Results matching “"qui tam"”

Better bounty hunting in securities litigation? - PointOfLaw Forum

Amanda M. Rose, Vanderbilt Law, has an interesting paper, "Better Bounty Hunting: How the SEC's New Whistleblower Program Changes the Securities Fraud Class Action Debate":

The SEC's new whistleblower bounty program has provoked significant controversy. That controversy has centered on the failure of the implementing rules to make internal reporting through corporate compliance departments a prerequisite to recovery. This Article approaches the new program with a broader lens, examining its impact on the longstanding debate over fraud-on-the-market (FOTM) class actions. The Article demonstrates how the bounty program, if successful, will replicate the fraud deterrence benefits of FOTM class actions while simultaneously increasing the costs of such suits -- rendering them a pointless yet expensive redundancy. If instead the SEC proves incapable of effectively administering the bounty program, the Article shows how amending it to include a qui tam provision for Rule 10b-5 violations would offer several advantages over retaining FOTM class actions. Either way, the bounty program has important and previously unrecognized implications that policymakers should not ignore.

As Rose correctly notes, FOTM suits rarely actually provide compensation: they involve transfer payments between sets of innocent shareholders—with a huge inefficient windfall commission paid to the attorneys. Nor do these suits provide deterrence: nearly all of FOTM suits are piggybacking off of public disclosures made by others. Replacing shareholder litigation with whistleblower qui tam suits would maintain or increase the deterrent effect without the social costs of securities litigation. Of course, whistleblower laws can produce their own distortions in the marketplace (already, a Fifth Circuit ruling and SEC regulations create the perverse incentive to hide wrongdoing from internal investigators), and if bounties are too high, there wouldn't be any savings to shareholders. More: Frankel; Rose @ Blue Sky Blog.

Rose already has an impressive collection of interesting papers and bears watching.

Pigford makes it into the New York Times - PointOfLaw Forum

Years after the late Andrew Breitbart called attention to the multi-billion dollar giveaway of taxpayer money to Friends of Obama under the guise of settling discrimination litigation, the New York Times notices that a political decision to settle meritless litigation that the government was winning in court as if the government had defaulted on all claims has led to an abuse of the Settlement Fund, and a lot of fraudulent claims, with no intent by the government to investigate the theft from taxpayers. (Where are the False Claim Act qui tam suits?) As the late Richard Nagareda and I noted years ago, when you have a mass-tort settlement with no checks for fraud, you will get the Field-of-Dreams problem: "If you build it, they will come," and the claims process will be overrun by fraud. But, as Paul Horwitz notes, the legal academy utterly ignored this aspect of the Pigford litigation.

One settlement of $700 million only presented $300 million of claims (itself a likely exaggerated figure), leaving a $400 million slush fund for the attorneys (Cohen Millstein) for "cy pres," again with apparently no oversight. Will anyone be checking to determine if the money is actually going to its intended purposes instead of to something affiliated with the attorneys?

More: Walter Olson; Daniel Foster; earlier on POL.

The story focuses on Department of Agriculture settlements, and thus omits the equally problematic Cobell v. Salazar settlement. There, the government had essentially won the litigation, getting the D.C. Circuit to throw out a judgment of $455 million. Yet, once Obama took office, the case settled for $3.4 billion—including $1800 a pop for hundreds of thousands of class members with absolutely no damages because they correctly had only pennies in their trust accounts. As you recall, I filed an objection on behalf of a class member who complained that class members with actual damages were being shortchanged by the settlement because of the arbitrary payments to the uninjured class members. Yet, though the D.C. Circuit had earlier held that such a distribution "would be inaccurate and unfair to an unknown number of individual trust beneficiaries," it affirmed approval of a settlement with the exact same "inaccurate and unfair" distribution. That taxpayers ended up on the hook for $3 billion more than the D.C. Circuit had already held was unreasonable has gone entirely unreported upon.

Even more remarkable is the fact that the plaintiffs used the D.C. Circuit briefing to admit that they had lied before Congress about their case. James Otis Kennerly, served as the poster child for the class because he had allegedly been cheated out of millions of dollars by poor trust accounting relating to an oil well on his land; lead plaintiff Elouise Cobell testified before Congress about that story as late as 2007. In arguing for rejection of the settlement, we noted that Kennerly was going to get the same $1800 as class members entitled to nothing. In response, plaintiffs argued that Kennerly's case couldn't be used to prove the settlement unfair because Kennerly wasn't actually entitled to anything either, because evidence the government presented years before Cobell's testimony to Congress showed that Kennerly never had a legitimate claim to the oil well. (Mother Jones hasn't run a correction to its story, and a documentary about Cobell is apparently planning to retell the bogus version of the Kennerly account; if you google Kennerly, you will find no indication from anyone other than me that plaintiffs have made this admission.) Again, no consequences: Cobell was awarded $2 million, and her heirs are asking for another $11 million as an "incentive" for her success in this case.

