Friday, February 29, 2008
The Supreme Court heard oral argument Wednesday on whether to uphold the $2.5 billion punitive damages award against Exxon Mobil and its shipping subsidiary in a class action arising out of the 1989 oil spill of the Exxon Valdez in Alaska's Prince William Sound. For commentary on the argument and on the Justices' questions, see Scotusblog, Point of Law, and the New York Times. The Times article points out that the award, on behalf of a class of 32,000 fishermen and business owners, is the largest punitive damages award ever upheld in federal court. With Justice Alito recused because of stock ownership, a 4-4 tie would result in affirmance of the judgment. Observers have suggested the strong possibility that the award will be reduced but not eliminated.
Thursday, February 28, 2008
The American Enterprise Institute has posted the audio and video for its panel presentation on February 21 on Federal Preemption and the Supreme Court. AEI's Ted Frank moderated the panel, which included Michael Greve (AEI), Catherine Sharkey (NYU), Daniel Troy (Sidley Austin), and Brian Wolfman (Public Citizen).
Wednesday, February 27, 2008
Friday, February 22, 2008
The Kentucky Supreme Court has created a committee to explore possible improvements in the handling of mass tort litigation. According to the press release, the committee "will determine whether current court rules for attorneys and judges provide adequate safeguards against unethical conduct and whether rule changes may provide guidance to attorneys and courts dealing with complex litigation." The appointment comes in the wake of indictments against several Kentucky lawyers charged with stealing client funds in fen-phen settlements. Here's the Torts Prof post about the committee, with a link to a news account.
I met with the Kentucky committee in Frankfort last month, and enjoyed the opportunity to discuss with them the challenges of mass tort litigation and some of the ways in which rules of procedure and rules of professional conduct may be modified or sensibly interpreted to accommodate the demands of mass disputes while respecting core values of justice and attorney-client relationships. It will be interesting to see what proposals, if any, the committee generates after exploring the possibilities. It will be equally interesting to see how many of those proposals are ultimately adopted.
Thursday, February 21, 2008
Chris Seeger, a leading plaintiffs' lawyer and one of the chief architects of the Vioxx settlement, will deliver a lecture entitled "The Vioxx Story: Mass Settlement Without Class Actions" on March 11, 2008, 6:30 p.m. at Cardozo Law School in New York. The program will be moderated by Cardozo Professor Tony Sebok and will include commentary from Kathleen O'Connor of Dechert and from Howard Erichson (me).
For those who wish to understand mass tort litigation, Vioxx is the most important tale to grapple with since fen-phen. It's a story of mass collective representation, parallel state and federal litigation, multiple categories of claims, class cert denials, rejection of large-scale trial consolidation, informal bellwether trials, widely varying trial outcomes, a classic turnabout in defense strategy from vigorous litigaton to comprehensive resolution, and a sophisticated but not problem-free mass aggregate settlement. It's pretty much everything that's right and wrong with mass tort litigation today. I'm looking forward to the event.
Merck announced yesterday that it would seek review of a Canadian decision to certify a Vioxx class action. Here’s an excerpt of its press release on the matter:
Merck Frosst Canada Ltd. has learned that the Saskatchewan Court of Queen's Bench has decided to certify class proceedings in a lawsuit regarding VIOXX®. The Company intends to seek appellate review of the decision because it believes that each plaintiff's case should be tried separately.
"Our legal strategy remains the same," said Maurice Laprairie, of MacPherson, Leslie & Tyerman LLP, Saskatchewan counsel for Merck Frosst and Merck & Co., Inc. "Although we argued against the creation of a class, the Court's decision still requires that each plaintiff must prove his or her claims on an individual basis because each plaintiff's case is unique and depends on an individual set of facts. Heart attacks, for example, are unfortunately common in the population and caused by many different risk factors."
