April 17, 2009
U.S. Homeowner Health Problems from Chinese Drywall
Article in the Wall Street Journal -- Homeowner Problems With Chinese-Made Drywall Spread, by Michael Corkery. Here's an excerpt:
Fearing that the construction material is making them sick, homeowners are moving out of their houses, filing lawsuits and demanding help from lawmakers. Two U.S. senators have proposed a temporary ban on certain Chinese drywall imports. A Chinese government agency is also investigating, according to a Chinese news report.
The actual health effects of the drywall, which is commonly used to construct interior walls, are still unknown. While homeowners attribute bloody noses, sinus problems and headaches to the drywall, the Florida health department said there is no evidence that gases being emitted from the construction material pose a serious health risk.
April 16, 2009
Second Wall Street Journal Editorial on Plaintiffs' Lawyers Hired for Contingency Fee by State of Pennsylvania
Our editorial last week on the state lawsuit racket has created a stir in Pennsylvania, where Governor Ed Rendell has finally had to defend his "pay-to-play" relationship with Houston plaintiffs lawyer F. Kenneth Bailey. That's the good news. The rest of this underreported story is that Mr. Bailey has been running a nationwide "pay-to-sue" operation with Democratic state Attorneys General.
As we reported, Mr. Bailey made repeated donations to Mr. Rendell's 2006 re-election campaign in the months before his law firm was given a no-bid, contingency-fee contract to sue Janssen Pharmaceuticals on the state's behalf. Mr. Rendell told the Philadelphia Inquirer -- whose reporters have roused from their slumbers -- that "there wasn't the slightest bit of pay-to-play here." But the Governor was obliged to acknowledge that Mr. Bailey had approached the state about suing Janssen. Normally, the state Attorney General would handle such legal matters, but the AG rebuffed Mr. Bailey. Mr. Rendell's office then decided to hire the law firm that was also his major campaign donor. Smile if you think the two were related.
The episode speaks volumes about Mr. Rendell's political ethics, but more important is what it reveals about the plaintiffs bar's latest "business" model. Mr. Bailey's Janssen suit is part of a national pay-to-sue operation, as he and his Bailey, Perrin & Bailey law firm have taken their pre-packaged lawsuit to many states. Janssen's complaint asking the Pennsylvania Supreme Court to dismiss Bailey Perrin from the suit notes that the firm has "taken on numerous engagements similar to this action, including representation in the states of Louisiana, South Carolina, Arkansas, Mississippi and New Mexico."
April 15, 2009
Scholarship on Damage Caps
Catherine Sharkey (NYU) and Jonathan Klick (Penn) have posted an article entitled "What Drives the Passage of Damage Caps?" on SSRN. The article is available here. Here is the abstract:
Damage Compensation for Low Probability/High Damage Events
Richard Lempert (Michigan) has posted an article entitled Low Probability/High Consequence Events: Dilemmas for Damage Compensation on bepress. Here is the abstract:
This raises the following question in my mind: Are large "unique" catastrophes really unique? That is, should as a matter of procedure or institutional design treat tort claims arising out of Katrina or 9/11 differently than the tort claims arising out of use of Zyprexia or Vioxx? If so, why? One explanation might be that we think of disasters as being blameless, while we do assign blame in the tort context, but arguably that isn't true with respect to 9/11 (terrorists) or Katrina (government ineptitude). Although it is the case that those wrongdoers cannot be successfully hauled into court.
Does Litigation = Regulation?
A very intriguing analysis just posted on bepress calls into question whether litigation is a substitute for regulation. See Eric Helland and Jonathan Klick, The Relation Between Regulation and Class Actions: Evidence from the Insurance Industry, available here.
Here is the abstract: