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September 2010 Archives

Senate Majority Leader Reid and Minority Leader McConnell that worked out an arrangement that will prevent President Obama from making recess appointments before the Senate returns to session after the November elections.

As in 2008 when Sen. Reid blocked recess appointments by President Bush, the Senate will hold brief pro forma sessions twice a week. By these regular meetings, the Senate avoids being recessed for a long enough period that the President's appointment authority would go into effect. Such is the claim, at any rate. You would think a leader of the Executive Branch would challenge the limits on its authority.

With the agreement, Senate Republicans also allowed the five controversial judicial nominees that were sent back President in August to remain under Senate consideration. Thus, President Obama will not have to renominate his controversial judges: Edward M. Chen, District Judge for the Northern District of California; Louis B. Butler, Jr., Western District of Wisconsin; John J. "Jack" McConnell, Jr., to District of Rhode Island; Goodwin Liu, to be U.S. Circuit Judge for the Ninth Circuit; and Robert N. Chatigny, to be United States Circuit Judge for the Second Circuit.

The House on Wednesday passed H.R. 847, the James Zadroga 9/11 Health and Compensation Act, by a vote of 268-160. The emotional/political force achieved by invoking the victims of the terrorist attacks of September 11, 2001, overwhelmed any substantive critique of the legislation.

For example, the bill included a $7.4 billion tax increase on foreign companies with U.S. operations included in the legislation, criticized by Rep. Charles Boustany (R-LA): "This tax increase will make it less attractive for many of these 'in-sourcing' companies to initiate or expand operations here in the United States. Potentially encouraging them to ship these jobs overseas."

The politics of medical liability reform made an appearance. A motion to recommit introduced by Rep. Chris Lee (R-NY) included a package of medical liability reforms that House Republicans contend should have been in the new health care law. That motion failed 185-244. And there was talk of paying for the bill by eliminating or delaying other parts of the expanded federal health care programs. Rep. Anthony Weiner (D-NY) raged in response:

You want to re-litigate the health-care bill? OK, we're going to get to do that the first Tuesday of November. People are going to be talking was the health-care bill a good bill or a bad bill? Let's do that later. Let's do the politics later. Let's do the right thing now.

There was a lot of this making of implicit threats: We must put aside politics on this bill, and if you don't, we'll denounce you for being against the victims of 9/11.

Kate Pickert at Time magazine's Swampland blog accurately describes the politicking, "The 9/11 Bill and Political Maneuvering."

Rep. Lamar Smith (R-TX) gave a floor speech detailing the objections to the bill. We'll link to it when the Congressional Record is published online. (Update; 2:51 p.m.: Here it is.)

UPDATE (10:30 a.m.): Also, President Obama issued a statement praising House passage. We do not find a news release from the American Association for Justice, the only non-labor union to lobby on the bill. (List of those who lobbied the bill.)

Earlier post here.

The legal system that is Canada

The University of Windsor might have a bit more trouble recruiting a dean for its law school after an Ontario Human Rights Tribunal announced that it reserved for itself the right to fire any dean hired and replace them with a complainant, Emily Carasco, who has argued that the search committee's consideration of allegations of plagiarism in her unsuccessful quest for the job reflected gender discrimination. [National Post (h/t M.Y.)]

The expansion of the 9/11 compensation fund

Update (5 p.m.) The bill passed after lengthy arguments and maneuvering by a vote of 268-160. We'll do a post Thursday a.m.

The House of Representatives is scheduled to vote today on H.R. 847, the James Zadroga 9/11 Health and Compensation Act. The bill creates a variety of new, redundant health programs for care of people exposed to the terrorist attacks against the World Trade Center. It also makes major changes to the compensation fund established in the wake of the murderous assault.

The CRS summary of the bill reports:

Title II : September 11th Victim Compensation Fund of 2001 - (Sec. 201) Amends the Air Transportation Safety and System Stabilization Act to: (1) make individuals eligible for compensation under the September 11 Victim Compensation Fund of 2001 for harm as a result of debris removal; (2) extend the deadline for making a claim for compensation for physical harm not discovered before the deadline; (3) cap liability for claims related to debris removal based on the level of insurance available; (4) limit the total payment for compensation for claims filed on or after the regulations are updated pursuant to this Act; and (5) cap the amount that an individual may charge in connection with a claim under such Act, with exceptions.

[UPDATE: 11:05 a.m. If the House rule passes, the House will consider a substitute amendment.]

Despite the political sensitivities, the bill failed to gather the two-thirds majority necessary for House passage when leadership tried to push the bill through on the suspension calendar in July. (The vote was 255-159.) Although aggressively promoted by New York-area members of the House and local editorialists, the bill could run into further difficulties today. See WABC, "GOP amendments could derail 9/11 health bill," with compensation for illegal aliens being the issue.

The only groups to have lobbied in support of the measure this year (second quarter) are the labor unions and trial lawyers, that is, the American Association for Justice.

During the July floor debate, Rep. Joe Barton (R-TX), summarized the objections in his floor remarks:

The bill before us today... creates a brand new entitlement program that could last an additional 21 years. It creates a special compensation system for hospitals in the New York City area at 140 percent of Medicare rates, provides special protections for trial lawyers, and creates a host of special programs and special protections. It also does not require any kind of a citizenship test, Mr. Speaker, to receive a benefit. It is, in fact, apparently a $7.4 billion new entitlement program.

The minority report filed on the bill by the Republicans on the House Judiciary Committee further detailed the objections:

Around the web, September 29

  • MI's Marie Gryphon: Congress shouldn't force citizens to fly blind. [Wash. Examiner]
  • Supreme Court cert grant in Astra v. County of Santa Clara, on whether there's a private right of (class) action over pharmaceutical prices agreed to by HHS. [Santa Clara v. Astra (9th Cir.)]
  • Paycheck Fairness Act criticism roundup. [Overlawyered]
  • Are plaintiffs or defendants worse actors when it comes to confidentiality of documents? [Drug and Device Law]
  • Which CFPB will we get? [Wright]
  • On remand in Rodriguez v. West Publishing Co.,, Judge Manny Real reduces proposed attorneys' fees from $12M to $500,000. [ABA J]
  • "Lawyer Bluster on Display in Oil Spill Litigation" [WSJ Law Blog]
  • Ninth Circuit lawlessly stays an execution planned for a Death Row inmate, Albert Greenwood Brown, who raped and murdered 15-year-old Susan Jordan in 1980, two lifetimes ago for the victim. The grounds: questions over the constitutionality of lethal injection, concerns that the Supreme Court resolved in 2008. Judges can do this because Congress has abdicated its constitutional responsibility to impeach such judges. [SF Chronicle]
  • Lost in the fuss over Stephen Colbert's testimony: Christopher Coates, a former ACLU attorney who joined DOJ in the Clinton years, testified about racial bias in Obama's Civil Rights Division. [Politico; Bader]

There's been some press coverage of Justice Scalia's stay of a judgment in Philip Morris USA Inc. v. Scott, the Louisiana class action requiring the tobacco company to set up a $250M+ smoking cessation fund, but it's mostly focused on scorekeeping and the underlying allegations of the suit. But what's really significant about the stay is the interest the Supreme Court is taking on the tail-wagging-the-dog aspect of class actions, where the procedural Procrusteanism of creating a class ends up depriving defendants of their ability to mount a substantive defense that they would have to individual claims. Scalia's order weighs in on the tremendous due process problems—a hint on his thoughts in the pending Dukes v. Wal-Mart case. If the Supreme Court weighs in, it would have the potential to strike down billions of dollars worth of abusive consumer class actions, especially the "harm-less lawsuits" that Michael Greve and I have frequently criticized. Russell Jackson has excellent analysis, and Daniel Fisher's coverage at Forbes is, as usual, more savvy than that of most legal reporters.