Roundup, July 18 - PointOfLaw Forum

  • "Supreme Court Isn't Pro-Business, But Should Be" [Ponnuru]
  • Judge tosses major portion of Toyota shareholder suit under Morrison. []
  • Qui tam action accuses retailers supplying government of violating Buy American Act. [AP]

  • Facebook accounts subject to secret search warrants. [Reuters]
  • "The University of California is cutting back on many things, but not useless diversity programs." [Mac Donald @ City Journal]
  • The truth about the auto bailouts. [Zywicki]
  • Arrest when parent protests unnecessary TSA groping of daughter. [Alkon]

"New Breed of Patent Claim Bedevils Product Makers" - PointOfLaw Forum

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

Wake up to lawsuits! - PointOfLaw Forum

The "Litigation at Sunrise" presentations at the American Association for Justice's semi-annual conventions preview new, up-and-coming ways to sue (mostly) business. Creative, cutting-edge or far-fetched, the topics do promise additional costs to the economy and an expansion of American litigiousness.

Children's dental centers are a target? How interesting ....

AAJ's summer convention this year is July 10-14 in Vancouver, B.C., and the schedule lists two "Litigation at Sunrise Sessions." Here, then, are the topics being presented by attorneys from the United States. (Canadians are also presenting Monday but on broader areas.)


  • Tripping Up the Utility Company: Millan v. PAWC, Lawrence Spegar, PA
  • Gardasil, Melissa Fry Hague, PA
  • The Effect of General Releases on Qui Tam Cases, Loren Jacobson, TX
  • Vaginal Mesh, Mark T. Sadaka
  • Radiation Overexposure, Emily Hawk Raley, AL
  • Quick-Set Infusion Sets: Another Metronic Recall, Yvonne M. Flaherty, MN
  • Toyota Sudden Acceleration and Other Resources from the AAJ Exchange, R. Graham Esdale, AL
  • Foodborne Illness, Richard J. Arsenault, LA


  • DUI Fatalities, Troy N. Giatras, WV
  • The Dangers of Magnets in Toys, Sim Osborn, WA
  • Litigation Against Children's Dental Clinics (Small Smiles), Pamela A. Borgess, OH
  • Patent Infringement Damages, Christopher A. Seidl, MN
  • Industrial Farming, Richard H. Middleton, Jr., GA
  • Federal Labor Standards Act, Amanda A. Farahany, GA
  • Fighting Mandatory Arbitration After Rent-A-Center, F. Paul Bland, DC
  • ABCs of IRS Whistleblower Fraud Cases, Laura Baughman, TX
  • Elevator Accidents, Dale K. Perdue, OH
  • Plastic Surgery Malpractice, Spencer M. Aronfeld, FL

Around the web, May 28 - PointOfLaw Forum

  • Add the plaintiff-friendly Exxon Shipping v. Baker to the list of Supreme Court decisions some in Congress wish to make even more plaintiff-friendly. [NLJ]
  • Richard Epstein on the Rand Paul-Rachel Maddow hubbub. [Forbes]
  • Michigan appellate court holds 2-1 that running car in enclosed garage is not an open and obvious risk, and thus lack of wacky warning can result in liability. [Overlawyered, with many links]
  • "McConnell is unqualified to sit on the federal bench in R.I." [Rickard @ ProJo]
  • Serial whistle-blower and convicted criminal Joseph Piacentile has made millions under qui tam law under questionable circumstances. [American Lawyer]
  • DC Circuit denies appeal of dismissal of suit over Judge Roy Pearson's firing. [BLT via ABA Journal]
  • Walter Barclay had incurable bedsores, and had been in three car accidents and two wheelchair accidents, but criminal prosecutors sought to blame his death on a 1960s shooting that had previously resulted in a conviction. A jury acquitted 74-year-old defendant William Barnes—already in prison on a parole violation—on the murder charges. [Phil. Inquirer and Legal Intelligencer via ABA Journal]
  • On the other extreme, I'd like to know what happens to attorney George Freeman, who got charges dropped against client Rodney Newsome in 2007 by falsely representing to the court that his client was in a coma, and then dead. An eagle-eyed court clerk recognized Newsome three years later. [WaPo]
  • SEC class action against Bank of America punishes shareholders for being victims. [Schonbrun @ HuffPo]
  • Europe ahead of US in deregulating air travel, and gets lower prices because of it. [AEI]

The next hot areas of tort claims - PointOfLaw Forum

At the American Association for Justice's summary convention in Vancouver, B.C., this July lawyers will meet to organize new litigation groups, described by AAJ as "a critical tool for our members to level the playing field when forced to battle the overwhelming resources of corporate counsel."

