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November 2010 Archives

In the Kellogg's Frosted Mini-Wheats class action settlement, class members (those who purchased the cereal on certain dates in 2008 and 2009) who submit claims will receive $5/box for up to three boxes of purchased Frosted Mini-Wheats, with claims pro-rated if there are more than $2.75 million in claims. If there is less than $2.75 million in claims, money goes to a charity that has yet to be named. In addition, Kellogg's will donate "$5.5 million" in food to charity (that also has yet to be named), though there is no indication how that valuation will be determined. For this, six law firms are requesting $2 million in fees, though:

  • That amount of fees is disproportionate to the class relief;
  • the settlement provides for cy pres relief even though there might be more than $8.25 million in claims, demonstrating that the attorneys put the interest of the third-party charities ahead of their clients' interest; and
  • the class notice is defective for failing to identify the charitable recipients of the cy pres, giving the class no opportunity to object to an improper recipient.

If you're a class member and you're unhappy with attorneys improperly making millions in your name, do contact me at the Center for Class Action Fairness to discuss your options. (CCAF is not affiliated with the Manhattan Institute.)

With Kamala Harris now victorious in the California attorney general election (see below), Democrats nationwide can mark the state AG races as one area where they didn't do awfully on election night. Republicans won five AG seats from Democrats, four in solidly GOP states (Arizona, Georgia, Kansas and Oklahoma), as well as the competitive state of Ohio, where former U.S. Senator Mike DeWine defeated the incumbent appointee, Richard Cordray. But, as Governing.com reported:

Democrats staved off worse results by retaining six of their endangered seats, four of them in the Democratic stronghold of the Northeast. The Democrats retained AG slots in Connecticut, Massachusetts, New York and Rhode Island -- all of these but Massachusetts were open seats -- while also retaining seats held by endangered incumbents in more marginal states, Iowa and Nevada.

Post-election Democrats will still maintain the edge in elective state attorneys general, 22 out of the 43 positions. (See also WSJ Law Blog, "On Its Big Night, GOP Picks Up Attorney General Seats As Well.")

The National Association of Attorneys General has a list of election winners from Nov. 3. The NAAG's new AG orientation starts Monday in Phoenix, with the rest of the group's winter meeting following Nov. 30 to Dec. 2. In other developments:

Steve Cooley, Los Angeles County's Republican district attorney, this week conceded the race for California attorney general to Kamala Harris, the San Francisco D.A. (Cooley's statement.) With Harris' victory -- which she plans to celebrate on Tuesday -- Democrats won all the statewide races in the California general election.

The San Jose Mercury News opines, "Cooley's loss is coup de grace for California GOP." Perhaps so. Then again, with the enthusiastic regulator and litigator Jerry Brown in the governor's office and Democrats running the executive and legislative branches, the public should have no doubt about who's responsible for fixing the worsening budget crisis, high unemployment and economic struggles California endures. In one-party states begin accountability. Maybe.

The state trial lawyers association responded to the election results with celebratory taunting. The Nov. 3 news release from the Consumer Attorneys of California declared, "California to Corporate Campaigns: Don't Waste Your Money or Our Time":

[Candidates] who favor consumer rights scored big victories as Golden State voters bucked the dizzying nationwide trend that saw Republicans take over the U.S. House of Representatives and make serious inroads in statehouses around the nation.

"The Tea Party wave crashed against the Sierra and couldn't swamp California," said Lea-Ann Tratten, political director of the Consumer Attorneys of California. "Our voters could tell the difference between corporate-backed candidates and those who will keep in mind the best interests of everyday Californians."

The group was most pleased by the victory of Dave Jones over Assemblyman Mike Villines in the contest for insurance commissioner. The CAOC attacked Villines for being supported by insurance companies and corporations. OK. And here's the Civil Justice Association of California's news release about campaign spending for Jones, "Trial Lawyers Pour In Money for Dave Jones."

TSA "Opt-Out Day" tremendous success

You'll see a lot of press about how noone opted out; the TSA Twitter account is retweeting like mad all the people happy about how quickly the lines went Wednesday. A closer review reveals that the the TSA turned off many backscatter machines—there was no need to opt out, so no one opted out. It goes very far to demonstrate how unnecessary these machines are: if the machines were really critical for safety, rather than for public relations, then one hopes TSA wouldn't play with our safety so. But when push came to shove, the TSA was more concerned about the threat to its illusion of security theater than it was about the threat of an attack by terrorists. If every day were Opt-Out Day, the TSA would turn the machines off permanently. More at the TSA Abuse Blog.

Around the web, November 25

Happy Thanksgiving!

  • Prosecution of silicosis attorney who bribed insurance company officials to settle cases proceeds without "honest services" claims. [law.com; United States v. Hoeffner (5th Cir. 2010)]
  • Taxpayers pay government to sue itself in environmental cases. [Ciano @ Daily Caller]
  • Ribstein vs. Bainbridge on insider trading. [WSJ Law Blog]
  • The new issue of Journal of Tort Law focuses on Richard Epstein.
  • "Consider, too, the possibility that [San Francisco's anti-circumcision proposal] might drive those seeking circumcisions into the hands of back-alley mohels, sometimes charging outrageous fees and operating in circumstances that, because unregulated, might be much more dangerous to the patient." [Horwitz @ Prawfsblawg]
  • Google gives a $6 million bonus to an engineer; Gawker's sources suggest it was because she was female. Gawker doesn't ask: does this create a Title VII class action claim from male engineers? [Gawker]
  • As the government spends money fighting obesity, it is also spending money to open an IHOP in the yuppie Columbia Heights neighborhood in Washington, DC. [Freddoso @ DC Examiner]

RIP Greg S. Coleman

Greg S. Coleman, a great appellate attorney and name partner in Yetter Coleman who successfully argued the Ricci and NAMUDNO cases in the Supreme Court the same month, has died last night in a plane crash while attempting to land a plane in the Florida panhandle. Coleman, a University of Texas Law grad, clerked for Edith Jones and Justice Thomas, and was the first solicitor general of Texas. My condolences to his family and friends.

More from Rick Hasen.

