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April 2011 Archives

Richard Epstein, the Laurence A. Tisch Professor of Law at the New York University School of Law and libertarian thinker, had the usual multitude of interesting things to say this afternoon at a Cato Institute forum on F.A. Hayek, with the most topical -- and non-academic -- being his critique of U.S. labor law, with an added denunciation of the National Labor Relations Board's recent complaint against Boeing. The NLRB's action is travesty and a menace, Epstein said.

The comments followed remarks by Bruce Caldwell of Duke, a Hayek scholar and editor, and George Soros of the Open Society Foundations. The discussions were moderated by Cato's Ronald Hamowy, who received his Ph.D. at Chicago under Hayek and edited the new "The Constitution of Liberty: The Definitive Edition."

Others are better equipped to comment on the major themes, including Soros' attempt to synthesize Hayek and Karl Popper while claiming the political extremes have distorted their ideas.

But Epstein's remarks on modern-day progressives, the National Labor Relations Act, and the NLRB's move against The Boeing Company were definitely timely (and easy enough to grasp). We've been reporting at Shopfloor.org on the complaint filed by the NLRB's acting general counsel, Lafe Solomon, against Boeing for adding production facilities in South Carolina instead of Washington. By locating in the non-union South Carolina instead of the Puget Sound area, Boeing was supposedly retaliating against the International Association of Machinists and Aerospace Workers and therefore committing an unfair labor practice.


Now the last point I want to make is a vehement attack on the progressive movement, precisely because it refuses, at least in its current incarnation, to consider one viable element, which is the deregulation of various markets in which state monopolies have been created. ...

Daniel Greenberg of the Center for Class Action Fairness LLC has filed an objection on behalf of two class members to a coupon settlement where the attorney-fee request does not even begin to comply with the basic Class Action Fairness Act requirements of 28 U.S.C. § 1712. We are mystified how the plaintiffs intend to justify the settlement; perhaps they will contend that the $10 discount "certificates" issued to the class are not coupons. The attorneys and class representatives are asking for $1.46 million without even an attempt to predict the redemption rate of these certificates.

The case is Sobel v. Hertz Corp., No. 06-cv-545 (D. Nev.), and the fairness hearing will be in Reno May 17.

(The Center for Class Action Fairness LLC is not affiliated with the Manhattan Institute.)

The late plaintiffs' attorney John O'Quinn was dinged for $35 million for overcharging breast implant plaintiffs. Now, 187 former clients of O'Quinn are suing over overcharging and failing to distribute settlement proceeds in silicosis litigation. [Texas Lawyer]

The case was brought in Texas state court, but one presumes that O'Quinn had the same mandatory arbitration clause with these clients that he did with his breast implant clients. As we've covered in the past, even trial lawyers claiming mandatory arbitration clauses are unconscionable have mandatory arbitration clauses with their clients, but the hypocrisy goes unnoted in press coverage of the arbitration issue.

Class arbitration and unconscionability

In Cottonwood Fin. Ltd., v. Estes, 2010 WI App75, 325 Wis.2d 749, 784 N.W.2d 726, the Wisconsin Court of Appeals held that an arbitration provision that included a class action waiver. An appeal is in abeyance awaiting the decision in the similar U.S. Supreme Court case of AT&T Mobility, LLC v. Concepcion, No. 09-893.

I'm quoted in a Wisconsin Law Journal news story on the Wisconsin case:

"If a company creates an alternative dispute mechanism that provides compensation, and is quicker and better than class actions, where is the unconscionability?" he said. According to Frank, courts in California and Wisconsin, by concluding that the lack of class actions as a remedy is unconscionable, have treated the right to file a class action as an end in and of itself rather than a means, "allowing the procedural tail to wag the substantive dog."

Milberg and several other law firms collected $21 million in quick-pay fees for a Missouri state-court class action settlement that provided face value of $39 million to the class, most of which was in $8.22 coupons. The Center for Class Action Fairness appealed the rubber-stamp approval, and, on Friday, filed a reply brief in the case. Oral argument is set for May 4 in St. Louis.

Daniel Fisher catches the New York Times failing to fully assign blame to very wealthy lawyers such as Mikal Watts for their role in preventing Louisiana residents from receiving compensation from BP. [Forbes via @overlawyered Twitter feed]

In an extraordinary (and likely unconstitutional) move, some Hawaii legislators seek to create law that will hold authors and publishers of guidebooks liable for insufficient warning in the event that a tourist is killed or injured at a recommended spot. [WSJ]

In the WSJ, Carrie Lukas notes that once the ceteris is paribus, there is no male-female wage gap; indeed, for single, childless urban workers between 22 and 30, women earn 8% more than men. Women and men make different career choices and choose different career paths, which accounts for any difference in results below a certain age.

I see this in two-lawyer households frequently: more often than not, the wife stays home with the kids or drops out of the BigLaw rat-race for a less stressful job. And the most of the BigLaw husbands billing 2500/hours a year I talk to think their wives are getting the better end of the bargain (though their wives may not always agree). In the legal profession, women leave the BigLaw partnership track because it's socially acceptable for them to do so, but law firms continually express surprise that their attrition rates are higher for women than for men and that, decades after women started making up half of law graduates, women are still a minority of new partners.

Martin Act abuses

In a paper for WLF, Robert A. McTamaney argues for preemption of New York's overbroad Martin Act.

Around the web, April 26

King & Spalding, under pressure from gay activists, has dropped its agreed representation of Congressional officials who want to defend the constitutionality of DOMA. [Adler @ Volokh]

Just so we're clear: it's okay for law firms to represent Islamic terrorists (who, at the end of the day, just want to massacre gays), but House Republicans are beyond the pale.

When law firms were under criticism from Bush administration attorney Cully Stimson for their zealous pro bono representation of Guantanamo detainees, the outrage against Stimson (who was forced to resign) was overwhelming: doesn't he know that everyone deserves a lawyer, and these lawyers are just defending procedural niceties? How dare someone criticize lawyers for representing unpopular clients? Those procedural niceties apparently only apply when the cause is one the left approves of.

Any corporate defendant considering King & Spalding as their attorneys should evaluate closely: apparently, all it takes for that law firm to unethically drop a representation is just a wee bit of political pressure, and if it works for Human Rights Campaign, why not for unions or other activists on the left?

(As I've stated earlier, I disagree with DOMA as a public-policy matter, believe that the Supreme Court will eventually declare it unconstitutional, but believe the politicization of the issue is appalling.)

"Abnormal Use" interview

The bloggers at the always-fun Abnormal Use blog interview me:

I view tort reform as a means to an end, rather than an end in and of itself. I consider myself a consumer advocate, and it just so happens that the pendulum of the legal system has swung so far in favor of lawyers that consumers are being hurt, and tort reform is needed to restore balance. ...

