Thursday, June 24, 2010
Yesterday Judge Hellerstein held what the media is calling a "fairness" (in scare quotes) hearing on Wednesday and approved the settlement proposed for resolving the cases in the WTC Disaster Site litigation. Everyone was supportive, including Ken Feinberg.
Here's an interesting twist:
Tom Hayes of the A/P reports that the judge appointed Roy Simon of Hofstra to monitor attorney-client communications on the plaintiffs' side: "The monitoring would, ostensibly, reduce the possibility that some clients could be bullied or frightened into accepting the deal, or misled about how much money they might stand to receive." See the article here on MSNBC.com
Tuesday, June 22, 2010
According to the New York Times, he's called for speedier payouts to victims of the Gulf spill. He is quoted as saying:
“Do not underestimate the anger and frustration of people in the Gulf, the uncertainty of not knowing what they’ll receive and when they’ll receive it."
Wednesday, June 16, 2010
The NYTimes reports that BP has agreed to set aside $20 billion for a compensation fund. Ken Feinberg will be the independent administrator. In the last ten years Feinberg has become the gold-standard of mediators and administrators.
If you're worried about whether BP can pay, its operations garnered $27.7 billion in cash last year. It had about $24 billion in debt with a debt to equity ratio of 20%.
The NYTimes feature Room for Debate addresses the oil spill today with entries by the following:
- Zygmunt Plater, environmental law professor
- Alice Schroeder, former regulator, Financial Accounting Standards Board
- Kate Gordon, Center for American Progress
- Richard Nagareda, law professor
- Alex Tabarrok, economics professor
- Noah Hall, environmental law professor
The Wall Street Journal is reporting that Ken Feinberg, who is currently handling the 9/11 First Responders' Settlement, will likely be appointed as independent administrator of an oil-spill escrow fund. I can't say that I'm surprised. As I watched last night's presidential address on the oil spill and the promise of compensation, Ken Feinberg was the first person to come to mind and would be an excellent choice.
Richard Epstein (Chicago, NYU) has an op ed in the Wall Street Journal calling for a strict liability regime for the BP incident. Here is a nice quote from the op ed:
The legal system should never allow self-interested parties to keep for themselves all the gains from dangerous activities that unilaterally impose losses on others—which is why the most devout defender of laissez-faire must insist, not just concede, that tough medicine is needed in these cases. The fundamental question here is one of technique: What mix of before and after sanctions will do the job at the lowest cost?
He goes on to explain that "Solid insurance underwriting is likely to do a better job in pricing risk than any program of direct government oversight." That is an interesting point. It raises important questions of how underwriting is actually done, what the quality of the risk assessment is, and how it can be improved-- see Tom Baker & Sean Griffiths work on D&O insurance for examples of the kind of studies that ought to be done. They find reason for hope in D&O insurance underwriting. It also begs the question of what background rules create the situation where such underwriting is necessary and what incentives are in place to avoid errors.h/t Nate Oman, concurring opinions
Frank Pasquale (Seton Hall) has an excellent post over at Concurring Opinions about how the current administration permitted BP to dump a chemical dispersant into the oceans in the immediate aftermath of the spill, a dispersant about which no toxicity studies have ever been done and the ingredients of which are trade secrets.
Pasquale refers to his recent article on the relationship between property rights and the precautionary principle called Beyond Innovation and Competition and available on SSRN.
Tuesday, June 15, 2010
Both the ABA Journal and the Wall Street Journal have articles in today's news about the use of social networking as a legal tool. The ABA Journal notes that law firms' websites are "set up to resemble community forums or news boards." But a closer look at the forums shows that they're principally meant for client recruitment and information dissemination. For example, Sokolove Law's website Yaztalk.com has created a Facebook group (with an empty "discussion" board) where it poses questions as posts, such as "Do you know your clot risk." Its main website has a chat function and a form for requesting a free legal consultation. Thus, both the website and the Facebook page seem focused on client recruitment, not building communities. The Wall Street Journal's report confirms as much in this short excerpt: "'Young ladies spend a lot of their time online, socializing through social media,' said Michael Skoler, [Sokolove's] chief marketing officer. The YazTalk.com site, which includes a sign-up form for legal consultation, has netted hundreds of clients, he said. 'The folks who reach us through social media are twice as likely to become clients as those who would reach us through television or print."
As someone who has written extensively about the power of social media to connect claimants in nonclass aggregation, allow them to discuss the litigation's progress and their particular ends with one another, and, ultimately, to make decisions and exercise client control, I have mixed reactions to websites like Yaztalk.com.
On one hand, the sites do a nice job of educating the public on alleged drug risks. Similar sites such as bigspills.com keep the public abreast of news developments in the growing BP oil spill. Sites like these provide a notice function (albeit one that is largely one-sided), which is an admirable public service. Other sites like Napoli Bern's site for the First Responders' 9/11 litigation (www.877wtchero.com) provide litigation documents, legal news, transcripts of judicial hearings, frequently asked questions, and all of the pertinent settlement documents.