Congress recently decided that it knew how to run airlines for passengers' convenience better than airlines did, and instituted fines for permitting passengers to wait on the tarmac for more than three hours at a time. And now the New York Times reports:

New federal rules have pretty much abolished instances of planes sitting on the tarmac for more than three hours. But the rule, which went into effect in May, may have had the unintended effect of forcing more flights to be canceled, some airline experts say.

Airlines said they have a strong incentive to comply with the tarmac rule given that the potential fines of $27,500 per passenger could end up costing around $3 million per delayed flight. But as a result, airlines have been canceling flights that they expect may face a long delay. When a plane returns to the gate to avoid the three-hour penalty, there is also an extra chance it will get canceled.

From May to September, the last month for which data is publicly available, only 12 flights remained on the tarmac more than three hours. That compares with 535 in the same period last year. But more flights were canceled in the same period, even as airlines reduced their overall capacity. ...

With fewer flights, though, travelers could end up waiting for hours at the airport, or even spend the night there, without any compensation for the inconvenience if bad weather delays operations.

The problem is sure to get worse as the weather does. Earlier at POL and Overlawyered (where I anticipated this exact problem).

Speaking of air travel, today is TSA Opt-Out Day, where travelers should opt-out of backscatter screening to register their nonviolent protest against pointless TSA security measures. Get to the airport early. For more on the recent TSA controversy, check my new TSA Abuse Blog.

Litigation v. Regulation roundtable

The GMU Law & Economics Center has papers and videos from its recent roundtable.

What media bias? CBS issues a press release for plaintiffs' lawyers in discussing the Brian Cole case. Cole rolled his Ford Explorer and died when he was ejected from the vehicle. But lawyers are creative sorts, and Ford was sued on the theory that Cole was wearing his seat-belt, but that it magically stopped working; Ford presented evidence that Cole wasn't wearing the seat-belt. A Jasper County, Mississippi, jury awarded the family of Cole, a marginal prospect for the New York Mets, $131 million, and CBS wonders if you, dear viewers, might be subject to defective seat-belts.

Ford, facing punitive damages, settled for an unknown amount rather than appeal for a new trial before the same judge.

Now here's what CBS didn't tell you:

  • Cole was speeding.

  • A passenger in the Explorer was wearing a seatbelt. He wasn't ejected; he survived.

  • The accident happened in Florida. So why was a Mississippi jury deciding the case? Yeah, exactly.

  • This was the third trial. The first two ended in mistrials.

  • The settlement was much less than the jury verdict, despite the possibility of punitive damages.

  • The attorneys negotiated a 50% contingent fee for themselves.

That last point was revealed when a post-settlement dispute over how to divvy up the fees resulted in a collateral lawsuit; the settlement is sitting in an escrow account until the lawyers agree how the money gets distributed. [Clarion-Ledger]

More detail on the suit at MS Litigation Review, where Philip Thomas has been covering the case since February.

In re Classmates.com

In a class action settlement, the defendant agrees to make "available" $9.5 million to the class—but the settling parties negotiate a claims process so burdensome (and relief so miniscule) that only a small fraction of the class files claims, resulting in $117 thousand going to the class. In calculating attorneys' fees, should that be valued at $9.5 million or $117 thousand? The class counsel in the Classmates.com settlement argues for the former in seeking $1.05 million in fees; the Center for Class Action Fairness begs to differ. We even get a shout-out from ESPN.com's Gregg Easterbrook.

The objection also objects to the creation of a $500,000 cy pres slush fund.

Around the web, November 23

Randy Mastro and his fellow Gibson Dunn attorneys have put together an excellent summary of all the games, maneuvers and machinations that U.S. trial lawyer Steven Donziger has practiced in an effort to avoid depositions by Chevron.

Donziger is the New York attorney who has directed the PR/advocacy/calumny campaign against Chevron to support the $113 billion contingency-fee suit for environmental damage in Ecuador by the company's predecessor, Texaco. Last week, the Gibson Dunn attorneys filed a memorandum of law in U.S. District Court for the Southern District of New York to support Chevron's motion to compel Donziger to produce documents.

After a variety of delaying tactics and rejected motions to the Second Circuit, Donziger submitted a privilege log more than 2,000 pages long to claim he did not have to produce 8,562 documents. Judge Lewis Kaplan ordered Donziger to appear in court today with Chevron's requested documents, adding a hand-written note: ""ORDERED that this order shall not be constructed to imply that Donziger is not already in violation of a previous order that required the production forthwith of all documents responsive to the subpoena."

The Chevron memo is a good read, and we have a fuller post on the latest judicial proceedings in the litigation at Shopfloor.org. Additional news coverage:

Michael Fumento is on the case of 87-year-old Leon Przybylowski's sudden acceleration claims.

"Challenging Cy Pres Scams"

Karen Lee Torre (of Ricci fame) discusses the Apple backdating case (and the Center for Class Action Fairness) in the Connecticut Law Tribune. Earlier.

Governor-elect Rick Scott of Florida, a former health care executive, spoke Thursday, Nov. 18, to the influential business group, The Florida Council Of 100. From his prepared remarks:

We also need serious tort reform, and a 35% reduction in workman's compensation costs.

The US Chamber of Commerce survey rates Florida worse than 41 other states for our state liability system. Florida has been called a judicial hellhole.

If the plaintiffs' bar is allowed to roam at will -treating businesses just as easy targets with deep pockets, businesses close or move.

If state government workers see their job as policing mindless regulations that restrict and obstruct business activity, businesses close or move.

To become the leader in job creation, the state of Florida has to align its policies with the pre-requisites for growth.

The Sarasota Herald-Tribune draws on Scott's speech to columnize, "Trial lawyer foes have reins in Florida."

Gov. Rick Perry (R-TX) lauded "loser pays" in a recent interview in the Wall Street Journal sponsored "Journal Editorial Report" on FoxNews. (Transcript) And businessman Bill Haslam's pending governorship in Tennessee also improves political prospects for tort reform, The Knoxville News-Sentinel reports.

Earlier, "Governors and tort reform: How about the English Rule?"