Marie Gryphon on "loser pays" on "Stossel"

Asylum denial rates go down

I've previously argued that the benefits of so-called "civil Gideon" are overstated, and another example hit the news recently.

In FY 1986, 89% of asylum claims were denied, and 52% of asylum seekers had counsel.
In FY 2010, 50% of asylum claims were denied, and 91% of asylum seekers had counsel; the approval rates for without and with counsel were 11% and 54% respectively.

Therefore, Syracuse's Transactional Records Access Clearinghouse announces, legal representation helps asylum seekers in court, and more legal representation is needed—a claim repeated uncritically by an article by Marcia Coyle in the National Law Journal without any opposition in her story. Given that the ABA has called for that legal representation to come at taxpayer expense, that is not an apolitical claim.

There are two problems with TRAC's claim. First, the causal arrow goes both ways. For example, in civil litigation, a number of delusional people insist upon self-representation or are refused representation by attorneys. They do not lose their cases because they don't have attorneys, they don't have attorneys because their cases are facially meritless. The same is true in asylum cases. Someone with a meritorious asylum case is more likely to spend their own money to ensure they have an attorney; an attorney trying to decide which of her scarce resources to devote to a pro bono case is going to triage her cases to reject the ones she does not think have merit. Coming to court with an attorney is a signaling device that either the client or the attorney thinks the case has enough merit to expend time and money on it.

Second, it is painfully obvious from TRAC's own numbers that there are other causes for the huge decrease in asylum denials. Even if every unrepresented applicant was denied asylum in 1986 (which clearly wouldn't be true), represented applicants could not have won more than 22% of their cases. So judges are granting asylum far more often today—which is odd, because there has been no material change in asylum law, and in terms of facts on the ground, the world is a far less repressive place in 2010 than it was in 1986 by any legitimate measure.

In short, TRAC and the National Law Journal have missed the real story. Why are asylum rates going up? The change in the mix of judges seems to have something to do with it. And the most notorious asylum seeker this year, Zeituni Onyango, Barack Obama's Kenyan aunt, was granted asylum on the laughable theory that she faced political oppression because she was related to Obama, a hero in Kenya. Ms. Onyango, who ignored a 2004 deportation order after her original asylum request was denied during the Clinton era, is now living on the taxpayer dime in Boston.

Dahlia Lithwick does it again

Occasional POL contributor Marc Williams (Nelson Mullens; immediate past president, DRI) responds to my September 3 post:

Implicit in tomorrow's 10:00 a.m. Senate Judiciary Committee hearing on honest services fraud, which Carter linked last week, is the notion that there is a need to "restore" prosecutorial tools after the Skilling decision that reined in the vague federal honest-services-fraud law (see our post here and links therein). As our regular readers know, we tend to be skeptical; see Ted's article here; my op-ed here; and Marie Gryphon's writings here, here, and here.

Interestingly, there is another Congressional hearing tomorrow, on the House side, which promises a look at federal criminal law more in keeping with our views:

At 3 p.m. in the Rayburn House Office Building, room 2141, the House Judiciary Committee's Subcommittee on Crime, Terrorism, and Homeland Security is holding a hearing entitled "Reining in Overcriminalization: Assessing the Problems, Proposing Solutions." All the hearing details have not yet been released, but based on my knowledge of the staff's plans, it promises to be a very provocative panel with victim witnesses, similar to last summer's hearing on the same topic. Those in the D.C. area should check it out.


The witness list is as follows:

Panel I

  • Jim Lavine, National Association of Criminal Defense Lawyers

  • Bobby Unser, Personal Impact Victim, Albuquerque, NM

  • Abner Schoenwetter, Personal Impact Victim, Pinecrest, FL

Panel II

  • Brian Walsh, The Heritage Foundation

  • Stephen Smith, University of Notre Dame Law School

  • Ellen S. Podgor, Stetson University College of Law

  • Andrew Weissmann, Jenner & Block, LLP

The Senate Judiciary Committee has scheduled a mark-up session next Thursday, Sept. 30, to act on S.2888, Law Student Clinic Participation Act.

In his December 2009 news release announcing the bill's introduction, Sen. Ben Cardin (D-MD) cited the most compelling kind of individual casework that might benefit from more forces in the law clinics.

Washington, DC - U.S. Senator Benjamin L. Cardin (D-MD), a member of the Senate Judiciary Committee, has introduced legislation that would increase opportunities for law students who work for the federal government to participate in legal clinics, helping more Americans gain access to qualified legal guidance and expanding students' experience in federal law. S. 2888, the Law Student Clinic Preparation Act of 2009, would allow law students who work for the federal government to participate in legal clinics in which a case may be brought against the United States or a substantial U.S. interest.

"Unfortunately, many low-income Americans do not have access to justice. They may be battling to keep their home from foreclosure, trying to sort out veterans benefits with the VA or tax issues with the IRS, but they can't afford to hire a lawyer or obtain legal assistance during a serious time. This legislation takes a step forward in closing this gap by expanding the number of law students eligible to volunteer their services at legal clinics," said Senator Cardin.

The legislation prohibits an EPA employee, for example, participating in a suit against the EPA, so that direct conflict of interest is avoided. But given the political activism of so many legal clinics, you just have to be skeptical of directing federal employees into their activities.

P.S. This mark-up session will also consider the nomination of Robert Chatigny to the U.S. Second Circuit. Chatigny was the only one of the controversial five judicial nominees the committee did not approve this week.

From the Senate Judiciary Committee:


The Senate Committee on the Judiciary has scheduled a hearing entitled "Restoring Key Tools to Combat Fraud and Corruption After the Supreme Court's Skilling Decision" for Tuesday, September 28, 2010 at 10:00 a.m. in Room 226 of the Dirksen Senate Office Building.

Scheduled witnesses are:

  • Lanny A. Breuer, Assistant Attorney General, Criminal Division, Department of Justice
  • Samuel Buell, Professor, Duke University School of Law
  • Michael Seigel, Professor, University of Florida Levin College of Law
  • George Terwilliger, Partner, White & Case

Scotusblog's entry on Skilling v. United States is here.

Mark Lanier flip-flop on "Stossel"?

The odd thing about Mark Lanier endorsing "loser pays" on "Stossel" is that he took the opposite position when the Wall Street Journal covered Marie Gryphon's paper last year.

Links related to yesterday's program (which Fox Business News is rerunning all weekend):

Trask on Mearshimer on class actions

Andrew Trask has an interesting post suggesting that John Mearshimer's theory of "offensive realism" can inform our thinking of class action practice.

Perhaps it's my bias as an economics major against political theory, but I'm not sure I buy it. Simple economic rationality explains everything Mearshimer does and more.

Relatively meritless cases are filed because it's potentially profitable to do so under existing de jure and de facto legal rules.

Plaintiffs' lawyers have every incentive (as do defense lawyers) to portray their internal value of the case as higher quality than they actually believe because it gives them additional leverage in settlement negotiations.

