Mass Tort Litigation Blog

No, the Minnesota Bridge Compensation Deal is not a Mini-9/11 Fund

Yesterday, Gov. Tim Pawlenty signed a $38 million settlement for victims of the I-35W bridge collapse.  Here's the AP story in USA Today.  Interestingly, state legislator Phyllis Kahn, who co-authored the compensation bill, was quoted in this article in the Minnesota Daily as saying that the bill was modeled after the 9/11 Victim Compensation Fund, including the waiver of the right to sue the state.  For reasons I explained on Monday, the Minnesota compensation deal is better understood as an ordinary mass tort settlement rather than as an extraordinary government compensation package like the September 11 Fund.  There's an enormous difference between the government's using taxpayers' money to settle potential claims against that government (the Minnesota deal) and the government's using taxpayers' money to settle potential claims against others (the 9/11 Fund, which used federal government funds but required participants to release whatever claims they may have had against the airlines or Port Authority).  The former might occur anytime a government defendant faces mass tort claims.  That's why the Minnesota package makes me glad as long as both the claimants and the state are satisfied with its terms. The latter, however, can rarely be justified.  This is the point that special master Ken Feinberg made powerfully in his final report on the Victim Compensation Fund: the 9/11 situation and the government's generous response to it should be viewed as sui generis.  That strikes me as exactly right, which is why it makes me nervous to hear the 9/11 Fund invoked as a model for something that in fact is quite different and much less problematic.

HME

Indian Protests Over Bhopal Disaster

The Bhopal gas-leak disaster in India remains perhaps the most devastating single-incident mass tort in terms of loss of human life.  As this article from the Associated Press shows, nearly 25 years later, the effects are still being felt.  Here's an excerpt from the article, Indian police detain 80 protesters from Bhopal, by Ashok Sharma:

Police detained 80 people who walked nearly 500 miles from the site of a catastrophic 1984 gas leak in central India to protest Monday outside the prime minister's residence, an organizer said.

The protesters, including 52 children, were calling for the site of the Bhopal gas leak to be cleaned up and for survivors to be compensated, said Rachna Dhingra, a spokeswoman for Bhopal Group for Information and Action.

Guards took the protesters to a nearby police station soon after they arrived outside Prime Minister Manmohan Singh's official residence, Dhingra said. They were freed two hours later.

Police officer Jagat Singh said the protesters came without an appointment with the prime minister, and protests are not allowed around the official residence.

The leak from the Bhopal pesticide plant in 1984 killed at least 10,000 people and affected about 550,000 others. A subsidiary of U.S. chemical company Union Carbide ran the plant at the time.

BGS

Compensation Deal for Minnesota Bridge Collapse Victims

The Minnesota state legislature appears on the verge of approving a $38 million compensation package to settle the claims of victims of the 2007 collapse of the I-35 bridge over the Mississippi River in Minneapolis, according to this AP story on law.com (via Point of Law):

Minnesota lawmakers reached agreement on a $38 million compensation package for victims of a deadly bridge collapse, culminating months of work to provide relief beyond the state's legal liability.  The deal struck in a joint committee of the House and Senate will offer everyone who was on the bridge up to $400,000, with an additional $12.6 million pool for the people who suffered the most severe injuries and losses. Thirteen people died in the Aug. 1 collapse and 145 were hurt. ...

The package is expected to be approved by the Legislature on Monday and sent off to Republican Gov. Tim Pawlenty, who called it "needed relief and support" for victims.

If victims agreed to take the money, they would have to sign away their rights to sue the state and other governmental entities in Minnesota. They would not be precluded from suing other parties in the collapse. ...

The National Transportation Safety Board is investigating the cause of the collapse. Officials have focused on a design flaw involving gussets, the plates that help connect steel beams, and the weight of construction materials at vulnerable points in the bridge. Victim lawsuits are on hold until a final determination is made.

As a legislative decision to compensate disaster victims, the package bears a passing resemblance to the September 11 Victims Compensation Fund.  It is better understood, however, as an ordinary mass tort settlement, in which a defendant (the state) offers to settle plaintiffs' claims against it.  Unlike the 9/11 Fund, which used government funds but required participants to release their claims against the airlines and other private parties, the Minnesota deal apparently requires only the release of claims against the state, just like any other settlement offer by a defendant.