From the Senate Judiciary Committee's website:


The Senate Committee on the Judiciary, Subcommittee on Crime and Drugs, has scheduled a hearing entitled "Examining Enforcement of the Foreign Corrupt Practices Act" for Tuesday, November 30, 2010 at 9:30 a.m. in Room 226 of the Dirksen Senate Office Building.

Chairman Specter to preside.

Deputy Assistant Attorney General Greg Andres opens the testimony. A second panel includes the follow witnesses: Mike Koehler, Assistant Professor of Business Law, Butler University, Indianapolis, IN; Andrew Weissmann, Partner, Jenner & Block, L.L.P., New York, NY; Michael Volkov, Partner, Mayer Brown, L.L.P., Washington, D.C.

Koehler has written extensively on the FCPA, and he blogs at the FCPA Professor blog.

Radio talk show host Hugh Hewitt, a lawyer, broadcast Thursday from the Republican Governors Association meeting in San Diego. He asked his guests about tort reform.

Indiana Gov. Mitch Daniels:

HH: You could adopt the English rule. You can do anything you want. What do you want to do?

MD: Well, I think the English rule is an interesting, would be an interesting next step. Indiana's got a good tort law. It's one of those reasons we are now at the top of everybody's lists of good states to do business. You will not be abused in an Indiana courtroom. And our courts have been, as I see it, faithful to their duty on their end. So we're a very positive state in this regard. But we could be better. And of course, the English rule, which I believe is the rule in most of the world, they should call ours the American rule, I think...

HH: Yeah.

MD: ...because we're the outlier, aren't we, in the way we do it?

HH: Yes.

MD: And it would be a nice improvement for any of our states.

Milberg Weiss and Bernie Madoff

There's a certain schadenfreude in learning that Mel Weiss and David Bershad of Milberg Weiss, the corrupt plaintiffs' firm which regularly bragged about its success in sniffing out fraud before anyone else did (which isn't hard when you indiscriminately accuse corporations of fraud whenever their stock price drops and ignore all the false positives), had invested their money with the infamous Bernie Madoff's Ponzi scheme. Except it turns out that Weiss and Bershad were among the few to profit from the scheme; the bankruptcy trustee is suing the two for the return of $20.4 million. [Bloomberg via ABAJ]

Weiss long claimed before his conviction that he didn't do anything other securities lawyers weren't doing. The return of Republicans to power in the House raises the possibility of the delicious scenario where Milberg Weiss lawyers are invited to testify under oath and name names.

In defense of Vincent Briccetti

Ira Stoll seems to take issue with the Obama administration's nomination of Vincent Briccetti for a federal judgeship on the Southern District of New York because Briccetti, after serving four years as a federal prosecutor, represented some unsavory clients as a criminal defense attorney.

This is a poor reason to oppose a judicial nominee. It's only on television that a criminal defense attorney constructs a career purely out of representing the innocent; to cherry-pick an attorney's worst clients and hold them against the attorneys is a way to guarantee that only lifelong government attorneys or politicians get nominated to the federal bench. That means prosecutors only, and no one with experience in the world of business litigation. That's not how we want to slant the bench.

Even in terms of cynical political gain, this isn't the type of attack Republicans should be making, because it would disproportionately affect Republican nominees. In my own career, I've represented pharmaceutical and auto companies; Hollywood studios; a doctor accused of insurance fraud; a patent troll; a bingo machine manufacturer; a trial lawyer; and I even performed a weekend's worth of work for Fannie Mae. My willingness to represent these individuals and businesses in court on particular matters on particular issues hardly represents an endorsement of everything they've done or an implication of how I would rule on the bench.

Now perhaps there is something else objectionable about the Briccetti nomination. But it's hardly the case that his defense of eventually convicted criminals—even repugnant criminals—tars him, much less disqualifies him.

New York City Mayor Mike Bloomberg came through Washington on Tuesday to lobby for Senate passage of H.R. 847, the James Zadroga 9/11 Health and Compensation Act, a $7.1 billion bill that would re-open the 9/11 compensation fund for new payments, especially for claims based on health problems resulting from debris removal.

The Washington Post took note of the mayor's trip with a large Style Section piece on his political ambitions, "N.Y. Mayor Bloomberg: He says he won't run for president, but keep asking." 

As for the legislation, supporters are pinning their hopes on another New York pol. The New York Daily News reports, "Unions and sick 9/11 responders agree only Sen. Chuck Schumer can seal deal to pass Zadroga Bill."

Interestingly, there was a drive-time radio ad this morning on WMAL here in Washington, a spot voiced by a man with a heavy NYC accent pleading for aid for firefighters and policeman. Assume it was a union-paid spot; we didn't hear any disclaimer. (Here's a list of groups that lobbied for the bill, which passed the House in September.)

As Ted -- who has testified on the bill -- has pointed out, the legislation will produce "what will be inevitable multi-billion-dollar fraud on the taxpayers." Trial lawyers filing claims will do well, however.

So many judicial nominees, so little time

Sen. Patrick Leahy (D-VT), chairman of the Senate Judiciary Committee, gave a Senate floor speech Wednesday protesting the slow pace of judicial confirmations. Leahy inserted into The Congressional Record a Slate article on the issue by Dahlia Lithwick and Carl Tobias.

Leahy's remarks could be seen as laying the groundwork for a move by the majority Democrats to force a vote on pending judicial confirmations. Sen. Sheldon Whitehouse (D-RI) bruited such a move to the Blog of the Legal Times for the most controversial nominees, Rhode Island trial lawyer John "Jack" McConnell, Louis Butler of Wisconsin, Goodwin Liu of California for the 9th Circuit, and Edward Chen for the Northern District of California. The WSJ's Law Blog also reports, "Lame Duck Senate Looking to Act on Controversial Judges."

The Senate Judiciary Committee is scheduled to vote on the nomination of 12 federal judges this morning, including the controversially beleaguered and embattled Robert Chatigny to the Second Circuit.

Conservatives groups sent a letter to Senate Majority Leader Reid on Monday urging him not to push any executive branch nominations during the lame-duck session, citing the mentioned judicial candidates as among "the most egregious."

