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October 2009 Archives

New Jersey Supreme Court

There's a good chance the next governor could reshape it with as many as four appointments on a seven-seat court. [Mary Fuchs, Star-Ledger via NJLRA]

P.S. And why, asks Paul Mulshine in the WSJ, does Republican candidate Chris Christie keep ducking the need to confront the state supreme court over its long, disastrous venture into redesigning the state's school finance system?

Jennifer Rubin at Commentary:

A friend points out a little nugget of absurdity and political mendacity in the Pelosi health-care bill. Remember Obama's effort to try a "test" for tort reform? (We don't actually need a test, since it has worked to lower medical malpractice coverage and help increase access to doctors in states that have tried it.) Well, Pelosi's bill has an anti-tort-reform measure. On pages 1431-1433 of the 1990 [page] spellbinder, there is a financial incentive for states to try "alternative medical liability laws." But look -- you don't get the incentive if you have a law that would "limit attorneys' fees or impose caps on damages."

That's what the trial lawyers get for the millions spent in supporting the Democratic party, and that's what tort "reform" in the Alice-in-Wonderland world of health-care legislation amounts to. States will be strong-armed into repealing existing caps in order to get the Fed's money. Sweet, huh? Well, unless you thought the aim was to reduce medical costs. No, this will go a long way toward ensuring that tort lawyers remain rich, malpractice insurance remains high, and unnecessary defensive medicine remains a fixture of the health-care system. Nice going, Nancy!

The New York Times finds a Cornell labor academic willing to semi-defend the unionized Carnegie Hall stagehands who make $530,000, $453,000, $434,000, etc. The Times does note: "The power of the stagehands is palpable in the nervousness shown by people in the industry when talking about them." The IATSE (International Alliance of Theatrical Stage Employees) union Local 1 itself declined comment, as it did when Bloomberg News broke the story.

Three important new papers highlight the dangers of the fast-growing practice of third-party litigation finance. The Chamber of Commerce's Legal Reform Summit this week saw the release of a study (PDF) by Skadden's John Beisner, Jessica Miller and Gary Rubin entitled "Selling Lawsuits, Buying Trouble: Third-Party Litigation Funding in the United States" Executive summary:

"Third-party litigation financing" is a term that describes the practice of providing money to a party to pursue a potential or filed lawsuit in return for a share of any damages award or settlement. Litigation-financing companies provide financing for myriad litigation costs, including attorneys' fees, court fees, and expert-witness fees.Funding arrangements also may involve financing the party's living expenses while the trial and any appeals are pending. Third-party litigation financing is a growing phenomenon in the United States,and it has received much attention of late from both proponents and critics, including practicing lawyers, academics, jurists,and policy-makers. Although third-party funding is not widespread, it is playing an increasingly visible -- and potentially harmful -- role in U.S. litigation. If such funding becomes more prevalent, it will pose substantial risks of litigation abuse. This is particularly true in the context of class or mass actions, which are already very vulnerable to abuses.

The root problem with third-party litigation financing is that it introduces a stranger to the attorney-client relationship whose sole interest is a financial one.The stranger wants to protect its investment, and its interest lies in maximizing its return on that investment, not in vindicating a plaintiff's rights. Put simply: the stranger's motive is to pursue investments that will generate returns whether or not the claims underlying those returns lack merit. The stranger, like a law firm, is a repeat player in the lawsuit-financing game. But unlike a law firm, the stranger does not have a privileged, fiduciary relationship with the plaintiff.

Eventually, then, the stranger's presence will require a relaxation of the rules governing attorney professional responsibility, compensation, and the attorney-client privilege to accommodate these new realities.This relaxation threatens to chip away at -- and eventually eradicate -- critical safeguards against lawsuit abuse.

This paper begins with an overview of third-party litigation financing. It next examines current third-party financing practices in the United States. It then sets forth a critique of the practice, particularly the incentives it creates to engage in frivolous and abusive litigation. In this section, the paper also presents a case study on the Commonwealth of Australia, the first jurisdiction to permit third-party litigation funding, where such funding has dramatically increased litigation and given investors pervasive -- even total -- control over a plaintiff's litigation. Finally, the paper proposes that third-party litigation financing be prohibited in the United States to prevent these abuses. At the very least, the paper concludes, such funding should be banned in class actions and other forms of aggregate litigation.

Meanwhile, Northwestern's Searle Center is showcasing two excellent papers by Stephen Presser (Northwestern) and Paul Rubin (Emory) from a public policy roundtable on the topic held at Northwestern. From Prof. Presser's draft, which is entitled "A Tale of Two Models: Third Party Litigation in Historical and Ideological Perspective":

In this modest paper I argue that we have two different models of litigation in this country. One is a traditional model, best exemplified by Sir William Blackstone and Abraham Lincoln, that litigation is something pernicious that ought to be discouraged. A second model, one that has recently captured the popular imagination (or at least the imagination of our policy makers and elite lawyers), is that litigation is a noble tool that can lead to transformative social change, just as it did, for example, in the struggle for civil and educational rights in the fifties and sixties. What one thinks about third-party financing of litigation may turn simply on the choice of which model or ideology seems more appealing, and what is now happening in the American states is confusion over which of these models ought to predominate.

In addition to much interesting detail on the subject of societal views of litigation, Presser goes on to discuss key recent decisions on litigation finance from Texas and Ohio, and the general relaxation of restaints against champerty and maintenance.

From Prof. Rubin's paper, "On the Efficiency of Increasing Litigation", the abstract:

The common law has long forbidden third party investment in lawsuits based on "champerty" and related doctrines. More recently, these restrictions have been relaxed, although they may not have been entirely eliminated in the U.S. While it might appear efficient to allow such investment, in fact it is not. The effect of relaxing restrictions will be to increase litigation. When there are benefits of litigation these are deterrence of harmful activities. However, the U.S. already goes much farther than any other country in allowing class actions and other group based litigation, and so any benefits of increased litigation are likely to be small or nonexistent. There are two external costs from increasing litigation. First, the plaintiff must pay his own fees, but also imposes costs - sometimes quite significant costs - on defendants when a lawsuit is filed. In many cases, the costs imposed on defendants are greater than costs borne by plaintiffs, especially when plaintiffs are individuals or class members and defendants are business firms. Second, the type of lawsuits that would likely result from increased third party investment would probably move the legal system away from efficiency. Overall increasing third party financing of litigation is likely to be harmful.

Around the web, October 30

  • Salaried retirees got shaft, UAW retirees got comfy bailout in Obama GM/Delphi scheme [NYT] "Government Strongarm Tactics in the Chrysler Bankruptcy" [Coyote]
  • Talisman Energy ruling: "2nd Circuit Finds Aid Must Be 'Purposeful' for Alien Tort Statute Liability" [NYLJ] Could put crimp in ATS suits [Anderson, Volokh]
  • Make him spend it all: George Soros pledges $50 million donation to combat free-market economic thinking [Future of Capitalism] More: Anderson, Volokh.
  • "How Tort Reform Cut Florida Workers' Compensation Costs" [Helvacian/NCPA, Public Nuisance Wire]
  • New book: "Punitive Damages: Common Law and Civil Law Perspectives" [TortsProf]
  • Massachusetts judge rejects controversial Wal-Mart wage-hour class settlement [American Lawyer and earlier]

Rep. Hank Johnson (D-GA) gave an opening statement at the House Judiciary subcommittee hearing, "Access to Justice Denied - Ashcroft v. Iqbal," stating his intention to cosponsor Rep. Nadler's bill to overturn the Supreme Court's Iqbal and Twombly decisions. (See post below.) Johnson is chairman of the Judiciary Committee's Subcommittee on Courts and Competition Policy, and he said he would quickly move to mark up the bill. Full Committee Chairman John Conyers is also on board.