There are so many places where reform is needed. The judiciary and the bar aren't doing enough to punish or deter fraudulent cases. We have very sensible rules that courts don't second guess the good faith decisions of lawyers or prosecutors, or the exercise of business judgment by executives, but those rules are thrown out the window when it comes to second guessing the design decisions of engineers or the judgment calls of physicians, though there is every reason to believe that courts are even less likely to get those questions right, especially in hindsight. And uncapped noneconomic or punitive damages introduces an element of complete randomness into the system. Even when the system is considered to be "working," the majority of the expense of the system goes to paying the administrative costs of the attorneys rather than to the putative victims: we wouldn't tolerate that level of overhead in any other sector of the public or private economy. All of these features distort incentives, deter innovation, result in unjust punishment of the innocent, and hurt the economy and consumers in the long run.

As Connecticut's attorney general, Richard Blumenthal used to be able to get his shot of publicity by filing populist, anti-business lawsuits. Now as a junior member of the U.S. Senate, he's forced to seek publicity in other ways, introducing outrageous charges of possible criminality in his campaign against the oil industry. From The Hill, "Grand jury floated to probe gas prices":

Sen. Richard Blumenthal (D-Conn.) on Sunday called for an aggressive federal probe - including a possible grand jury - into whether rising gasoline prices stem from illegal manipulation of energy markets....

Blumenthal, Connecticut's former attorney general, said on CBS' "Face the Nation" that federal officials need to play hardball.

"I commend and applaud the president for focusing on this issue but I think there really needs to be an investigation involving, for example, subpoenas and compulsory process which I used as attorney general in similar investigations. There needs to be very possibly a grand jury to uncover the potential wrongdoing," said Blumenthal, who was elected to the Senate last year.

Blumenthal is a member of the Senate Judiciary Committee, and you would expect Chairman Patrick Leahy to hold hearings to attack "Big Oil" soon enough.

The political posturing that historically accompanies rising gas prices has gotten even more twisted this year than in the past. Last week President Obama announced that Attorney General Eric Holder would lead a task force, as described in his Saturday radio address, "with just one job: rooting out cases of fraud or manipulation in the oil markets that might affect gas prices, including any illegal activity by traders and speculators." Holder touted his effort at the White House blog and promoted it at the dispassionately named web site, StopFraud.gov.

Why turn to the Department of Justice when the Federal Trade Commission already has the expertise in investigating oil pricing and speculation? A reasonable conclusion is that the White House wants a political document with pre-ordained conclusion, because factual studies have previously disproved allegations of speculation. Here's what the FTC concluded in its study of pricing in the wake of Hurricane Katrina, a report released in May 2006.

In its investigation, the FTC found no instances of illegal market manipulation that led to higher prices during the relevant time periods but found 15 examples of pricing at the refining, wholesale, or retail level that fit the relevant legislation's definition of evidence of "price gouging." Other factors such as regional or local market trends, however, appeared to explain these firms' prices in nearly all cases. Further, the report reiterated the FTC's position that federal gasoline price gouging legislation, in addition to being difficult to enforce, could cause more problems for consumers than it solves, and that competitive market forces should be allowed to determine the price of gasoline drivers pay at the pump.

A separate study in 2008 by the Commodity Futures Trading Commission found that financial trading had not driven price moves in the oil market. (See Wall Street Journal editorial, Sept. 15, 2008, "See You Later, Speculator.")

"The Man Who Vetted Sarah Palin"

The March 2011 Washingtonian profile of the very impressive A.B. Culvahouse is on line. Your humble blog editor plays a bit part. Sadly, the story does not discuss Culvahouse's fascinating vet of Justice Anthony Kennedy, or give a fair shake to Palin regarding the trumped-up Troopergate allegations.

Around the web, April 22

  • Overcriminalization and the Constitution. [Heritage]
  • Early coverage of the (still undocketed) CCAF Cobell objection, including the first conspiracy theory. [Plains Daily; ATL; Popehat; Overlawyered; Turtle Talk; earlier]
  • "How is it that the government can prosecute someone for not providing an agency with what they claim is discoverable material, while not prosecuting DOJ attorneys who fail to provide constitutionally mandated discoverable material to defense attorneys?" Feds re-indict former Glaxo in-house lawyer. [Corporate Counsel/law.com]
  • Does clinic representation make a difference for clients? NB obvious "civil Gideon" implications. [Concurring Opinions via Olson]
  • "More disclosure may be a good idea. But the way to get it is to fix securities litigation." [Ribstein]

  • "Public Interest Objectors in Class Action Settlements" [Karlsgodt]
  • SEC proposes crackdown on Wall Street bonuses. [Dealbook/NYT]
  • In defense of habeas. [Greenfield; earlier]
  • Spitzer's role in causing the financial crisis? [Ribstein; WSJ]

Assistant Attorney General JoAnne Kloppenberg has requested and will receive a statewide recount of the April 5 election for the Wisconsin Supreme Court, which incumbent Justice David Prosser won by 7,316 votes. (Official county-by-county canvas.) Prosser's margin of victory was 0.489 percent, below the 0.5 percent margin means the state, i.e., the taxpayers, will pick up the approximate $1 million cost of the recount to begin next week -- even though no previous recount has ever reversed an election with such a large margin of victory.

At a news conference, Kloppenburg cited various "anomalies" to justify the recount and said:

Wisconsin residents must have full confidence that these election results are legitimate and that this election was fair. A recount will establish where votes were incorrectly tabulated and expose if irregularities compromised the electoral process. A recount may change the outcome of this election or it may confirm it. But when it is done, a recount will have shone necessary and appropriate light on an election which, right now, seems to many people, suspect.

And after the recount, will the losers then declare, "Yes, the vote was fair, we acknowledge the results, and congratulate Justice Prosser on his victory?" Seems unlikely, especially given the tone taken by the same union officials who supported her campaign and paid for anti-Prosser ads. The national AFL-CIO blog reports that Stephanie Bloomingdale, Secretary-Treasurer of the Wisconsin State AFL-CIO, said "This race was a dead heat before something questionable happened in Waukesha."

Each and every voter in Wisconsin deserves to be certain that their vote counted and was counted correctly. No matter the results of the recount-April 5 demonstrates how Gov. Walker's extreme overreach and attack on workers' rights united Wisconsin to turn a runaway win for an incumbent judge into a competitive race.

Manne and Wright on search-engine bias

Geoffrey Manne and Joshua Wright conclude in a white paper that

Search bias is not a function of Google's large share of overall searches. Rather, it is a feature of competition in the search engine market, as evidenced by the fact that its rivals also exercise editorial and algorithmic control over what information is provided to consumers and in what manner. Consumers rightly value competition between search engine providers on this margin; this fact alone suggests caution in regulating search bias at all, much less with an ex ante regulatory schema which defines the margins upon which search providers can compete. The strength of economic theory and evidence demonstrating that regulatory restrictions on vertical integration are costly to consumers, impede innovation, and discourage experimentation in a dynamic marketplace support the conclusion that neither regulation of search bias nor antitrust intervention can be justified on economic terms.