So Sen. Leahy's remarks Wednesday could be rallying the troops for the fight. Oh, they could have been just be another floor speech. Before he spoke, Sen. Christopher Bond (R-MO) made a brief speech about S. 3538, the National Cyber Infrastructure Protection Act. After Sen. Leahy, Sen. Ron Wyden commemorated National Home Care and Hospice Month.

UPDATE (12:35 p.m.): The Judiciary Committee postponed action on all the judicial nominees.

Around the web, November 18

  • Tobacco companies have won several consecutive Engle trials in Florida. [American Lawyer; Fisher @ Forbes]
  • Lots of detail of the EPIC appeal of new TSA screening regulations. [LTB]
  • Chutzpah: Minnesota man who was sent to jail for killing three people in auto accident, freed by blaming Toyota "sudden acceleration," is now suing Toyota. [AP/WaPo]

  • Paycheck Fairness Act blocked with a 41-58 cloture vote; Democrats will have to flip two Republicans. Lots of people continue to point out it's a bad bill. [Olson @ Cato; Shopfloor; Boston Globe; W$J]
  • "A New Jersey man gets seven years for being a responsible gun owner." [Balko @ Reason]
  • It's widely reported that the US lost over $4 billion on the sale of its shares in the GM IPO yesterday—but that doesn't include the billions of dollars of tax incentives given to the company that its competitors won't get. It's not even a question of the government switching money between pockets, because the government owns only 61% of the revenue stream from the tax break. [Anderson @ Volokh]

$30M Texas verdict against SunMart

Was a Texas gas company fraudulently shortchanging customers, or was it a function of a statistical calibration error? A $30M jury verdict rides on the answer. And, quite frankly, it's a simple matter of math: did the errors systematically disfavor the consumer such that it could not have occurred by chance, or were they randomly distributed with the realm of chance and tolerances and the lawyers cherry-picked? I have no idea who's right, but only one of the two competing experts would have been testifying consistent with the laws of probability, so it's disturbing that the Houston Chronicle (via ABAJ) simply treats it as a "he said, she said" issue, since it suggests that the judge let both testify. (Ceteris paribus, I'm inclined to believe the Texas attorney general in this case if, as they claim, there was an attempt at last-minute calibration once a raid began. But given the availability of statistical evidence, there's no reason for the ceteris to be paribus.)

Apple backdating litigation update

Larry Ribstein writes:

Consider the recent endgame in the Apple backdating litigation. The lawyers did come up with $16.5 million settlement. But, as if to demonstrate that fiduciary problems are everywhere, the settlement diverted $2.5 million to "corporate governance" programs of three [sic] law schools. Two of the schools were affiliated with lead plaintiffs' lawyers. Beyond that, one wonders what effect the money would have on the schools' teaching and research about litigation's role in corporate governance.

Ted Frank's Center for Class Action Fairness has embarrassed the parties into at least giving Apple shareholders an opportunity to get that money, and is now asking for a guarantee that the shareholders will get the entire settlement.

Harvard Law, Columbia Law, and the University of Delaware are each out $208,333; nine other schools are still in the hunt for shareholder money, including San Diego State, which, as Lyle Roberts amusingly points out, issued a press release counting their pre-hatched chickens. See also CCAF (with links to briefs); Stoll; CNBC; earlier on POL. I still have to wonder why, if the corporate governance programs knew about the diversion of shareholder money, it fell to me to say something about it. (The Center for Class Action Fairness is not affiliated with the Manhattan Institute.) The settling parties do want you to know, however, that though they entirely capitulated on one element of my conflict-of-interest complaint, they "found it to be without merit."

In other Ted Frank news, I'm on the front page of trial-lawyer advertising site "Lawyers and Settlements" for an interview calling me a "Modern Day Robin Hood" that even spells my name right most of the time.

Remember that appalling $500 million verdict in Nevada against pharmaceutical companies Teva and Baxter Healthcare over reused needles at the notorious Desert Shadow Endoscopy Center causing hepatitis? The more we learn about the verdict, the more appalling it is. George Knapp reports that Judge Jesse Walsh made unbelievably prejudicial rulings, including not allowing the defendants to present evidence that Desert Shadow managers ordered employees to disregard labeling and reuse needles. Even plaintiffs' lawyer Justinian Lane, who's never met a lawsuit against drug companies he didn't like, sees injustice. There are strange procedural shenanigans going on; a second judge made more reasonable evidentiary rulings in a parallel case, and the plaintiffs' lawyers succeeded in getting that case stayed.

Is Dodd-Frank constitutional?

That's the question C. Boyden Gray and John Shu ask in the new issue of Engage, complaining about its vagueness and delegations of unfettered administrative authority. The Federalist Society has a lot of links related to the article.

"U.S. Says Holocaust Fund Was Defrauded"

Virtually every mass tort and mass-tort administered compensation fund is the victim of systematic fraud and attempted fraud promoted by attorneys—and apparently a German fund for Holocaust survivors is no different. Or different only in that federal prosecutors are taking action. Still no prosecutions, or even sanctions, for lawyers in the silicosis mass tort fraud.

Lund on "merit selection"

Nelson Lund has a new paper (via Blackman) asking "May Lawyers be Given the Power to Elect Those Who Choose Our Judges? 'Merit Selection' and Constitutional Law":

"Missouri Plan" judicial selection mechanisms, which many states have adopted, seek to ensure that judges are appointed on the basis of "merit" rather than "politics." These devices typically feature a judicial nominating commission comprising some lawyers and some lay members. The lay members are usually chosen by the governor, and the lawyers are frequently elected by the state bar.

Laws giving lawyers a legally preferred role in judicial selection sit very uneasily with basic tenets of republican government and political economy, though principles of federalism might counsel against federal interference with these state decisions about the structure of government. Whatever one thinks about those contending principles, however, the states are now governed by a well-settled body of equal protection doctrine that sharply limits their authority to hold elections from which some voters are excluded.