"The Company intends to defend these cases vigorously over the coming years, and we are confident that the courts will decide these cases based on sound science," said Mary M. Thomson, of Gowling Lafleur Henderson LLP, Canadian national counsel for Merck Frosst and Merck & Co., Inc. "We will continue to argue that centralized judicial management of individual cases, not a class action, is the preferable procedure for trying each case in a fair and expeditious manner."
Canada appears more willing to resolve these claims through class action procedures than did the U.S., where Judge Fallon consolidated and (is in the process of) settling the claims on a multidistrict litigation basis. Canada’s National Report, submitted in conjunction with Stanford’s Globalization of Class Actions Conference last December observes:
Class actions have given rise to a wide variety of claims, including: governmental liability, products liability and mass torts; breach of contract; insolvency proceedings; and, securities, environmental and competition law violations. Whether or not a class is certified, of course, depends on many factors. However, Canadian courts have not singled out a particular kind of claim as being particularly problematic for class action treatment. For example, a number of product liability and mass tort class actions have been certified. Regarding these kinds of claims, the Canadian courts’ approach appears more receptive than their American counterparts.
Wednesday, February 20, 2008
The Supreme Court today decided Riegel v. Medtronic, an important case concerning federal preemption of state law product liability claims. Justice Scalia wrote for the 8-1 majority in favor of preemption, reasoning that experts at the FDA are better positioned than jurors to evaluate the risks and benefits of medical devices. Justice Ginsburg dissented. Here's a copy of the opinion on Findlaw. And here's an excerpt from David Stout's story in the New York Times, Justices Make It Tougher to Sue Medical Device Makers:
In a case with huge implications for the health care-technology industry, the Supreme Court ruled on Wednesday that the manufacturer of a federally approved medical device cannot be sued under state law if the device causes an injury.
The 8-to-1 ruling in favor of Medtronic, the Minneapolis-based maker of cardiovascular devices, made it much more difficult for patients and their families to sue makers of medical devices that have been granted federal approval. ...
The Supreme Court upheld the lower federal courts on Wednesday, with Justice Antonin Scalia writing for the majority that Medtronic and other manufacturers were protected under the Medical Device Amendments of 1976, which in its section on pre-emption bars states from imposing on medical devices “any requirement which is different from, or in addition to, any requirement applicable under this chapter.”
But the justices’ ruling was hardly the last word on when F.D.A. approval bars patients from suing. They are already considering at least three cases involving drugs and drug-labeling.
This morning's Wall Street Journal reports that a district court judge in Nevada reduced a jury award against Wyeth from $134 million to $58 million. The damages included both compensatory and punitive damages based on the theory that the drugs Premarin and Prempro caused plaintiffs' breast cancer. The judge was concerned that the amounts represented "the result of passion and prejudice." Here's an excerpt of the story:
Washoe County District Court Judge Robert Perry granted the drug maker's motion to find the damages excessive. He ordered the award reduced to about $58 million -- $23 million in compensatory and $35 million in punitive damages.
The judgment had been the largest award to date against the Madison, N.J., company, which faces about 5,300 similar lawsuits across the country.
All involve the drugs Premarin, an estrogen replacement, and Prempro, a combination of estrogen and progestin.
Judge Perry said the jury's judgment of $35 million in compensatory and $99 million in punitive suggested the amounts were "the result of passion and prejudice."
"The court believes that this reduction in damages adequately compensates plaintiffs for the serious consequences which the jury found to have been caused by defendant, while also serving to punish defendant and deter others from similar conduct," he wrote.
Tuesday, February 19, 2008
Keith Hylton (Boston University) has posted his piece, Asbestos and Mass Torts with Fraudulent Victims, on SSRN. This piece was part of Southwestern's Perspectives on Asbestos Litigation Symposium. Here's the abstract:
Deterrence and compensation goals should be distinguished, and compensation priorities should change in response to the deterrence goal. This has immediate implications for the problem of handling marginal and fraudulent claims in asbestos litigation. Where the deterrence goals come to the forefront, for example in instances of reckless exposure, it may be desirable for courts to require defendants to pay damages that are not transferred to any claimants. Where the deterrence goals are less compelling, as in instances of ordinary negligence, the importance of weeding out marginal and fraudulent claims becomes paramount. I consider optimal penalties for attorneys who bundle fraudulent claims.
