November 3, 2007
UCLA and RAND Form Research Alliance; Host Conference on Civil Justice Secrecy
UCLA Law School and the RAND Corporation have formed an alliance to study law and public policy -- see the RAND press release. Their first endeavor was a conference on November 2, 2007, studying the use of secrecy in the civil justice system. Here's an excerpt from the L.A. Times article -- UCLA Law School joins others to pry into judicial secrecy, by Henry Weinstein:
UCLA Law School and the Rand Corp. launched an alliance Friday to study secrecy in the nation's civil justice system.
Attorneys and legal scholars spent the day at a conference at the law school debating just how much secrecy there is and whether any of it is justified.
"This subject could not be more timely," said UCLA Law School Dean Michael Schill. "Transparency in our civil justice system is incredibly important for its legitimacy." At the same time, he said, privacy trumps transparency on some occasions.
Michael Rich, Rand's executive vice president, expressed dismay that in recent years the civil justice system has seemed to be moving away from public scrutiny, with fewer trials being held, more private judges operating outside the normal court system and a proliferation of cases settled with confidentiality agreements.
Among the controversial issues discussed were the role of secrecy in settlement agreements and the increasing prevalence of arbitration agreements. More information on the conference and speakers can be found at the RAND conference description, which notes that "[t]he papers presented at the Transparency in the Civil Justice System will be collected in a book that will be released at an event on Capitol Hill in Summer 2008."
October 31, 2007
Lerach pleads guilty
Former Milberg Weiss partner William Lerach pleaded guilty this week to charges of paying kickbacks to plaintiffs to serve as class representatives. His plea agreement calls for forfeiture of $7.75 million, a fine of $250,000, one to two years in prison and three years of supervised release.
Today, the Los Angeles Times published an editorial -- An Isolated Case -- arguing that the scandal does not indicate a need to curtail class actions in general:
Famous -- or make that infamous -- class-action attorney William S. Lerach pleaded guilty Monday to one count of conspiracy, admitting his role in a $11.3-million kickback scandal that has upended his former law firm, the pathbreaking shareholder advocacy firm of Milberg Weiss.
As part of his plea, Lerach will pay $8 million to the federal government, and could spend up to two years in prison. Responding to news of the deal, tort reform advocates seized the easy opportunity to make sport of Lerach's downfall. But for those tempted to argue that his crimes make the case for curtailing class-action suits sharply, we'd like to offer the objection that such an argument overstates the evidence. Paying plaintiffs to sue is illegal and should be. Zealously representing injured clients is not and shouldn't be.
To the contrary, it's a necessary calling that benefits victims and society. The usual complaint against lawyers such as Lerach is that they trump up frivolous claims against innocent corporations, dragging down the economy and laughing all the way to the bank. Business interests point out, with some merit, that while individual plaintiffs can receive little in compensation, class-action lawyers reap millions of dollars in fees. Lerach's fees in suits against Enron alone may surpass $1 billion.
But here's the rub: Complaints against a company such as Enron, to cite an obvious example, aren't frivolous at all. Through deceitful accounting practices, Enron defrauded shareholders out of $40 billion and wreaked havoc in energy markets. Class-action lawsuits allow wronged investors and other parties injured by corporate malfeasance to pool resources and seek redress far more effectively and efficiently than any individual could. It's not always pretty, but it's the best solution at hand. Government, for instance, lacks the resources -- and often the incentive -- to handle all business oversight through regulation.
Yes, there have been abuses, but many of the worst were legislated out of existence by the Private Securities Litigation Reform Act of 1995 (which wasn't yet law when Milberg Weiss and Lerach paid off their plaintiffs.) The best outcome of Lerach's fall wouldn't be the demise or even the curtailing of the class-action lawsuit. It would be weeding out lawyers who abuse the system. Such action would assure that legitimate class-action suits get their fair hearing in court.
It's good to read a non-shrill account of the Milberg Weiss fiasco. The editorial is surely correct that one firm's nondisclosed payments to class reps, while wrongful, does not indicate a need for massive reform. But I wouldn't have minded if the editorial had taken it a step further and said that in a world with serious litigation abuses (by lawyers for both plaintiffs and defendants), a set of payments to class reps is hardly the biggest thing to worry about.
October 30, 2007
Congress Considers Marked Expansion of CPSC
With political will stoked by the recent lead-paint scares in children's toys, Congress is considering significantly expanding the role of the Consumer Product Safety Commission. The Wall Street Journal reports in Congress Weighs Sweeping Overhaul Of Consumer Product Commission, by M.P. McQueen and Christopher Conkey:
Spurred by a spate of scares over the safety of imported goods, Congress is weighing the most significant consumer-safety legislation in a generation -- even as states and nonprofit groups step up their own watchdog efforts.
A bill that would substantially boost fines, add staffers and increase transparency at the embattled Consumer Product Safety Commission is moving through the Senate. The moves represent efforts to address what consumer groups and critics widely see as the weakness and inefficiency of the commission, the tiny federal agency charged with regulating at least 15,000 types of consumer products, from toys to all-terrain vehicles to mattresses.
The Senate bill faces industry opposition and other hurdles on Capitol Hill, including conflict with President Bush over the direction of the CPSC. The House has already passed separate legislation. But consumer advocates predict the Democrat-controlled Senate could pass a version by year end. Industry groups say Republicans aren't likely to try to kill the bill, but hope to amend it to change provisions manufacturers find onerous.
Manufacturers and retailers say they will fight some of the bill's provisions, including the increase of fines to a maximum of $100 million from $1.85 million. But their clout has been diminished by a rash of highly publicized recent recalls involving everything from Halloween pails with lead paint to hazardous cribs to toys with small parts that present choking hazards.