Johnson's wandering statement included an unpleasant suggestion that federal judges might dismiss civil suits so they could land lucrative private sector jobs. At least that's how we read it:

It seems this measure penalizes plaintiffs as opposed to defendants, particularly in discrimination cases where you cannot uncover the wrongdoing without doing some basic discovery. And this decision would do away with that possibility because judges would be in the position to use their subjective wisdom, if you will, or perhaps even their desire to get a high-paying job in the future in the public sec...I mean the private sector, could be jeopardized if, - or it could be enhanced, I'll put it like that - by their ruling on a motion to dismiss based on inadequacy of the pleadings.


Transcribed from the hearing video.

In his opening statement Tuesday at a House Judiciary subcommittee hearing, "Access to Justice Denied - Ashcroft v. Iqbal," Chairman Jerrold Nadler (D-NY) said he would soon introduce legislation to restore the pleadings standards in federal civil cases to those prior to the Supreme Court's decisions in Iqbal and Bell Atlantic Corp. v. Twombly. The legislation will be the House version of Sen. Arlen Specter's S. 1504.

From Nadler's release and opening statement:

This is another wholly invented new rule, overturning 50 years of precedent, designed to close the courthouse doors. This combines with tightened standing rules, and cramped readings of existing remedies, to implement this conservative Court's agenda to deny access to the courts to people victimized by corporate or government misconduct. This is judicial activism at its worst - judicial usurpation of the procedures set forth for amendment the Federal Rules of Civil Procedure.

Ranking Member Jim Sensenbrenner (R-WI) disagreed, saying the Supreme Court merely reiterated longstanding pleading principles applied by lower courts since the 1950s. He added: "If the Iqbal decision is overridden by statute, lawyers would of course save money because their complaints would simply have to list the names of the people sued with no supporting facts. But it would be immensely costly to the cause of justice, the innocent, and to our national security."

From the witness testimony, we highlight the statement of former Assistant U.S. Attorney General Gregory G. Katsas, returning to Jones Day as a partner in November. He concluded:

In short, the Act would do nothing less than create a cloud of uncertainty over five decades of pleading jurisprudence, as developed between Conley in 1957 and Twombly in 2007. That is a recipe for a vast increase in litigation, which would impose huge costs on parties as well as on the already-overburdened federal courts.

The American Association of Justice issued a news release, with the sub-hed describing the argument succinctly: "Hearing today on Ashcroft v. Iqbal decision shows yet another avenue for corporations to evade accountability." The AAJ listed other groups supporting a return to notice pleadings, a who's who of aggrieved activists:

As Russell Jackson notes in the National Law Journal (article in PDF, summary at his blog), Alien Tort plaintiffs have enjoyed enough successes lately, among the numerous setbacks, to encourage the continued bringing to U.S. courts of alleged human rights violations in faraway lands:

It is ironic that -- at a time when a nationwide negligence class action for physical injuries cannot be certified because of the differences in legal standards among the states -- courts have reached out to assert jurisdiction over class actions for claims under the "law of nations" whose elements and subtleties seem far less well-settled than negligence law.

Abstract of their paper on SSRN:

For several decades now a debate has raged about policy-making by litigation. Spurred by the way in which tobacco, environmental, and other litigation has functioned as an alternative form of regulation, the debate is about whether policy-making or regulation by litigation is more or less socially desirable than more traditional policy-making by ex ante rule-making by legislatures or administrative agencies. In this paper we enter the debate, but not to come down on one side or another, all things considered, of the litigation versus ex ante rule-making regulatory debate. Rather, we seek to show that any form of regulation that is dominated by high-salience particular cases is highly likely, because of the availability heuristic and related problems of representativeness, to make necessarily general policy on the basis of unwarranted assumptions about the typicality of one or a few high-salience cases or events. And although this problem is virtually inevitable in regulation by litigation, it is far from absent even in ex ante rule-making, because such rule-making increasingly takes place in the wake of, and dominated by, particularly notorious and often unrepresentative outlier events. In weighing the value of regulation by ex ante rule-making against the value of regulation by litigation, it is important for society to recognize that any regulatory form is less effective just insofar as it is unable to transcend the distorting effect of high-salience unrepresentative examples.

(via Mass Tort Lit)

Speaking at Columbia Law tomorrow

The Federalist Society chapter at Columbia Law School is having me in for a lunchtime talk there tomorrow (Thursday, Oct. 29) on problems with the changing (and seemingly ever-more-aggressive) role of state attorneys general. James Tierney, former attorney general of the state of Maine and director of Columbia's program on state AGs, will be on hand to offer a contrasting point of view. Hope to see a few readers there. (cross-posted from Overlawyered).

Around the web, October 28

  • Spain's Supreme Court rules in favor of contingency fee legality [Hartley]
  • Obama, Sunstein and Calabresi all share an instrumentalist view of tort law, per Anthony Sebok [TortsProf]
  • New push for laws expanding employee privacy rights as against employers? [Ariana Levinson, SSRN via LaborProf]
  • "Memo to Spitzer: Put a sock in it" [DC Examiner re: his attack on U.S. Chamber and earlier interactions with Milberg Weiss]
  • Demagoguery on "Franken rape amendment" arbitration controversy has been perfectly shameless [Kathleen Parker] More: Hans Bader letter.
  • Class actions over auction rate securities fiasco haven't fared well [LaCroix]

From MI's Center for Medical Progress, a new report coauthored by Frank Lichtenberg (Columbia Business School) and Gautier Duflos (Paris School of Economics):

...Using data on virtually all prescription drugs sold in the United States during the period 2000-2004, our study examines the effect of patent expiration on prescription drug prices, marketing, and utilization. We examine how prices, marketing, and utilization change over a typical drug's "life-cycle." The year a drug is first sold in the United States is considered year zero. During the first twelve years of a typical drug's life-cycle, it faces very little generic competition. Generic competitors tend to enter the market in years twelve to sixteen. In that period, both the prices of formerly patent-protected drugs and the marketing expenditures on their behalf fall by about sixty percent. However, we also find that the number of drugs dispensed doesn't change. Evidently, the increase in utilization that results from lower prices is offset by the reduction in utilization that results from less marketing....

"Outcomes, outcomes"

Adrian Vermeule and Eric Posner review the Jack Balkin/Reva Siegel-edited volume "The Constitution in 2020". [New Republic, Harvard Law School reprint]

It's today in Washington, D.C., and will be online as a webcast.

Around the web, October 27

  • Hallowe'en celebrations bring specter of drinking and dramshop liability [Hochfelder] Not entirely unrelated: "Recent Bar and Restaurant Assault Cases Increase Exposure to Premises Owners" [same]
  • Veteran Iowa trial lawyer Roxanne Conlin plans race against Senate's Chuck Grassley [Quad City Times, Mason City Globe-Gazette, Des Moines Register]
  • More straws in wind on international climate change class actions [Carter at ShopFloor]
  • "Healthy Choices" food labeling program, furiously assailed as fakery by New York Times and Connecticut AG Blumenthal, turns out to be based on the government's own nutrition standards [Allysia Finley, WSJ] More: TortsProf (some food manufacturers retreat from program).
  • "Democracy in Name Only -- Election reform in New York is long overdue." [John Avlon, CityJournal]
  • When ProPublica teams up with Business Week for a litigation piece, it's a pretty good bet the resulting article (on gadolinium/MRI dye suits) will please the plaintiff's side [Jeff Gerth, BW]

The Toshiba settlement, 10 years later

The Chamber-backed Southeast Texas Record takes a look back at one of the biggest economic-harm class action settlements in history, though it barely scratches the surface of the reasons to be outraged at the case.

House hearing on Iqbal/Twombly

Sounds as if they didn't invite Beck or Herrmann to testify at the hearing today, which is a shame, since they've provided the best coverage on why the Supreme Court's recent jurisprudence on pleadings deserves to be defended rather than steamrollered by a plaintiff's-bar-friendly Congress.

P.S. The hearing page lists only Prof. Arthur Miller's NYU affiliation, not his Milberg affiliation.