The inferior federal courts have uniformly upheld Missouri Plan devices against equal protection challenges, but all of the opinions have been poorly reasoned. This paper focuses on the Kansas version of merit selection, which gives lawyers a uniquely powerful role in selecting that state's supreme court. The paper concludes that the Kansas system, which is now being challenged in federal court, is almost certainly unconstitutional under existing precedent.

Heritage's Hans von Spakovsky writes against proposals to end the deductibility of punitive damages, raising issues familiar with the readers of this site. Von Spakovsky, however, misses other arguments: deductibility of punitive damages does not cost taxpayers anything, because the deducted punitive damages are taxable income to the plaintiff and his attorney.

The New York Times covers the issue of litigation financing, which can range from basic high-interest loans to law firms; to contingent arrangements linked to specific lawsuits; to the potentially troubling practice of tricking consumers to assign litigation rights and enmesh them in lawsuits against defendants who could have more quickly and cheaply assisted the consumers if they had gone through normal warranty procedures. The practice drew attention recently when Judge Hellerstein prohibited Napoli Bern from seeking reimbursement from their clients for its interest expenses in financing the Ground Zero litigation on top of the exorbitant contingent fees.

Update: good commentary from Walter Olson and Daniel Fisher @ Forbes. The problem that Fisher identifies of lawyers strong-arming clients into settlements that pay the lawyers quickly after they've promised the moon, however, is one that is independent of litigation financing, except to the extent that the attorney would not have brought the suit without the financing or the extent that the financier is dictating the attorney's strategy.

Around the web, November 15

  • Merck responds to Mark Lanier's factually creative Vioxx comments on the Stossel show. I just remember being in the Green Room and repeatedly muttering. "That's not true. That's not true, either."
  • More on the Breusewitz v. Wyeth vaccine case. [Park @ Heritage]
  • Mickey Kaus points out a trial-lawyer-friendly employment-law provision of the California legalized-marijuana referendum that should perhaps have us sighing with relief that it didn't pass. We can end the War on Drugs without killing jobs. [Kaus]
  • Extraordinary prosecutorial abuse in closing statement excused by court; I'm less concerned by the Georgia Supreme Court ruling, given the strategic decision of defense counsel not to object, than I am that a trial-court judge would have permitted the behavior in the first place. [Smith v. State (Ga.) via Volokh]

  • Two "stream-of-commerce" personal jurisdiction merits briefs in U.S. Supreme Court. [Beck]
  • Reform of lame-duck sessions? [Ackerman @ WaPo & Balkinization; Adler @ Volokh]
  • Fred McMurray-lookalike Captain Marvel taken down by a thousand paper-cuts of litigation. [Comic Book Resources (h/t D.F.)]
  • Outrage over TSA virtual-strip-search screenings and abusive retaliatory gropings for opt-outs. [FlyerTalk; Salon; Goldberg; nonviolent resistance; and lots of blogging from Bainbridge]

  • One of those investigations Republicans are threatening of the Obama administration might include one about the firing of Americorps inspector general Gerald Walpin, who complained about a sweetheart deal with an Obama-favored politician accused of wrongdoing. [Wash. Examiner]

Another push for judicial confirmations

The Senate Judiciary Committee has scheduled confirmation hearings for four U.S. District Court nominees on Wednesday, Nov. 17. The next day, the committee votes on confirming nine District Court nominees and three nominees to the U.S. Court of Appeals, including the controversial nomination of U.S. District Judge Robert N. Chatigny to the Second Circuit. (The other appellate nominees scheduled for votes are Susan L. Carney, Second Circuit, and James E. Graves, Fifth Circuit.)

The usual legislative strategy at this point of a Senate's term is to get as many nominees out of committee as possible, working toward a session-closing compromise and confirmation by unanimous consent. The inclusion of Chatigny in any slate would likely kill that strategy. Nominated by President Obama in February, Chatigny has drawn vociferous opposition by conservative groups and Republicans largely over his leniency shown toward a serial killer, Michael Ross. Chatigny had suggested Ross's diagnosis of sexual sadism might be an extenuating factor that prevented the death penalty. (Washington Times editorial, "Obama nominee's sympathy for sexual sadists.")

And here's a surprise: the Alliance for Justice excoriating "unprecedented Republican tactics of procedural obstruction" in a Nov. 8 news release, "Broken Judicial Nominations Process Limps Into Lame-Duck Session."

A new study from Northwestern University Feinberg School of Medicine polls residents and learns that many wish to leave the state to avoid its "hostile" malpractice environment. While some of these doctors would have passed up Illinois anyway, it's no surprise that there's an effect at the margin given the financial incentives involved. [NWU press release]

Thorogood v. Sears

Attempts to bring a class action against Sears over its washing machines repeatedly failed in the Northern District of Illinois and Seventh Circuit. So the plaintiffs' lawyers tried for another bite at the apple in a California federal court—and then threatened Sears with heavy litigation expenses if they did not agree to settlement. Sears asked for an injunction in the Illinois court to enforce the collateral estoppel, and the Seventh Circuit, in an opinion by Judge Posner, held that the All Writs Act entitled them to one. Posner's opinion is a must-read on the problem of extortionate class action practice. Lots of commentary in the blogosphere: Jackson, Trask, LNL, Drug and Device Law, Mass Tort Litigation. (And congratulations to Brian Anderson and Andrew Trask, whose Class Action Playbook was cited by Judge Posner.) As Professor Burch points out in her post, the pending Smith v. Bayer case in the Supreme Court may have an effect on the ability of federal courts to enforce collateral estoppel in such situations.

The need for Judge Posner's ruling becomes all the more apparent once one sees that the Northern District of California was prepared to permit the duplicate class action go forward.

"The 77% of Income Fallacy"

The Competitive Enterprise Institute, in a cert petition with POL favorite Michael McConnell on the brief, challenges a Fifth Circuit decision upholding the multi-hundred-billion dollar tobacco settlement negotiated by state attorneys general—effectively a tax and a state-mandated cartelization without any legislative approval, even aside from the giveaway of billions of dollars to trial lawyers who used a questionable legal theory. Sadly, I'm not optimistic about the willingness of the Supreme Court to enforce the Constitution's Compact Clause, which means that it's been "amended" out of the Constitution as inconvenient. See also Michael Greve.

How entrepreneurial!

Just in time for the governorship of Jerry Brown, a news release, "Russell Budd of Baron & Budd, P.C. Announces Expansion of California Presence":

LOS ANGELES--(BUSINESS WIRE)--Baron & Budd, P.C. announced the expansion of the firm's California office. Previously located in Beverly Hills, the California office has been moved to Century City. The new office will focus on complex litigation, including the representation of businesses and individuals in commercial litigation and municipalities in environmental litigation. The expanded California office will be managed by veteran attorneys Dan Alberstone and Roland Tellis, both recent additions to Baron & Budd's roster of shareholders.

In addition to broadening capacity, Alberstone and Tellis will innovate fee structures for new corporate clientele. "The basic economics of business are changing and we want to be at the forefront of that change, offering corporate clients the advantages of contingency-based and other alternative fee arrangements," said Russell Budd, President and Managing Shareholder of Baron & Budd. "This is a unique entrepreneurial opportunity for us and for the corporate community."

In other California developments, the Republican candidate for Attorney General, Los Angeles County District Attorney Steve Cooley (campaign website), maintains a slight lead over San Francisco DA Kamala Harris (website) -- about 19,000 votes out of the more than 7.3 million cast. Now it's on to provisional ballots. News coverage ...

The case will decide the extent to which state courts can override freedom of contract by permitting consumers to negotiate for a lower price in exchange for a promise that they won't bring a class action—an expensive and clumsy procedural device that all too often does nothing other than transfer wealth from consumers and businesses to attorneys.

The general argument against arbitration is that it forces consumers into uneconomic proceedings, but no one can make that complaint about the AT&T Mobility contract, where the company agrees to pay the cost of the arbitration, not to seek attorney's fees, and to pay a bounty if the arbitral award exceeds a written settlement offer. (And it's telling how bad the class-action system is if a corporation is willing to agree to such consumer-friendly dispute resolution procedures in an effort to avoid it.) Nevertheless, the Ninth Circuit considered it "unconscionable."

Professor Brian Fitzpatrick generally writes intelligently about class actions, so I was surprised at his San Francisco Chronicle op-ed touching on all the left-wing talking points, and bemoaning that the case could "end" class actions. But that's plainly false; looking at my docket at the Center for Class Action Fairness (which (1) is not affiliated with the Manhattan Institute and (2) submitted an amicus brief in this case), about half of my cases involve consumer or securities transactions not readily susceptible to a class-action waiver: an ice cream or headset vendor isn't going to find it worthwhile to set up a retail structure requiring consumers to sign a contract to proceed with a transaction. Moreover, nothing in the Federal Arbitration Act prohibits state attorneys general from bringing consumer actions against defendants who are actually unfairly treating a class of consumers.

And even if neither of those facts were true, so what? In every single one of my cases, my clients would have been better off, ex ante, with the AT&T Mobility arbitration provision than with what class action attorneys negotiated for them—even aside from the lower prices they would have realized in 90% of those cases. The fact that the arbitration provision does not provide classwide relief is hardly relevant: if hundreds of consumers bring identical claims under arbitration because the company is treating consumers uniformly unfairly, AT&T Mobility will eventually find it profitable to accommodate those complaints.

Unfortunately, the media is uniformly describing this case as one of consumers vs. businesses, when it's really one of consumers vs. lawyers trying to protect their monopoly on dispute resolution procedures.

See also Bainbridge. Earlier.

Update: Andrew Trask makes similar points.

Jane Doe sued various entities related to the "Girls Gone Wild" video series when they used topless images of her without her consent; apparently Doe was dancing clothed in a bar where crews were filming when a third party pulled down her top against Doe's will, and the crew never bothered to get a written or filmed waiver. It was very controversial when a jury came back with a defense verdict finding implied consent. A judge has now granted a new trial.

Assuming the court accurately and fairly related the facts, I don't begrudge the decision, which seems correct. If those facts are true, Jane Doe had a case, though the multi-million dollar demand may be high. But it's worth noting that, for all the trial bar's deification of the jury system and their attacks on any constraints on it, Juries Gone Wild is a problem that can afflict plaintiffs as well as defendants, and procedures putting checks on unreasonable jury verdicts protect both sides.

We asked Victor Schwartz of Shook, Hardy & Bacon for his reaction to The New York Times Magazine's latest cover story on the positioning by plaintiffs' lawyers in the litigation against BP for the Deepwater Horizon spill, "The Other Oil Cleanup. (Our earlier blog post.)

Schwartz is general counsel of the American Tort Reform Association, which is mentioned in the piece by Douglas McCollam. Schwartz e-mails us (and we add the links and a little punctuation):

Several months ago I observed that the only animal that thrived in the Gulf oil spill were sharks,but when you looked more closely, they may have been trial lawyers. Now something new has happened, the sharks are attacking each other.

First, in competing for the very lucrative positions of being on or possibly lead the official Litigation Steering Committee.
Second, in competition between an old fashion style trial lawyer like Mr. Buzbee, who wants to try cases and more modern class action lawyers like the master Mark Lanier who want a mass settlement, and
Third, between the AAJ Leadership who have faith that it is better to treat Ken Feinberg, head of the $20 billion BP Settlement Fund as a friend, than the Buzbee view to treat him as an enemy.

Those of us who want to see actual victims properly compensated hope that all judges involved will rise above the shark battles and make their rulings favor the goal of victims receiving fair compensation quickly and having funds go in that direction and not elsewhere.

A final observation. AAJ's smear of the Chamber is totally gratuitous and intended to shift focus away from a New York Times article that showed trial lawyers more as creatures of greed as contrasted with victims' true needs.

"Principles of Product Liability"

West Publishing has just released Principles of Product Liability by George Mason University Law Professor (and Point of Law contributor) Michael Krauss. I look forward to reading it.