On the other hand, despite the Wall Street Journal's quote that "[w]ith sites like Facebook and Twitter, it has become easier for firms to 'build targeted communities and to network within those communities,'" I see little evidence of genuine community. But I also see tremendous potential. As I wrote recently in Litigating Together: Social, Moral, and Legal Obligations, "Technology has changed the way we interact with one another socially, but it has also provided a means for facilitating traditional face-to-face interaction. Plaintiffs might use these new communication media to set up regional face-to-face meetings, discuss key decisions, receive attorney updates and recent court documents, pose questions, tell their stories, and generally keep in touch with one another. In short, this kind of technology makes it easier for geographically dispersed plaintiffs to coordinate initial meetings and, subsequently, to communicate, deliberate, and bargain with each other." (at 32) Giving litigants a voice in the decision-making process (through communicating with one another and voting on major litigation decisions) furthers litigants' faith in the judicial system and makes it less likely that they'll collaterally attack the result.
So, while I applaud the use of technology, I do hope that it can be deployed in more meaningful ways that extend beyond client recruitment to allow claimants to communicate with each other. (Of course, to the extent that it includes privileged information, it would need to be password protected and include appropriate security measures.)
If you're interested in the use of technology in class actions, you might also take a look at an article by Bob Klonoff, Mark Herrman, and Brad Harrison titled "Making Class Actions Work: The Untapped Potential of the Internet."
(h/t Jason Solomon)
Monday, June 14, 2010
Today's National Law Journal reports that Judge Sidney Fitzwater of the Northern District of Texas has approved a class-action settlement in the E-Ferol litigation. E-Ferol was a non-FDA approved vitamin E supplement given to premature babies during the 1980s that is alleged to have caused the deaths of approximately 40 babies. The class action, brought against defendant manufacturer Carter-Glogau Laboratories and distributor O'Neal, Jones & Feldman, Inc., includes 369 plaintiffs who claimed that E-Ferol caused liver and kidney failure as well as brain bleeds in the affected children. The settlement amount is $110 million.
When the 9/11 Victim Compensation Fund was created it was widely considered a one time, unique institution responsive to the particular national tragedy (and the risk to the airline industry of catastrophic liability). It looks like the Obama administration is trying to negotiate the creation of a similar fund with BP to pay the victims of the oil spill.
It is still not clear whether the fund will happen, how much money will be available, and whether participants will have to give up their legal claims as the participants in the 9/11 Fund did. But some choice quotes from an AP report published today indicate that this is in the offing.
The NY Times also reports on the proposed fund. The Times reports that "Administration officials said that since last week, White House lawyers have been researching Mr. Obama’s legal authority to compel BP to set aside money for claims, based on the 1990 Oil Pollution Act." However, the President's authority is not clear. The desire for such a fund is driven by the concern about BP's 10+ billion dollar dividend. Joseph Grundfest (Stanford) is quoted in the Times: "“I’m not aware of any legal precedent that would give the government any authority that would preclude British Petroleum from paying dividends" especially because there isn't any evidence that BP lacks the funds to pay for the damages caused by the spill. The Times also quotes John Coffee (Columbia) stating that the courts may have the power to issue an injunction to prevent BP from paying the dividend under some circumstances.
Thursday, June 10, 2010
The NYTimes reports that there has been a new settlement reached in the WTC First Responders litigation. According to the article, the city's insurer (WTC Captive Insurance Company) has agreed to pay out more for the settlement ($712.5 million). The lawyers agreed to reduce their fees to a maximum of 25% rather than 33.33%.
According to the article, the judge's response to the revisions was positive:
“This is a very good deal — I am very excited by this deal,” he said.
He acknowledged that his intervention in the class action settlement had been unusual but said that the gravity of the claims demanded it. “It just begs for judicial supervision, and I have exercised it, and I will continue to exercise it,” he said.
The lead plaintiff's lawyer, Paul Napoli, is quoted as saying that the settlement “can be described in three words: bigger and better.” Ken Feinberg is also quoted with good things to say about the settlement: “This settlement brings to an end one of the final chapters of the 9/11 tragedy.”
The Judge will hold a hearing to permit plaintiffs to ask questions and speak out about the settlement on June 23.
Interested readers can find settlement documents on the Napoli Bern website created for the WTC Litigation.
Wednesday, June 2, 2010
“It’s going to be a jungle of different kinds of legal beasts running around.”
I have four words for you, BP: punitive damages class action. See Catherine Sharkey's article The Exxon Valdez Litigation Marathon for more.
The lawyers have offered to cap their fees at 20% instead of 30%. But this does not solve all the issues identified by Judge Hellerstein, particularly the "pig in a poke" problem - claimants can't figure out what they will get before signing on.
This offer to reduce fees reminds me of the governmental attempt to reduce the bonuses AIG had contracted to give certain employees after its implosion. Not that the situation is the same, but it shares a theme. The theme: even when you have a signed contract there is the possibility to renegotiate (perhaps something more than a mere possibility in the case where a federal judge says your fees are too high) .