Billy Sulcer got in 53 years of smoking before he died of lung cancer in 1993 at the age of 66; his widow sued. An Escambia County jury found Sulcer 95% at fault for his own death, and $225,000 in compensatory damages, meaning that the final award will only be $11,250.

The plaintiffs' attorney, Matthew Schultz, suggests that the jury double-counted their 95% reduction because he had asked for $4.5 million in compensatory damages, but has to swallow his aggravation, since it ill behooves a plaintiffs' attorney who makes his living off of the sympathy of jurors to criticize that randomness when it works against him.

Demonstrating the essential randomness of non-economic and punitive damages, four earlier Escambia County juries awarded $6.2M, $20.4M, $3.35M, and $28.3M in tobacco cases, which are in various stages of appeal. [Pensacola News-Journal] Of course, it is almost a certainty that none of these seniors actually valued their non-economic and economic lives enough to insure themselves for millions of dollars in the event that they died of an unexpected aneurysm rather than at the hands of Demon Tobacco.

Today the Center for Class Action Fairness filed an objection to the $3.4 billion taxpayer-funded Cobell Indian trust settlement on behalf of Sisseton-Wahpeton Ovate tribe member and class member Kimberly Craven.

Congress recently held hearings in response to the class attorneys' fee request of $223 million, which was over twice the $99.9 million they promised Congress they would limit their request to. [BLT]

The fee request includes one $925/hour attorney who claims to have billed over 28,000 hours in seven years, including a 28.5-hour day. The class representatives have also requested an unprecedented $13 million payment for themselves, raising conflict-of-interest questions that could preclude settlement approval.

Ms. Craven's objection, among other issues, challenges the "upside-down" allocation methodology, where class members who have suffered the most mismanagement of their trust accounts will receive less money than equally situated class members whose trust accounts were administered appropriately.

The settlement and objection present interesting legal issues of whether Congress can constitutionally abrogate class action certification requirements and whether a mandatory class action for injunctive relief can involuntarily waive class members' rights to relief already won in court in exchange for one-size-fits-all cash payments.

The case is Cobell v. Salazar, No. 1:96-cv-1285 (TFH) (D.D.C.).

The Center for Class Action Fairness is not affiliated with the Manhattan Institute.

The American Association for Justice has filed its first quarter lobbying disclosure form with the Clerk of the House, reporting $850,000 in lobbying expenses for the period, down from the $910,000 reported in the fourth quarter of 2010. The report filed with the House Clerk's Office indicates continued lobbying on familiar issues, such as:

  • Notice pleadings in federal courts (Iqbal/Twombly)
  • Preemption of state causes-of-action involving drug manufacturers
  • Various bills to restrict pre-dispute arbitration provisions in contracts.
  • S. 623/H.R. 592 (Sunshine in Litigation Act of 2011); relating to the use of protective orders, sealing of cases, and disclosure of discovery information in federal civil cases. (See earlier POL post.)

In light of the new Republican control of the U.S. House, the trial lawyers are also lobbying some new issues and pieces of legislation. These jumped out at us:

  • H.R. 966/S. 533 (Lawsuit Abuse Reduction Act of 2011); to amend Rule 11 of the Federal Rules of Civil Procedure to make sanctions mandatory.
  • S. 299/ H.R. 10 (Regulations From the Executive in Need of Scrutiny Act of 2011); to provide that major rules of the executive branch shall have no force or effect unless a joint resolution of approval is enacted into law.
  • H.R. 1 (Full-Year Continuing Appropriations Act); specific interest in House Amdt. 85 to defund the Equal Access to Justice program, and House Amdt.159 to defund the the Consumer Product Safety Commission Product Safety Database.
  • H.R. 887(no short title); to direct the Secretary of the Interior to submit a report on Indian land fractionation, and for other purposes, specific interest in the modification of attorney's fees. (This is a post-Cobell piece of legislation from Rep. Don Young (R-AK).

The GOP House has also elicited an increased level of lobbying against federal medical liability reform, specifically, H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act and malpractice reforms generally. The AAJ continues to go outside its own lobbying shop to pay Patton Boggs to work the health care issue, among others, to the tune of $130,000 for the quarter, as well as Forscey and Stinson, $50,000.

The AAJ has also added another lobbying firm to handle medical liability and health care issues, Van Heuvelen Strategies, LLC. Bob Van Heuvelen is the former chief of staff to Sen. Kent Conrad (D-ND), who is not seeking reelection in 2012.

Internet poker crackdown II

Ashby Jones's post (which links to lots of other news coverage) suggests that the recent indictment "could test the claim by the poker site operators that operating a poker site online isn't illegal because, they say, as a game that involves skill, poker is not gambling." I think the odds of that are zero. Just as the federal government nabbed Al Capone for tax evasion, the government is very carefully avoiding having to litigate over the legality of poker: the crux of the allegations are violations of bank reporting law. The defendants could be selling Beanie Babies; the legality of the underlying transaction isn't going to excuse the technical violation. I'd be surprised if any of these cases even go to trial: the power of the prosecutor's cudgel will encourage a plea bargain. Earlier.

"Merit selection" in Illinois

Wouldn't you know it, it doesn't live up to its advertised benefits. [Chicago Tribune via Adler @ Volokh]

In Wisconsin, Prosser wins

With all counties having canvassed the votes, incumbent state Justice David Prosser has defeated Assistant Attorney General Joanne Kloppenburg for a 10-year term on the Wisconsin Supreme Court by 7,316 votes. Kloppenburg can request a taxpayer-paid recount (the deadline is Wednesday 5 p.m. for the request) but the largest statewide margin ever overcome in a recount was 500 votes.

From Daniel Foster at National Review Online, a transcription of Prosser's comments at a news conference, including:

A public office is a public trust. While I have certainly made misstatements and mistakes along the way, I have never broken the public trust. This proposition was challenged repeatedly and viciously throughout the campaign. My detractors set out to paint a false picture of who I am and what I believe. "

Powerful forces, not always clearly identified, attempted to turn this election. . . into a referendum on the governor of Wisconsin. . . [As a result] the qualifications, experience, even the identity of my opponent became irrelevant. Fortunately the people of Wisconsin rejected this effort.


Public Citizen's blog discovers that all that consumer protection they've asked for has resulted in a proposed Obama-administration regulation to prohibit the use of family income in determining credit-card issuance—with the effect that stay-at-home spouses (mostly women) will be unable to get credit cards in their own name. (Citing Margaret Ryznar @ SSRN.) Earlier.