Monday, February 18, 2008
Article on cnn.com -- Toymakers, stores must act on lead - regulator. Here's an excerpt:
The head of the U.S. Consumer Product Safety Commission said Monday that toymakers and retailers need to step up their efforts to eliminate lead from toys.
"I will not tolerate this industry or any other not complying with our regulations," said Nancy Nord, the acting chairwoman of CPSC. "This problem must be fixed."
Nord, speaking at the annual American International Toy Fair, called on manufacturers to audit their factories. She also said that retailers must do more to assure that they don't sell tainted toys.
"We will be relentless with recalls," Nord said. "There is no reason why they can't certify that every toy has been designed for safety."
The CPSC has been working with the Toy Industry Association over the past few months to hammer out tougher toy safety standards after more than 25 million toys were recalled last year because of lead paint hazards and defective designs.
The TIA board of directors on Sunday approved a proposal for testing and a safety verification system for toys sold in the United States. Specifics of the plan will not be released until Friday. The association said key elements include procedures for design hazard analysis, auditing manufacturing process controls and product safety testing.
Sunday, February 17, 2008
Professor Mark Geistfeld (NYU) has posted his paper, Punitive Damages, Retribution, and Due Process, 81 Southern Cal. L. Rev. 263 (2008), on the NELLCO Legal Scholarship Repository. Here's the abstract:
Tort law provides awards of punitive damages for reasons of deterrence and retribution. In light of a recent decision by the U.S. Supreme Court in Phillip Morris USA v. Williams, the retributive rationale for punitive damages will inevitably come under heightened scrutiny. The case involves a punitive award of $79.5 million, which is ninety-seven times greater than the compensatory damages, making it constitutionally suspect for exceeding the single-digit ratio between punitive and ompensatory damages. The Court, though, has never addressed the institutional issue in a case involving serious bodily injury or death, and so Williams poses a number of new questions. How can compensatory damages provide an appropriate baseline for evaluating punitive damages in a case of wrongful death, given that monetary damages provide no compensation to a dead person? What is the appropriate baseline? Any future deterrence provided by a punitive award cannot protect the decedent’s tort right, and so the award must be justified exclusively in terms of retribution. Is retribution inherently subjective and arbitrary, unless constrained by some objective measure such as the single-digit ratio between the punitive and compensatory damages? Or is there some way to translate retribution into dollars? These questions are not limited to wrongful death cases and must be resolved by any court trying to determine whether a punitive award is unconstitutional for exceeding the single-digit ratio. These questions can all be answered once retribution is tied to the inherent limitations of compensatory damages, which yields a method for quantifying this form of punitive damages. Based on government data and methodology for quantifying the social cost of a premature death, this method shows why vindication of the decedent’s tort right in Williams justifies the $79.5 million punitive award. When formulated in this manner, vindictive damages satisfy the requirements of both substantive and procedural due process and provide a baseline for reviewing courts to determine whether any given punitive award, like one based on general deterrence, is excessive in violation of substantive due process. This method fully accounts for the reprehensibility factors that determine the constitutionality of a punitive award, while also explaining why the Court could defensibly rely on procedural due process to reverse and remand Williams back to state court.
Saturday, February 16, 2008
Article in the Wall Street Journal -- Senate Forges Consumer-Safety Bill, by M.P. McQueen. Here's an excerpt:
Following a rash of toy recalls last year, Senate Democratic and Republican leaders announced Friday that they reached a compromise on a bill to overhaul the Consumer Product Safety Commission.