The proposed groups from the AAJ's convention schedule.

  • Proposed Vaginal Mesh Litigation Group
  • Proposed Radioactive Litigation Group
  • Proposed Intellectual Property Litigation Group
  • Proposed Qui Tam Litigation Group
  • Proposed Motor Vehicle Litigation Group
  • Proposed Industrial Agricultural Litigation Group

A window into Scruggs's P.R. efforts - PointOfLaw Forum

Privilege logs introduced in insurance qui tam litigation provide glimpses of the intensive public relations efforts that Dickie Scruggs and his associates put into their litigation, including lavish attention to how they were being portrayed on blogs and in the Wall Street Journal. [YallPolitics]

More: Tom Freeland analyzes the significance of the new documents and also flags an immediate favorite: "Have the public relations firm work up a Wikipedia entry for the Rigsbys."

Around the web, March 12 - PointOfLaw Forum

[compiled: W.O., posted: C.W.]

Trial Lawyers, Inc.: K Street -- Federal Government Relations (I) - PointOfLaw Forum

As my last installment on Trial Lawyers, Inc.: K Street, I'm scheduled to discuss the trial bar's federal efforts to expand litigation opportunities. Because the K Street report is national in scope, these efforts are extensively covered, and federal legislation comprises two subsections of the report, roughly twice as much material as is devoted to state activities. Thus, I'm breaking my posts into two parts: first, today, I'm going to go into already-passed legislation. Then, over the weekend, I'm going to do a second post with proposed/pending legislation. Finally, I'll add a brief concluding post, with a roadmap back over where we've been.

As we note in our report, the lawyers' aggressive affirmative agenda in Washington is something of a paradigm shift. "Until recently, the main purpose of Trial Lawyers, Inc.'s involvement in federal politics was to block reform legislation that would deny it various lucrative lines of business" -- such as Bill Clinton's veto of product liability reform legislation and securities class action reform legislation in the 1990s (the latter overridden and enacted), or Senate Democrats' stifling of medical-malpractice and asbestos litigation reforms during the Bush administration.

In the last two years, Congress has acted to expand consumer litigation, expand employment litigation, expand qui tam litigation, and limit private arbitration. Many of the pieces of federal legislation will be familiar to our readers, but a brief summary is still in order:

Trial Lawyers, Inc.: K Street -- State Government Relations - PointOfLaw Forum

In addition to contributing some $780 million to political candidates in federal campaigns over the last decade, lawyers have funneled $725 million to state-level campaigns. As noted in the Trial Lawyers, Inc.: K Street report:

Whereas trial lawyers' giving at the federal level tends to focus on Congress, at the state level the money is spread among all three branches of government. Because state judiciaries make most tort law--and have the power to invalidate statutory tort reforms as unconstitutional--the plaintiffs' bar has long concentrated on getting its allies onto the state bench . . . . State legislatures, as the source of statutory tort reform, are another arena of interest: any state legislator who tries to advance tort-reform legislation immediately becomes a target of the trial bar and can expect a very expensive reelection campaign. The litigation industry has even begun to turn its attention to the executive branch, since state attorneys general can farm out representation of the state's civil lawsuits to attorneys in private practice, and state treasurers and comptrollers, who control public-employee pension funds, can hire outside lawyers to initiate securities-fraud lawsuits . . . .

I'll briefly discuss how trial lawyers play in the political process for each branch of government; further detail can be found in the report itself, here.

  1. Judicial branch. Since tort law is common law governed by the courts, and many states elect their judges (39 in total, and 21 for the highest court), it is hardly surprising that the plaintiffs' bar focused much of its early political efforts on ensuring that its allies filled state supreme courts. In 1990, a trial lawyer "brazenly told Forbes magazine: '[U]ntil last year the plaintiff bar owned and controlled the Texas Supreme Court.' "

    What happened, also unsurprisingly, is that business interests figured out that they could pool their resources and influence judicial elections, too--setting off an arms race that grew increasingly unseemly, the worst excesses of which were exposed in last year's U.S. Supreme Court case, Caperton v. A.T. Massey Coal Co. The need to campaign creates inherent conflicts of interest "between judges' role as neutral interpreters of the law and their status as elected officials with a need to fund-raise for campaigns," and as both Walter and I have noted here in the past, there's much to be said for the decision by the framers of the U.S. constitution to separate the federal judiciary from the electoral process.