Douglas Kmiec resigns

The conservative legal scholar gave critical cover to Barack Obama in the 2008 election, but found himself hamstrung by internal opposition within the State Department and resigned his ambassadorship to Malta. Given the record of the Obama bus and who has been thrown under it, it seems prudent, when dealing with this administration, to collect on one's quo before giving up on one's quid. (Witty, if perhaps unfair, comment from Facebook friend J.B.: "It profits a man not to sell his soul for the whole world... but for Malta? For a half-term?")

Too much habeas?

I've been saying so for years, but two law professors point out in the New York Times that the overwhelming majority of thousands of habeas claims are denied, and suggests that the writ be limited to capital cases and claims of actual innocence.

Given the availability of direct review and collateral attack of convictions in state courts (and the possibility U.S. Supreme Court review of the federal constitutional implications of thosedecisions), I would agree that we generally don't need a third level of review in the federal courts. I would go further than Hoffman and King and restrict the writ to cases of actual innocence; while federal courts are more likely to grant habeas petitions in the capital context, it generally appears that they do so for purposes of protesting capital punishment rather than because capital cases are handled more constitutionally sloppily than run-of-the-mill felonies. If anything, the blizzard of habeas cases in the federal courts hurts the innocent, because it's harder for their habeas petitions to stand out amongst the mass of frivolous cases. Money currently devoted to litigating these thousands of petitions would be better served upgrading the public-defender system.

A class action against Babies "R" Us and manufacturers of upscale baby products—BabyBjorns, Britax car seats, Kids Line and Peg Perego products, Maclaren strollers, Medela breast pumps—over allegedly anticompetitive vertical price restraints has resulted in a $35.24 million settlement after the district court certified a class of consumers who purchased particular products from Toys "R" Us or Babies "R" Us since 1999 (and, occasionally, shorter time windows).

But the attorneys reserve themselves the right to ask for one third of that amount plus "expenses" plus fees for administering the settlement; the notice provides no upward bound for that amount, so for all we know class counsel (including Spector Roseman and Hagens Berman) will be asking for a majority of the fund. And notice and administration expenses come from the settlement fund, so the attorneys are seeking a commission on the notice. There is a cy pres provision entitling moneys to be used for third-party charities that the class counsel and defendants like; the notice provides no information who those third-party charities are. Because the class counsel is also seeking a third of those moneys, they have no incentive to ensure the money goes to their clients rather than to the charities that they themselves have selected. The settlement itself has a "clear sailing" agreement (¶ 26) prohibiting the defendants from challenging the fee request, so unless there are objectors, the court will be faced with an ex parte request for this skimming of millions of dollars that should be going to the class. There's also a quickpay provision: the attorneys' fees are paid immediately, but there's no obligation for the settlement fund to ever disburse to the class members. But who has the incentive to hire an expensive attorney to object?

That's where the Center for Class Action Fairness (not affiliated with the Manhattan Institute) comes in. It will be representing a client in this case.

A bill passed by the Pennsylvania House would end joint and several liability for defendants found less than 60% responsible. The head of the Pennsylvania Senate Judiciary Committee, Stewart Greenleaf, however, is proposing to eviscerate the bill in that house. [AP/Lebanon Daily News]

Bateman v. AMC Theaters

A remarkable settlement notice of a FACTA class action is unlikely to draw any objectors: the class consists of people who used a credit card at an AMC theater in a eight-week window in 2006-07 and got back a receipt that revealed too many credit-card digits, so unless you save four-year-old credit card receipts or have a very good memory, you're unlikely to be eligible to object. The remedy is coupons (well, "vouchers") for free popcorn that the plaintiffs' attorneys will no doubt seek to value at full price, though the vouchers are unlikely to be fully used. And even if they are, AMC is unlikely to mind: who buys salty popcorn at a theater without having already paid $10+ for a ticket and also spending at least $4 for 25 cents worth of soda? The class attorneys, Spiro Moss, don't even disclose how much they're going to seek in attorneys' fees. [Case No. CV07-171 JHN (AJWx) (C.D. Cal.).]

Internet poker crackdown

It's good to hear that all the really problematic crimes in Manhattan have been solved and that the U.S. Attorney's office for the Southern District of New York has the free time to indict eleven entrepreneurs across the world who dared to do business with U.S. customers. Does this mean we can reduce the terrorist threat level from orange to yellow? [Bloomberg; Balko @ Reason; PPA]

I've previously opined on the problem of extortionate shareholder derivative suits that are entirely fee-driven with no benefit to shareholders. Professor Michael Perino (St. John's) points me to a recent Delaware decision, In re Emerson Radio Shareholder Deriv. Lit. (via Pileggi), that attempts to clarify the issue, but may only confuse it further. He's generously given me permission to repeat his analysis:

The opinion restates the traditional rule courts in Delaware about fee awards. Courts award fees based on the following factors: (i) the amount of time and effort applied to the case by counsel for the plaintiffs; (ii) the relative complexities of the litigation; (iii) the standing and ability of petitioning counsel; (iv) the contingent nature of the litigation; (v) the stage at which the litigation ended; (vi) whether the plaintiff can rightly receive all the credit for the benefit conferred or only a portion thereof; and (vii) the size of the benefit conferred.

The decision is odd on a number of levels. The standard is, of course, so vague that you can use it to justify any fee. The fee levels the court suggests (10% - 15% in cases that settle early in the pre-trial process; 15% to 25% for those that settle after significant discovery or motion practice) seem high and create a disincentive to early settlement. True, this approach might deter the attorney from settling the case too early and too cheaply, but perhaps at the cost of make-work.

Awarding fees for the non-monetary gains to the corporation seems completely inappropriate. To be sure, the court criticizes counsel who try to inflate their own recovery by claiming the value of these therapeutic benefits, but it uses some pretty suspect math to come up with its own valuation. Giving the lawyers 25% of this "value" leads to a fee award of 29% of the monetary benefits in the case.

The notion that we consider the "standing and ability of counsel" seems to be an invitation to award greater fees to established firms (thus helping to maintain a concentrated plaintiffs' bar).

The court also makes an interesting observation about risk by contrasting this case from the run-of-the-mill M&A action: "[u]nlike when entrepreneurial plaintiffs' firms routinely file representative actions against mergers, knowing that the defendants' ability to issue supplemental disclosures and the hydraulic pressure of deal closure will combine to create a ready-made settlement opportunity, plaintiffs' counsel here did not get into the case with an obvious and well-marked exit in sight." That might be true to a degree, but I think the court is still suggesting more risk than there actually was. The case involved related party transactions by a CEO and majority shareholder. An outside law firm had already determined that there had been irregular transactions. Was there really that much risk of non-recovery?

To this excellent analysis I would add that (1) the suggested fee levels guarantees make-work unless a court considers whether the additional litigation added any benefit to the shareholders at the margin by virtue of a higher settlement offer than the early offer, and the make-work is especially problematic given that it is a double-cost to shareholders, who are paying both for their "own" attorneys and those of the corporation; and (2) considering the "standing and ability" of counsel is double-counting: the ability of counsel can (and should) be measured entirely by the results achieved by counsel.