The Senate is likely to vote this month on the bill, which would give the agency greater resources to remove unsafe products from the marketplace, but it would still have to be reconciled with a bill the House passed in December. Although industry groups have raised objections, the agreement appears to put CPSC-overhaul legislation back on track to clear Congress, especially in an election year when a crackdown on unsafe children's products has broad consumer appeal.
The bill would boost fines for safety violations to $20 million from the current $1.8 million, restore the commission to five members from three and require the safety agency to set up a database containing reports of injuries, illnesses or deaths from consumer products submitted by the public.
Article in the Wall Street Journal -- Boost for Off-Label Drug Use: FDA Would Let Firms Keep Doctors Informed On Unapproved Methods, by Anna Wilde Mathews and Avery Johnson. Here's an excerpt:
The Food and Drug Administration wants to allow drug companies to give doctors information about unapproved uses of prescription drugs, a controversial move that is already drawing objections from Capitol Hill.
Companies generally aren't allowed to advertise or market such "off-label" uses, though doctors can prescribe drugs for any condition. The FDA has proposed guidelines allowing manufacturers to give physicians reprints of medical journal articles about uses of drugs and medical devices that haven't won the agency's approval.
The regulator is stepping into a high-stakes business issue, because off-label uses of prescription drugs are a mainstay of the industry -- an estimated 21% of drug use overall, according to a 2006 analysis published in the Archives of Internal Medicine.
Drug makers are generally expected to welcome the proposal because it clarifies a blurry legal area. At least under certain conditions, it promises a haven for a controversial promotional practice. It also contains an argument from the agency that may help the companies in court cases about marketing practices: There are "important public policy reasons for allowing manufacturers to disseminate truthful and non-misleading medical journal articles" and reference materials about off-label uses.
Thursday, February 14, 2008
As I've previously posted, Widener Law School in Harrisburg is hosting a symposium entitled, Crimtorts, on Monday, February 25, 2008. Here's the brochure: Download crimtorts_symposium_brochure.pdf One change from the brochure -- Professor Mary Kate Kearney is unable to present, and instead, Professor Frank Vandall of Emory will present. I will appear on the Applications Panel and discuss crimtorts and class actions.
Another settlement has been reached in the Rhode Island nightclub fire litigation. Clear Channel Broadcasting, which owns the radio station that promoted the 2003 rock concert that ended in a tragic fire when pyrotechnics used by the band Great White ignited the club's soundproofing foam, has agreed to a $22 million aggregate settlement, according to this AP article on Law.com. The deal still requires the consent of each of the plaintiffs. According to the Law.com story, "[t]he tentative deal brings to more than $70 million the total amount of settlement money offered to survivors and victims' relatives. Other defendants that have reached settlements in recent months include The Home Depot, a manufacturer of insulation material, a pyrotechnics maker and a TV station whose cameraman was accused of blocking an exit while filming the fire." An earlier aggregate settlement was negotiated with other defendants several months ago. Here's more from today's news report:
The owner of a radio station that promoted a rock concert where pyrotechnics ignited a deadly blaze reached a tentative $22 million settlement with survivors and victims' relatives, according to court papers filed Wednesday.
The deal with Clear Channel Broadcasting is the latest in a series of settlements stemming from the Feb. 20, 2003, fire at The Station nightclub in West Warwick, R.I., that killed 100 people and injured more than twice that many. ...
The settlement requires the approval of all the plaintiffs and the federal judge overseeing the case, among other conditions, the court papers said. A Duke University law professor has been appointed to create a formula for the distribution of settlement money.
Tuesday, February 12, 2008
Article in the Wall Street Journal -- Closing Argument: Mr. Lerach Mulls Life Behind Bars, by Peter Lattman. Here's an excerpt:
Yesterday in Los Angeles, U.S. District Judge John Walter sentenced Mr. Lerach, 61 years old, to two years in federal prison for conspiring to obstruct justice in connection with alleged kickback payments made by his former law firm, Milberg Weiss LLP. Mr. Lerach is also paying an $8 million penalty. He has been suspended from the practice of law and will be disbarred.