Around the web, October 26

  • Unwanted visibility these days for hiring of Rendell contributor to file Pennsylvania drug suits [Philadelphia Inquirer]
  • Government ethics law very hard to mesh with bailouts, maybe we need to end the bailouts [Richard Painter, SSRN via Salmon]
  • How Obama administration policy on "international human rights" differs from predecessor's [Eric Posner]
  • "Tort Reform in the States" video w/Meese, McQuillen, Batchelder [Heritage]
  • "Don't use my name - other plaintiff's lawyers'd never forgive me for sending you tips!" [Beck & Herrmann]
  • Remembering the landmark 1974 class-action case of Eisen v. Carlisle & Jaquelin, and how it cut both ways [Karlsgodt]

Marc Hodak on bank compensation curbs

The wrong solution to the wrong problem:

OK, incentives at banks have been deficient. I've seen them all: bonuses based on loan volume; banking fees based on a percentage of the debt issued; traders being richly rewarded for unsustainable performance shortly before getting fired....I'm just wondering who out there believes that it is worth having every major bank submit their incentive plans to prior judgment by federal officials. Especially when there is zero evidence that incentive plans actually contributed to the financial crisis, and plenty of evidence that the Fed did contribute to it.

Related: Crit-turned-fed-governor Daniel Tarullo is emerging as a major force for more heavy-handed bank regulation, per the WSJ. "Some Fed officials said privately Mr. Tarullo can have an overbearing skepticism of banks and supervisors. Some Fed staffers are so wary of being second-guessed they ask him to approve even mundane bank applications."

Galleon's legal sideshows

They're even more bizarre than the insider trading case, per Kevin LaCroix:

Among other things, on October 22, 2009, a group of survivors of alleged "terrorist" bombings sued [Raj] Rajaratnam and his father claiming they knowingly provided financial support to the Tamil Tigers.

On a more positive note, Galleon was recently affirmed as lead plaintiff in a securities class action lawsuit pending in the Eastern District of Pennsylvania.

P.S. Not to neglect the substance of the debate over insider trading, here's Prof. Bainbridge explaining why he disagrees with Prof. Boudreaux.

Reporting the Ledbetter case

The Tampa Tribune has printed a correction of misreporting on the employment discrimination case, but, as Hans Bader notes, the New York Times appears curiously reluctant to do so.

Hofstra's Federalist chapter is hosting Frank Scaturro (Hofstra) and Jeffrey Segal (SUNY Stony Brook) the evening of Oct. 29 for "Advice & Consent: A Panel on Judicial Confirmation in Theory and Practice". Details here.

"...and a defeat for many people who are going to want to be able to find an affordable apartment in New York in the future." [Brian Doherty on the Stuyvesant Town decision]

Shrinking under the pay TARP

Sounds as if the taxpayers may be left nursing a stake in less valuable firms: "At BofA and AIG close to a majority of the top executives whose salaries were to be cut have already left." [Alex Tabarrok and Business Insider on this Washington Post report] Another fear mentioned in the Post report: "making companies unwilling to promote rising stars for fear of bringing them to Feinberg's attention."

Around the web, October 23

  • Russia settles $22.5 billion Bank of New York Mellon lawsuit, much written about in this space, for only $14 million, which works out to seven hundredths of a cent on the dollar, right? [Parloff/Fortune] Plaintiff's lawyer Steven Marks also suffers setback in his case on behalf of Nicaraguan banana workers [Longstreth/AmLaw]
  • Advocates hope to throw monkey wrench into tens of millions of foreclosures through creative attacks on legal adequacy of mortgage clearinghouses and securitization [Cavanaugh, Reason]
  • House Energy and Commerce approves chemical-plant-security bill with "citizen suit" attractions for entrepreneurial lawyers [Carter at ShopFloor]
  • "Scotland should introduce class action suits, says Lord Gill" [OUT-LAW, report and synopsis via Hartley]
  • Toldjah so: government crackdown on bank late fees and penalties results in hiking of fees for "good" customers [USA Today via Instapundit]
  • Protective orders in discovery: "Questionable Plaintiff Tactics Hammered In Florida" [Beck & Herrmann]

House Judiciary Committee:

Hearing on: Access to Justice Denied - Ashcroft v. Iqbal Tuesday 10/27/2009 - 2:30 P.M. 2237 Rayburn House Office Building Subcommittee on the Constitution, Civil Rights, and Civil Liberties

Rep. Jerrold Nadler (D-NY) chairs the subcommittee. No witnesses listed yet.

For more on Iqbal/Twombly and notice pleadings, see Walter's July 24 post, "Back to the bad old days on pleading?" Also, May 21, "Iqbal: High court reins in liberal pleading"

Update: Earlier this month, Rep. Nadler chaired a subcommittee hearing, "Civil Rights Under Fire: Hearing on the Recent Supreme Court Decisions," including Ashcroft v. Iqbal in a long list of grievances.

[Bumped Thursday a.m. with new links and some rearrangement]

Alex Tabarrok, Marginal Revolution: "There is no way this will work as advertised. ... Chaos will be created at these firms as top people leave in droves. Will the administration then order people back to work?" Hodak Value: "In short, the politicians have figured out yet another way to buy our votes with our dollars" and earlier (on views of Elizabeth Warren). Prof. Bainbridge says there "really ought to be more outrage over this proposal". A contrary view: Felix Salmon ("these guys are effectively civil servants now, and they deserve to be paid as such.")

Larry Ribstein:

As for rewriting contracts, these firms became government bureaucracies (and their employees knew it) as soon as they took TARP money trailing thick strings, including the Treasury's power over pay. It's bad, but should this latest move really be so shocking?

If some lawmakers have their way, at any rate, watch for Wall Street trading to shift away from the publicly-held firm model. Quoting the WSJ:

Sen. Charles Schumer (D., N.Y.) plans to press for legislation extending Mr. Feinberg's governance changes to all publicly traded companies.

More: Megan McArdle, Nicole Gelinas, Joe Weisenthal/Business Insider. And a Reuters report helps clarify which contracts come under Mr. Feinberg's purview.

The Washington Times hails the Alabama Supreme Court's tossing out of wholesale price litigation, and notes the role of the state's private contingency-fee counsel:

Writing for the court, Alabama Supreme Court Justice Thomas A. Woodall agreed that the Alabama suit was "an attempt to use tort law to re-define [Alabama's] Medicaid reimbursement obligations." Or, in short, it was what Justice Woodall described as illegitimate "regulation by litigation."

Earlier here, here, here, etc.

Ilya Shapiro thinks that the full Fifth Circuit en banc will overturn the recent panel decision in Comer v. Murphy Oil, or that the Supreme Court will agree to review the case. [Cato at Liberty]. "Mass tort litigation specialist Russell Jackson calls the plaintiffs' claims "the litigator's equivalent to the game 'Six Degrees of Kevin Bacon.'" Jackson also notes in a second post that a judge's recent dismissal of the Kivalina suit should be helpful to defendants seeking review of Comer. Earlier here.

Around the web, October 22

  • Florida Justice Association race-baiting ad furor: "Trial Lawyers' Group Suspends Top Three Execs" [Legal Blog Watch, earlier at Overlawyered]
  • Dept. of unsurprising findings: per survey of news reporters, 38 percent find plaintiff's lawyers to be useful sources, 0 percent find defense lawyers so [Monteith & Co. (PDF) via Legal Blog Watch]
  • Dept. of unsurprising findings II: many public interest law firms from "liberal" and "conservative" sides unite as amici to support enhanced fees for public interest law firms [Coyle/NLJ, WSJ Law Blog, Mauro/NLJ (Children's Rights Inc. case); earlier]
  • "Threatening to strip their anti-trust exemption as a quid-pro-quo is the kind of thing that sounds cute until someone thinks up a way to do it to people on your side." [Megan McArdle, earlier]
  • I've been blogging extensively at Overlawyered, and have a new City Journal piece, on the Federal Trade Commission's scary new guidelines purporting to regulate bloggers' acceptance of freebies such as review copies of books and conference passes;
  • Burford Capital Ltd., litigation finance group in Britain, raises $130 million in IPO [Bloomberg via Hartley]

Don't Americans viscerally reject ex post facto laws, even in civil cases? Thomas Jefferson suggested as much in an 1813 letter when he wrote:

The sentiment that ex post facto laws are against natural right, is so strong in the United States, that few, if any, of the State constitutions have failed to proscribe them. The federal constitution indeed interdicts them in criminal cases only; but they are equally unjust in civil as in criminal cases, and the omission of a caution which would have been right, does not justify the doing what is wrong.

