measure for years; a good place to start is here.

Around the web, April 7

Steve Korris, West Virginia Record:

A prominent national asbestos law Motley Rice law firm implores U.S. District Judge Eduardo Robreno not to turn asbestos litigation into an investigation of false X-ray reports.

In a March 19 brief, John Herrick of the Motley Rice law firm complained that businesses defending themselves against asbestos claims seek to turn Robreno's court into a grand jury.

"After all, defendants are defendants in these cases -- not plaintiffs," he wrote.

Earlier here. P.S. In Tuesday's WSJ: Where are the prosecutors in the bogus-diagnosis scandals?

Lawyers' Vaccine Court bills

Investigative blogger Kathleen Seidel has been doing more digging.

"Borrowers from minorities didn't pay higher interest rates for subprime mortgages, a New York Federal Reserve Bank study shows, contradicting findings indicating those people were targets of expensive credit." [Bloomberg report; study in PDF]

Stuart Taylor, Jr. favors a full domestic inquiry into the abuse of detainees, but also says the Obama Administration "needs to slap down an insult to U.S. sovereignty now brewing in the Spanish courts" under the long arm of "universal jurisdiction". The U.S.-based Center for Constitutional Rights, which benefits from multiple ties to liberal foundations and prestige law-school programs, and in turn describes itself as an "active member" in groups like the Alliance for Justice, has been one group campaigning for such a prosecution. Among the "human-rights" lawyers behind the Spanish complaint, writes Taylor, is "one Gonzalo Boye -- who served time for his role in a left-wing terrorist group's 1988 abduction of a Spanish businessman for ransom". Earlier here.

More: Jeremy Rabkin and Mario Loyola, Weekly Standard; Julian Davis Mortensen, Slate; Mark Hemingway, NRO "Corner" (noting the New Yorker's favorable treatment of lawyer Philippe Sands).

What do you want to bet the bill doesn't cover bullying by SEIU itself?

"Consumer advocates are hailing a Supreme Court ruling that allows individuals who believe they have been cheated by a merchant to file a lawsuit under the state Consumer Fraud Act without first requesting a refund or giving the merchant an opportunity to make amends." Bruce Greenberg, who "filed a friend of the court brief in the case on behalf of the Consumers League of New Jersey", said that in the absence of such a legal interpretation merchants would attempt to "buy off" discontented customers. You know, buy them off by giving them satisfaction before they had a chance to sue.

Do you ever find yourself wondering who "consumer advocates" actually represent?

A proposal in Albany would let municipalities do that. Despite some of the readily imagined dangers -- such as that town officials will hire their pals to do marginally needed fixups and then stick the lender with the padded bill -- the New York Times's cheerleading account doesn't deem it necessary to quote any critics of the idea (via @MidWestchester).

Around the web, April 5

  • Healthy banks urged to be patriotic and take part in TARP program -- and now not being allowed to escape the heavy regulatory hand by paying back the money? [Varney, WSJ; Bank Lawyer's Blog and more]

  • Elizabeth Burch on conflict within aggregate litigation [TortsProf]
  • "Veteran Employment Attorney Defends AIG Bonuses" [NLJ, Carolyn Plump]
  • Which are the best Torts textbooks? The worst? Law teachers and students compare notes [Volokh]
  • "California High Court Imposes Reality Check on Consumer Class Actions" [Washington Legal Foundation, PDF]
  • Lower house of Michigan legislature votes to strip drugmakers of FDA immunity defense [Pero]

Koh's road to confirmation

Apparently if you can show that some people are leveling silly and inaccurate charges against Harold Koh, you get to glide right by any alarms raised about Koh's views that might be not so silly and not so inaccurate.

It's Ed Murnane, known for his work with the Illinois Civil Justice League.

From the brochure promoting the American Association for Justice's "Jazz Fest Seminar: Litigating Auto Collision Case," May 1-3 in New Orleans.

8:45 am-12:30 pm
Introduction to the Auto Case
Case Investigation and the Role of the
Accident Reconstructionist
Facebook and Myspace: Discoverable

Using the Web to Market Your Motor
Vehicle Practice
Effective Use of Demonstrative Evidence

You can get your license as soon as you drop your FaceBook page, young lady! We don't want anybody using it against you if you have a fender-bender.

Looks like a fun session there at the Royal Sonesta Hotel: "In the morning, get strategies and secrets for winning, then savor the sights & sounds of Jazz Fest."

Claudia Rosett in Forbes on the dangers of sanctioning a body with serious designs on free-speech rights. More: Cliff May.

NAM Legal Beagle on Shell Oil v. U.S., a Ninth Circuit case before the Supreme Court:

The Ninth Circuit decided that a manufacturer of a hazardous substance is jointly and severally liable under CERCLA for any spill or misuse of the product by a third party after the substance has left the custody and control of the manufacturer. However, the product in question was sold as a useful commercial product to a third party, and not as hazardous waste. The seller relinquished control at the point of delivery, and the material subsequently leaked and contaminated some soil. The Ninth Circuit's ruling means that a seller of a useful product that may be hazardous has actually "arranged for the disposal" of the product within the meaning of CERCLA, and is thus liable for the cleanup costs.

