October 20, 2006
Merck, Schering-Plough Shares Climb
Article in today's Washington Post -- Merck, Schering-Plough Shares Climb, by Linda Johnson. The article notes that "Merck . . . said it can now reasonably estimate its Vioxx costs through 2008 and reserved an additional $598 million for future defense costs, on top of the $970 million previously set aside. But the number of Vioxx lawsuits has now topped 24,000, and an additional 15,000 potential plaintiffs have entered agreements temporarily suspending the time to sue."
Manhattan Institute Publishes Report on Illinois Trial Lawyers
The Manhattan Institute this week published Trial Lawyers, Inc.: Illinois, a tort-reform-oriented study of trial lawyers and tort litigation in Illinois. It's announced on the Manhattan Institute's blog Point of Law and at Walter Olson's Overlawyered, and written up in this article in The Madison St. Clair Record -- Trial Lawyers' Profits Dwarf Business Revenue in Illinois -- which notes that much of the report focuses on St. Clair County and Madison County in southern Illinois and Cook County in Chicago.
October 19, 2006
Court backs rulings on WTC insurers
Article in the Chicago Tribune -- Court backs rulings on WTC insurers, compiled from Tribune news services: "A federal appeals court Wednesday upheld jury verdicts requiring insurance companies to pay developer Larry Silverstein $4.6 billion to rebuild the World Trade Center complex but preventing him from getting the $7 billion he had sought."
October 18, 2006
Panel Suggests Adding Drug Label Warning
Article in the Washington Post -- Panel Suggests Adding Drug Label Warning, by Andrew Bridges of the Associated Press:
Post-menopausal women who take tamoxifen to treat breast cancer face a greater risk of
recurrence if they have a specific genetic variation, federal health advisers said
Wednesday in recommending that a warning be added to the drug's label.
Recent studies have found tamoxifen does not work as well in women with breast cancer
who carry a variant of a gene called CYP2D6. An estimated 7 percent to 10 percent of
women with breast cancer may have that special form of the gene, which affects how their
bodies process the drug.
A panel of Food and Drug Administration advisers recommended the agency change
tamoxifen's label to warn post-menopausal women of that potential risk.
Study: Neck Stents Present Stroke Risk
Article in the Washington Post -- Study: Neck Stents Present Stroke Risk, by Mike Stobbe of the Associated Press:
An experimental treatment used to clear clogged neck arteries carries a higher-than-expected
risk of stroke and death, according to a study that was stopped early for safety reasons.
The study compared the use of stents _ small tubes that prop open blood vessels _ with a
common surgical procedure for cleaning out blockages in the carotid artery. Deaths and
strokes were more than twice as common in patients treated with stents, the researchers found.
The findings conflict with influential earlier research, which found stents to be safer.
Kentucky Fen-Phen Lawyers Ordered to Turn Over $20 Million to Clients
Article in Monday's Lexington Herald-Leader -- Judge Orders Money in Fund from Fen-Phen Settlement Moved:
Nearly $20 million that had been placed in a controversial fund controlled by three Lexington lawyers should instead be held for 400 of the lawyers' former clients, a judge has ordered.
On Friday, Special Judge William Wehr ordered that money from the Kentucky Fund for Healthy Living, which was set up using money from a $200 million fen-phen lawsuit settlement in Boone Circuit Court, be placed in a trust for the lawsuit's plaintiffs, all of whom said they suffered medical problems because they took the diet drug.
Those plaintiffs are now suing their former attorneys: Lexington lawyers William Gallion, Melbourne Mills and Shirley Cunningham Jr. and Cincinnati lawyer Stanley Chesley. The 400 former clients say that their lawyers took more money from the settlement than what they agreed to give them in attorney fees.
According to the article, Wehr ruled earlier this year that Gallion, Mills and Cunningham violated their duty to their clients by taking more than their share of the settlement proceeds. In August, the Kentucky Supreme Court temporarily suspended the attorneys pending a disciplinary investigation.
Many Ground Zero Workers Gain Chance at Lawsuits
Article in today's New York Times -- Many Ground Zero Workers Gain Chance at Lawsuits, by Anthony DePalma:
A federal judge has rejected the city’s claim that it is protected by law from being sued
over the way it handled rescue and recovery operations at ground zero. The ruling opens
the way for lawsuits by thousands of workers who say they were made sick by exposure
to toxic substances during the 10-month cleanup.
Judge Alvin K. Hellerstein of United States District Court in Manhattan rejected the city’s
motion to dismiss the lawsuits. In a 99-page decision released yesterday afternoon, he
stated that state and federal statutes do provide some immunity for the city, its private
contractors and the Port Authority of New York and New Jersey for actions undertaken
in response to an enemy attack. However, the judge said that protection is not universal
and varies by time and place, making it necessary to hear the details of individual cases.