Scherzer v. U.S. Air Force

High-school students Bodhisattva "Bodhi" Sherzer-Potter, 16, and Christopher Cody Thompson, 18, went to an all-night birthday party held at an abandoned military bunker in Helendale, California, planning to spend the night in a jeep after the party. Unfortunately, they were instead found shot to death, execution style, the next morning; three local teens have been charged with murder and robbery. This is, according to a lawsuit, the fault of the U.S. Air Force and the Bureau of Land Management for not demolishing the bunker, presumably because teenagers would never have found somewhere else to hold a rave when unsupervised by their parents.

The cover story in the latest New York Times Magazine is "The Other Oil Cleanup," in which Texas trial lawyer Tony Buzbee is the peg to tell the story of competition among the plaintiffs' bar for a piece of the litigation against BP.

The author, Douglas McCollam, a contributing editor for the Columbia Journalism Review and The American Lawyer, then explores the role of trial lawyerdom in today's economy and legal system.

The BP disaster comes at a pivotal juncture for the American trial bar. In many respects its power and influence hit its zenith in the late 1990s, when a coalition suing the tobacco industry on behalf of 46 states reached a landmark $206 billion settlement in a case that both fundamentally altered the public's perception of cigarette smoking and made billionaires out of several of the lawyers involved. That settlement led to predictions, both dire and hopeful, that the trial bar would use its newfound financial clout to go after a host of other industries, transforming the face of American capitalism.

Instead, the plaintiffs' bar has seen setbacks in Congress, state legislatures, the courts and most importantly, public opinion. And then, a new model of addressing liability in disasters arises: Kennth Feinberg and compensation funds.

The Feinberg fund represents an alternative model for the resolution of big disasters, one that moves trial lawyers from center stage to a spot in the chorus. Over the last few decades the trial bar has built what amounts to a private-enterprise regulatory machine, compiling an impressive string of victories over -- or at least a series of large settlements from -- the most powerful corporations in the world. Some call them parasites and label their style of litigation the "American disease." Others see them as the last truly effective check on corporate power left in the U.S. system. With the Feinberg model comes the prospect of their further diminishment, a blueprint for a future without big-time trial lawyers. And they are not willing to accept that future without a fight.

It's an excellent piece, with a lot of detail about the Multidistrict Litigation process, including a judicial panel's July meeting in Boise, Idaho, that featured the nation's major trial lawyers pleading their case as to jurisdictions and the makeup of the steering panel. Judging by the scope and detail of the reporting, McCollam must have a book in the works.

The American Association for Justice issued a statement in reaction to the article: Buzbee is not a member of AAJ "nor does he represent the interests of the trial bar," and asserting that only trial lawyers can hold BP accountable, and we mean it!

Via AmLawDaily, Judge Kaplan has issued a 52-page ruling explaining his decision to deny Donziger's motion to quash Chevron's subpoena of him. It's a stunning must-read detailing the attempted $113 billion fraud using outtakes from the "documentary" "Crude."

Update: see also Daniel Fisher @ Forbes.

The American Association for Justice has said little publicly about the results of the 2010 elections, on its webpage only noting the Republican gains in the House and commenting: "This surge will also mean additional clout for opponents of the tort system, with attacks on Medical Malpractice certain to be the first order of business for the House."

Right before the election, however, the AAJ launched a new marketing and fundraising push, the "7th Amendment Fund" campaign.

Your contribution to the 7th Amendment Fund provides the resources necessary to protect the civil justice system and every American's right to a trial by jury. When you support the 7th Amendment Fund, you help protect the future of your practice and give your clients a fighting chance.

The American Association for Justice is committed to protecting the civil justice system from the relentless attacks by powerful special interests. Drug, oil, and insurance companies have spent millions of dollars to generate myths about how lawsuits are out of control and responsible for all of America's ills. The facts tell a much different story...

What you read at the link relies on the same emotional stories, so there's not TOO much repositioning going on.

Although ...the first case AAJ cites is that of Diana Levine of Wyeth v. Levine fame, in which the U.S. Supreme Court rejected implied federal preemption. If the trial lawyers are thwarted in their legislative agenda, the attacks against preemption can continue unabated in the Obama Executive Branch agencies.

With Republicans soon to take control of the U.S. House, chairman of the Judiciary Committee will be Rep. Lamar Smith (R-TX), a conservative who has served as ranking member. News coverage has played up his interest in enforcement of the immigration laws, but he is also a vocal supporter of medical liability reform. (See these November 2009 remarks from The Congressional Record.)

We were also impressed by his handling of the House opposition during the floor debate on H.R. 847, the James Zadroga 9/11 Health and Compensation Act, a trial lawyer giveaway.

The trade publication/website Main Justice has more on Smith's agenda, "Texan, Likely Chairman of House Judiciary Panel, Outlines Agenda." The Journal of Accountancy describes Smith as "a champion for the [accounting] profession's positions on tax strategy patents and liability."

In the Senate Judiciary, Sen. Pat Leahy (D-VT) will likely continue as chairman in the 112th Congress, but Sens. Russ Feingold (D-WI) and Arlen Specter (D-PA) will bid adieu. Sen. Charles Grassley (R-IA) is likely to rise to ranking member, replacing Sen. Jeff Sessions (R-AL).

Pridgen v. Avco

On August 1, 1999, a 31-year-old Piper PA-32-260 crashed in Ohio, killing the pilot and three passengers. The plane was loaded within ten pounds of the weight limit: when the plane took off, "the tail was almost touching the ground." The National Transportation Safety Board found that the probable cause of the crash was pilot error; given how close to the weight and center-of-gravity limits the plane was loaded (if not over the limits), the pilot had very little margin for error, and failed to maintain appropriate speed and trim when making a turn.

A forum-shopped Philadelphia state-court jury didn't care, and assessed $89 million compensatory and punitive damages against the maker of the carburetor, finding it 100% responsible. The survivor of the crash was awarded $3 million in compensatory non-economic damages alone. [Law.com; AvStop.com]

The General Aviation Revitalization Act of 1994, a federal statute that imposes a statute of repose on lawsuits against aircraft and their component manufacturers eighteen years after the product is first sold, should have precluded the lawsuit, but the plaintiffs took advantage of a loophole in the law for misrepresentations to the FAA—though the FAA did not find any misrepresentations, which should preclude liability under the Supreme Court's Buckman decision.

