Saturday, December 1, 2007
On November 26, in the Southern District of New York, Judge Kaplan dismissed claims made by the Louisiana Attorney General’s office that the State would not have paid for Rezulin prescriptions filled by Medicaid recipients if it knew that information was withheld or misrepresented by Warner-Lambert. The MDL Panel transferred the case to the court in September of 2005. But in the two years since, the Louisiana Attorney General’s office did not initiate discovery requests and failed to submit a Rule 56(f) affidavit to counter defendants’ motion for summary judgment. Although one might dismiss the case as an anomaly, it does raise questions about institutional design. Namely, who should bring enforcement actions—public governmental actors, private attorney’s generals, or some mix of the two. This case suggests some value to having multiple, decentralized enforcers to circumnavigate potential agency inaction. I’ve written about additional benefits to decentralization in an earlier piece that can be found here.
The Wall Street Journal has an article -- In Scruggs Probe, Focus Turns to Another Lawyer, by Peter Lattman and Ashby Jones -- that suggests that Timothy Balducci is cooperating with the government prosecutors in connection with the alleged attempted bribery of a Mississippi state judge by Balducci, Dickie Scruggs, and others. The alleged attempted bribery was supposedly meant to skew the judge's attorney-fee distribution in the Katrina insurance litigation. From the article:
The indictment also cites several conversations held between Mr. Balducci and others named in the indictment that were held outside the judge's chambers. That, some defense lawyers say, suggests that, at some point in the investigation, Mr. Balducci began cooperating with the government.
"I would not be surprised at all if Balducci was cooperating," said Daniel Gitner, a defense attorney in New York and former federal prosecutor who isn't familiar with the case beyond the indictment and news reports. "There's a tremendous amount of detail relating to what he did in relation to the other defendants. It would appear that a good portion of that probably came from his mouth" because it happened outside of the judge's bugged office, said Mr. Gitner.
He added that while it is possible that there were several wiretaps outside the judge's chambers, "the odds of the government monitoring more than one phone are lower than the government monitoring a single phone. It's complicated for the government to use electronic survelliance."
Furthermore, Mr. Balducci hasn't been arraigned in court this week, while the other four defendants all pleaded not guilty.
Friday, November 30, 2007
Top plaintiffs' lawyer Dickie Scruggs, of tobacco and asbestos fame, has been indicted for alleged attempted bribing of a Mississippi state judge in connection with the distribution of fees from the Katrina insurance litigation. As with the separate Milberg Weiss allegations about paying class representatives, the government appears to have much stronger evidence against a less-well known lawyer intermediary, who was allegedly working on behalf of the well-known plaintiffs' lawyer. In the Katrina litigation, that intermediary is alleged to be Timothy Balducci, who was audiotaped offering the bribe and delivering the money, according to the government. Scruggs denies the allegations.
The Wall Street Journal has details on the build up of the case in the article, How the Scruggs Case Came Together, by Ashby Jones and Peter Lattman. In addition, an editorial in the Journal -- The Trial Bar on Trial -- celebrates the possible downfall of prominent tort lawyers who were indicted this year, including Bill Lerach, Dickie Scruggs, and others at Milberg Weiss including Melvyn Weiss.
If true, all of these allegations suggest remarkable hubris in at least some of the top plaintiffs' lawyers. One wonders about the effect of a lifestyle of private jets and multiple wins of multiple millions (or tens of millions) in fees. One also wonders about the effect of high-risk, winner-take-all, contingency fee litigation. Brash and aggressive personalities seem to thrive in such an environment -- but they too must keep in mind that lawyers ultimately serve the client (not the other way around) and that no one (especially not the lawyer) is above the law.
Thursday, November 29, 2007
After a push toward class actions in Britain, the United Kingdom’s Office of Fair Trading has issued a report cautioning against American style litigation. You can access Legal Week’s article here. Currently, Britain permits only certain groups to bring aggregate litigation, including Which?, an organization promising to be independent source for information on consumer products. Among other agenda items, it campaigns for safety in the cosmetic industry.
Britain’s backlash surfaces against an increasing worldwide propensity for aggregate litigation. Stanford and Oxford University are hosting a joint conference on the Globalization of Class Actions in Oxford from December 12-14. Pending legislation and reports from roughly 35 countries can be found here.