    There are no easy solutions, however, and as Ted Frank noted here, much of the campaign for "judicial independence" is little more than a thinly veiled effort by George Soros and others on the left to achieve supremacy. As Ted notes, for these advocates, the "idea that judicial decision-making is beyond questioning by other branches of government . . . . somehow only appl[ies] to criticism of left-wing judges and judicial decisions." Tellingly, these same voices purportedly concerned about any criticism of the judiciary raised not a peep when President Obama upbraided Supreme Court justices for their Citizens United ruling--when the justices were seated before him, surrounded by hostile partisans, in the televised State of the Union address; instead, they were busy decrying the same judicial decision themselves.

  2. Legislative branch. The trial bar has long been giving to state legislative races, too. Historically, these efforts were largely defensive: "the trial-lawyer lobby largely contented itself with blocking legislative reforms, depending on state supreme courts to invalidate, on constitutional grounds, those that somehow achieved enactment." As previously suggested, those efforts are still ongoing (realized most recently in the Illinois supreme court's decision to overturn legislatively enacted medical-malpractice-law reforms, again, on dubious constitutional grounds). But of late, the trial bar has embarked on a more aggressive, affirmative legislative agenda, as they've sought to exploit recent electoral shifts that "produced or increased majorities of trial-lawyer-friendly Democrats in state legislatures."

    Among the trial bar's legislative successes are expansions of consumer-fraud statutes in Iowa and Washington; the creation of new qui tam statutes in New Mexico, New Jersey, and Oklahoma; the addition of new theories of non-economic damages in Iowa and Illinois; and an increase in statutory limits on damages recoverable against the state in Oregon. This legislation, as well as other trial-bar-backed efforts introduced but not passed into law, is summarized in the Trial Lawyers, Inc.: K Street report, as well as recent articles and reports by the American Tort Reform Association (see here and here (PDF)).

  3. Executive branch. Finally, it will come to no surprise to regular readers of this site--or those who have read Walter Olson's The Rule of Lawyers--that lawyers have also become increasingly active in working to influence state attorneys general and others with the capacity to engender litigation from the executive branch. Since Ron Motley and the now-incarcerated Dickie Scruggs pioneered this tactic in the multistate tobacco litigation, it has ballooned into a major part of the business model for the plaintiffs' bar.

    The week before we released the K Street report, this issue got significant media attention: The Washington Times (in an editorial) explored the trial bar's "pay to play" tactics with state AG's who hire outside contingency counsel; and The Wall Street Journal (in an in-depth investigative piece) looked at the securities-class-action bar's political contributions to various state and local politicians who influence or control public employee pension funds (among the biggest investors in the market, and thus the best able to control such lawsuits under the Private Securities Litigation Reform Act of 1995). More detail is available in the full report, here.

(I'd like to apologize to our readers for not posting a summary of our Trial Lawyers, Inc.: K Street's state government relations section before this morning: I got preoccupied penning a lengthy response to a disingenuous hit job on the report, which was written by Joanne Doroshow of the trial-lawyer-allied Center for Justice and Democracy (there's lots of stuff on that outfit and its shoddy and misleading work in our archives, and here); stay tuned for my reply.

Anyway, notwithstanding that I'm just getting around to my state government relations posting, I still intend to wrap this up with a post about the trial-bar's federal government relations activities sometime later today, so stay tuned for that, too.)

Hanging out in Maui with the litigation industry - PointOfLaw Forum

The American Association for Justice's winter convention begins this Saturday in Maui. As the convention brochure and the online schedule document, the list of legal targets is long, indeed.

We always like to check out the topics discussed at the "Litigation at Sunrise" session, because the presenters usually include the more entrepreneurial among the trial lawyers. So to speak. From the agenda:

  • Birth Defects Suffered by Children Whose Parents Are Exposed to Chemicals Used in "Clean Rooms" -- Frank Verderame, AZ
  • Denture Cream -- Andres F. Alonso, NY
  • Preemption in Generic Drug Cases Post-Levine -- Seth A. Katz, CO
  • Pharmacy and Pharmacist Liability and Other Resources from the AAJ Exchange -- E. Drew Britcher, NJ
  • Fleet -- M. Clay Martin, AL*
  • What Is a Qui Tam Case? How to Know It When You See It -- Jan Soifer, TX
  • Recent Trends in Federal Whistleblower Law -- Brian J. McCormick, Jr., PA
  • Pool Safety: Drain Entrapment -- Dennis M. Lynch, IL
  • How I Learned to Relax and Love Mediation -- Douglas K.W. Landau, VA
  • Zimmer Durom Cup -- Robert J. Binstock, TX
  • Hawaiian Heli-Tour Industry: "Under the Radar" -- Kristine K. Meredith, CA

There are so many ideas for litigation that each speaker is limited to 10 minutes. Otherwise, they couldn't squeeze in all the presentations by 8:30 a.m.