“The fact-intensive nature of the issue makes its resolution unsuitable for resolution by
motion,” Judge Hellerstein concluded. “Discovery, additional proceedings and a more
extensive factual record, and perhaps a trial, will be required.”
Ex-F.D.A. Chief Pleads Guilty in Stock Case
Article in today's New York Times -- Ex-F.D.A. Chief Pleads Guilty in Stock Case, by David Stout:
Lester M. Crawford, the former commissioner of food and drugs, pleaded guilty Tuesday to
lying and conflict-of-interest charges in connection with stock he and his wife owned in
companies regulated by the F.D.A.
Magistrate Judge Deborah A. Robinson, who accepted Dr. Crawford’s plea to two
misdemeanor charges, scheduled sentencing for Jan. 22 in Federal District Court.
Dr. Crawford, 68, could face up to a year in prison and a fine of up to $100,000 on each of
the two counts, but his lawyer has said she expects him to be placed on probation.
Mark Lanier Lead Counsel for Joint Vioxx Trial
Article on Law.com today by Miriam Rozen (Texas Lawyer) -- Plaintiffs Lawyers Choose Lanier to Try Multiple Vioxx Cases in New Jersey.
If all goes according to plan, on Jan. 16, W. Mark Lanier will begin trying as many as nine Vioxx-related cases -- at the same time -- before New Jersey Superior Court Judge Carol Higbee.
On July 18, 2006, Higbee, taking suggestions from some of the plaintiffs lawyers, identified 39 of the Vioxx cases, then she asked plaintiffs lawyers to select no more than 10 of them to be tried at the same time, starting in January 2007, says her law clerk Meghan Quinlivan. Quinlivan says her judge wanted to schedule as many as 10 Vioxx cases together "as a way to explore different ways of handling the litigation."
Under the proposal, the first phase of the January trial would focus on general issues of Merck's alleged failure to warn patients about concerns regarding Vioxx's safety, and the second phase would deal with individual, case-specific issues, such as patients' medical history.
According to the article, plaintiffs' lawyers on Oct. 16 submitted a list of nine cases that they propose for a joint trial with a bifurcated trial structure. Plaintiffs' lawyers had met last week concerning trial selection. Merck continues to object to trying the cases jointly on the grounds that the issues are too individualized to warrant joint resolution.
Merck Ordered to Disclose Vioxx Lawyers' Fees
Here's an interesting one. In the New Jersey Vioxx litigation, Judge Higbee ordered Merck to disclose its attorneys' fees in the joint Cona/McDarby trial, according to this story by Theresa Agovino (AP) in BusinessWeek Online -- Judge Orders Merck to Reveal Trial Cost.
The order apparently grew out of a dispute over fee-shifting. Plaintiffs submitted a request for fees as prevailing parties under the consumer fraud statute, and when Merck objected to the size of the request, plaintiffs asked Merck how much it spent on the case, presumably to show that the plaintiffs' fees were not unreasonable in comparison to the defendant's fees:
Judge Carol Higbee's order stems from a request from plaintiffs' lawyers that Merck pay their legal fees and expenses of roughly $5.6 million for a trial that combined the cases of two men who suffered heart attacks while taking Vioxx. The jury found that Merck committed consumer fraud in its marketing of Vioxx, and that finding allows plaintiffs firms to ask for legal fees.
But Merck balked at the expense level, prompting plaintiffs lawyers to ask how much Merck spent on the trial.
According to the article, Merck disagrees with the decision and its lawyers are "exploring their options."
October 17, 2006
Former F.D.A. Chief Is Charged With Conflict
Article in today's New York Times -- Former F.D.A. Chief Is Charged With Conflict, by Stephanie Saul:
Lester M. Crawford, former chief of the Food and Drug Administration, was charged
yesterday with conflict of interest and lying about stock he and his wife owned in
companies the agency regulates.
Dr. Crawford, who resigned abruptly in September 2005, just two months after his
nomination had been approved by the Senate, is expected to plead guilty in federal
court in Washington today, said his lawyer, Barbara Van Gelder.
Each of the two charges filed against Dr. Crawford, 68, is a misdemeanor punishable
by up to a year in jail, but Ms. Van Gelder said she expected him to be fined and placed
Zyprexa Settlement Approved
Article from Sept. 28 by Jeff Swiatek of The Indianapolis Star -- $700M Zyprexa Deal OK'd by Judge:
A federal judge has given his blessing to Eli Lilly and Co.'s complex $700 million settlement with Zyprexa patients, who should see the money soon after lawyers and Medicare and Medicaid take their cuts....The order by Judge Jack B. Weinstein, of federal court in Brooklyn, N.Y., posted on the court's Web site Tuesday, is one of the last steps in carrying out the private settlement by Lilly to deal with thousands of lawsuits and potential lawsuits against it over its antipsychotic Zyprexa.Patients alleged the schizophrenia drug, Lilly's best-selling product, caused diabetes-related symptoms, including weight gain and high blood-sugar levels.Payments will range from $5,000 lump-sum awards to more than $100,000 per person.