Sunk costs combined with the American Rule mean that it's usually more profitable to keep litigating a case that turns out to be relatively meritless than to drop the case before the eve of trial. This "dollar auction" aspect of litigation deserves more thought, but I offer it to Marie Gryphon as a paper idea for another reason why loser-pays would prevent socially inefficient litigation at the margin.

And finally, in a world of imperfect information, we would expect the attorneys who bring cases to be overconfident on average and overestimate the ex ante value of a case, because the underconfident ones are going to refrain more often. The winners' curse comes into play here, and it's a subject I've discussed before including in my paper with Marie on the game theory of medical malpractice.

(Relatedly: Brian Anderson's and Andrew Trask's new book, The Class Action Playbook, arrived in the mail yesterday, and instantly became the best practitioners' guide to class actions out there: I would definitely go to Anderson-Trask now before I go to the often sloppy Newberg treatise. My major complaint is that it wasn't out a month ago when I could have cited it in my Ninth Circuit briefing.)

The Ocean State Policy Research Institute wants some answers about McConnell's role in a corrupt $2.5 million cy pres award in the Rhode Island lead paint litigation—to a Massachusetts hospital that Motley Rice owed money to, and that accepted the cy pres award as satisfaction of Motley Rice's obligation, thus serving as a laundered attorney's fee. A shame neither the Democratic U.S. Attorney nor the Democratic state attorney general is going to investigate it: the Senate Judiciary Committee should take this opportunity to do so.

From today's business meeting of the Senate Judiciary Committee:

  • Kathleen M. O'Malley, to be United States Circuit Judge for the Federal Circuit, Ordered Reported By Voice Vote
  • Beryl A. Howell, to be United States District Judge for the District of Columbia, Ordered Reported By Voice Vote
  • Robert L. Wilkins, to be United States District Judge for the District of Columbia, Ordered Reported By Voice Vote
  • Edward M. Chen, to be United States District Judge for the Northern District of California, Ordered Reported By Roll Call Vote, 12-7
  • Louis B. Butler, Jr., to be United States District Judge for the Western District of Wisconsin, Ordered Reported By Roll Call Vote, 12-7
  • John J. McConnell, Jr., to be United States District Judge for the District of Rhode Island, Ordered Reported By Roll Call Vote, 13-6
  • Goodwin Liu, to be United States Circuit Judge for the Ninth Circuit, Ordered Reported By Roll Call Vote, 12-7
  • Robert N. Chatigny, to be United States Circuit Judge for the Second Circuit, Held Over

UPDATE (4:45 p.m.): It's the bottom five on that list, the "fringe five," who are the disputed candidates. News coverage, commentary ...

The U.S. Chamber's Institute for Legal Reform has released results of a survey of 1,000 small business owners (conducted by the respected bipartisan team of Bill McInturff and Doug Schoen). Litigation is a concern. Highlights:

  • One in three (35 percent) of all small businesses have been sued or threatened with a lawsuit.
  • Sixty four percent say that lawsuits have been on the rise, and 68 percent believe that the number of lawsuits against companies will continue to increase over the next five years.
  • If targeted in a lawsuit: 74 percent of small business owners say companies such as theirs would very likely have to pass those costs on to their customers; 68 percent say they would very likely have to reduce existing employees' benefits; and 71 percent say they would very likely have to hold back on hiring new employees.

Meanwhile, "trial lawyer" remains a potent accusation in campaigns around the country. More from the political world:

Manhattan Institute on "Stossel" tonight

This week's edition of "Stossel" on Fox Business News features Marie Gryphon talking about "loser pays", me talking about class action settlements and the Center for Class Action Fairness, and both of us debating the issue (and the Vioxx case!) with trial lawyer Mark Lanier. Tonight at 9 Eastern and midnight, with rebroadcasts Friday and Saturday.

(CCAF is not affiliated with the Manhattan Institute.)

Daily Show takes on unions

Long-time Point of Law readers are familiar with the practice of unions hiring non-unionized minimum wage workers to picket targeted businesses—we covered the story in 2005. Five years and a week later, the Daily Show is on the case, with the same union (UFCW) and the same target (Wal-Mart). See also.

The dramatic effect of Citizens United

Er, doesn't seem to be so large. "[A]s of September 1, according to a USA Today report not a single company surveyed plans to spend corporate money to run independent ads calling for the election or defeat of any candidate. Zilch. Nada. Zippo." (Unions, however, might be a different matter.) [Pero; USA Today]

One hopes that judges will scrutinize class action settlement proposals closely. It's not clear, however, that scrutiny of the racial and sexual composition of the law firms should be part of that scrutiny.

In an order signed this week, U.S. District Court Judge Harold Baer (S.D.N.Y.) required two firms serving as co-lead counsel in a securities class action to "make every effort" to assign at least one minority and one woman to the case. "This proposed class includes thousands of participants, both male and female, arguably from diverse backgrounds, and it is therefore important to all concerned that there is evidence of diversity, in terms of race and gender, in the class counsel I appoint," wrote the judge.

Baer had himself appointed these same firms to lead the case two years ago.

According to the American Lawyer, judge Baer has made supporting diversity a priority. Indeed, his order references a ruling in another case that co-lead counsel must assign one woman and one minority lawyer to the case.

If the lawyers' pleadings are insufficient in their representation of the class, a judge should properly intervene. But is judge Baer of the view that only lawyers of the same race and sex as class members can "represent" them? In a securities class action? Why is that so? Presumably judge Baer is not multi-sexual and is perhaps not multi-racial; yet presumably he can nonetheless decide cases impartially. Is Judge Baer making affirmative action a pre-requisite for appearances in his court? Perhaps he has clerks of different races and sexes? If so, is he implying that judges whose chambers are not "diverse" are incapable of rendering justice?

Concussions continued

We take note when news coverage on an issue coincides with congressional hearings, at least if the subject matter might involve liability and civil litigation. Maybe it's just the Zeitgeist, but the plaintiffs' bar is so adept at generating sympathetic coverage, one always wonders.

Anyway, today's Washington Post had two stories on athletes and concussions, an issue we've been following since last December.

On the front of Sports, given big play with photos is "Concussion symptoms linger for former soccer star Alecko Eskandarian as he returns to school at Virginia." On the front of the Metro section, "D.C. bill would sideline athletes with possible concussions."

Coincidentally ... At 10 a.m. Thursday, the House Education and Labor Committee holds a full committee hearing, "Protecting Student Athletes from Concussions Act." Chairman George Miller (D-CA) describes the bill:

At the request of several members of the Education and Labor Committee, the Government Accountability Office (GAO) investigated the prevalence of concussions in high school athletics and found that concussions often go unrecognized. Recent research shows that concussions can have serious repercussions for student athletes both on the field and in the classroom. During the 2005-2008 school years, an estimated 400,000 concussions occurred in high school athletics - brain injuries that often go unnoticed and untreated.

The Protecting Student Athletes from Concussions Act would establish minimum standards in K-12 schools on concussion safety and management, including educating students, parents and school personnel about how to recognize and respond to concussions.

And here are the concussion-related blog posts at the Child Injury Lawyer Blog maintained by personal injury attorneys.

The (fact-gathering, non-jury) trial stage of the civil suit against Chevron in Ecuador has ended, Judge Leonardo Ordonez, president of the provincial court of Provincial Court of Sucumbíos in Lago Agrio, informed the parties in a letter last week.

The judge's announcement follows the final submission of "expert" reports to the court, including one from various supporters of the shakedown litigation that now claims as much as $113 billion in damages -- up from the mere $27.4 billion tallied in the report from the now-discredited special master. Judging by the news release from the PR outfit that represents the U.S. trial lawyers , the sum is necessary to remove all trace of civilization from the Amazonian oil patch. (Kohn, Swift & Graf is funding the litigation, Steven Donziger is orchestrating it.)

Chevron also made submissions to the court as reported in its news release, "Chevron Statement on Ecuador Court Filings":

SAN RAMON, Calif., Sep 17, 2010 (BUSINESS WIRE) -- Yesterday, Chevron Corp. (NYSE:CVX) submitted expert testimony from leading scientists to the Provincial Court of Sucumbios in Lago Agrio, Ecuador demonstrating that there is no evidentiary basis for the lawsuit against the company. Chevron also has renewed its motion for dismissal of the case because there is no evidence of liability and because there is overwhelming proof of fraud on the part of the plaintiffs' lawyers.

The news release provides a "greatest hits" account of the plaintiff team's conniving and falsehoods, devastating revelations made public through Chevron's use of 1782 motions to obtain testimony from witnesses involved in the Ecuadorian activities, including damning outtakes from the documentary, "Crude." A highly recommended summary.

"The victims of 'consumer protection'"

Who are the victims? It's you, dear consumer. I explain in today's New York Post.

Senate Majority Leader Harry Reid on Monday, Sept. 13, introduced S. 3772, the Paycheck Fairness Act, giving new, election-season impetus for the bill that would encourage lawsuits against employers.

The House passed its own version, H.R. 12, in January 2009 in tandem with the Lilly Ledbetter Fair Pay Act, which removed statutes of limitations on employment pay suits. Reid's bill supplants the one introduced by Sen. Hillary Clinton (D-NY), S. 182, before she became Secretary of State.

Free market advocates oppose the bill for government's interference in supply and demand and contracts, well summarized by Hans Bader of the Competitive Enterprise Institute as "[forcing] employers to pay some people equal amounts for doing unequal work." (Washington Examiner, Aug. 4, "Paycheck Fairness Act would mandate equal pay for unequal work, triggering flood of lawsuits.")

Business groups also object to the legislation's provisions that would encourage more lawsuits against employers. As the National Association of Manufacturers' "key vote" letter opposing the House bill summarized:

By removing all limits to punitive and compensatory damage awards on claims made under the Equal Pay Act (EPA), the Paycheck Fairness Act (H.R. 12) would expose employers to increased threats of litigation - even when unintentional pay disparities may have occurred. Its passage would likely prompt many employers to purchase additional legal liability insurance, increasing their costs and decreasing their ability to raise wages, increase benefits or hire new U.S. House of Representatives workers. In fact, it is difficult to imagine a scenario in which the bill would not lead to lower wages and fewer jobs.

The White House has stepped up its advocacy for the bill, with adviser Valerie Jarrett having an op-ed published in The Washington Post promoting the bill, "Closing the wage gap: It's a matter of survival for working families" adding some "it's a matter of life or death!" hyperbole to the usual "women only make 77 cents for every dollar a man makes" misrepresentation. Thankfully, Diana Furchtgott-Roth is always prepared with a factual refutation as in this letter, "After almost 50 years, the gender gap in pay still resonates."

UPDATE (4:40 p.m.): The head lobbyist for the Association of American University Women had a meeting with Senate Majority Leader Harry Reid this afternoon on the issue, or so her Twitter report has it.

With the arrival of the September 20 deadline (extended from August 20), business groups have commented on the Financial Accounting Standards Board's proposal to require disclosures about contingent liabilities, the Exposure Draft, Topic 450, "Disclosure of Certain Loss Contingencies."

FASB has posted the comment letters online here.

While acknowledging the current proposal is improved over the previous iteration withdrawn in 2008, the criticism is still substantive. The Association of Corporate Counsel on Monday added 40 additional signatures to its Aug. 18 comment letter. Excerpt:

[As] a whole the Exposure Draft fails the key test for a change in standards as any foreseeable benefit from the proposal is far outweighed by the substantial problems that the proposal would create for public companies, their shareholders and financial statement users. In particular, we have serious concerns about the proposed requirement for disclosure of amounts accrued for individual loss contingencies and for disclosure of information about such accruals in a tabular reconciliation. We believe these requirements would harm shareholder and company interests as they would limit the ability to obtain shareholder-favorable settlements of litigation matters, otherwise hamper litigation strategy and potentially fuel additional litigation. We also are concerned that these accrual-related disclosure requirements could generate new tension surrounding issues of attorney-client privilege and work-product protections. The Exposure Draft also calls for enhanced disclosure of various information - disclosure of certain remote contingencies, amount of damages claimed, and insurance information - that has the potential to mislead financial statement users, on the one hand, and cause prejudicial impacts on litigation positions to the detriment of company and shareholder interests, on the other.

The National Association of Manufacturers, my employers, submitted its comment letter Monday. The U.S. Chamber of Commerce submitted its comments on Aug. 11. Mayer Brown has published a summary of the issues, "FASB revises its proposal regarding disclosure of loss contingencies." CFO.com previously reported, "Will FASB's Breadcrumb Trail Remain?"

The American Association for Justice is sponsoring a four-day training session in Baltimore for plaintiffs' lawyers starting Thursday, a "Case Workshop Program." It looks like a fascinating agenda with a lot of work on focus groups, attendees even bringing their own cases to review.

Before the program, you will be asked to provide a case summary for faculty review, including specific case information such as the stage of the case, the plaintiff's and defendant's legal theories, and best arguments to prevail, and what you want to get out of the focus groups. You should plan to bring two key exhibits with you to the program for professional analysis and critique.

The Focus Group Members
We screen and recruit hundreds of members of the community from several different sources to make up your focus groups. We will provide as diverse a group as possible with respect to occupation, gender, ethnic origin, political affiliation, and age.

The agenda is here, and the brochure is here.

This week on 'Outlaw': Dreck

The new NBC series "Outlaw" has been getting a pounding from the critics, and sure, the premise is laughable: Strict constructionist Supreme Court justice (Jimmy Smits) has a change of heart when his liberal father dies in a car wreck, so he quits the bench to fight for justice as a pro bono attorney.

Well, not only the premise is bad, the writing is bad, the acting is bad, and the depiction of reality is bad. A Supreme Court justice is kicked out of a casino for counting cards in a six-deck shoe and then has an angry confrontation with a cute ACLU activist amid an anti-death penalty protest, with no security around? And that's in the first three minutes!

Judging from the first quarter-hour, business will be depicted as malevolent. Smits' character, Justice Cyrus Garza, walks down the front steps of a CGI-Supreme Court and enters a limo to speak to a U.S. Senator, a bald, overweight Senator, of course, who says with a scowl ..."Chelsea vs. Intel, Frankl vs. Portland, Manilow vs. 3M. All five-four decisions. Five-four. These are precedent-setting cases, and they all went south because of you."

The Senator tells Garza he's heard the justice may stop the execution of a liberal cause celebre, Greg Beals. He continues the warning: "If this new direction of yours is because of your dad's death, see a therapist. If it's a mid-life crisis, screw your secretary, but do not shift the balance of the Supreme Court. We put you in there, we can take you out. You're at the tipping point here Cyrus. You don't vote the right way on Beals, you're out."