The Center for Class Action Fairness (which is not affiliated with the Manhattan Institute) is looking for institutional investors interested in challenging attorney-fee awards in shareholder litigation whom we could represent pro bono.

Berry v. Schmidt

Kentucky state law bans lobbyists from giving to state legislative campaigns, but the state legislative ethics commission decided that an incident involving a Kentucky senator's aides asking lobbyists for money was an innocent mistake that did not warrant discipline. Attorney John M. Berry publicly criticized the commission for their inaction and that merited a full-fledged 15-month investigation and a warning letter from the state bar association. Berry sued in federal court, arguing that the disciplinary rule was facially unconstitutional because it, inter alia, barred "reckless truths," true statements made with reckless disregard for their truth or falsity; the district court held the rule was not subject to a facial challenge, and that Rooker-Feldman barred a collateral attack on the actual discipline itself. [AP/Kentucky.com]

Around the web, April 14

  • New York Times assumes that there must be something criminal about the bad business decisions that led to the financial crisis: "why, in the aftermath of a financial mess that generated hundreds of billions in losses, have no high-profile participants in the disaster been prosecuted?"
  • Does Justice Kagan really think your money belongs to the government? [Bainbridge on Arizona Christian School Tuition Organization v. Winn]
  • Judge Laurence Silberman speaks out on the mainstream media double standard on Supreme Court ethics. [BLT; Whelan]
  • Canada learning first-hand about the evils of coupon settlements. [Globe and Mail (via @j_leclerc)]
  • Oklahoma court affirms dismissal of suit seeking to blame mobile phone providers for distracted driving. [Jackson]
  • Due process and legal niceties lacking in Dubai, even (and perhaps especially) for tourists. [Daily Mail]
  • Also: Pakistan. [CNN (h/t W.O.)]
  • "What the judge had for breakfast" may be less important than "Has the judge recently eaten lunch?" according to Israeli study. [Discover via Law Blog]
  • Latest "Most Ridiculous Lawsuit of the Month" poll. [Faces of Lawsuit Abuse]
  • BP disaster may be leaving parts of Louisiana richer than before it happened. [WaPo]

When a book is already blurbed by Bryan A. Garner, David Mamet, and George Will (not to mention Eugene Volokh) I don't know that my endorsement can add much at the margin, but I found Farnsworth's Classical English Rhetoric edifying and entertaining.

Farnsworth is now a professor at Boston University Law School, but the book takes me back to the days when he was a law-school classmate and then a fellow Seventh Circuit clerk; now, as then, I envy his clear and convincing writing. With this book and his earlier The Legal Analyst, Farnsworth now has two volumes that belong on every law student's shelf as readable reference works to sharpen legal thinking and communicating.

Sen. Herb Kohl (D-WI) has again introduced the Sunshine in Litigation Act, trying to limit the discretion of federal judges in issuing protective orders or approving settlement agreements that maintain the confidentiality of materials obtained in court proceedings. The Senate Judiciary Committee already has a mark-up of the bill, S. 623, scheduled for Thursday, even though no hearing has been held this year. (We understand consideration may be postponed until after the Easter recess.)

According to CRS, the bill would amend the federal judicial code to prohibit a court, in any civil action in which the pleadings state facts relevant to the protection of public health or safety, from entering an order restricting the disclosure of information obtained through discovery, approving a settlement agreement that would restrict such disclosure, or restricting access to court records, unless in connection with such order the court has first made independent findings of fact that: (1) the order would not restrict the disclosure of information relevant to the protection of public health or safety; or (2) the public interest in the disclosure of past, present, or potential health or safety hazards is outweighed by a specific and substantial interest in maintaining the confidentiality of the information, and the requested protective order is no broader than necessary to protect the confidentiality interest asserted.

Rep. Jerrold Nadler (D-NY) has introduced the House version, H.R. 592.

Similar legislation has been floated in Congress since 1991 and sponsored by Sen. Kohl since at least 1995 (S. 374). Supporters claim legislation is necessary to bring information about potential health or safety hazards into the public eye. Their solution to this theoretical problem is to force judges to compromise the legitimate property and privacy interests of parties in civil litigation, in the process generating lengthy delays and unnecessary expense. Not surprisingly, the trial lawyers emerge as the strongest advocates for the legislation.

Business groups have vigorously fought the bill over the years. In a 2009 letter to the House Judiciary Committee, the Coalition to Protect Privacy, Property, Confidentiality and Efficiency in the Courts (which includes my employers at the National Association of Manufacturers) argued:

[The] bill would severely restrict existing judicial discretion to protect the privacy, property, and confidentiality of all litigants by requiring federal judges to make premature decisions about the masses of information produced in modern civil litigation. Ultimately, H.R. 1508 would increase the costs and burdens associated with civil litigation while stifling the federal court system. Finally, the bill would confer unfair tactical advantages on certain litigants at the expense of others.

Protective and sealing orders are invaluable litigation tools which allow litigants to respond to extraordinarily broad discovery requests. These orders help ensure the confidentiality of valuable information produced in discovery. Severe restrictions on their availability would have a chilling effect not only on discovery and settlements but also on the commencement and defense of claims.

The Judicial Conference has also consistently opposed the legislation. In July 2008, Judge Mark R. Kravitz, chair of the Judicial Conference Advisory Committee on Civil Rules, testified against before the House Judiciary Subcommittee on Commercial and Administrative Law. (Hearing transcript) The Conference's newsletter, The Third Branch, reported:

Oklahoma tort reform passes

The state caps non-economic damages at $350,000; abolishes joint and several liability; and requires a jury instruction that certain damages are tax-free. Unfortunately, tort reform measures have to pass all three branches, and the trial lawyers have promised to sue in the state courts over the caps. [Daily Oklahoman; Governor Fallin]

Our discussion of Wal-Mart v. Dukes has begun. Expected participants include Lester Brickman, Matthew Cairns, Jim Copland, Richard Epstein, Myriam Gilles, Russell Jackson, and Andrew Trask.

Sen. Ron Johnson (R-WI) spoke at the Heritage Foundation's weekly The Bloggers Briefing today on federal spending, the budget and political matters. Johnson was elected in the strong Republican showing in the 2010 Wisconsin elections that brought Scott Walker into the governorship and gave the GOP control of both the state Senate and Assembly.

In response to a question, Sen. Johnson described Tuesday's Supreme Court race between the incumbent Justice David Prosser, a conservative and former Republican legislator, and the union-backed Joanne Kloppenburg as an extension of the 2010 elections:

So if you really take a look at the detailed results of that election, I’m actually pretty buoyed by it. I was pretty depressed. I came in here, I think it was Wednesday morning, and he was up by a couple of votes, and I attended a hearing and come back, and he’s down by 224. And that was depressing. The signal that that would have sent, the amount of energy that would have provided to public sector unions, the bosses, and just to the Left in general, I think would have been terrible for the nation, truthfully.