Medtronic's Sprint Fidelis Cardiac Lead -- Problem Signs and the Role of the FDA
The Wall Street Journal has an extended article, Medtronic Recall Exposes Gaps In Medical Safety, by Thomas M. Burton and Anna Wilde Mathews, which provides an interesting description of the build-up of scientific warning signs for Medtronic's Sprint Fidelis cardiac lead, as well as the FDA's regulatory role. Here's an excerpt from the lengthy article:
In late January, something unsettling happened at the Minneapolis Heart Institute. On two successive days, patients came to the clinic after their heart defibrillators had jolted them with huge, unnecessary and painful electric shocks. One 65-year-old woman said she'd been zapped 14 times in an hour.
Doctors checked the hospital's records and discovered four similar cases had occurred in recent months. Each stemmed from a broken wire -- called a lead -- that tells a defibrillator when to send an electric shock to a malfunctioning heart. All six cases involved the Sprint Fidelis 6949, manufactured by Medtronic Inc., a leading medical-device maker.
Within days, the Heart Institute concluded that the Sprint Fidelis wasn't safe enough, told the company of its concerns, and stopped using the product.
Across the country, physicians at leading hospitals from Chicago's Children's Memorial Hospital to Boston's Brigham and Women's Hospital came across similar problems and some took similar steps.
But it wasn't until this month that Medtronic of Minneapolis reached the same conclusion. On Oct. 7, Medtronic President and Chief Executive Bill Hawkins convened a meeting of top executives who decided that the company should suspend sales of the Fidelis leads. In one of the biggest recalls of a medical device, it pulled all Sprint Fidelis models from the market, citing five deaths in the devices' three years on the market.
The events surrounding the Medtronic recall expose a hole in the U.S.'s medical safety system: Medical devices are regulated under different standards from those applied to prescription drugs. The Food and Drug Administration requires that almost all new medications be tested in human trials before they go on the market. But some devices, like the Sprint Fidelis leads, are subject to lighter guidelines because they are considered modifications of earlier products. The FDA, in most cases, also doesn't mandate major studies of medical devices after they've hit the market.
As a result, both the federal agency and the company were handicapped in evaluating whether a widespread public health threat was emerging.
Summary Judgment for Wyeth in Minnesota HRT Lawsuit
A Minnesota judge granted summary judgment for Wyeth today in a hormone replacement therapy (HRT) lawsuit. Here's an excerpt from the Reuters story:
A judge in Minnesota has dismissed a product liability lawsuit against Wyeth, granting the drugmaker's motion for summary judgment in a case in which a woman blamed the company's hormone replacement therapy for her breast cancer, Wyeth said on Tuesday.
In dismissing the case that had been scheduled to go to trial in January, Judge George McGunnigle of the Hennepin County District Court in Minneapolis found that the plaintiff, Patricia Zandi, had not offered any scientifically valid evidence to support her claim that she had developed breast cancer as a result using Wyeth's Premarin and Prempro.
The decision is bound to dampen some of the momentum for HRT plaintiffs generated by the recent Reno verdict.
Drug and Device Law Blog
Happy birthday to the Drug and Device Law Blog. Always interesting to see what Jim Beck and Mark Herrmann have to say about pharmaceutical litigation (and for anyone who's looking for even more blogs that address mass torts, here's the Blogs of Interest post I did late last year).
Suit Against Multinationals for Conduct During Apartheid Upheld
The Second Circuit has overturned the dismissal of class action lawsuits by three groups of plaintiffs against various multinational companies claiming that the companies "actively and willingly collaborated with the government of South Africa in maintaining a repressive, racially based system known as 'apartheid'." The plaintiffs bought claims for violations of international law, the Alien Tort Claims Act (ATCA), Torture Victims Protection Act (ATVPA) and RICO. The Multi District Litigation Panel transferred all the actions to the Southern District of New York, which dismissed all the claims. The 2nd Circuit affirmed the dismissal of the TVPA claims. The ATCA claims, however, were upheld by the Second Circuit. Importantly, the Second Circuit upheld a theory of aiding and abetting liability under the ATCA. The opinion was per curiam, with Judges Katzmann and Hall filing concurring opinions and Judge Korman (sitting by designation) filing an opinion concurring only in the dismissal of the TVPA claims and dissenting from the remainder of the opinion.
The case is Khulumani v. Barclay Nat. Bank Ltd., --- F.3d ----, 2007 WL 2985101 (2d Cir., Oct. 12, 2007). The opinion is available on the 2nd Circuit website here.
October 29, 2007
U.S. Supreme Court to Review Exxon Valdez Punitive Damages
The United States Supreme Court has granted certiorari to review the punitive damages award in the Exxon Valdez litigation. Interestingly, Justice Alito has recused himself, because of his ownership of Exxon stock. Here's an excerpt from the cnn.com article, Supreme Court to review Exxon Valdez damages:
The Supreme Court on Monday agreed to decide whether Exxon Mobil Corp. should pay $2.5 billion in punitive damages in connection with the huge Exxon Valdez oil spill that fouled more than 1,200 miles of Alaskan coastline in 1989.
The high court stepped into the long-running battle over the damages that Exxon Mobil owes in the spillage of 11 million gallons of oil into Alaska's Prince William Sound, the worst oil spill in U.S. in 1994.
The justices said they would consider whether the company should have to pay any punitive damages at all. If the court decides some money is due, Exxon is arguing that $2.5 billion is excessive under laws governing shipping and prior high court decisions limiting punitive damages.
The damages were, by far, the largest ever approved by federal appeals judges, the company said in its brief to the court.
The case probably will be heard in the spring. The court's last ruling on punitive damages, in February, set aside a nearly $80 million judgment against Altria Group's Philip Morris USA. The money was awarded to the widow of a smoker in Oregon.