HME

Verdict Upheld Against Port Authority in 1993 WTC Bombings

John Sullivan, writing for the New York Times, reports that the NY Court of Appeals has upheld the verdict.  He writes:

“The evidence placed before the jury entitled it to conclude that the defendant’s negligence was, if not gross, dramatically out of the ordinary,” the court found. “The documentary proof persuasively demonstrated that the defendant, years in advance of the bombing, had been repeatedly placed on notice of a gaping vulnerability in its subgrade parking facilities rendering its premises susceptible to a potentially catastrophic car bombing; indeed, defendant was repeatedly advised, not simply to the vulnerability, but as to the precise manner in which it could with little practical difficulty be exploited to devastating effect.”....

....The Port Authority said it originally faced 575 lawsuits stemming from the 1993 attack and over the years all but about 50 have been resolved. Mr. Coleman said he did not know how much the authority has paid to settle the cases so far.

ADL

 

Grisham's Latest

What do mass tort scholars do in their down time?  ... Well, read a mass tort novel, of course.  John Grisham's latest book, The Appeal, involves a toxic tort of groundwater pollution that injures many in a Mississippi town -- sort of Grisham thriller meets Jonathan Harr's A Civil Action.  The plot steers off into pursuing issues of judicial elections, but along the way there are plenty of mass tort themes, involving David vs. Goliath plaintiff-defendant litigation, class actions, and the implications of a trial verdict for case inventories.  I'm in the middle and having fun, as I have reading Grisham since The Firm came out back in the early 90s.

For the last few years, I've been gradually assembling a "mass tort movie library" of DVDs, which I lend out to students in my mass tort litigation class, and I use a clip of the film version of A Civil Action in class.  I've been mulling over incorporating excerpts from novels in my class, as well -- Grisham's King of Torts also sounds many mass tort themes.  Part of the appeal of studying mass tort litigation is the variety of perspectives available -- not only substantive and procedural, but also factual and fictionalized.

BGS

Pthalates in Toys

The PBS show NOW aired a segment about pthalates which are a chemical found in many toys and other soft plastic goods made of PVC plastic.  You can access the show here.  The EU has banned these substances in toys and products meant for use by children because there is some scientific evidence (although not conclusive) that pthalates interfere with sexual development in boys.  The EU and San Francisco has banned the use of pthalates in toys.  Apparently, there are other chemicals and substances that can be used to make soft plastic toys that are pthalate-free, although they are slightly more expensive.  Many of these toys are manufactured in China, and many factories there have two production lines - for toys meant for the European market (pthalate-free) and those made for the American market.

In our liberalized regulatory environment, where we rely largely on ex-post regulation through litigation, this seems like a litigation waiting to happen once the science is more established.   This controversy also raises some interesting questions about the relationship between innovation and regulation.  It is possible that the absence of regulation in a case such as this results in less innovation, because there is no incentive for manufacturers to seek out alternative chemicals if consumers aren't informed enough to make their preferences known (assuming, of course, that significant numbers of consumers prefer toys that don't put their boys sexual development at risk).  There are a couple of regulatory reactions that the government could adopt.  Like Europe, we could ban pthalates.  Or we could require that manufacturers identify which of their products contain pthalates and let consumers decide whether they would rather pay more for a toy that is pthalate-free.  My sense is that the requirement of adding a pthalate warning (especially if it included substantive information about the risks) would spur the use of alternative chemicals.  According to NOW, there is some movement among big retailers (Wal-Mart and Toys 'R Us were mentioned) to demand pthalate-free toys from manufacturers.  If I were a European company, I would advertise my toys in the US as European regulated (especially my soft plastic toys) - there is a market for regulated toys that seems lucrative.   In fact, I think Europe could benefit greatly from its regulated environment by using the regulation as a seal of approval for American consumers.

ADL 

Wither Agent Orange

BNA reports that the Second Circuit is driving the nails in the coffin of the Agent Orange litigation.  It held on February 22 that the government contractor defense precludes claims by U.S. military veterans who allege injuries from exposure to the toxic herbicide Agent Orange used as a defoliant during the Vietnam War.  Twinam v. Dow Chemical Co. (In re "Agent Orange" Product Liability Litigation), 2d Cir., No. 05-1760-cv, 2/22/08.