Leonard Leo discusses at the Congressional Civil Justice Caucus Academy Educational Briefing on Medical Liability Reform.

Honest services fraud event

A panel of attorneys discussed the consequences of recent Supreme Court jurisprudence on "honest services" fraud March 9. [Fed Soc (Chicago Lawyers chapter)]

In January, we discussed a Center for Class Action Fairness objection to a coupon settlement involving HP inkjet printers. That settlement turned out to be even worse than the pathetic one advertised: $5 million in coupons were offered, but the multi-million member class only bothered to file claims for $1.5 million worth of the coupons, with the rest reverting to HP. And of course, a claim for a coupon is not an actual redemption of the coupon: my $2 coupon will likely go unused, since there's nothing HP sells on its website that isn't more than two dollars more expensive than what I can get it for elsewhere.

The attorneys asked for $2.9 million in fees and expenses, justifying it with a quack economic expert report valuing some token injunctive relief as being worth tens of millions of dollars. In a March 29 opinion, Judge Fogel rejected that valuation, held that the settlement was worth only $1.5 million to the class, and reduced the award of fees and expenses to $2.1 million.

Some of the language in the opinion is very good: all too often, courts divorce the fee inquiry from the relief actually won. As Russell Jackson points out, this court said, "To allow an award of attorneys' fees to outstrip the benefit to consumers in such cases would undermine the importance of focusing the efforts of class action counsel on issues that most affect consumers."

So why did the attorneys get $2.1 million? Because of the economic fiction of "fees" and "expenses," which are calculated differently. See, "expenses" cover things like travel, experts, and copying costs. But "fees," that covers things like rent and other overhead, attorney salaries, and paralegals. Attorneys will allocate a dollar received into one bucket or the other, and for some reason, courts will scrutinize the buckets differently, though at the end of the day, the attorneys get a check for money. So the court held that the $2.9 million requested, consisting of $2.3 million in fees and $0.6 million in expenses, was unreasonable with respect to the fees, and reasonable with respect to the expenses—even though the fee request also includes money that goes to expenses, just a different category of expenses. So the attorneys got all of their "expense" request, and just had the "fee" request reduced—but still ended up with more than the class.

That's just business as usual, but there were a couple of other troubling things about the decision. The Class Action Fairness Act requires coupons to be valued by their redemption rate, not by the claim rate. Many of these coupons (such as the one I am scheduled to receive) are not going to be used; one institutional party received tens of thousands of unusable coupons because the terms of the settlement require a claimant to use only one coupon per order, and it would be infeasible for the company to split up its bulk orders to tens of thousands of individual orders.

Second, the court opinion says that there were only three objections, but this is false: there were hundreds of objections, but, because of a confusing notice, 99% of the objectors (including the institution discussed earlier) sent their objections to the claims administrator, the parties never passed along those objections to the court, and the court disregarded my complaint about the procedure in its opinion. Ironic for a consumer fraud case that the plaintiffs' attorneys successfully took advantage of a misleading notice they provided.

Should CCAF appeal this decision? An attorney commenting at Jackson's site suggests that the plaintiffs' attorneys will appeal, and if they do, we'll certainly cross-appeal. At some point CCAF will ask the appellate courts to create a bright-line rule forbidding attorneys from recovering more than their clients. Is this the case to do it?

The Center for Class Action Fairness, LLC, is not affiliated with the Manhattan Institute.

Inside Higher Ed has an article (via @annaivey) about anonymous attacks on Bradley Smith's candidacy for the deanship at Case Western Reserve Law.

A third-year law student who is organizing the opposition to Smith said that the candidate's political activism should disqualify him from the post. "He is not an academic, in my mind," said the student, who asked to remain anonymous because he is close to graduating. "He has crossed over into activism with a lot of his outside activities.

Because, after all, Harvard Law suffered so much when they hired Elena Kagan, a former Clinton administration political official, as dean. There thankfully doesn't seem to be any faculty support for the smear campaign.

Opponents of federal medical liability reform, that is Democratic politicians and trial lawyers, commonly make two arguments against Congressional action along the lines of the current H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare Act: 1. Liability reform ignores "the real issue", that of medical errors and patient safety, and 2. Federal legislation is an attack against the states, their laws, courts and prerogatives.

The first is an attempt to change the subject, deflecting attention away from the costs of defensive medicine and putting the onus on doctors and insurance companies instead of trial lawyers.

The second serves a political purpose, appealing to federalism-minded House Republicans, especially new members aligned with the Tea Party. There's another advantage, too: The argument has legal and constitutional merit.

Unfortunately, supporters of national medical liability reform rarely engage the federalism issue. Until, that is Wednesday's hearing in a House Energy and Commerce subcommittee, "The Cost of the Medical Liability System Proposals for Reform, including H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011." In testimony on behalf of the Health Coalition on Liability and Access, Dr. Troy M. Tippett argued that activist state courts had overturned reasonable tort reforms enacted by legislatures, and health care fell under the Commerce Cause. From Dr. Tippett's prepared statement:

Enacting a federal statue, we believe, is the most effective avenue available to rein in judicial activism, address the medical liability crisis and ensure patient access to health care. H.R. 5 would level the playing field for doctors, hospitals, patients and attorneys, provide needed consistency to the system and eliminate the patchwork of protections in favor of a federal framework based on fairness and common sense.

There is plenty of legal justification for moving in this direction -- some that goes as far back as James Madison and his persuasive arguments in support of the Commerce Clause. This important provision gives Congress the ability to regulate interstate commerce (a definition which the health care industry clearly meets) when done in the public interest. In a 2003 report, the Congressional Research Service (CRS) confirmed this view, concluding that Congress has the authority to enact tort reform legislation generally, under its power to regulate interstate commerce.4 This legal logic has already been applied to an earlier medical dilemma when Congress passed the National Vaccine Injury Compensation Program, a federal program that preempts state court tort awards to protect vaccine manufacturers from bankruptcy in the face of extreme state tort jury awards. A precedent has been set, and we believe now is the time for Congress to act by passing federal medical liability legislation that protects doctors, patients and the states.

But vaccines are sold into interstate commerce and already regulated by the FDA. How is a doctor botching a procedure similar?

Prosser ahead in Wisconsin

Reports had Wisconsin Supreme Court Justice David Prosser's challenger, JoAnne Kloppenburg, ahead by 204 votes out of about 1.5 million, suggesting a long and painful ballot litigation that might have to go to a Wisconsin Supreme Court where three of the six remaining justices are heavily partisan. But Thursday, Waukesha County announced that it had not counted 14 thousand ballots that gave Prosser a 7000-vote lead. That doesn't change the possibility of litigation, but it does provide some cushion that makes it less likely that the election will be decided by a fluke of the courts.