Wednesday, November 28, 2007
The Associated Press reports that Ford has agreed to settle class action suits covering plaintiffs in California, Connecticut, Illinois and Texas arising out of claims that Ford Explorer SUVs were prone to rolling over. It is reported that plaintiffs will get transferable vouchers to buy new Explorers or other Ford or Lincoln Mercury cars. This apparently settles all the suits against Ford arising out of the rollover accidents linked to Ford Explorers and Bridgestone/Firestone tires. The Associated Press article can be accessed here. Because the cases were brought in California State Court, the CAFA limitations on coupon settlements do not apply.
Monday, November 26, 2007
James Dorn, a China specialist at the Cato Institute, has posted an op-ed article on the lead-paint problems with Chinese imports and possible Congressional response -- Toxic Toys: Congress Risks Making Things Worse. Here's an excerpt:
The role of government is to safeguard private property rights and, thus, to protect people against fraud and violence. But an overzealous government that tries to keep all bad products off the market is likely to err by keeping too many good products off the market. It is increasingly costly for government to monitor every product. The only viable alternative is to allow private agencies to supplement government regulation to ensure the optimal amount of safety - that is, the amount that is worth what it costs.
Former FDA deputy commissioner Scott Gottlieb noted that "the FDA cannot be everywhere, every time a risk arises, especially as the supply chain for both food and drug products continues to grow more diverse and more global. Ultimately, (the) FDA needs to enable companies to be inspected by reputable private third parties that are certified by the agency."
The execution of Zheng Xiaoyu, former head of the Chinese State Food and Drug Administration, for taking bribes while approving deadly drugs and lead-tainted toys is a stark reminder that government oversight does not guarantee product safety. Even an advanced economy like the United States can fail to prevent hazardous products from entering the market.
Neither the government nor the market will lead to perfectly safe toys, pet food, toothpaste, seafood or drugs. Achieving 100% safety - zero risk - is not an option, and utopian solutions to socioeconomic problems have always proved to be disastrous.
The danger is that new legislation could be a veil for protectionism, as special interests try to gain advantage in the domestic market by restricting imports and also by handicapping smaller domestic firms by increasing their regulatory costs.
Adam Liptak as a column in today's New York Times about the use of cy pres distributions in class action settlements. A cy pres distribution ordinarily occurs when the settlement funds have not been exhausted by payments to claimants and are redistributed to charities. Sometimes these charities are related, sometimes not related, to the subject of the underlying litigation. I think of cy pres as being a feature of consumer class actions only, but Liptak cites to a drug settlement that included cy pres distributions. He writes:
The Illinois Institute of Technology got $5 million from a settlement in a case involving a diabetes drug in Illinois, as did a Chicago hospital. A Hasidic Jewish group, Lubavitch Chabad of Illinois, picked up $2 million from the drug settlement.
As Sam Issacharoff (NYU) states in the article, the power to distribute such substantial funds has the potential to corrupt judges. I wrote about these types of settlements in the consumer context in 2003 (the article is called Fundamental Principles for Class Action Governance, 37 Ind. L. Rev. 65 (2003)). There I argue that the best medicine for the types of problems created by cy pres distributions is transparency. I also note there another phenomenon, which is that defendants sometimes place restrictions on the types of organizations that can receive cy pres funds, excluding those that are likely to pursue more of the same type of consumer protective litigation. The question of cy pres distributions raises a more fundamental question that plagues mass tort, consumer and all collective litigation: is the goal to deter wrongoing (in which case all we ought to care about is that defendants pay out an optimal amount) or to compensate individuals wronged (in which case we should be deeply offended by the use of mechanisms such as cy pres distributions)? Even if one thinks the answer is a little bit of both, there remains the difficult question of how that balance ought to be struck.
Sunday, November 25, 2007
Federalist Society Publication Articles on Preemption, Learned Intermediary Rule, and Class Action Attorneys' Fees
The Federalist Society has posted the October 2007 issue of Engage. Mass-tort related articles include the following: Catherine M. Sharkey, The Roberts Court Wades into Products Liability Preemption Waters: Riegel v. Medtronic, Inc.; James M. Beck & Theodore H. Frank, West Virginia Supreme Court Strikes Down Learned Intermediary Rule; and Jack Park, Attorneys' Fees in Class Actions: The Problem Remains.