The government contractor defense is now coming into play in another area, the use of military contractors in Iraq.  There is an excellent blog entry on this issue by Laura Dickinson (UConn Law) on Balkinization, and more is forthcoming in her book Outsourcing War and Peace, which should be out next year.  (My very limited post on the subject is here).  I predict litigation against government contractors, which crosses lots of boundaries (national, international, contract, tort, etc.) will be significant in the next few years and will present courts and Congress with serious legal and policy challenges.  Maybe an Agent Orange litigation for our times.

ADL

Ted Frank Commentary on Exxon Valdez Oral Argument in U.S. Supreme Court

Ted Frank of the American Enterprise Institute comments in a Federalist Society SCOTUScast on oral argument in Exxon v. Baker.

BGS

Oral Argument on Punitives in Exxon Valdez Class Action

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.

HME

Rhode Island Nightclub Fire Settlement

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.

HME

Sheila Birnbaum and Pro-Insurance Katrina Appellate Rulings

The Wall Street Journal has an article -- Rulings Bolster Insurers, by Liam Plevin and Peter Lattman -- that discusses the tide of pro-insurance appellate rulings in the Katrina litigation.  The Journal's Law Blog also celebrates State Farm's outside counsel, Sheila Birnbaum of Skadden Arps, as the Law Blog Lawyer of the Day. 

I worked with Sheila Birnbaum while I was at Skadden, and can second the Law Blog's comments.  Mass tort litigation remains an unsettled, developing phenomenon, and Sheila's deep understanding of the issues, born of her many years as a law professor at NYU and Fordham, is an invaluable asset -- as is shown particularly by her mastery of appeals and complex negotiations.  In the continuing history of mass torts, now several decades old, Sheila should surely be seen as among the handful of most influential lawyers.

BGS

Balducci Pleads Guilty; Scruggs Pleads Not Guilty

According to an article in the L.A. Times -- Lawyer admits bribing judge, from the Associated Press -- lawyer Timothy Balducci has pleaded guilty to attempting to bribe a Mississippi judge in the Katrina insurance litigation.  Dickie Scruggs, however, has pleaded not guilty.

BGS

Bhopal Revisited

This week was the 23rd anniversary of the Union Carbide toxic gas leak in Bhopal, India.  The world's worst industrial disaster, it claimed thousands of lives and unsurprisingly spawned major litigation.

As often happens with multinational mass tort litigation, the doctrine of forum non conveniens played a central role.  One of the ironies of forum non conveniens is that the defendant-movant describes the doctrine as a kind of international venue transfer while actually hoping it will serve as a litigation death knell.  A related irony is that on the issue of "adequate alternative forum" (one of the requirements under Piper Aircraft v. Reyno), U.S. defendants sing the praises of foreign legal systems while foreign plaintiffs bash their home courts.  So it was in the Bhopal litigation, but with the embarrassing twist that the one bashing the Indian legal system was the Indian government itself.

On the Indian blog Churumuri, Alok Prasanna offers an angry and pessimistic two-part series from Bangalore on the Bhopal litigation.  Yesterday's post -- How the Rajiv government screwed up on Bhopal -- tells the sorry story:  the aggressive solicitation of Indian plaintiffs by U.S. lawyers, the Indian government's self-anointment as sole representative plaintiff, the filing of U.S. litigation, the forum non conveniens dismissal, and the subsequent lawsuit and settlement in India.  Here's an excerpt in which Prasanna describes the Indian government's bungling of the litigation:

As initial reports of the pending flood of litigation claims started to trickle through, the Indian government, fearing exploitation, and an opportunity to turn this into an emotive, electoral issue, instantly passed a law prohibiting all but itself from representing the victims in any forum anywhere in the world. Then it went ahead and made a mockery of the move.
It filed suit in the District Court of New York, USA. ...

Before even the first papers had even been filed, the then-Prime Minister Rajiv Gandhi started making grandiose claims of a $2 billion compensation that his government would be seeking from [Union Carbide Corporation ("UCC")].  Big mistake.

Any lawyer would connect this statement to the filing of the suit in the USA and ask the American court to dismiss the case since the Indian Government was “forum shopping”, or in lay terms, simply looking for the best bargain. American Courts since 1981 had stopped entertaining foreign claims that could be filed elsewhere, but had been filed in the USA with the sole motive of getting a better award of damages. ...