And yet...

  • In Michigan, the state House of Representatives this year passed a bill to to repeal a 1995 law that prohibited tort claims against pharmaceutical companies if the drugs had been approved by the Food and Drug Administration. The bill would wipe away more than a dozen years of legal protection for the companies by allowing retroactive lawsuits back to 1996. (More from Lawrence McQuillan of the Pacific Research Institute.)

  • In Washington, D.C., Democratic members of the House Judiciary Committee this week introduced a bill to revise the Patriot Act. As AP reports, one of the provisions "would repeal the retroactive immunity given to telephone companies, who complied with a Bush administration warrantless wiretapping program." The House bill, H.R. 3845, mirrors a Senate bill, S. 1692. See TheDay.com story, "Dodd looking to wipe out immunity provisions for telecoms."

For more on ex post facto, see this section of The Heritage Guide to the Constitution.

The new Manhattan Institute report was discussed the other day in The Economist's "Lexington" blog, and on the floor of the Senate by Arizona Sen. Jon Kyl (plays video).

Staff of the Senate Health, Education, Labor and Pensions Committee last night made it known the nomination of David Michaels to head the Occupational Safety and Health Administration will not be included in the committee's markup session this morning. His absence is just a matter of paperwork, or so we're told, and does not necessarily mean that there will be a public hearing on the nomination -- a hearing that many business groups have been calling for.

Just for political/PR reasons, it's hard to see the HELP Committee holding a separate markup on Michaels alone -- too much attention -- so his confirmation may be slowed until another slate of labor-oriented candidates can be put together for committee action.

It appears the committee will act on the controversial nominee to the National Labor Relations Board, labor counsel Craig Becker. More at Shopfloor.org.

Galleon insider-trading charges

The Georgia Supreme Court took a "breathtaking" view of the legislature's role in a 2007 vaccine preemption case, and that puts the Obama administration in an awkward position, writes Jack Park.

Dan Pero at American Courthouse notes a $15 million punitive damage award (later reduced to $10 million) arising from a $186,000 bad faith insurance claim.

Hans Bader calls out some liberal press outlets for demagoguing and misrepresenting the debate over a piece of legislation 99.9% of whose effects will be felt in disputes unrelated to rape. More: James Sherk, Heritage.

The Legal Services Corporation nominees

Immediately below we note the Senate Health, Education, Labor and Pensions Committee is holding an executive session tomorrow to mark up nominees for the National Labor Relations Board and OSHA.

And five nominees to the Legal Services Corporation, who will also escape having to go through public hearings.

Here's a news release from Sen. Mike Enzi (R-WY), the ranking Republican on the HELP committee, from September 18, 2007, "Enzi Says Legal Services Corporation Oversight Must be Strengthened, Better Management Needed."

Washington, D.C. - U.S. Senator Mike Enzi (R-WY), Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, today said that a new report by the General Accountability Office (GAO) confirmed that the Legal Services Corporation (LSC) needs additional governance and accountability measures to ensure effective board oversight.

With respect, wouldn't a confirmation hearing be one example of oversight and accountablity?

Edited a bit at 4 p.m. for clarity.

The Senate Committee on Health, Education, Labor and Pensions is going straight to an executive session Wednesday to mark-up President Obama's nominees for the National Labor Relations Board, the Legal Services Corporation and, astonishingly, the Assistant Secretary of Labor for Occupational Safety and Health, i.e., the head of OSHA.

That means that none of these nominees will have to submit themselves to the Senate hearing process, i.e., being sworn into to testify before the Senate about their views on their executive branch responsibilities.

This absence of accountability is especially inexplicable in the case of David Michaels, the OSHA nominee. We've written about Michaels' writings and philosophy, which invariably regard business as a bad actor. Too, Michaels is a critic of the Daubert standard, which attempts to limit the introduction of junk science into court proceedings. As The Washington Times wrote in a Sunday editorial, "Occupational hazard":

Mr. Michaels devoted a whole chapter in his tendentious book "Doubt Is Their Product" to the idea that Daubert created "social imbalance" away from the interests of plaintiffs and their lawyers. Elsewhere, he co-wrote a paper of the exact same name as the book chapter in which the authors claim Daubert "has led to unreasonable legal demands of scientific certainty."

However, contra Mr. Michaels, scientific certainty can be the essential difference between getting a case right or wrong. For example, the Daubert ruling's insistence on sound science directly helped U.S. District Judge Janis Jack of Texas blow the whistle on thousands of false claims for the lung disease silicosis in which radiologists admitted to having "diagnosed" as many as 800 asbestosis cases in just 72 hours -- a physical impossibility.

Yet as it now stands, the HELP Committee will not explore this area with Michaels in a public hearing. After some discussion -- we hope -- there will just be a vote tomorrow and his nomination will go to the floor.

Well, at least we have his responses to Sen. Johnny Isaakson's questions for the record. But it's the nature of candidate responses that they are carefully written in conjunction with the White House to avoid all controversy, and Michaels are no different. Senator Isaakson is interested in combustible dust standards -- understandably so -- and we appreciate his inquiries about OSHA proposing new ergonomics standards.

We'll put the entire question and response about Daubert in the extended entry. That's apparently as close to accountability as the public is going to get.

UPDATE (4:40 p.m.): Matt Madia, regulatory policy analyst at OMBWatch -- an organization that supports an expanded regulatory state -- strenuously disagrees with the criticisms of Michaels' record and writings. Nevertheless, at the group's blog, Madia writes: "While it may be politically expedient, bypassing the hearing is a mistake, in my opinion. OSHA is a major regulatory agency, and the leaders of such agencies should, as a rule of thumb, go before the Senate committee of jurisdiction to explain their views and qualifications."

The sum was less than the city had asked; the oil company will appeal. [ABA Journal, New York Law Journal, AmLaw Daily] Earlier here, etc.

It's in a tobacco case, but of course there are implications for other defendants as well. [Russell Jackson] And this from Legal Blog Watch:

The SJC [the state's highest court] also ruled that the plaintiffs claims are not blocked by the statute of limitations. Because the technology was only recently developed that would allow the medical monitoring they seek in their complaint, the discovery rule would apply, the SJC said.

For all the many reasons to welcome the advance of new technologies, there is something unsettling in the idea that they could reopen lapsed statutes of limitation and reawaken decades' worth of defunct legal claims.

More: Beck and Herrmann explain why they would say "Donovan only 'sort of' recognized medical monitoring" -- "subcellular changes" are a prerequisite.

Occupational Health & Safety online has details.

Correction/clarification: Not a hearing, but a markup, as Carter explains.