Next scene, Garza is on the bench with his fellow justices and announces, "I'm staying the case of Gregory Beal and sending it back for a new trial ..." In the audience, the Senator scowls.

Nowhere, nowhere, is the question ever answered: Why is Barry Manilow suing 3M?

Fridays, 10 p.m. Eastern, 9 p.m. Central. Must not watch television.

More on Zyprexa

The District of Columbia "makes it illegal for anyone to 'guide or escort' anyone else for hire without first passing a test and obtaining a special license. The prohibition on unauthorized talking covers all of the public spaces in D.C.--including roads and sidewalks." The Institute for Justice, through attorney Bob McNamara, is suing over the restriction on speech and economic liberty. [IJ, IJ video, WSJ, MSNBC, Legal Times, AP]

Patterico has the story alleging that Democratic Senate candidate and New Castle County Executive Chris Coons uses the Delaware court system to abuse political opponents through aggressive code enforcement.

For over a decade, I've been at the same bank with free checking. Then, in the last year, the Democratic Congress, in its infinite wisdom, passed new laws prohibiting banks from imposing certain kinds of fees on its customers for overdrafts and the like. Isn't that consumer-friendly?

Except banks were basically running their business off of the fees that Congress has outlawed, and can no longer provide cheap services to the financially responsible. So now my bank is refusing to offer me free checking. I'm going to face $15/month (plus $0.50/check and $1.50/ATM transaction) charges if I stay with Citibank. So I'm either out $200/year, or I need to waste a day of my life finding a new bank, negotiating with numerous vendors over all my automatic bill payments, and getting my automatic paycheck deposits fixed. Thanks, Congress!

Once upon a time, Commerce Bank offered to help you switch to their bank by promising to take care of all those transactions costs for you. Which is perhaps why they're out of business now. Can anyone recommend a bank that offers free checking and makes this switch easy? Drop me an email.

The Health Subcommittee of the House Committee on Energy and Commerce on Thursday, Sept. 16, passed out H.R.1347, the Concussion Treatment and Care Tools Act, sponsored by the subcommittee's chairman, Rep. Frank Pallone (D-NJ). Pallone's news release is here. The bill now goes on to the full committee, which is chaired by Rep. Henry Waxman (D-CA).

Now, this Thursday, Sept. 23, the House Education and Labor Committee will hold a hearing on a separate bill, "H.R___, Protecting Student Athletes from Concussions Act.

As we've previously observed, there's a lot of Congressional activity on this issue, rising almost to the level of web activity of the personal injury attorneys. (This, for example.)

Then this law firm's website, which really stands out, featuring an account of a $3 million verdict for a high school football player who sued for a brain injury. Readers are greeted with a pop-up window: "Hi...You may just be browsing but we are available to answer your questions. Click 'Yes' for live help."

Interesting note from the account of the litigation: "To avoid issues of sovereign immunity, suit was filed against the coaches and administrator as individuals." There's so much litigation that can be spread around: coaches, doctors, sports equipment manufacturers. And Congress is legislating in ways that can only increase that liability.

Schools have already removed playgrounds for fear of litigation. Could high school sports be next?

Kenneth Anderson has details about today's Second Circuit decision in Kiobel v. Royal Dutch Petroleum. See also Julian Ku.

Update: More from Kenneth Anderson.

The five controversial federal judicial candidates President Obama re-nominated on Tuesday were moved without any new hearings -- which would be superfluous, to be sure -- to the Senate Judiciary Committee's schedule for a vote at today's business meeting, but then action was held over until next week. The five are: Edward M. Chen, District Judge for the Northern District of California; Louis B. Butler, Jr., Western District of Wisconsin; John J. "Jack" McConnell, Jr., to District of Rhode Island; Goodwin Liu, to be U.S. Circuit Judge for the Ninth Circuit; and Robert N. Chatigny, to be United States Circuit Judge for the Second Circuit.

The Washington Times weighed in on the judges in an editorial, "GOP Senate needed to block bad judges," objecting most vigorously to Chatigny and Chen. The Providence Journal covers the local story, "McConnell renominated to federal judgeship."

President Obama travels to Stamford, Conn., today to campaign for Attorney General Richard Blumenthal, who's running for the U.S. Senate.

Wonder if either one will refer to Connecticut v. American Electric Power, the Blumenthal-led suit that claimed electric utilities created a public nuisance through their greenhouse gas emissions. Last September the Second Circuit found for the states, and Blumenthal touts the case on his campaign site as an example of his "standing up to polluters."

But the Obama Administration wants the Second Circuit's ruling thrown out, which is to say, wants Blumenthal to lose. In a brief filed by the Solicitor General on behalf of the Tennessee Valley Authority, the Administration called for the Supreme Court to vacate the circuit court's ruling and remand the case for further proceedings. (More on the brief from Jonathan Adler at Volokh.)

The President and AG will avoid mentioning the dispute, no doubt, but wouldn't a frank acknowledgment be refreshing? "Vote for my friend, Richard Blumenthal! He's wrong on the law, and my Administration is fighting him in the Supreme Court, but otherwise, he's OK by me."

UPDATE (Friday): Nope. President Obama made no mention of the litigation. He gave a populist address, Blumenthal standing up for the little guy, with a heavy dose of class warfare. To wit:

Now, Connecticut, let's face it, this decision in this election should be a no-brainer. (Laughter.) Right? (Applause.) I mean, it should be. Should be a no-brainer. Here you've got a man who's been fighting for the people of Connecticut since the day he walked into the attorney general's office. He's got the record to prove it. He's taken on the tobacco industry and helped stop those companies from targeting our kids. He's taken on utility companies to try to beat back electricity rate increases and skyrocketing costs of heating oil. He's taken on the auto industry to help keep family dealerships open that have been around for almost a century.

Six lawyers from the Beasley Allen firm wrote 52 checks for $606,000 and laundered them through an "arcane maze" of PAC groups for unsuccessful Alabama Supreme Court candidate Deborah Bell Paseur without ever appearing on a list of contributors to her campaign. Paseur is running for the state appellate court this year. [Legal Newsline]

"The Law of McDonald's"

Video of my talk to the Louisiana State University Law School Federalist Society is on line. And I can give the same talk to your law school Federalist Society, or talk about class actions, Vioxx, Toyota, or many other subjects.

The American Association for Justice, the trial lawyers' lobby, has posted its public priorities for Congress' short September session at his homepage, www.justice.org. (Pdf'ed for posterity here.)

Congress Is Back: We're Running Out of Time
With only four weeks to go until the end of the session there is a short window to promote issues that strengthen the civil justice and jury system. Get involved!

Help provide strong remedies to victims of the BP oil disaster under the Death on the High Seas Act.

Hold foreign manufacturers accountable for the safety of their products in the U.S. legal system.

The November election is close at hand and the forces of Tort Reform are gaining momentum. They are powerful and well funded. AAJ PAC supports candidates on both sides of the aisle and ranks as one of the top contributors to House and Senate candidates every election cycle.

We're puzzled by the capitalization of "Tort Reform," and it's crass to boast of your fundraising prowess on a non-PAC website, but so be it.

Missing from the public list of priorities is the $1.6 billion tax break for contingency fee litigation, legislation (S. 437 and H.R. 2519) that stalled in Congress.

If the current Congress is so tough, imagine trying to push this special-interest tax break through once the balance of political power shifts with the November elections. These political realities explain the AAJ's attempt to get a tax guidance or interpretation from the U.S. Treasury, a quiet appeal that fortunately made it into the public eye.