To counter this, the Indian government made an even more stupid move. It claimed that the Indian judicial system was incompetent and inefficient to deal with the problem. It got professors and experts to file affidavits running down the Indian judicial system before American courts.

Humiliatingly, it was upto the UCC lawyers to defend the Indian judicial system asking for the case to be moved to India. They also pointed out the simple logistical problem of having to haul thousands of documents, mountains of evidence and thousands of witnesses halfway across the world for a trial.

Naturally no American court wanted to be stuck with an expensive, unending case on its hands and the district court of New York threw out the case. The Indian government cut a pretty sorry figure as it dragged itself to the district court of Bhopal, Madhya Pradesh for the next round of litigation. Before the same judicial system and judges it claimed were incompetent and inefficient.

As the litigation dragged on in the Indian courts, Union Carbide eventually settled for $470 million on terms that included dismissal of criminal charges.  Prasanna then describes a painfully slow disbursement process, and suggests that the Indian government as plaintiff was burdened by a serious conflict of interest:

The saga doesn’t end there. The long and painful process of disbursing the amount began and took about 20 years after the settlement. Long slow and laborious the “tribunals” set up by the Government to hand out the awards functioned pretty much like Courts and one needed the help of numerous touts, lawyers and doctors before rightly deserved compensation was gotten. The net result was that the victims didn’t get as much money or as quickly as was promised.

All of this can possibly attributed to run-of-the-mill bungling by the government. Except in this case, the government was as liable as UCC for the Bhopal gas tragedy. Both UCC and the Indian government were shareholders in UCIL. UCIL alone was too small (all assets amounting to Rs 100 crore only) to be made wholly liable for the affair. Any attempt to make UCC liable as a shareholder would automatically make the Indian government liable on an equal footing.

Take a step back and look at it from a distance. One of the defendants in the case, by using its sovereign powers, has usurped the claimants’ rights and ensured that it has not been made liable. It has gone to the extent of settling the case for a far lesser claim than promised instead of fighting for every last penny and virtually let the offenders go scot free.

Today's post -- And how the legal system screwed up on Bhopal -- discusses problems with Indian tort law, evidence, corporate veil-piercing, court resources, and Indian lawyers.  Prasanna sadly agrees with the experts who testified for India (that is, against India) on the forum non conveniens motion:

Remember the stand taken by the Indian Government before the New York district court regarding the inefficiency and incompetence of Indian Courts and legal system? Remember all those esteemed professors of law and legal mavens filing lengthy affidavits detailing the faults and flaws of the Indian legal system and judiciary?

Guess what, it was all true. There was no way in hell that the victims of Bhopal would have seen a single rupee of compensation had the case gone to trial in India.  The reasons are manifold, ranging from the inadequacy of the law to the incompetence of the lawyers.

The author's cynicism, however, is reserved for India.  Prasanna puts on rose-colored glasses when viewing U.S. mass tort litigation, laughably referring to Grisham's King of Torts as an example of how things ought to be done, but understandably looking to the U.S. mass tort experience for ideas on how mass-disaster compensation might have been better handled than it was in Bhopal:

So, do victims of mass disasters have no remedy or relief? Not really. Lawyers in the US and elsewhere had been developing this field of “mass torts” for some years and had mastered the skill of getting relief for their victims quickly without engaging in protracted litigation. Those who have read “The King of Torts” and other John Grisham books would have some idea of how this works and what are the advantages and pitfalls of this technique. Indian lawyers had no clue what was going on.

Indian lawyers stood exposed in the Bhopal tragedy. With little or no specialization in the various fields of law, the bewildering complexity of the problem and multi-disciplinary approach it needed completely befuddled Indian lawyers. Long used to adversarial, lengthy proceedings before courts, the legal fraternity had no answer to the kind of problems the Bhopal tragedy failed. While judges did try to solve the problem with a proactive approach towards interim relief and a bit of legal creativity, they were about as effective as Band Aids on a compound fracture.