B & B: radiology reports stay secret

"Baron and Budd of Houston, a leader in asbestos litigation, has asserted attorney client privilege in more than 7,000 suits that depend on reports from radiologist Jay Segarra." [SE Texas Record]

Around the web, October 19

"Yes, the CRA is toxic"

Much-bandied claims that CRA loans have performed better for banks than other loans seem, well, ill-documented at best [Edward Pinto, City Journal] But the 1977 Community Reinvestment Act just wasn't big enough in its scope to have played any major role in the mortgage meltdown, right? Well... [Peter Schweizer, Forbes] Per one calculation, "Almost two-thirds of all bad mortgages in our financial system were bought by government agencies or required by government regulations." [Peter Wallison, WSJ]

Russell Jackson brings word that the Fifth Circuit has now joined the Second Circuit's much-noted ruling in appearing to give a green light to climate change litigation:

The Fifth Circuit [panel in the new decision] held that plaintiffs lacked standing to bring their claims for unjust enrichment, fraudulent misrepresentation, and civil conspiracy, but that they had standing to assert their claims for public and private nuisance, trespass and negligence. The court further held that this latter group of claims did not present a non-justiciable political question.

The new opinion is Comer v. Murphy Oil (PDF). We covered the Second Circuit decision in Connecticut v. American Electric Power here and earlier, and (by contrast) a trial judge's dismissal (PDF) of the Kivalina suit here.

Around the web, October 17

  • I'll be on a panel discussion on food safety Tuesday afternoon at the American Enterprise Institute in Washington [details];
  • Metaphorically or otherwise: Massachusetts "can't afford" to take on project of state-sponsored law school [Boston Globe, Legal Blog Watch, Above the Law]
  • If the state knew the score, it wasn't fraud: "blockbuster" Alabama high court ruling throws out state's verdicts against drug companies on wholesale pricing [Frankel, American Lawyer]
  • Now Florida Gov. Crist's going after utilities [Osorio, CEI]
  • "California's landmark med-mal law called a national model" [Rizo, LNL] Does MICRA keep plaintiffs out of court? Glad you asked [Cal Civil Justice]
  • "Canadian Court Allows Indirect Purchaser Antitrust Class Action" [Hartley] Correcting some misconceptions about class actions in Canada [Karlsgodt]

"It clearly was a growing problem and a developing industry that was seedy and predatory," said Judiciary co-chair Andrew McDonald (D-Stamford) of the burgeoning business of accosting accident victims in emergency rooms and on the street and steering them to physicians ("I know a doctor who can see you immediately"), chiropractors and lawyers. Insurers and trial lawyers joined in backing the legislation, which makes Connecticut the tenth state to regulate runners. [Connecticut Law Tribune]

Andrew Stuttaford tells us what he thinks of the Elmer-Gantry-esque former governor's "thuggish, nonsensical & characteristically nasty" attack on the business lobbying group. And Stuttaford's onslaught against Spitzer is the safe-for-work one, unlike Tim Cavanaugh's at Reason. More: Osorio, CEI.

CALPERS scandal

Is anyone really surprised -- and does anyone think the minor tinkering proposed for New York's public pension arrangements by AG Cuomo will prevent some comparable future scandal here? [Stoll, Future of Capitalism]

Talk about eliminating the middleman: in anticipation of a run for AG, Sean Coffey is stepping down as a senior partner with the prominent class action firm of Bernstein Litowitz Berger & Grossmann LLP, which has donated to some high-profile AGs in the past. He won't run if incumbent Andrew Cuomo decides to stay with the job, knowing Cuomo as he does "from time spent in state Democratic Party activities." [WSJ Law Blog; Longstreth/AmLaw Daily] It should be noted that our most recent mention of Mr. Coffey in this space has him coming off in a rather favorable light, as a critic of the practices of the egregious Bill Lerach (who as it happens has moved to a halfway house in preparation for his expected release March 8). [Updated Fri. a.m. for clarity and to add source]

The Senate Health, Education, Labor, and Pensions Committee has just released the agenda for its October 21st executive session, i.e., its business meeting, "Executive Session - Any Nominations Cleared for Action." Listed are 11 nominees for the committee to "mark up" -- act on -- including President Obama's three nominees to the National Labor Relations Board and his nominee of David Michaels to be the administrator of the Occupational Safety and Health Administration.

None of these candidates has gone through a public hearing before the committee. Their approval and Senate confirmation now seems set to occur without the scrutiny and accountability that accompany a hearing.

Point of Law has posted previously on Michaels' dislike of the Daubert ruling meant to guard against junk science being introduced into court, his reflexive antagonism toward business, and his alignment with the interests of the litigation industry and "consumer activists." Business groups have cited serious concerns about Michaels' record and philosophy to call for a Senate hearing, a public session during which the nominee could explain his views in more detail. (See here and here.)

President George W. Bush's nominee to head OSHA, Ed Foulke, testified before the HELP Committee on January 31, 2006 -- back when Republicans held a majority. So skipping Michaels is not a matter of protocol or tradition.

We can only conclude that the Republican members of the HELP Committee did not demand a hearing, did not raise a fuss, didn't even bother with a perfunctory Senatorial hold. Perhaps they felt they weren't up to a fight.

As for the NLRB...well, it's another victory for the SEIU's will to power.

U.S. District Judge Saundra Brown Armstrong has dismissed the federal public nuisance lawsuit filed by the Alaskan native village of Kivalina against oil, coal and power companies, concluding the question of global warming's damage to the environment is appropriately left in the political sphere.

In an order filed September 30, Judge Armstrong of the Northern District of California granted the defendants' motions:

In their Rule 12(b)(1) motions, Defendants contend that Plaintiffs' claims are not justiciable under the political question doctrine, and that Plaintiffs otherwise lack standing under Article III of the United States Constitution. Having read and considered the papers filed in connection with this matter, and being fully informed, the Court hereby GRANTS Defendants' motions to dismiss for lack of jurisdiction.

Judge Armstrong clearly distinguishes the claims made by the Kivalina plaintiffs from those in the Connecticut v. American Electric Power case (opinion) decided September 21 by the Second Circuit, a federal public nuisance suit brought against power companies by several states and an environmental group.

Based on the judiciary's history of addressing "new and complex problems," including those concerning environmental pollution, the [Second Circuit] court concluded that "[w]ell-settled principles of tort and public nuisance law provide appropriate guidance to the district court in assessing Plaintiffs' claims and federal courts are competent to deal with these issues" such that their global warming concerns can "be addressed through principled adjudication." This Court is not so sanguine. While such principles may provide sufficient guidance in some novel cases, this is not one of them.

The cases cited by Plaintiffs as well as the AEP court involved nuisance claims founded on environmental injuries far different than those alleged in the instant case. The common thread running through each of those cases is that they involved a discrete number of "polluters" that were identified as causing a specific injury to a specific area. Yet, Plaintiffs themselves concede that considerations involved in the emission of greenhouse gases and the resulting effects of global warming are "entirely different" than those germane to water or air pollution cases.

Earlier Point of Law posts here.

Larry Ribstein and Tom Freeland on the grant of certiorari to Jeff Skilling of Enron. See also the links in our addendum to Tuesday's post on honest services doctrine, including the latest commentary from Houston lawyer Tom Kirkendall, the most eloquent crusader in Skilling's defense. More on honest-services fraud theories: Jacob Sullum.

Readers of Point of Law learned about this remarkable connection way back in January, and now today's lead WSJ editorial confirms NLRB nominee Craig Becker's role, with help from an inquisitive Sen. Orrin Hatch.

Wolf protection lawsuits

Having gray wolves take your sheep is bad enough, thinks David Freddoso at the Examiner, but paying plaintiff's environmental lawyers more than $600 an hour for the privilege adds insult to injury.

Around the web, October 15

Following up on Walter's post below, "The Obama NLRB arrives," we note this brief NLRB summary included in The Kiplinger Letter report, "Big Changes Coming to the Workplace":

Union Rights. A pro-labor stance by the National Labor Relations Board is certain as soon as Congress confirms President Obama's appointees, giving Democrats a majority. Look for reversals of key decisions made by Bush appointees on the use of e-mail by workers for union organizing and representation of nonunion workers at disciplinary meetings. The new board also is likely to narrow the definition of a supervisor, which will make more workers eligible to join a union.