EFCA and the South

R. Pepper Crutcher: "Most Southern business and political leaders... see EFCA as a rustbelt effort to impose a failed business model on sunbelt employers... [It] is perceived to threaten decades of social and economic development progress."

Ward Churchill Wins, Sort Of...

Let's say you hire a man for a job for which he's unqualified, in no small part because of his race (except that you get his race wrong -- he represented himself as an American Indian, but the Tribe he said he belongs to says he is a Caucasian). Then you reap what you sow, when he produces shoddy scholarship and disgraces his university by denigrating 9/11 victims as "little Eichmanns." Can you fire him for the shoddy scholarship? A Colorado jury said that motive was a pretext, and that he was fired for his disgraceful language, a violation of his tenure and First Amendment rights at a state university. Ward Churchill was awarded only $1 in damages, however, possibly an eloquent testimony to the jury's appreciation of him as a scholar. In so doing, the jury both vindicated tenure rights for state university professors and informed Churchill of what they thought of him.

A judge must now decide whether Churchill gets his job back (an equitable remedy not in the purview of the jury).

A sadder indictment of affirmative action in higher education is hard to imagine. Churchill stated, "CU has been exposed for what it is. It was found by a jury that I was wrongly fired." Yes, except if you were also wrongly hired -- therein lies, hopefully, a lesson for all universities.

Here's the Denver Post report on the case.

Around the web, April 3

  • Jury awards $1.3 million to financial advisor after Wachovia wouldn't take him back after military service [Hartford Courant, Daniel Schwartz]
  • Texas Senate considers asbestos reform rollback [Overlawyered]
  • Paint companies await decision on Rhode Island lawsuit cost reimbursement [AP/Boston Globe via Genova]
  • "Plaintiffs firms still hiring for securities class actions" [The Recorder]
  • More high-profile exposure for Philip Howard's proposal to establish nonjury medical liability courts [NYT, WSJ law blog]
  • Church abuse suit: I'm suing you again because I shouldn't have settled with you the first time [Seattle Times]

With Washington, D.C. momentarily poised between the last month's epic battle over the as-introduced version of the Employee Free Choice Act (which appears to have fallen short of the votes needed to break a GOP filibuster) and the widely expected next-round epic battle (over some stripped-down version or "EFCA-light" that might command enough votes), we had trouble choosing between two good recent columns on the subject, one by Manhattan Institute senior fellow Diana Furchtgott-Roth and the other by veteran political columnist Michael Barone. So we've reprinted both.

Besides their highly visible campaigns against pre-emption and consumer arbitration, they're hoping to obtain more favorable tax treatment of lawsuit settlements, destroy the confidentiality of many settlements, and open up med-mal suits by uniformed personnel against military doctors, for starters. [Legal Times]

Prof. Bainbridge does not share Andrew Sullivan's enthusiasm for this ardently sought goal of some U.S. "human-rights" activists.

It's contrasted with Australia's more conventional one in a paper by Harold Luntz (Melbourne) on SSRN (via Robinette).

The Supreme Court has blinked in its epic poker game with the Oregon Supreme Court over the latter's punitive damages award against Philip Morris. The Supremes on Tuesday, four months after oral argument, dismissed the tobacco giant's appeal in Philip Morris v. Williams as having been "improvidently granted" in a one-sentence opinion. Mayola Williams now stands to receive up to $150 million (the judgment amount plus interest) for the wrongful death of her husband Jesse. Here's the Wall Street Journal's legal blog report of the case.

This case came before the Supreme Court three times, and has been discussed copiously by yours truly, Ted Frank, Carter Wood and others on this site (use "site search" above to find the various postings). Each time the Supremes invited Oregon courts to revise the huge punitives award -- and each time Oregon judges reaffirmed it, while varying their reasons for doing so.

The last remand was in 2007, with instructions to be sure the verdict did not punish Philip Morris for injuries to anyone other than Jesse Williams. The Oregon Supreme Court responded by reaffirming the verdict again, this time based on an independent state procedural ruling that Philip Morris had not preserved the right to appeal this question. [Since the court was interpreting its own procedural requirements, the U.S. Supreme Court cannot intervene unless that rule produces an unconstitutional result.] PM, for its part, asked the court to finally declare, once and for all, that double-digit multiplier punitives are a per se due process violation. Clearly, the justices could not form a stable majority on these two questions, and decided that no ruling at all was better than incoherence. The Oregon justices have triumphed, though of course the precedential value of the case is limited. Expect other state supreme courts to invoke procedural limitations to sidestep constitutional rulings of which they disapprove, however.

Around the web, April 1

  • Wisconsin Attorney General J.B. Van Hollen tells off Sen. Grassley on corporate governance demagoguery [WSJ]
  • Lloyd's of London warns of rise in lawsuits against business [Times Online]
  • More prestige than Lerach, that's for sure: "Coughlin Stoia Recruits Cherie Blair for RBS Class Action" [American Lawyer]
  • "New Drug/Device Preemption Scorecard" [Beck & Herrmann]
  • "Emerging sources of new plaintiffs defined at asbestos litigation conference" [Scott Sabatini, Madison County Record]
  • Blawg Review #205, at Declarations and Exclusions, is cleverly based on Holst "The Planets" theme [George Wallace]



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.