October 16, 2006
NJ Mass Tort Designation for Risperdal, Seroquel, and Zyprexa
On September 11, 2006, the Supreme Court designated all litigation, pending and future, statewide involving the drugs, Risperdal, Seroquel and Zyprexa as mass tort and assigned it for centralized, coordinated handling to the Hon. Bryan D. Garruto in the Middlesex vicinage. This litigation involves claims filed largely against the manufacturers of these pharmaceuticals for alleged damages and injuries arising from their use.
The state supreme court designated litigation over the three drugs as a single mass tort "for coordinated and centralized management purposes." By contrast, in the federal courts, the Judicial Panel on Multidistrict Litigation designated separate MDL's for Zyprexa (E.D.N.Y.) and Seroquel (M.D. Fla.).
ALI Principles of the Law of Aggregate Litigation
Last week, the American Law Institute held meetings of the Advisors and the Members Consultative Group for the Principles of the Law of Aggregate Litigation. The groups met to discuss Preliminary Draft No. 4 (Sept. 21, 2006), which is available for purchase from the ALI and also available in many law libraries. The draft contains three chapters, addressing (1) General Principles of Aggregation, (2) Aggregate Treatment of Common Issues; and (3) Aggregate Settlements. It's worth reading. The draft is full of thoughtful and provocative proposals, and the commentary and reporters' notes provide a thorough education in aggregate litigation policy.
Chapter 3 addresses both class action settlements and non-class aggregate settlements. Among other important proposals, it advances two ideas that, if adopted as law, would dramatically enhance the power of aggregate counsel to negotiate binding settlements for classes or non-class client groups in mass torts. Section 3.07 ("Approval of a Settlement Class") would allow approval of a settlement class action even if it does not satisfy the requirements for certification of a litigation class. This section rejects the position of Amchem Products v. Windsor (U.S. 1997) that a class may not be certified for settlement unless it satisfies the requirements for class certification for litigation (other than trial manageability). The issue hearkens back to the mid-1990's, when this came up in the Georgine case, and when the Advisory Committee on Civil Rules considered a proposal for a new category of class actions -- Rule 23(b)(4) -- that would have permitted certification of a settlement class action without meeting the requirements of Rule 23(b)(3) for trial. Given the reluctance of most courts to certify mass tort class actions, combined with the desire of defendants in some mass torts to seek global resolutions, anything that eases the certification of settlement class actions would enhance the possibility of broadly inclusive resolutions in mass tort litigation. Whether that's a good idea is another story, and the proposal in this ALI draft brings us back to the concerns about leverage, collusion, and reverse auctions that pervaded discussions of Amchem and the 23(b)(4) proposal.
As to non-class aggregate settlements, section 3.17 ("Circumstances Required for Aggregate Settlements to be Binding") would allow clients to waive, in advance, the informed consent requirement of the aggregate settlement rule. Every state has an ethics rule along the lines of Model Rule of Professional Conduct 1.8(g), forbidding lawyers to enter an aggregate settlement for multiple clients unless each client gives informed consent after full disclosure of the settlement terms. The proposal in the ALI draft would allow clients to consent, in the retainer agreement, to be bound later by an aggregate settlement. For example, under this proposal, a lawyer representing numerous plaintiffs in a particular mass tort might include in the retainer agreement a provision that each client agrees to be bound by an aggregate settlement if approved by majority vote of the client group. The proposal contains a number of specific protections for claimants, including a limited right to challenge the fairness of a settlement. Also, the proposal would limit such waivers to settlements involving numerous claimants and high aggregate stakes. Like the class action proposal, this proposal would empower lawyers to negotiate settlements on behalf of large groups of clients. In the mass collective representation typical of mass tort litigation, both plaintiffs' counsel and defendants often favor settlements that bind entire groups. Elsewhere (in Beyond the Class Action, 2003 U. Chi. Legal F. 519, 570-75, and in A Typology of Aggregate Settlements, 80 Notre Dame L. Rev. 1769, 1809-10 (2005)), I've explained why in general I do not think it makes sense to permit such ex ante waivers of the protections of the aggregate settlement rule. It will be interesting to see how the issue plays out in the ALI project.
Appeal in Light Cigarette Class Action
Tobacco companies have petitioned the Second Circuit for review of Judge Jack Weinstein's class certification decision in Schwab v. Philip Morris on the grounds that they "risk a multi-billion dollar verdict in a manifestly unlawful class action" in which the district court "committed fundamental legal errors."