Today, 76 business trade associations, medical groups, legal reform groups and others sent a letter to Treasury Secretary Geithner explaining their opposition to the tax break. (My employers at the National Association of Manufacturers were among the signers.) The Chamber's Institute for Legal Reform has the news release and letter. This letter argues primarily on the basis of tax law and the economic impact of the requested treatment: "[Such] change in policy would damage the economic recovery, not just as a result of losing billions in tax dollars, but also by fostering more questionable litigation."

In New York and Rhode Island, Democratic voters nominated candidates for attorney general on Tuesday.

From Associated Press, "Lawmaker vs. prosecutor for NY attorney general": "NEW YORK (AP) -- State Sen. Eric Schneiderman, who won the Democratic nomination for New York attorney general, will face Staten Island District Attorney Dan Donovan in a general election, pitting a self-described progressive lawmaker against a tough-talking prosecutor in the race to become the state's top lawyer."

Yes, several of the five Democratic candidates seemed to be running on the platform of who could be the most "progressive," which seemed to mean appealing to traditional Democratic constituencies such as environmentalists, consumer groups, and supporters of economic redistribution.

Second behind Schneiderman was Nassau County District Attorney Kathleen Rice. Schneiderman's campaign website is here, and Donovan's is here.

Interesting fall-out, too. Sean Coffey, who won a $6 billion settlement for WorldCom investors, has decided to retire from law. Coffee finished third in the primary.

In Rhode Island, Democrats nominated state Rep. Peter F. Kilmartin of Pawtucket, a former Pawtucket police officer turned lawyer. (Providence Journal coverage.) The Republican nominee is Erik B. Wallin, a former JAG and state prosecutor. Public corruption will be a big campaign issue.

DOJ ignores voter fraud

The Obama administration has announced that it will refuse to enforce provisions of federal election law designed to prevent voter fraud because it "doesn't have anything to do with increasing minority turnout." Meanwhile, though it is an urban legend across the left that there is no such thing as voter fraud, dozens of counties across the United States have more registered voters than eligible voters. [Adams @ Pajamas Media; Wash. Times; Hillyer @ Wash. Times]

Not unrelatedly, the Inspector General has opened an investigation into the Civil Rights Division, and whether it is enforcing the law in a non-discriminatory fashion. [WaPo; OIG letter]

Preemption and Arizona redux

In the Wall Street Journal, Jay Lefkowitz and Michael Shumsky defend the US v. Arizona result as a fair application of preemption—and ask whether the Obama administration will be as solicitous of the doctrine when it comes to upsetting the trial lawyers in drug litigation.

There's a difference, however, between Arizona and Buckman: there exists a federal statute requiring DHS to assist local law enforcement. There is no similar FDA obligation. The argument for Buckman preemption is stronger in the FDA context.

Severino on judicial nominations

Carrie Severino refutes the notion that the slow pace of judicial nominations in the Obama administration is because of Republican obstructionism.

Today is primary election day in seven states and D.C. We've already noted the hotly contested, five-way Democratic primary for state attorney general in New York. (AP story.) The other semi-interesting contest for the AG nomination takes place in Rhode Island, with three Democrats running.

The incumbent, Patrick Lynch, is term-limited out of office and has already withdrawn from the party's race for governor. We bid adieu to Lynch, who carried on the law-stretching public nuisance litigation against the paint industry begun by his predecessor, Sheldon Whitehouse. The Republican candidate is Erik B. Wallin of South Kingston, who was a JAG prosecutor for the U.S. Air Force before returning to Rhode Island to become a state prosecutor and subsequently enter private practice.

There are three Democratic candidates:

  • Joseph M. Fernandez is a former city solicitor for Providence, who has a background in complex commercial litigation and who represented business in private practice. (Campaign website)
  • Peter F. Kilmartin is a former police captain who represents District 61 (Pawtucket) in the Rhode Island House of Representative. Organized labor is backing Kilmartin. (Campaign website)
  • Stephen R. Archambault, a defense attorney, is one of the five members of the Smithfield Town Council. He's a former police officer who's prosecutor for the town of Lincoln (Campaign website.)

Actually some tough campaigning in the contest, or at least negative ads. AP, "Negative TV ad by AG candidate": "PROVIDENCE, R.I. (AP) - State Rep. Peter Kilmartin put out a negative TV ad in his campaign for Attorney General on Wednesday attacking his Democratic primary opponents with questionable claims." Kilmartin has raised the most money.

Elsewhere, it's boring. But read on, if you will....

From the White House, Sept. 13, "Presidential Nominations Sent to the Senate":

Louis B. Butler, Jr., of Wisconsin, to be United Stated District Judge for the Western District of Wisconsin, vice John C. Shabaz, retired.

Robert Neil Chatigny, of Connecticut, to be United States Circuit Judge for the Second Circuit, vice Guido Calabresi, retired.

Edward Milton Chen, of California, to be United States District Judge for the Northern District of California, vice Martin J. Jenkins, resigned.

Goodwin Liu, of California, to be United States Circuit Judge for the Ninth Circuit, vice a new position created by Public Law 110-177, approved January 7, 2008.

John J. McConnell, Jr., of Rhode Island, to be United States District Judge for the District of Rhode Island, vice Ernest C. Torres, retired.

In accordance with Senate rules, the Senate returned the nominations to the President in August when it recessed. Republicans refused to suspend the rules to allow these specific nominations to be carried over.

Earlier posts here.

The Seventh Circuit upheld a 2007 Wisconsin bar advertising campaign to promote positive perceptions of lawyers paid for with members' mandatory dues because it was "germane" to the purpose of a bar association.

Matrixx Initiatives, Inc. v. Siracusano

The Supreme Court appeal of a bad Ninth Circuit decision holding that failure to prematurely disclose adverse event reports can give rise to shareholder liability begins briefing. [ScotusBlog]

With thanks to correspondent Liz Ditz, it now appears to me that CBS News got it wrong when it implied that the federal government had conceded a causal link between vaccines and autism in the suit for which it announced a settlement earlier today (see my POL posting below).

The federal payment does not acknowledge a vaccine-autism link. The payment was made for a mitochondrial disorder and encephalopathy which fall under a category of so-called "Table" injuries for which parents do not need to show proof that the vaccine aggravated the condition as long as it appeared within a certain amount of time after vaccination.

"It's a complicated story...the government hasn't explained to the press or the public exactly what their thinking was in this case," says Paul Offit, a pediatrician and infectious disease researcher at the Children's Hospital of Philadelphia. The symptoms which a doctor later used to diagnose her with autism "were part of a global encephalopathy," he wrote in an opinion piece in the New England Journal of Medicine two years ago (15 May 2008, NEJM) and could have been aggravated by the vaccine or by other naturally-occurring childhood fevers. This child, in other words, did not suffer from autism but from a neurodegenerative disorder with "features of autism." Dr. Poling, the child's father, is indeed saying that his daughter's case is not unique - that it is typical and therefore is does say something about a broader vaccine-autism connection. But Hannah Poling's history has many features that are not typical of autism - like a history of otitis media with frequent fevers, seizures, and what sounds like a rare encephalitis that probably did result from vaccines. Even if we put her mitochondrial mutation aside - this is not a typical case of autism.

A good summary of the case can be found on this science blog.