Business groups have called on the Senate Health, Labor and Pensions Committee to hold confirmation hearings on the NLRB nominees, the Democrats Craig Becker and Mark Pearce and the Republican, Brian Hayes. There's a particular concern about Becker as a former SEIU counsel, given the union's already mighty influence: Former union official Patrick Gaspard serves as White House political director and SEIU President Andy Stern is a frequent White House visitor. (Stern is so influential he even ranks 36th in GQ's list of the 50 most powerful people in Washington. )

Despite the calls for hearings, the whisper mill reports that the nominations may go straight to the Senate floor for a confirmation vote. You would think that an Obama Administration, intent on transparency, would insist that its nominees receive the public scrutiny that comes with confirmation hearings.

Bank of America Indictment Watch

The NYT today reports on newly disclosed emails between members of the Bank of America Board of Directors that reveal deep doubts about the wisdom of the banks ill-fated merger with Merrill Lynch. The same story reports that Rep. Edolphus Towns (D - New York), chair of the house oversight panel, is promising to subpoena individual board members in the ongoing congressional inquiry. New York Attorney General Andrew Cuomo has already broadened his investigation to include the board members.

Emails between board members reflecting sentiments such as "Unfortunately, it's screw the shareholders!" will only add fuel to this spreading investigative fire. But was this a board-driven snafu, or was Bank of America's hand forced by an overreaching Treasury and Fed? I argue the latter in an article titled "Banking on a Scapegoat" over at NRO.

As I noted here in September, a trial to watch is the one in Philadelphia where Michelle David, a former cheerleader for the Philadelphia 76ers, sued personally and on behalf of her 3-year-old son Lyam Kilker, claiming that the latter's heart defects were caused by her consumption of Paxil during pregnancy. The Kilker case is among more than 600 other cases alleging that Paxil's side effects were concealed. Paxil generated about $942 million in sales last year.

During opening statements, the plaintiffs' attorney read to jurors from a 1997 memo from a Glaxo executive. "If neg, results can bury," the executive had advised, referring to the possibility that the company might be compelled to conduct animal trials with Paxil. David's attorneys claim that Glaxo urged in-house scientists to withhold data on side effects from the company's report on the "core safety philosophy" for Paxil. For their part, Glaxo's lawyers told the jury that the 3-year-old's heart defect wasn't caused by Paxil at all, and that plaintiffs cherry-picked a few out-of-context snippets from a huge number of Glaxo documents to put together their case.

On Tuesday, after deliberating for seven hours, a jury condemned Glaxo to pay $2.5 million to the plaintiffs. [The Philadelphia Inquirer report is here.]

Ms. David, 28, said she came from a large family with no previous incidents of heart problems in babies. "I just kept thinking, 'What did I do differently in my pregnancy,' " she said. [This type of post hoc, ergo propter hoc reasoning is typical of drug suits.] For its part, Glaxo noted that "..., the scientific evidence does not establish that exposure to Paxil during pregnancy caused [Lyam's] condition. Very unfortunately, birth defects occur in 3 to 5 percent of all live births, whether or not the mother was taking medication during pregnancy."

Glaxo will appeal, of course, so the saga continues.

California Lawyer (and dentist!) Orly Taitz has been sanctioned $20,000 for misconduct in filing frivolous litigation claiming that president Obama is not a native-born citizen of the United States.

U.S. District Judge Clay D. Land of the middle district of Georgia levied the sanction for misconduct in a Columbus, Ga., case wherein Taitz claims her client, a soldier, is not obliged to obey the Commander in Chief's order to deploy because the latter is alleged to be "an illegal usurper, unlawful pretender and unqualified imposter."

Land, appointed by president Bush in 2001, noted that he had never imposed monetary sanctions on an attorney without a motion from an adverse party, but that the legal vacuousness of Taitz's diatribes, and his repeated admonitions, justified the penalty. "[C]ounsel's wild accusations may be protected by the First Amendment when she makes them on her blog or in her press conferences, but the federal courts are reserved for hearing genuine legal disputes, not as a platform for political rhetoric and insults."

The Fulton County Daily Report story can be found here.

Law firm pension pay-to-play in New York

The Obama NLRB arrives

EFCA, writes Michael Fox, "is by no means the whole deal": no matter what Congress does, the new 3-2 Democratic majority on the National Labor Relations Board is expected to overturn a wide array of Bush-era precedents so as to remake federal labor law in a pro-union direction. The Chamber has put out a monograph on the subject: The National Labor Relations Board in The Obama Administration: What Changes to Expect.

Trial Lawyers Inc. update: health care

The Manhattan Institute's Trial Lawyers Inc. series today published its latest update on the workings of the litigation industry, "Health Hazard: Litigation Increases Medical Costs, but Lawyers Block Reform". Excerpt:

Notwithstanding the president's remarks and popular opinion, Congress has been laboring to expand medical liability against nursing homes, medical-device makers, and military doctors--changes that would be expected to drive up, not down, health-care costs.

The paper also explains the "denominator game" often played by Litigation Lobby advocates to minimize the apparent percentage impact of medical liability -- for example, they will pack into the denominator of the fraction as many health-related services as they can come up with (pharmaceuticals, nursing homes, wheelchair manufacture, physical rehab therapy) while then limiting the numerator in unrealistically narrow ways (i.e., payouts in lawsuits against medical doctors only, not providers of health care more broadly defined)

An audio podcast in which MI health policy director Paul Howard interviews James Copland is here. Coverage: Freddoso/Examiner, Wood/ShopFloor, Rizo/SE Texas Record, Paul Howard/NRO "Critical Condition", Corrinne Hess/Milwaukee Business Journal, Waterbury Republican-American; related Jim Copland Examiner op-ed.

Adam Liptak at the Times has a good overview of two cases (appeals by former Alaska legislator Bruce Weyhrauch case and media magnate Conrad Black) in which the Court will have the chance to address a major engine of overcriminalization. Earlier Point of Law coverage here.

Update later Tuesday: the high court has agreed to hear a third honest-services case, that of Jeffrey Skilling of Enron (who also raises other issues in his appeal): WSJ Law Blog and more, Kennerly. Tom Kirkendall makes a case in Skilling's defense.

Blawg Review #233

"A Twombly of Scholarship"

Beck and Herrmann dip into (as they have again and again) the steady stream of recent law school discussions of Twombly, Iqbal, and the tightening of pleading standards. Like the Supreme Court -- but unlike so many of the academic commentators -- they consider it a step forward to protect litigants from the costs of process inflicted by legal actions based on vague or unfounded pleadings.

Emergency relief for the ER department?

Sponsored by Rep. Bart Gordon (D-Tenn.), "the Health Care Safety Net Enhancement Act ... was introduced in April, and would designate emergency providers as federal employees when providing EMTALA-related care, said Dana Lichtenberg, the legislative director for Representative Gordon's office. Basically, [EPs] wouldn't have to buy liability insurance. It would be provided by the federal government" -- at least in cases in which the federal EMTALA law obliged an emergency room to treat arriving patients. Limitations applicable to suits against federal employees, such as unavailability of punitive damages, would also be in effect. As of August, the bill had only three co-sponsors. [Emergency Medicine News; related state initiatives]

British lawyers object to a do-it-yourself website for accident victims. [Law Society Gazette]

Around the web, October 12

All-blog edition:

  • Class action over prepaid phone calls brings out Judge Weinstein's creative side [Russell Jackson]
  • Talking back to Wall Street pay czar Ken Feinberg [Marc Hodak via Bainbridge]
  • Why one victim of clergy abuse chose not to sue the Catholic Church [Andrew Sullivan]
  • Is this year's Supreme Court docket really unusually heavy in business cases? [Carter at ShopFloor]
  • "How to stop Congress from insider trading" [Ribstein]
  • California's MICRA law: let's hear what doctors have to say [Cal Civil Justice]

No, not "Glee." "Lie to Me!"