HME

More on the Scruggs Indictment for Allegedly Attempting to Bribe a Mississippi State Judge

The Wall Street Journal has more on the Dickie Scruggs indictment for allegedly attempting to bribe a Mississippi state judge in the Katrina insurance litigation -- It's Party Time for Mr. Scruggs, by Paulo Prada and Peter Lattman.  (Prior related posts are here and here.)  Some in the article who defend Mr. Scruggs speculate that perhaps Mr. Balducci, the less-well-known lawyer allegedly taped offering the bribe on behalf of him and Mr. Scruggs, was working on his own, trying to impress Mr. Scruggs.   

Interestingly, the best-selling author John Grisham, who is also a friend of Mr. Scruggs, defends Mr. Scruggs on the grounds of egregious plot:

"This doesn't sound like the Dickie Scruggs that I know," Mr. Grisham said yesterday. "When you know Dickie, and how successful he has been, you could not believe he would be involved in such a boneheaded bribery scam that is not in the least bit sophisticated."

We'll have to wait for Grisham's next novel to see how he can correct the plot to make it more convincing.  But as many a practicing lawyer knows, real law practice is often not as interesting as a Grisham novel.

BGS

Balducci Cooperating with Government in Alleged Attempted Bribery Case?

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.

BGS

State Farm Sues Mississippi Over Katrina Investigation

Here's an interesting twist on the complexities of handling parallel civil and criminal proceedings.  State Farm Insurance filed a lawsuit against Mississippi's attorney general, claiming that the AG reopened a criminal investigation in violation of an agreement to drop the inquiry in exchange for the company's reconsideration of thousands of policyholder's claims after Hurricane Katrina.

Victoria Pynchon wrote a provocative post on this at the IP ADR Blog -- State Farm v. State of Mississippi: Withdrawing Criminal Charges to Settle a Civil Action? -- raising ethical questions about the underlying agreement.  Pynchon, a copyright mediator, says that she often faces the question whether a plaintiff may agree to withdraw criminal charges in exchange for a settlement of civil claims.  She refers to an AP news report in the New York Times describing State Farm's lawsuit:

State Farm Insurance is suing Mississippi's attorney general, accusing him of violating an agreement to end a criminal investigation of the insurer’s handling of claims on the Gulf Coast after Hurricane Katrina, according to court papers unsealed Friday.

State Farm’s lawsuit claims that the attorney general, Jim Hood, reopened a criminal investigation of the company and its employees “for the purpose of harassment” and to coerce the insurer into settling civil litigation spawned by the Aug. 29, 2005, hurricane.

State Farm says Mr. Hood agreed in January to end his office’s criminal inquiry as part of a settlement agreement that called for the company to reopen and possibly pay thousands of policyholder claims.

On Pynchon's reading, such an agreement would be unethical:

State Farm suing Mississippi for failing to honor an agreement to drop a criminal inquiry in exchange for the settlement of civil claims?  I must be missing something because the settlement sounds unethical and the lawsuit without merit because civil claims were settled in exchange for the termination of a criminal investigation.

The law is far from uniform on the ethics of using criminal charges to civil settlement negotiations.  In New York, following the Model Code of Professional Responsibility, DR 7-105 provides: "A lawyer shall not present, participate in presenting, or threaten to present criminal charges solely to obtain an advantage in a civil matter."  The ABA abandoned this rule when it adopted the Model Rules of Professional Conduct.  Pynchon cites ABA Ethics Op. 920-363 (1992) (allowing a lawyer to use a threat of a criminal referral to obtain advantage if the civil claim and criminal matter are related and well-founded).  Some states that adopted the Model Rules chose to retain the prohibition.  New Jersey's RPC 3.4(g), for example, provides: "A lawyer shall not ... present, participate in presenting, or threaten to present criminal charges to obtain an improper advantage in a civil matter."

I've always found this rule intriguing and a bit troubling.  First, the language of both DR 7-105 and NJ RPC 3.4(g) leaves open a possible distinction between bringing or threatening criminal charges and withdrawing or offering to withdraw charges, although as a matter of legal ethics and public policy it is hard to see why that distinction should matter.  Pynchon points to a California ethics opinion (Formal Op. 1991-124) extending the prohibition to dismissal of criminal charges.