The punitive damages of $64 million were based on the $640 million net worth of the defendant, which, as a matter of public policy, acted to punish the defendant for being successful, rather than for wrongdoing.

The Superior Court has already been reversed several times in this case, so it will be interesting to see what Pennsylvania appellate courts do on appeal.

On Election Day, some politics

Control of the Michigan Supreme Court has swung back to the Republicans with the election of Judge Mary Beth Kelly and incumbent Justice Robert Young, who withstood ugly and dishonest personal attacks.

In Illinois, Justice Thomas Kilbride has exceeded the 60 percent margin to retain his seat on the Supreme Court. From The Chicago Tribune, "Supreme Court judge wins retention against business-backed push." Democratic Party, unions, trial lawyers far outspent business interests to keep justice on the court who helped overturn states' med-mal caps in Lebron v. Gottlieb Memorial Hospital.

Connecticut Attorney General Richard Blumenthal has been elected Senator in Connecticut. Well, he'll probably do less damage to the business and legal climate with a single vote in the Senate than he did as AG.

Also in Connecticut, former state Democratic Party Chairman George Jepsen has declared victory in the race to replace Blumenthal as AG.

In New York, AG Andrew Cuomo is elected governor, declaring "The mandate tonight is to clean up Albany." The race to succeed him as attorney general is close.

UPDATE (2:30 a.m.): Schneiderman wins over Staten Island prosecutor Dan Donovan. Schneiderman campaigned in the Democratic primary as the most "progressive" candidate. Yeah ...

UPDATE (12:30 p.m. Wednesday): From Dan Pero at The American Courthouse:

In Iowa, in a push-back against judicial arrogance, voters dumped three sitting Supreme Court justices who were up for retention - the first time in history that any justice lost a retention election.  Voter outrage erupted when an activist court overstepped its authority by overturning the legislature's ban on gay marriage and forcing the state to grant marriage licenses to gay couples.

Pero, a critic of merit selection, wraps up the court races and concludes, "Elections a Big Victory for Judicial Accountability."

Arbitration looks better now, doesn't it?

The litigation lobby condemns the use of mandatory arbitration provisions in credit-card agreements to reduce the expense of litigation (and Dodd-Frank regulations are likely to end the practice, raising costs for honest consumers), claiming that the success rate of credit-card companies in arbitration supposedly demonstrates bias, but as a Sunday New York Times story points out, it's not like consumers fare better in court, where the default rules are considerably stricter than in arbitration. In litigation, a robosigner can obtain a default judgment 100% of the time; meanwhile, in arbitrations, consumers win partial victories nearly 20% of the time even when they have defaulted. This is something Sarah Cole and I pointed out in 2008. Alas, the New York Times story doesn't mention the possibility of alternative dispute resolution, and how Congress is acting to take that away.

Election day

Legal NewsLine has a roundup of AG and state supreme court elections taking place today. Of particular interest: Illinois, where Thomas Kilbride is facing a serious enough challenge that he's misrepresenting himself as a Republican; and Iowa, where three justices face a Rose-Bird-like challenge over their activist reading of the Iowa constitution to require gay marriage. In Michigan, Robert Young is running against Denise Langford-Morris and some particularly slimy attacks.

Baer's Rule 23 racial quotas

Updating our previous story, Judge Baer issued an order finding the requisite "diversity" in lead plaintiffs' counsel. Bainbridge points out that this contradicts the PSLRA, which doesn't permit judicial substitution of lead counsel appropriateness in a securities action, and agrees with Jason Mazzone that it's unconstitutional. However, no one has standing to appeal the order (at least in a securities case) except a law firm with the unambiguous right to serve as lead counsel who decides to challenge Judge Baer—and no law firm would ever want to alienate the judge to stand up for that principle.

The most competitive statewide race in New York is for attorney general between state Sen. Eric Schneiderman, a Manhattan/Bronx Democrat, and Staten Island prosecutor Dan Donovan, the Republican. The Wall Street Journal's Deal Journal blog reports, "And the Next Mortal Threat to Wall Street Is....":

One candidate in Tuesday's election is a state senator who pledges to keep close tabs on Wall Street's bad apples - in other words, a successor to Andrew Cuomo and Eliot Spitzer, who used lawsuits against financial firms as a cudgel for financial reform. On the other side is a Staten Island district attorney who says New York's attorney general should "promote fair markets and not bring cases simply to get headlines."

In Connecticut, the candidates for attorney general to succeed Richard Blumenthal are Martha Dean, the Republican, and George Jepsen, a former legislator state Democratic Party chairman. The Day summarizes the race under this screaming headline, "Dean, Jepsen differ on issues in AG race":

[Jepsen] said he would have sued the tobacco companies for lying about the health dangers of smoking and for pitching their products to children, an action that is bringing billions to Connecticut. He said he supports Blumenthal's suit against the coal-burning plants in the Midwest, which curbed air pollution drifting to the state, as well as Blumenthal's actions against social networking sites to curb sexual predators.

Dean said she would not have supported those suits, and saw the tobacco suit as particularly egregious, saying it was a scheme concocted by trial lawyers and AGs around the country who brought "tobacco to its knees without a judge hearing the case."

In "Power Player," Baltimore Magazine does a flattering profile of Maryland Attorney General Doug Gansler, getting people accustomed to the idea that he'll be a great governor after Martin O'Malley finishes his second term. Gansler's running unopposed this year for AG.

The American Lawyer has posted six excerpts from the outtakes of lawyer Steven Donziger in the "documentary" Crude that Chevron claims demonstrates an attempt to corrupt the Ecuadorian justice process.

Partial victory for Conrad Black

The Seventh Circuit has reversed two fraud counts. [Bashman link roundup; earlier at POL; me in 2008 at American Spectator]

Relatedly, Tom Kirkendall reminds us that the Fifth Circuit today will hear oral argument on Jeffrey Skilling's appeal of his criminal conviction—and that not a single Enron Task Force conviction has been upheld on appeal so far.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.