The American Association for Justice has scheduled a seminar in November, "Reading Microexpressions of Emotion for Attorneys":

Microexpressions are facial expressions that last for only a fraction of a second. Everyone has microexpressions and they can't be faked. Microexpressions are involuntary, cross-cultural, and cross-gender. Through extensive scientific research, what is barely detectable to the eye can reveal someone's true emotions.  

The ability to read and use microexpressions is an important skill that will increase your effectiveness and success as a trial attorney. By understanding someone's true emotions--not their obvious facial expressions, but what they are concealing or repressing--you can make tactical decisions in working with jurors, clients, witnesses, experts, and more.

Reading Microexpressions of Emotion has never before been offered for attorneys. AAJ Education is holding this first-ever seminar for a limited number of AAJ plaintiff attorneys led by Dr. David Matsumoto.

According to the faculty bios, Matsumoto has worked for the Ekman Group. The Fox TV series, "Lie to Me," draws on the work of Paul Ekman for its dramatic conceit -- a team of crack criminologists solving crimes by reading microexpressions.

Michael Krauss recently summarized the interesting suit by drug maker Allergan contesting, on First Amendment grounds, the FDA's ban on truthful off-label marketing of approved pharmaceuticals. Beck and Herrmann at Drug and Device Law have much to say about the suit as well:

One area where the First Amendment issue hasn't come up is in the various civil prosecutions of drug companies that state the DoJ, AGs (either "attorneys general" or "aspiring governors" - take your pick) or qui tam plaintiffs have brought concerning alleged off-label promotion in recent years. Why? One obvious reason is that big cases tend to settle because defendants generally are risk averse (this is the same reasons that certifying class actions leads to heavy settlement pressure). Another reason, more relevant to what we're discussing is that the First Amendment is something of a doomday defense, and regulated companies are reluctant to take on their regulator that directly. Regulated entities, rightly or wrongly, fear agency retaliation if they raise a defense with the potential of upsetting the entire regulatory applecart.

Though long (by blog standards!) and detailed, the post will be of interest to a wide variety of readers interested in commercial-speech doctrine, pharmaceutical law or regulatory practice.

More: They have an Oct. 13 update.

Paul Kersey, for the Mackinac Center for Public Policy, analyzes (leads to PDF) the sort of state enactment that really ought to be more controversial. From the executive summary:

PERA was based on the National Labor Relations Act, a law that was designed for private, for-profit employers. The NLRA has not always worked well in the private sector; applying the structure of the NLRA to government has created even more complications:

  • The incentives created by PERA tend to push local officials toward tax increases rather than spending cuts.

  • Unless local officials are prepared for a bargaining impasse, unions have an effective veto over any part of a local government's budget dedicated to personnel costs. Personnel costs can make up as much as 80 percent of a local government's budget.

  • Work rules found in collective bargaining agreements add to the scope of the "union veto." In practice, government union negotiators can manipulate any political issue that can be expressed in terms of employee compensation, job duties or work standards and be included in a collective bargaining agreement.

  • Court rulings have consistently held that collective bargaining trumps local statutes and even local charters. PERA has arguably subverted the home-rule principles expressed in the state constitution.

  • With agency fees effectively granting millions of dollars in guaranteed revenue to unions with strong political tendencies and little financial accountability, it would be fair to say that PERA has created a permanent, taxpayer-funded lobby for big government.

The government employee unions created by PERA may be the single largest
obstacle to restoring the state's prosperity.

Southwestern lawprof Byron Stier of Mass Tort Lit, on SSRN:

Mass tort scholars, practitioners, and judges struggle with determining the most efficient approach to adjudicate sometimes tens of thousands of cases. Favoring class actions, mass tort scholars and judges have assumed that litigating any issue once is best. But while litigating any one issue could conceivably save attorneys' fees and court resources, a single adjudication of thousands of mass tort claims is unlikely to further tort goals of corrective justice, efficiency, or compensation in a reliable way. That is because, as recent empirical research on jury behavior shows, any one jury's verdict may be an outlier on a potential bell curve of responses applying the law to the facts before it. Indeed, one aberrational, high jury claim valuation, if extrapolated to thousands of claims through a class action, may inappropriately bankrupt an entire industry. Similarly, one unusually low jury verdict might deny legions of plaintiffs the compensation that they deserve. To illustrate the problems of attempting to resolve a mass tort with a single jury, this Article discusses the Engle tobacco class action of Florida smokers, where the application of a single jury verdict to approximately 700,000 smokers appears to be an outlier verdict in light of prior juries' verdicts in Florida tobacco cases. In contrast, this Article argues that the use of multiple juries in individual cases is a superior method of resolving a mass tort....

The Supreme Court is considering a case (reviewing an Easterbrook Seventh Circuit decision) on the extent to which second-guessing by courts (as opposed to, say, market competition) is an appropriate way to regulate investment advisor fees. Prof. Bainbridge quotes/summarizes what SEC commissioner Troy Paredes has to say about the issues. More from Bainbridge here and here and from Larry Ribstein here and (as earlier noted) here.

"Lawsuit Growth in 2008"

Mass Tort Lit summarizes some of the 2009 Law360 Litigation Almanac highlights. "Among the federal-court findings: class actions rose 8% (reaching an all-time high); product liability litigation increased 20%; federal environmental lawsuits went up for the first time since 2005; and, in contrast, securities litigation dropped by 8%."

It's "something that lawyers of long experience said they have rarely, if ever, seen any government agency do." A cynic might wonder whether union clout played a role. [Hartford Courant]

Chrysler bailout and bankruptcy law

It doesn't look any prettier in the rear-view mirror:

...Details of the bankruptcy were unprecedented. For the first time in American history and totally counter to all established laws of bankruptcy, secured creditors would receive less than nonsecured creditors.... the bankruptcy laws which have been in place protecting the rights of secured creditors cannot be arbitrarily overthrown by an act of the Executive.

Employment law roundup

Democrats in Congress are preparing a bill to overturn the Supreme Court's 5-4 ruling requiring age discrimination plaintiffs to prove that age was the decisive factor in a negative job decision [Boston Globe, New York Times "Room for Debate"] EEOC retaliation claims are on the rise, notes the WSJ [Workplace Prof]. The Senate has adopted an amendment by Sen. Franken (Minnesota) to ban federal defense contractors from using arbitration clauses to resolve a wide variety of discrimination and other claims [Houston Chronicle, Schwartz] And President Obama's nomination of veteran Georgetown lawprof (and ADA drafter) Chai Feldblum will add a strongly liberal voice to the EEOC [Workplace Prof]

The court unanimously disbarred Bradley Marshall following accusations "of deceiving his clients and forcing them to pay additional fees" after agreeing to take work on a flat fee basis, as well as strong-arming reluctant clients into settlement. [Post-Intelligencer] For Marshall's record of browbeating a local blog over a critical post, see The Stranger/SLOG, HorsesAss and more. Best detail: Marshall "has taught ethics and business law at Seattle Pacific University". [Seattle Times]

The Staten Island Advance weighs in on New York City's perennial problem of litigation outlays: "Court settlements are killing us," said Mayor Bloomberg. Manhattan Institute senior fellow John Avlon is quoted noting the relative success of the city's Health and Hospitals Corp. in reducing claims 17 percent over the past decade (& welcome New Jersey Lawsuit Reform Watch readers).

Around the web, October 6

Russell Jackson writes on a federal court's ruling [PDF] that suits against Bausch & Lomb will have to be considered one by one, given the wide differences between individual consumers in proving harm.

Richard Weekley on Texas reforms

They're under attack, as he notes in Friday's Houston Chronicle: "Personal-injury trial lawyers have leveled the most aggressive and sustained attack on lawsuit reform that we have seen in over a decade. They pushed more than 900 bills this year in an attempt to get the Texas Legislature to roll back lawsuit reforms or create new opportunities to sue."

Corporate Counsel Magazine reports that Allergan, the maker of Botox, has decided to contest the FDA's ban on off-label marketing of approved pharmaceuticals.