More fundamentally, while the prohibition seems nice in theory, I wonder whether it really makes sense.  The theory, as I understand it, is that citizens ought to report crimes (or not) as a matter of civic responsibility, not for personal gain.  The criminal process, on this theory, should be reserved for its public purpose, not as a private tool in civil litigation.  But I wonder whether that idea hold up.  Criminal sanctions are supposed to encourage good behavior.  If fear of criminal punishment persuades a wrongdoer to make right a wrong, isn't that a good thing?  That, of course, assumes the legitimacy of the criminal charges and civil claims, but to the extent parties threaten illegitimate charges, couldn't we deal with that through the law of extortion or similar doctrines, rather than through an ethics rule that prohibits or chills consideration of criminal proceedings for civil advantage even in connection with legitimate claims?

Finally, even if we were to accept the theoretical justification for the prohibition, isn't it one of the least realistic rules in the book?  Any civil defendant accused of serious wrongs understands the possibility of criminal proceedings.  The implicit threat of such proceedings is present in the civil settlement dynamic, whether expressed openly or not.  The defendant knows that one of the advantages of resolving civil claims to the satisfaction of those who have been harmed is that satisfied claimants are less anxious to pursue other avenues to obtain justice.  Isn't that the reality, regardless of whether the ethics rules force lawyers to keep their mouths shut about it?  And if it is the reality, what's so bad about it?

In the State Farm case, by the way, it is not clear to me whether Pynchon fairly characterizes the deal as "an agreement to drop a criminal inquiry in exchange for the settlement of civil claims."  Did the company reopen policyholder claims as part of a civil settlement?  Is there a difference between plaintiffs' attorneys using criminal charges to drive a settlement of their clients' claims, versus the state using criminal charges to drive a settlement of citizens' claims?  The State Farm situation does not neatly fit the usual DR 7-105 scenario.  Keep in mind, in any event, that we're talking about third-hand info:  an agreement described in a lawsuit described in a newspaper article described in a blog.  In January I blogged on a failed earlier attempt at an agreement between State Farm and Mississippi (Birnbaum, Scruggs and the Katrina Settlement), but until now I had not continued to follow the saga.

HME

Update:  Thanks to Ted Frank for pointing out David Rossmiller's post on the State Farm action at the Insurance Coverage Law Blog.  Rossmiller has links to the complaint and other documents, as well as an extensive post on the suit.  He also has a shorter post on the subject at Point of Law, calling this "the most unusual development yet" in Katrina litigation.

California Wildfire Litigation

The National Law Journal has an article today predicting litigation in the wake of the California fires, and recalling the legal aftermath of the southern California wildfires of 2003, when "homeowners filed about 200 lawsuits against insurance companies, primarily for undervalued coverage or low-balled repair estimates."  The story by Amanda Bronstad -- As California Wildfires Die Down, Lawsuits May Ignite -- is on law.com.  The possibility of widespread insurance litigation by homeowners adds a dimension to Byron Stier's recent post here about the wildfires and arson as a mass tort.

HME

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.

BGS

Arson, Negligence, and the California Wildfire Mass Tort

We don't often think of arson as a mass tort.  But for those of us in Southern California, it's easy to see why it qualifies.  This last week has been a harrowing time -- according to the L.A. Times: 488,099 acres have burned, 1,775 homes and 2,103 structures total have been destroyed, 79 people have been injured, and 7 people have died.  That some of these fires have been started by the intentional acts of arsonists is maddening.  Recently, for example, the authorities have raised the award to $250,000 for information on the arsonist who started the Santiago fire that has destroyed at least 14 homes and burned 25,000 acres.  These are trespass-based mass torts, like the claims that would have been brought against the 9/11 hijackers and Al Qaeda if they were available for suit.

Similarly, other fires may have been caused by negligence.  The Magic Fire, for example, was reportedly started by sparks from welders in a construction site close to the Magic Mountain Amusement Park.  The Magic Fire went on to burn 2,824 acres, but luckily was fought back from the backyards of houses -- no structures were lost.

Should claims be brought, plaintiffs might face arguments about proximate causation.  As a matter of policy, is it proper to trace causation back to the person who started a fire, when it spreads for thousands of acres, and is subject to the vagaries of winds, temperature, and humidity?  The law has certainly struggled with these issues in the past when it comes to fires.  But intentional tortfeasors don't get breaks when it comes to proximate cause -- sound policy puts a broad swath of subsequent bad results on the shoulders of the intentional tortfeasors.  So I would argue any arsonist should be subject to lawsuit by all those whose homes were destroyed.  And even with regard to the negligently created fire -- can the welder adjacent to wildland for example argue that he didn't foresee that sparks might set ablaze the dry fire-prone chaparral vegetation that was already burning all over California? 