Roger Parloff, legal analyst at Fortune, has done an estimable job of summarizing recent developments in the U.S. contingency-fee litigation against Chevron claiming environmental damage in Ecuador. From his Legal Pad report, "Evidence of fraud mounts in Ecuadorian suit against Chevron":

FORTUNE -- A lawsuit against Chevron in Ecuador, which has become a cause célèbre for environmentalists worldwide, has suffered severe, crippling setbacks in recent months, as key plaintiffs lawyers have come under credible and weighty allegations of fraud....

Over the past ten months, Chevron's outside lawyers at Gibson, Dunn & Crutcher have filed 11 civil actions in federal courts across the United States, each designed to pull back the curtain on what they say is an elaborate, two-year-long charade in which plaintiffs lawyers covertly planned and ghostwrote a crucial report on damages that was ostensibly being authored by an independent expert appointed as an "auxiliary" to the Ecuadorian court. The expert's final report, issued in November 2008, recommended that Chevron pay the plaintiffs $27.3 billion.

The civil actions are "1782 motions" (28 U.S.C. 1782) to obtain evidence and depositions from parties involved with the litigation in Ecuador. The San Francisco Chronicle -- Chevron is based in Richmond, Calif. -- also hits on the issues in a recent piece, "Chevron keeps up pressure in Ecuador suit."

Elsewhere, The Harvard International Law Journal -- does one add the qualifier "prestigious?" -- recently turned over its pages to Pablo Fajardo, the Ecuadorian lawyer who often serves as the public face of the anti-Chevron litigation, a symposium piece, "Corporate Accountability, Human Rights and Pursuing Justice in the Ecuadorian Amazon: Attorney Pablo Fajardo's Perspective on Aguinda v. Chevron."

Fajardo has been lionized as a human rights and environmental hero, a brave man fighting the U.S. exploiter. In 2008, he received the Goldman Environmental Prize; in 2007 he won the "CNN Hero Award" in the "Fighting for Justice" category.

Good PR, to be sure. Here's context about Fajardo not included in the law journal, from a motion filed Aug. 3 by Chevron in U.S. District Court, Southern District of New York, asking for a preservation of evidence.

Despite consistent victories (reported on Point of Law) before the Court of Claims and the Federal Circuit, the government has apparently settled a Childhood Vaccine Act case filed by parents who claim that a combination vaccine (measles, mumps, rubella, polio, varicella, diphtheria, pertussis, tetanus, and Haemophilus influenzae) caused their child's autism. CBS News has the report here. The settlement will eventually exceed $20 Million, though of course its present value is worth less.

Note that the federal government said the inculpated vaccines aggravated an unknown mitochondrial disorder from which the child suffered and therefore didn't "cause" her autism, but "resulted" in it. Ummm, OK, but presumably that means that the vaccine causes autism in all those with said mitochondrial disorder.

If any POL readers have information on the process which led the government to settle this case despite constant legal victories, please email me at mkrauss@gmu.edu.

The Second Circuit has reversed Judge Weinstein's certification of a class and vacated his denial of a summary judgment motion.

A Weekly Standard blockbuster: The Intercollegiate Studies Institute says it fired Christine O'Donnell from her $65,000/year job because she was running a for-profit business. O'Donnell, now a Tea Party-candidate for the Republican Senate nomination in Delaware, sued for gender discrimination, alleging $7 million in damages. Among O'Donnell's lawsuit claims was damages for allegedly being forced to quit a master's degree program at Princeton—though she had not been admitted to Princeton or, indeed, even earned her bachelor's degree yet. O'Donnell dropped her lawsuit in 2008; she claims it was because of the inability to pay legal fees.

The Weekly Standard doesn't say so, but, of course, any successful Title VII suit will win attorneys' fees, so the only time employment-law attorneys insist on payment in advance is when they have no confidence in the case.

Greg Mankiw suggests a way that universities in New York can use rent-control laws to simultaneously deprive private-property owners, renters, and the taxing authority. Whether this is actually happening is a story for some investigation-minded New York newspaper (or perhaps City Journal?)

Plaintiffs and defendants filed three briefs Tuesday and Wednesday before the Friday fairness hearing in the Sears Holding derivative action. And I had a plane to Baton Rouge to catch at 6 am Thursday. So I got to relive my Stakhanovite days at a law firm by writing a brief in response to the one I received at 5 pm on Wednesday in the limited time I had available.  Apologies for the typo on page 3, and thanks to the students and professors at LSU Law for their hospitality Thursday.

"Legal PR, Trial Lawyers' Style"

Two of our favorite law bloggers, Walter Olson and Andrew Trask, are doing a WLF webcast on September 17 on the subject.

Is it really true that criminal defendants don't get a fair shake from republican-appointed judges? I've got a piece up at the National Law Journal in which I argue otherwise.

MI's Heather Mac Donald and Kay Hymowitz are among the speakers at what looks to be an interesting all-day conference in Washington about civil rights law in the 21st century.

Next Tuesday, Sept. 14, is the last big multi-state primary day before the Nov. 2 elections, and the most interesting race is the one for the Democratic nomination for attorney general in New York. Five candidates are running to succeed Andrew Cuomo, who is running for governor. Running on the Republican and Conservative Party lines is State Island District Attorney Dan Donovan (campaign website).

The New York Times covered a candidates' forum last night, "In Attorney General Debate, Humor and Surprise," reporting that state Sen. Eric Schneiderman came under the most criticism in a race that really has no front-runner. A point of debate: Who's the outsidiest of the Albany outsiders?

The candidates:

  • Richard L. Brodsky, an Assemblyman from White Plains, who cites his legislative history and investigatory experience. (campaign bio)
  • Eric T. Schneiderman of New York City, a "lifelong progressive Democrat" elected to the state Senate in 1998. (campaign bio)
  • Sean Coffey of Bronxville, a class action securities lawyer (who was once a federal prosecutor) who resigned as a partner at Bernstein Litowitz Berger & Grossmann to run for AG. (campaign bio)
  • Eric R. Dinallo of New York City, a former assistant district attorney, assistant attorney general and head of the New York State Insurance Department. (campaign bio)
  • Kathleen M. Rice of Garden City, District Attorney of Nassau County. (campaign bio)

The New York Law Journal has profiled each of the five:

If Chevron's legal defense against the contingency lawsuit claiming environmental damage in Ecuador tells us anything, it's this: U.S. trial lawyers will be much more cautious about recruiting documentary filmmakers to do public relations for their lawsuits.

The media/PR aspect is just one angle to this complex international litigation, but it's a fascinating aspect, especially given the explosion of "documentaries" that agitate against business. (Think "Bananas," the dishonest attack against Dole.)

Outtakes from the movie, "Crude," have revealed a wide range of misconduct by the legal and PR team led by New York attorney Steven Donziger waging the $27 billion litigation against Chevron. On Tuesday, U.S. District Court Judge Lewis Kaplan in the Southern District of New York ordered the director, Joe Berlinger, to submit himself to depositions. Kaplan -- upheld by the Second Circuit -- had already required Berlinger to make relevant video outtakes available so Chevron could defend itself on several fronts, including supporting two of their attorneys facing criminal charges in Ecuador.

Berlinger, who in interviews stressed his independence and fair-mindedness, had claimed a journalist's privilege in trying to keep the outtakes from scrutiny. (Media companies and First Amendment activists lept reactively to his defense.) Lawyers for the plaintiffs were equally energetic in their attempts to prevent access to the footage.