The Fifth Circuit, in a remarkably shallow opinion, finds harmless error in Jeff Skilling's honest services fraud instruction and conviction. [Podgor (discussing harmless error procedure issues); Berman; Kirkendall; TalkLeft; WSJ Law Blog]

One of the surprising aspects of removal jurisdiction is the confusion courts have had over the "amount in controversy" requirement. Some have insisted that a removing defendant under the Class Action Fairness Act prove that a class is likely to recover more than $5 million, which is a fundamental misunderstanding of the concept of "controversy": if there is a scenario where the plaintiffs may recover more than $5 million, and plaintiffs have refused to avail themselves of the opportunity to disclaim that possible demand, remand is inappropriate. After all, then the defendant might be whipsawed by the plaintiff deciding that, gosh, there should be punitive damages once the case has been remanded to state court (something that happened to a client of mine once in the District of Minnesota).

The best legal writer around, Judge Frank Easterbrook, provides clarity in the April 1 decision Back Doctors Ltd. v. Metropolitan Property & Cas. Ins., and now courts have no excuse to get it wrong. [Jackson]

If the new vote tally coming out of Waukesha County holds, JoAnne Kloppenburg's self-declaration of victory would seem even more premature than it did at the time. (And isn't it a bit unseemly for a prospective state-supreme court justice to be declaring victory with such a razor-thin margin? These are, after all, the monitors of due process, and a recount here was inevitable. Of course, unseemliness for the judiciary is also a bit inherent in such judicial campaigns overall -- one of the several critiques raised against this method of selecting judges. (But see also here, here, and here.))

I did want to clarify one small point of disagreement with Carter, though: unlike Carter, I tend to agree with Glenn Reynolds (citing Vincent Vernuccio) more than Greg Sargent here -- and Sargent's piece strikes me as a pretty weak political analysis. And that's even if Kloppenburg is ultimately able to prevail after all the inevitable legal wrangling and wind up on top at the end of the day.

Now, I fully agree with Carter that "a victory is a victory is a victory." And for Wisconsin, this election will have major, major implications (even if, as Carter notes, the outcome of Walker's reforms hinge less on it than Kloppenburg's supporters seem to believe).

But critically, Sargent, Reynolds, and Vernuccio are really writing about national, not Wisconsin, political implications. By mobilizing so agressively on what would have otherwise been a sleepy state supreme court race, organized labor was trying to scare the dickens out of anyone who'd try to emulate Scott Walker's approach in wrestling with public financing problems.

And on this score, like Glenn, I'm less than impressed. The unions did indeed go "all in" -- and in a low-turnout election in which their voter mobilization played a disproportionate role, they effectively eked out a tie.

Sargent writes about "a massive and astonishingly fast swing of support away from Prosser and in Kloppenburg's favor" and cites Prosser's primary-vote margin and Wisconsin's historic tendency not to reject incumbent justices as evidence for a big electoral shift here. Poppycock, in my view. Voters in general know not a lick about state supreme court races. They don't pay any attention whatsoever unless the races become highly contested with lots of outside dollars. It's not like Justice Prosser has wide name recognition or a big reservoir of public support on the Wisconsin streets.

Now, to be sure, those Republicans in Wisconsin facing recall elections do have some reason for concern: labor is mad, and they've shown a capacity to mobilize voters with disproportionate impact in a low-turnout race. But as for national implications, all this election shows is that the Left pushed a supreme court election into a virtual tie, after making the governor's controversial plan the defining feature of an otherwise-ignored supreme court race -- in a state that last supported a Republican for president in 1984. If the Democrats generally or the unions specifically read too much into this for the national political scene, then in my view they're deluding themselves.

UPDATE (6:55 p.m.): From WisPolitics.com: "The Waukesha County canvass netted Justice David Prosser more than 7,500 votes over JoAnne Kloppenburg, swinging the vote total dramatically in his direction."

Yes, there's next to no way to overcome a 7,000 vote margin in a recount.


UPDATE (4:47 p.m.): WisPolitics.com has an election blog, from which we learn that Justice David Prosser's legal team for the recount will be headed by Jim Troupis and include Milwaukee-based Attorney Dan Kelly and Ben Ginsberg of Washington, D.C., who was prominent on the 2000 Bush-Gore recount in Florida.

UPDATE (4:23 p.m.): With additional precincts reporting, now Prosser's up by several hundred votes.

Joanne Kloppenburg, the union-backed candidate for Wisconsin Supreme Court, declared victory over incumbent Justice David Prosser Wednesday on the basis of 206 votes out of 1.5 million case. A recount is likely.

Two takes on Kloppenburg's advance are common, typified by:

  • Glenn Reynolds at Instapundit: "WISCONSIN SUPREME COURT: A Referendum That Wasn’t. Nope. The unions went all-in and managed a dead heat in a judicial election. The mountain has labored and brought forth a mouse."

Versus ...

  • Greg Sargent at Washington Post's Plumline blog: "[Even] without a win, labor and Dems will have exceeded expectations big time, and will have proved that the grassroots energy unleashed by Walker’s overreach is still in full force. And of course, if Kloppenburg does pull this off, it will constitute a huge win that will only lend more momentum to the recall drives and confirm that Walker remains as politically toxic as ever."

It pains us to agree with Sargent, but a victory is a victory is a victory. John Fund at The Wall Street Journal raises the possibility of voter fraud, which would be no surprise given the flood of outside activists coming to the state and Wisconsin's same-day voter registration law.

Rep. Jerrold Nadler (D-NY) on the House floor, speaking March 31 against passage of H.R. 658, the FAA Reauthorization and Reform Act of 2011:

I do want to thank Chairman Mica and Congressman Coble for including language in the Manager's Amendment to strengthen the provisions guaranteeing the right to carry or check musical instruments onto an airline.

Even tubas?

Wisconsin Supreme Court results

As of a few minutes after 9 PM Central, with 17% of the vote in, incumbent Prosser is up by less than one percent. It's not clear whether the early count comes from predominantly Democratic or Republican regions, though. You can follow the count on this page.

Update: county by county, Kloppenburg is running six or seven points ahead of John Kerry in 2004; Kerry won the state by 0.4 points that year.

Update: Prosser leads this morning by 835 votes out of over 1.47 million cast, suggesting litigation and shenanigans to come.

That's a key administrative post?