To be honest, civil litigation and resulting personal bankruptcy is the least of the concerns for the arsonist.  There are of course criminal charges.  And maybe that's not even the worst, as the L.A. Times reports:

The arsonist is lucky he wasn't caught in the act, some residents added.

"Around here if they caught a guy doing that, they'd shoot him right on sight," said Leonard Schwendeman, 89.

Boeck added, "If they ever catch this guy, they better hope that it's the sheriff or the FBI that catch 'em, because if canyon residents catch 'em first, there won't be a piece of them big enough for a dog to bite."

BGS

Dickinson on Tort Liability for Military Contractors

My colleague Laura Dickinson, who is writing a book called Outsourcing War and Peace, has an interesting post on Balkinization about tort liability for military contractors.  Click here for the post. She explains that there are three types of suits that might be brought:

(1) suits brought by troops who’ve been injured by a contractor (an example here would be Carmichael v. KBR, 450 F. Supp. 2d 1373 (N.D. Ga. 2006), filed after a soldier suffered massive injuries in Iraq when the truck he was escorting, owned and operated by KBR and Halliburton, overturned in a ravine in Iraq); (2) suits brought by contractor employees (an example here would be the suit brought against Haliburton for deploying convoy as a decoy in an area the contractor allegedly knew to be under attack); (3) suits by third parties who’ve been injured by contractors (an example here would be the pair of cases brought by Abu Ghraib victims against CACI, Inc. and Titan Inc., the firms that provided interrogators and translators at the prison), see Ibrahim v. Titan Corp., 391 F. Supp. 2d 10 (2005); Saleh v. Titan Corp., 436 F. Supp. 2d 55 (D.D.C. 2006).

For purposes of this blog, the most intriguing  categories of cases are suits by third parties and employees.  Suits by Iraqis could be the next big human rights mass tort action, though the litigants may face jurisdictional problems -- remember the Bhopal suit against Union Carbide dismissed for forum non conveniens in the mid-80s?  Whether such suits survive such a challenge will depend on a lot of factors, including the state of the Iraqi legal system.   Dickinson also explains that such suits might be dismissed on either political question or immunity grounds.  She convincingly argues that the political question rationale is dubious.  The contractor immunity defense may have more teeth, but she reminds us, it was rejected in the most recent iteration of In re Agent Orange Prod. Liab. Litig., 373 F. Supp. 2d 7, 85-90 (EDNY 2005).

Addendum:  CCR and two lawfirms have already filed suit on behalf of Iraqis harmed by Blackwater employees under the ATCA.  A press briefing and link to the complaint can be found here.

ADL

 
 

McFarland and Garner on terrorism tort claims

Robert McFarland and Donald Garner of Faulkner University have posted a paper on SSRN suggesting that American law supports viable tort claims against Saudi Arabia for certain terrorist acts.  The paper -- Suing Islam: Tort, Terrorism and the House of Saud -- is forthcoming in the Oklahoma Law Review.  Here's the abstract:

This paper examines the Kingdom of Saudi Arabia's vital role in propogating Wahhabism, a peculiarly intolerant form of Islam justifying violent jihad, and argues that Saudi Arabia is liable for the resulting harm.

The Kingdom's role in creating terrorism is a subject of great national concern. The need for reform in Saudi Arabia's Wahhabist religious establishment is frequently discussed in the Congress. This paper argues that the federal judiciary, in addition to Congress, has a vital role to play, not only in generating compensation for terrorism victims, but also in winning the ideological war on terrorism. 9/11 and other contined manifestations of terrorist jihad are causally intertwined with the Sunni Wahhabism practiced and promoted by Saudi Arabia. Upon that understanding we build our tort theories and upon that understanding America can more thoughtfully defend itself in the ideological war on terror.

Part I discusses Saudi Arabia's historic and continued committment to Wahhabism. Part II argues that American tort law supports two viable causes of action against the Kingdom for harm inflicted by Wahhabi jihadists: (1) negligent incitement of terrorism; and (2) special relationship liability. Finally, in Part III, the question of Saudi Arabia's sovereign immunity is discussed with special attention given to the analysis of Saudi Arabia's immunity in the 9/11 litigation.