The punishment brings to an end a controversial legal career. The costly class-action lawsuits Mr. Lerach pursued in the name of shareholders made him loathed in America's boardrooms. Executives hit with his suits said they had been "Lerached." His defenders maintained he had championed investors and helped keep companies accountable.
It's the latter view that Mr. Lerach, who has earned more than $200 million, sees as his legacy. He recently looked back at his career and the case against him in an interview at his club and at his home, an Italianate California mansion perched on a cliff overlooking the Pacific Ocean in La Jolla. And, with his Chihuahua, Tommy, on his lap, he looked ahead to being in prison and to getting out.
The Wall Street Journal also has an editorial on Lerach.
Friday, February 8, 2008
Very interesting article on cnn.com -- FDA warns of Botox side effects, deaths. The FDA currently says it's only probing a "relative handful" of reports, but the widespread usage of Botox certainly raises the possibility of a mass tort. Here's an excerpt:
The popular anti-wrinkle drug Botox and a competitor have been linked to dangerous botulism symptoms in some users, cases so bad that a few children given the drugs for muscle spasms have died, the government warned Friday.
The Food and Drug Administration's warning includes both Botox, a wrinkle-specific version called Botox Cosmetic, and its competitor, Myobloc, drugs that all use botulinum toxin to block nerve impulses, causing them to relax.
In rare cases, the toxin can spread beyond the injection site to other parts of the body, paralyzing or weakening the muscles used for breathing and swallowing, a potentially fatal side effect, the FDA said.
Botox is best known for minimizing wrinkles by paralyzing facial muscles -- but botulinum toxin also is widely used for a variety of muscle-spasm conditions, such as cervical dystonia or severe neck spasms.
Other authors at this blog have been following the prosecutions of lawyers from Milberg, Weiss. Did those prosecutions have any effect on the world of class actions? The answer, according to lawyers at the Professional Liability Underwriting Society’s D&O Symposium on February 6, 2008 seems to be yes, but not in the way you would expect. There's no reduction in filings, but instead in collegiality. According to a defense-side lawyer at WilmerHale, "overcaffeinated 35-year-olds" are taking over some of the suits that Milberg Weiss would have brought. The article reporting on the conference, which you can find in the National Underwriter P&C, goes on to quote another defense side lawyer from Cravath:
the new lawyers are importing tactics from product liability cases, resulting in “an increasing inexorable tide of nastiness and incivility.” In particular, he referred to tactics such as filing discovery sanction motions, noting that while good-intentioned people on the defense side are trying to find “millions of pieces of paper,” they are being accused of “all sorts of high crimes and misdemeanors” by these younger attorneys who are “hijacking” the litigation process. [emphasis added].
These lawyers, at least, seem to be feeling the loss of repeat players. Securities litigation was rather predictable, they assert, allowing insurers to determine risk early on. The removal of these prominent plaintiff's attorneys from the scene is apparently changing all that. A couple of thoughts. First, I wonder if the Cravath lawyer concerned about good-intentioned people (and note that "good-intentioned" -- rather than well-intentioned -- are the words of the journalist and not the lawyer), had forgotten the recent flurry over the Qualcomm case when he made his comments. For more on Qualcomm, look in Law Technology Today and at the Legal Ethics Forum. Second, the overall tone seems to be that aggressive litigation is a bad thing (one lawyer is quoted as saying new lawyers make the case "about the process of litigation rather than about the merits"). But sometimes aggressive litigation is what addresses the merits, as compared with, say, just settling all cases in some smoky back room. I'm not saying that is what lawyers were doing before the entry of these over-caffeinated folks. But I'm also not against a cup or two if you're a bit slow in the morning. How do you determine the "merits" in the absence of litigation?