To recap, off-label use (use to treat a condition other than the condition for which the drug or device was approved by the FDA) of approved drugs by doctors is not illegal. [Indeed, in oncology and other specialties, over 50% of all drug use is off-label.] Nor is it illegal for doctors to report on the successes they have obtained from such use, in medical journals, at conferences, and the like. But a drug company may not tell other physicians, or indeed anyone else, that its product has been successfully used off-label uses. Allergan, of Irvine, Calif., has now sued to overturn this "truth ban": the drug company's claim is that the government's legal position -- that it's a crime for a drug company to communicate truthful information to physicians about off-label uses of its products -- violates the First Amendment.

This is one of those suits that, had I been in private practice instead of academia, I would have been itching to file for years. Countless lives can be saved if knowledge of a legal and valuable activity (off-label prescribing that is having positive therapeutic effects) is made known to physicians who might not be reading the scholarly journals. I look forward to following the developments in the Allergan case.

Connecticut Dept. of Speech Supervision

Per a press release from their offices, Connecticut "Attorney Richard Blumenthal and Healthcare Advocate Kevin P. Lembo today asked the state's five biggest health insurers for materials they may have sent policyholders regarding the impact of proposed reforms on the Medicare Advantage and prescription drug programs." The head of the Connecticut AFL-CIO applauded the move, but would presumably object (and with reason) if some successor of Blumenthal's demanded to review all of his communications with union members to see whether they included any statements that were deceptive, factually ill-grounded or otherwise not congruent with the public interest.

Labor law reform without EFCA?

Even if you believe that unions and their advocates have some legitimate beefs about the way representation elections are currently run, there are ways in which the National Labor Relations Board could address those discontents without the radical medicine of EFCA. NYU's Samuel Estreicher, in the abstract of a new paper entitled "Improving the Administration of the National Labor Relations Act Without Statutory Change":

A great deal of discussion and controversy surrounds whether Congress will enact the proposed Employee Free Choice Act (EFCA), a measure that would establish union bargaining authority without elections and allow arbitrators to impose first-time collective bargaining agreements where the parties are unable to. Comparatively little attention is being paid to what can be done under existing law. Whether or not EFCA becomes law, attention needs to be drawn also to how the National Labor Relations Board (NLRB), the agency responsible for enforcing our labor law, can better organize its resources to minimize the serious problem of administrative delay in holding elections and seeking court injunctions, use forms of rulemaking and advisory opinions to give parties better notice, and opportunity to participate in the formulation, of legal change, and recast existing approaches to give unions better access to the employee electorate once it is clear an election will be held and improve available remedies under existing law to deter employer violations. This paper develops an agenda for regulatory change at the NLRB.

(via Hirsch, Workplace Prof)

Antitrust law under Obama

Spencer Waller at Concurring Opinions summarizes the (activist) trend in government enforcement these days.

Considering the czars

Sen. Russell Feingold (D-WI) will chair a Senate Judiciary, Subcommittee on the Constitution, hearing on Tuesday, "Examining the History and Legality of Executive Branch 'Czars'." Legal scholars and authors scheduled as witnesses, so perhaps light will be shed on the constitutionality of non-confirmed policy advisers. Maybe we could start with a clear definition of what a "czar" is.

Heritage Foundation scholar Matthew Spalding is one of the witnesses, and in a recent interview in The Allentown (Pa.) Morning Call, he observed:

The current debate over czars is merely a suggestion of this larger problem. Over the course of the second half of the 20th century, Congress has delegated massive amounts of authority to the administration, meaning the cabinet departments and agencies under the department. They have all sorts of regulatory authority. What we are seeing now is the White House trying to get a hold of its own administration for policy purposes. It's a battle between the White House, which is trying to direct the bureaucracy toward policy objectives, and Congress, which has technically delegated the power but still has oversight over this whole mess and is trying to keep control of it too.

Our fear is that following plethora of czars, we might soon be plagued by a rash of Rasputins.

The U.S. Chamber of Commerce sent a letter Friday to the Senate Committee on Health, Education, Labor and Pensions calling for a full Senate confirmation hearing on the nomination of David Michaels to head the Occupational Safety and Health Administration. The gist:

Professor Michaels is a high profile advocate for more regulations, even when the science and data that is available to support such regulations may be inadequate or uncertain. He has also attacked the landmark, unanimous Supreme Court decision in Daubert v. Merrell Dow Pharmaceuticals which stands for the proposition that scientific evidence in litigation must meet certain standards to be admitted. He has also been the beneficiary of product liability actions which have been shown to be without merit. Finally, nominees for this position are normally subject to a hearing before they are confirmed and Professor Michaels should be no exception.

The letter raises substantive objections to Michaels' record under the rubric, "Professor Michaels' Views on the Use of Science Do Not Tolerate Debate," noting Michaels' misrepresentation of science on President Clinton's proposed ergonomics rule:

Instead of acknowledging that the scientific and medical record relied upon for this regulation left many questions necessary to issue a regulation unanswered, such as what level of exposures are associated with injuries, or what would be appropriate remedial measures, he described the science as settled and the efforts by business advocates to raise concerns about the science as nothing more than a delaying tactic.

Michaels' attacks against Daubert have been been discussed in previous posts at Point of Law, but this is the first time we've seen the ergonomics issue elevated as a point of discussion on Michaels' nomination.

It's a good, meaty letter representing serious concerns of the business community about the nominee. Michaels' defenders, meanwhile, continue to dismiss criticisms as "growing smear" -- as per Carl Pope of the Sierra Club, whose defense of Michaels is a pure appeal to authority.

Opening up new frontiers of business prosecution [Business Insider, New York Times] Jacob Sullum at Reason sees it this way:

In this case, a CEO is being held criminally liable for claims that were truthful, though arguably misleading. The government essentially is converting a disagreement about the interpretation of medical data and the emphasis of a press release into a felony. "One position in a scientific dispute has been criminalized," says Harkonen's lawyer, and he's right that it's "quite an astonishing thing."

California trial lawyer generosity

According to Cynthia Lambert at the Civil Justice Association of California, political giving by the state's trial bar continues to proceed at a high clip.

"Wasting Billions, Doing Injustice"

Stuart Taylor, Jr. on the need for malpractice reform:

Whatever the number, surveys of doctors and anecdotal evidence -- even allowing for self-serving exaggeration -- suggest that the occurrence [of defensive medicine] is high. A stunning 93 percent of Pennsylvania specialists in high-risk fields admitted practicing defensive medicine, according to a 2005 survey by the Journal of the American Medical Association. So did 83 percent of high-risk specialists in a 2008 Massachusetts Medical Society survey. That study also found that respondents' fear of liability accounted for almost 30 percent of the CT scans and MRIs they ordered and had spurred 28 percent of them (including 44 percent of OB-GYNs) to avoid treating high-risk patients. ...

Similar considerations explain why we already have specialized courts without juries for vaccine liability, workers' compensation, bankruptcy, and tax cases.

Around the web, October 2

Pay-to-play, the bipartisan way

South Carolina's Republican Attorney General Henry McMaster has taken big contributions from some of the private lawyers he's hired on contingency for drug reimbursement claims against Lilly, notes today's WSJ, following earlier reporting by Meg Kinnard/AP and Legal NewsLine. Meanwhile, Alabama Voters Against Lawsuit Abuse is quarreling with the state's Republican AG, Troy King, over his retention of outside lawyers in drug-pricing litigation, reports the Chamber-backed LNL. And Ira Stoll's new web venture, Future of Capitalism, notes the bipartisan nature of pay to play scandals in the public pension fund realm.

Update: McMaster responds here.

Yokoyama v. Midland National Life

A recent Ninth Circuit decision unwisely reinterprets and expands Hawaii's Deceptive Practices Act so as to facilitate class actions at the expense of reliance and causation, warns Russell Jackson.

Around the web, October 1



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.