Under Federal Rule of Civil Procedure 23(f), the Court of Appeals has discretion to decide whether to accept the appeal, since it's an interlocutory appeal of a class certification decision rather than an appeal from a final judgment. Given the size and significance of this class action, as well as the number of hotly disputed legal issues it raises, I'll be surprised if the Second Circuit declines the appeal. And assuming they take the appeal, I'll be surprised if they don't stay the proceedings in the district court. (Under Rule 23(f), an appeal does not automatically stay the district court proceedings, but either the district judge or the court of appeals may order a stay. In his class certification decision, Judge Weinstein explicitly declined to grant a stay, and set trial for January 22.)
Judge Weinstein's memorandum and order, all 540 pages of it (not counting the 998-page appendix), will give the Second Circuit plenty to think about. In classic Weinstein fashion, the opinion works the substantive law in order to facilitate aggregation. On the critical issue of whether the fraud-on-the-market theory of reliance can be extended to the RICO claims in this light cigarettes case, he says, "These doctrines are flexible; they permit deviations in favor of class certification." (p. 208) As always, he offers a powerful policy argument in favor of aggregate litigation, noting repeatedly that denial of class certification would be a "death knell" for this litigation because of the small size of the individual claims. (pp. 27, 219, 538) In response to the argument that due process requires individual proof as to each claim, he endorses the practical necessity of aggregate proof: "Examining each grain of sand is too burdensome in a survey of a beach." (p. 480) At Findlaw, Tony Sebok offers a thoughtful analysis of the problems with such aggregate proof of reliance and damages.
Parts of the district court opinion seem directed unabashedly to the Second Circuit. Judge Weinstein repeatedly emphasizes the enormity of the record in the case and the extent to which the issues are fact-sensitive. In denying certification of interlocutory appeal under 28 U.S.C. 1292(b), he notes the "probability that an interlocutory appeal would require lengthy appellate consideration and the likelihood that continued district court proceedings without appeal might moot the issues." (p. 537) In refusing to stay the proceedings, he emphasizes the importance of moving forward without delay: "This suit has been pending for almost two and a half years. Discovery is essentially complete. Legal questions antecedent to trial have been resolved. Further delay would run afoul of the first mandate of the Federal Rules of Civil Procedure: the courts shall 'secure the just, speedy, and inexpensive determination of every action.'" (p. 538, quoting Fed. R. Civ. P. 1)
Other parts of the opinion, however, seem directed to the parties and meant to encourage settlement of the class action. Judge Weinstein offers his frank opinion on the merits, telling the plaintiffs that their case is strong on liability but weak on damages: "While evidence of fraud on the class appears to be quite strong -- and defendants have been less than candid in insisting that there was no fraud -- evidence of the percentage of the class which was defrauded and the amount of economic damages it suffered appears to be quite weak -- and plaintiffs have been less than candid in failing to acknowledge that deficiency in their proof." (p. 22) He then goes even further and states that "the court believes, on the evidence thus far produced, that the amount of possible damages has been grossly exaggerated by plaintiffs." (p. 26) Why, in a class certification decision, would a judge comment so bluntly on the merits? Presumably, to give the parties enough information, along with just enough risk, to drive a settlement. The court's comments, along with the early trial date, denial of a stay, refusal to certify an interlocutory appeal, and the suggestion that the court would entertain a motion to alter the class definition "if that would assist the parties in negotiating a global settlement" (p. 540), all seem geared toward encouraging the parties to negotiate a class settlement.
Much of that settlement pressure will disappear, however, as soon as the Second Circuit does the expected and accepts the appeal.
October 15, 2006
Thank You For Smoking
The trailer for Thank You For Smoking, the satirical tobacco comedy movie recently released on DVD, has been posted on YouTube. The movie is a must-see for followers of mass tort litigation. Among the humorous scenes are lunchtime meetings of the "M.O.D. Squad" -- short for the "Merchants of Death," consisting of lobbyists for the tobacco, alcohol, and firearms industries. The movie, which is based on the novel by conservative Christopher Buckley and directed by Jason Reitman, generally forwards a non-politically correct agenda based on personal choice and personal responsibility. But no group is spared frequent satirical barbs. What could be wrong with a movie whose supporting cast includes Robert Duvall, William H. Macy, Rob Lowe, Sam Elliott, and Katie Holmes?
The movie also raises the issue of using movies in connection with law classes studying mass torts. In class, I've used clips from A Civil Action, which is a treasure of mass tort themes, and I've also thought about using clips from Erin Brockovich and The Insider. Rather than use clips, another alternative is to schedule casual, optional-attendance screenings of the movies outside of class; I've considered, but not yet tried, such screenings. Any comments about using movies for mass tort issues are very much welcomed.