From the White House, a news release, "President Obama Announces More Key Administration Posts, 4/5/11":

President Obama announced his intent to appoint the following individual to a key Administration posts:

Michael Les Benedict, Appointee for Member, Permanent Committee for the Oliver Wendell Holmes Devise
Michael Les Benedict is a leading scholar of American constitutional history and the Civil War and Reconstruction. He is the author of The Blessings of Liberty, The Impeachment and Trial of Andrew Johnson, and Preserving the Constitution, a selection of essays on the constitutional politics of Reconstruction. Professor Benedict also wrote the American Historical Association’s American Constitution bicentennial essay “Civil Rights and Liberties.” He is emeritus professor of history at The Ohio State University, where he was also an adjunct professor of law, and he has held visiting professorships at Yale Law School and on the law faculties of Hokkaido and Doshisha Universities in Japan. Professor Benedict has served on the board of directors of the American Society for Legal History and is currently Parliamentarian of the American Historical Association. He received his B.A. and M.A. degrees from the University of Illinois and his Ph.D. from Rice University.

This is undoubtedly familiar territory to the legal scholars among POL's readership, but I had no idea such a creature as a "devise" existed. The University of Colorado at Boulder explained the government body in 2002, when President George W. Bush appointed law school professor Allison H. Eid to the board: "Established by Congress in 1955 to administer the funds given to the government by the late Justice Holmes, the Permanent Committee prepares the history of the U.S. Supreme Court and sponsors the annual Oliver Wendell Holmes Lecture."

Robert Costa of National Review Online reports on a speech Monday to supporters by Joanne Kloppenburg, the union-backed candidate in today's Wisconsin Supreme Court election, running against incumbent Justice David Prosser.

Kloppenburg’s closing argument against Prosser began with a comparison of Facebook profiles. “When you look at my opponent’s Facebook page, you see a lot of meanness, a lot of hatred, a lot of fear,” she said. “When you look at my Facebook page, you see hope.”

Thus does campaigning progress. Next election cycle, candidates will compare Twitter accounts.

Will Kloppenburg, an assistant attorney general, oust Prosser, a rule-of-law jurist, and in the process turn the court's majority into a 4-3 liberal, activist majority? Organized labor certainly hopes so, working hard to elect Kloppenburg with the clear hope she will vote to overturn Gov. Scott Walker's collective bargaining and budget reform legislation. The election results will depend on voter turnout: Will the "progressive" voters of Madison come to the polls in sufficient numbers to outweigh voters from the conservative counties?

The last week or so has not been edifying. Organized labor threatened business owners who refused to post pro-union signs in their stores, a protection scheme that some police unions even signed on to.

The lefty group, the Greater Wisconsin Association, has run ads against Justice Prosser accusing him of cossetting child-abusing priests and damning him for referring to Chief Justice Shirley Abrahamson as a "total b*****." The Prosser campaign responded to the first ad with its own commercial, and The Wall Street Journal's John Fund suggests the original attack may have backfired.

Low-hanging fruit and job creation

Tyler Cowen's The Great Stagnation (an excellent work that merits a longer post from me) argues persuasively that America's growth pre-1970s stagnation was a result of taking advantage of "low-hanging fruit" in technological and educational improvement; with the "low-hanging fruit" gone, growth is bound to be slower now and in the future, and the polity must adjust.

I would argue that not all the low-hanging fruit is gone. As we were growing rapidly, society adopted a number of public policies that had the effect of throttling growth. An obvious one is our overlawyered society: I've previously argued that we're costing ourselves hundreds of billions of dollars a year just from excessive litigation at the margin: this is wealth destruction, rather than wealth transfers. A smaller source of low-hanging fruit is the wealth destruction that occurs from overregulation, especially overregulation from special interest cartelization. The Institute for Justice's Chip Mellor has a good example of how Florida governor Rick Scott is proposing creating jobs by eliminating job-killing licensing requirements in twenty occupations ranging from auto repair to interior design.

In the Great Stagnation that Cowen suggests, we need to ask ourselves whether we as a society still want to buy these luxuries that our current menu of public policy provides. We clearly can't afford all of it: something—entitlements, defense spending, public-sector unionism—has to give way. Measures to end overlitigation and overregulation are the closest thing we have to low-hanging fruit. As public policy choices go, they're the easy ones: we can't litigate and regulate our way to prosperity.

Lasker on preemption

Eric Lasker reviews the recent Supreme Court preemption jurisprudence for WLF:

While the Court went to great lengths in Bruesewitz and Williamson to explain its opinions on narrow grounds, the lack of any clear bright line preemption rule in those cases leads inevitably to the conclusion that success in preemption litigation will turn in the first instance on which party succeeds in defining the narrative through which a court will view its analysis. In Bruesewitz, for example, the Court's detailed grammatical dissection of the NCVIA's express preemption provision could not hide the fact that both sides' proposed statutory interpretations rendered parts of the statutory language superfluous. See Bruesewitz, 2011 WL 588789 at *7. The majority opinion may have had the better of this interpretive argument, but it is difficult to credit either side's view that Congress clearly expressed its intent through the at-best inartfully-worded express preemption provision. It is likewise difficult to believe that the important public health goals specifically furthered by preemption of vaccine design defect claims did not guide the Court in reaching the proper statutory interpretation conclusion. Even more so, in Williamson, the Court's determination that the implied preemption decision turns on the "significance" of the federal regulatory decision at issue sets the stage in future preemption cases for battles over whether the policies underlying particular regulatory decisions are sufficiently (or insufficiently) significant.

No surprise to longtime Point of Law readers, who are aware that much nursing home litigation is over events such as falls and bedsores unrelated to the actual quality of care: a NEJM study by David Studdert et al. finds that high-quality nursing homes get sued just about as often as low-quality nursing homes. [health.com; NEJM]

Around the web, April 4

  • How should courts treat "professional objectors"? [Schonbrun; Karlsgodt]
  • Wisconsin Supreme Court election tomorrow, has become proxy vote on Governor Walker union reforms. [Kaus]
  • Chamber continues to oppose Jack McConnell D.R.I. nomination; Senate Judiciary Committee approves. [ILR]

  • Virginia governor vetoes HB1459, which would have increased medical malpractice damage caps. Unlike most states, Virginia law caps total damages, and the bill increased the caps by 2.5% or less a year for twenty years. [WaPo]
  • Medical malpractice reform dies in New York. [Heritage]
  • Nocera on an odd exercise of prosecutorial discretion. [NYT]
  • US FCPA self-reporting down, while UK passes similar Bribery Act. An economist suggests that legalizing bribery (while continuing to forbid bribe-taking) is optimal way to discourage bribery, so these laws move in the wrong direction. [Corporate Crime Reporter; Levick @ Forbes; Tabarrok]
  • Odd, and likely unconstitutional, Arkansas ban on cyber-bullying passed despite sound opposition from Dan Greenberg. [Volokh]
  • Discredited Duke lacrosse accuser Crystal Mangum arrested for stabbing a man. [Raleigh News Observer]

Oklahoma tort reform moving forward

The legislature is considering a $350,000 cap on noneconomic damages, among other measures. [Insurance Journal; Tulsa World; Oklahoman; OK Chamber of Commerce (h/t C.W.)]

Wal-Mart v. Dukes



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.