Of course they were. The meetings and discussions they document are catastrophic for the trial lawyers and show Berlinger not to be a journalist striving for balance, as he claimed, but rather a partisan. Lawyers and environmental activists scheming to shake down a U.S.-based energy giant would make a good story for a documentarian, but the director chose to conceal that angle.

In his order Tuesday (available here), Judge Kaplan cited a ruling by another federal judge, Lorenzo F. Garcia, U.S. magistrate for the District of New Mexico, to describe the import of Berlinger's footage.

The release of many hours of the outtakes has sent shockwaves through the nation's legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct. In the film itself, Attorney Donziger brags of his ex parte contacts with the Ecuadorian judge, confessing that he would never be allowed to do such things in the United States, but, in Ecuador, everyone plays dirty. The outtakes support, in large part, Applicants' contentions of corruption in the judicial process. They show how nongovernmental organizations, labor organizations, community groups and others were organized by the Lago Agrio attorneys to place pressure on the new Ecuadorian government to push for a specific outcome in the litigation, and how the Ecuadorian government intervened in ongoing litigation.


The Health Subcommittee of the House Energy and Commerce Committee holds a field hearing Wednesday in Newark, N.J., " Protecting School-age Athletes from Sports-related Concussion Injury," with testimony on H.R.1347, the Concussion Treatment and Care Tools Act. The bill is sponsored by Rep. Bill Pascrell (D-NJ), and the Senate companion, S. 2840, is sponsored by Sen. Robert Menendez (D-NJ).

According to the CRS summary, the bill:

Amends the Public Health Service Act to direct the Secretary of Health and Human Services to: (1) establish concussion management guidelines that address the prevention, identification, treatment, and management of concussions in school-aged children, including standards for student athletes to return to play after a concussion; and (2) convene a conference of medical, athletic, and educational stakeholders to establish such guidelines. Authorizes the Secretary to make grants to states for: (1) adopting, disseminating, and ensuring the implementation by schools of the guidelines; and (2) funding implementation by schools of computerized preseason baseline and post-injury neuropsychological testing for student athletes. Directs the Secretary to require states to utilize, to the extent practicable, applicable expertise and services offered by local chapters of national brain injury organizations.

Without disputing the seriousness of concussions, we note a rising level of interest, commentary and activity surrounding the issue on the part the litigation industry. Here's an op-ed in last Sunday's Albany Times-Union by Michael W. Kessler, vice chair of the Traumatic Brain Injury Litigation Group, American Association for Justice, "Brain Injuries Misunderstood." And here's a blog post at InjuryBoard.com by Mark Bello - a trial lawyer who also runs a litigation financing firm - entitled, "Heads Up: Athlete Concussions May Lead to Serious Traumatic Brain Injuries."

More evidence: The AAJ's Traumatic Brain Injury Group sponsored a two-day session in Chicago last May, "Litigating Traumatic Brain Injury Cases Seminar." The title of the morning session was telling, "The Lawyers Teach the Medicine," including the topic, "Loss of Consciousness is Not Required for a Brain Injury."

Ill-defined or hard-to-diagnose injuries -- think soft-tissue injuries -- obviously hold an appeal for plaintiffs' lawyers pursuing damages. Passing a federal law would lend legitimacy to claims made in such lawsuits.

Earlier posts:

The lead editorial in today's Washington Post is "Toyota's acceleration problem could be customer-based," which begins:

THE RESULTS are not definitive, but a preliminary report on sudden acceleration from the National Highway Traffic Safety Administration (NHTSA) has some good news for Toyota Motor Corp. Of the 58 data recorders analyzed by the agency and the company, 35 showed that the brake pedal was not depressed at the time of the crash. Partial braking was involved in 14 other cases. Drivers were hitting the gas pedal instead of the brake. In short, electronics was not the issue. Human error was.

Good topic for a follow-up editorial: The litigation industry and political machinery that seek to obscure the real causes of the accidents. We suggest starting with all the Toyota-related accusations and materials posted at justice.org, the website of the American Association for Justice, the trial lawyer lobby.

Stockholm Syndrome in the Nachsin v. AOL case

The Center for Class Action Fairness filed its reply brief today in the Nachsin v. AOL appeal.

The principal-agent problem does not just affect class action plaintiffs' attorneys enriching themselves at the expense of their putative clients. I see it far too often in the case of class action defense attorneys beholden to the billable hour at the expense of their clients. I've had securities defense attorneys admit to me sotto voce that they don't want to see securities law reformed, because they're making money off the status quo. If I were a defense client, I'd worry about attorneys like that; they might prefer to lose their 12(b)(6) motion in the hopes of churning some billable hours in discovery disputes. In a notorious example, attorneys from defense firms lobbied the ABA to release a statement opposing preemption--something that would hurt their clients, though would certainly increase the demand for lawyers' services.

From the American Medical Association, "AMA, 90 Medical Organizations Oppose Tax Changes That Encourage More Lawsuits":

WASHINGTON, D.C. - Opposing any changes to the tax code that would encourage trial attorneys to file more lawsuits and add to the overall cost of health care, the American Medical Association (AMA) and 90 medical organizations sent a letter to the U.S. Treasury Department. The organizations oppose a policy under consideration that would allow trial attorneys nationwide to deduct litigation expenses from their taxes in certain cases.

"Changing the tax policy to allow trial attorneys to deduct court costs and other expenses would cost taxpayers $1.5 billion and increase the cost of health care in our nation," said J. James Rohack, M.D., AMA Immediate Past-President. "This change would encourage trial attorneys to file more lawsuits."

In 2009, the American Association for Justice planned to sneak the tax break through Congress by attaching it to unrelated pieces of legislation. Once that scheme was revealed, the trial lawyer lobbyists retreated to trying to win a tax interpretation or guidance from the U.S. Department of Treasury to accomplish this major policy change.

FoxNews.com is the first media outlet we've seen to cover this new development in the story ("AMA Urges Treasury to Reject Proposed Tax Change for Trial Lawyers"). Treasury, yet again, would not answer questions about the special-interest tax break.

Earlier POL coverage.

UPDATE (5:30 p.m.): Legal Newsline reported earlier this week that Treasury has not responded yet -- or indicated if it might respond -- to a letter inquiring about the tax break from Sen. Chuck Grassley (R-IA), and Rep. Dave Camp (R-MI), the ranking Republicans on the respective Senate and House tax-writing committees. We'd guess Treasury officials are probably waiting until Nov. 3.

Also, Forbes' Daniel Fisher had the story on the AMA letter earlier in the day, "AMA To Geithner: No Lawyer Tax Breaks!"

The Federal Circuit's Tuesday ruling in Stauffer v. Brooks Brothers permits qui tam relators to sue over mismarked patents, even when they have not personally been injured; together with an earlier decision that the $500 fine for violating the statute is calculated per mismarked item, rather than per incident, exposes manufacturers to potentially billions of dollars of liability. Naturally, a number of plaintiffs' lawyers are engaging in rent-seeking. [WSJ; Reuters; Bloomberg]

Impact of Oregon expansion of liability

In 2009, Oregon Senate Bill 311 increased state agency liability caps from $500,000 to $3.2 million, and the cap will increase to $4 million by 2015. "In response, groups holding public events on state property are being required to carry more insurance and the increase is more than some groups can handle." The tripling of insurance rates may cause the annual Labor Day Civil War reenactment to be canceled in future years. [Daily Astorian via R.L.; earlier]

Around the web, September 1



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.