* Fleet refers to oral sodium phosphate products for bowel cleansing, one of the many specialties of Mr. Martin's firm in Huntsville, Ala. The convention schedule also lists an entire litigation group devoted to oral sodium phosphate products.

Around the web, December 16 - PointOfLaw Forum

  • Someone leaked SEIU's Employee Free Choice Act "cheat sheet" [Big Government via @Eric_B_Meyer]
  • "Shameful" prosecutorial misconduct, lack of evidence: judge tosses charges against last two defendants in Broadcom backdating case [AP, Ribstein]
  • "Date set for 'apartheid' class action" [Daily Dispatch, South Africa]
  • Chicago class action firm KamberEdelson has filed secondhand smoke suits against Wynn, Caesar's Palace casinos in Nevada [Las Vegas Sun]
  • "Qui Tam Suit Against University Nets $78.5 Million Settlement" [University of Phoenix; The Recorder]
  • A trend? Federal Circuit issues a third mandamus order removing patent case from E.D. Tex. [Alison Frankel, AmLaw] Update: et plus encore.
  • "UMass Trustees Approve Plan for Public Law School" [Above the Law, earlier]
  • Don't hesitate to donate food generously at this time of year, Congress and most states have enacted Good Samaritan liability immunities that should stand up [Matti Neustadt Storie, Food Liability Law]

"Off-Label Promotion and False Claims" - PointOfLaw Forum

Beck & Herrmann note an Eleventh Circuit case at the intersection of FDA pharmaceutical regulation and qui tam litigation.

In California, advice on more remunerative litigation - PointOfLaw Forum

The Consumer Attorneys of California, the state trial lawyers association, is holding its annual convention this weekend in San Francisco. (Legal Newsline story.) Yesterday's afternoon sessions included those under the rubric, "Miracle Growth for Your Practice," headlined by Mark Lanier of the Lanier Law Firm. Judging from the program, that growth is to be achieved by gearing up lawsuits in the area of predatory lending, patents and copyrights, false claims and qui tam, and USERRA, i.e., the Uniformed Services Employment and Reemployment Rights Act.

Around the web, November 2 - PointOfLaw Forum

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

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

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

More: They have an Oct. 13 update.

Around the web, September 9 - PointOfLaw Forum

  • Steven Shavell and Mitchell Polinsky, "The Uneasy Case for Product Liability" [SSRN via TortsProf]
  • Distinguished alum now at odds with Gerry Spence's Trial Lawyer College [Norm Pattis, Greenfield]
  • Victory for sound policy: City of Milwaukee drops its public nuisance product liability case against Sherwin-Williams over lead paint residues [Genova]
  • Could the newly constituted NLRB order employers to recognize unions formed by card check even if the idea fails to pass Congress? [Mark Schoeff Jr., Workforce Management via ShopFloor; latest on measure]
  • Now before Supreme Court: Graham County v. United States ex rel. Wilson case might help rein in qui tam "whistleblower" actions that piggyback on official reports and investigations [amicus brief, PDF, and more from WLF, plaintiff's view from Labovick]
  • "Ten Things I Hate About Health Care Reform" [cardiologist/administrator Arthur M. Feldman, Washington Post via Althouse; #2 is the omission of you-know-what]

Bounty-hunters' paradise? - PointOfLaw Forum

At Overlawyered this morning I look into a stealthily added and then hastily withdrawn provision in the House health-care reform bill that would have opened up remarkable new scope for qui tam actions.

Federalist Society "Class Action Watch", May - PointOfLaw Forum

A few highlights from the new issue, dated last month:

  • Troy Yoshino and Patrick Perez, "Recent Wave of Case Law Rejects "Concealed Defect" Class Actions";
  • Karl Neudorfer and Erika Birg, "After Bridge: RICO Class Actions at a Crossing";
  • Randy Maniloff, "Fifth Circuit Expands False Claims Act Qui Tam Provisions in Time for Debate over Stimulus Package Fraud".

And other topics: CAFA & Katrina; certification in the Third Circuit; "foreign-cubed" actions; and mortgage-backed securities. The full issue is available in PDF form here.

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