HME

Rhode Island Nightclub Fire Litigation: Possible Settlement

There's a possible aggregate settlement in the works regarding the 2003 nightclub fire in West Warwick, Rhode Island.  Here's an excerpt from today's AP story on nytimes.com:

Several defendants being sued by relatives of the 100 people killed in a 2003 nightclub fire have tentatively agreed to a $13.5 million settlement, a lawyer for one family in the case told The Associated Press on Wednesday.

The settlements, if approved by a judge, would be the first in what the plaintiffs hope will be several agreements with dozens of defendants in the lawsuits stemming from the Feb. 20, 2003, fire at the Station nightclub in West Warwick. The fire also injured 200 people.

The fire resulted from the pyrotechnic display for the band Great White, which ignited flammable foam that the club had installed on the walls for sound-absorbtion.  The defendants involved in the settlement reportedly include Triton Realty (which leased the building to the club's owners), Celotex (soundproofing board manufacturer, and no stranger to mass litigation from its asbestos days), Luna Tech and High Tech Special Effects (maker and seller of pyrotechnics), and an alarm company.  Numerous additional defendants are not included in this settlement.

According to the news report, the settlement depends upon the appointment of a special master to oversee the distribution.  The lawyers have recommended Francis McGovern, a Duke Law School professor who has served as special master in numerous mass tort cases.

HME

Questionable Emails from State Farm to Engineers Assessing Katrina Damage

Article in the Wall Street Journal -- Emails May Help Homeowners In Fight Against State Farm, by the Associated Press.  Here's an excerpt:

Emails sent by officials of an engineering firm that assessed Hurricane Katrina claims suggest that State Farm Insurance Co. wanted engineers to blame damage on flooding so that it could make minimum settlements with policyholders.

The emails, obtained by the Associated Press, indicate that State Farm was threatening to dismiss Raleigh, N.C.-based Forensic Analysis & Engineering Corp. less than two months after Katrina hit on Aug. 29, 2005.

Attorneys for homeowners suing State Farm claim the emails support their argument that the insurer pressured its engineers to alter their reports on storm-damaged homes so that policyholders' claims could be denied.

BGS

Staten Island Ferry Case

The Staten Island Ferry crash of 2003, in which eleven passengers died and many others were injured, led to numerous wrongful death and personal injury claims against New York City.  Many of the claims have settled, but others remain in litigation.  The city has contended that under federal maritime law (specifically, the Limitation of Vessel Owner’s Liability Act), its liability is limited to the value of the ship.  Today, Chief Judge Edward Korman of the Eastern District of New York ruled against the city on this critical issue, finding that the failure to enforce a two-pilot rule (requiring that two captains be in the front-facing pilot house while the ferry is in motion) was negligent.  Judge Korman's opinion -- with an extensive negligence analysis citing such classics as U.S. v. Carroll Towing, The T.J. Hooper, and McCarty v. Pheasant Run -- belongs in a Torts casebook.  A New York Times article -- N.Y. Can't Limit Ferry Crash Damages, Judge Says -- reports on the decision:

A federal judge today rejected New York City’s attempt to use an obscure 19th-century maritime law to cap its liability in the 2003 crash of the Staten Island Ferry at $14 million.

The ruling exposes the city to tens of millions of dollars in damage awards to relatives of those killed and to scores of people injured when the boat, the Andrew J. Barberi, crashed into a maintenance pier at the Staten Island ferry terminal.

The city had argued that the accident was covered by an 1851 act, aimed at encouraging investment in the shipbuilding industry, that limited a boat owner’s liability to the value of the boat minus the repair costs — in this case $14.4 million.

The city has already paid out $27.6 million to settle two-thirds of the 186 damage claims. Of the 11 people killed in the crash, the estates of only two have settled with the city, for $3 million and $450,000.

The amounts of many settlements were held down, lawyers for the plaintiffs said, by the city’s argument that if it succeeded in capping the liability, the plaintiffs stood to win relatively little.

...

Judge Korman wrote: “The blame for this laxity lies squarely on the shoulders of the city.” The 1851 act limiting liability, he added, does not apply when the negligent parties include supervisors.

HME

Birnbaum, Scruggs, and the Katrina Settlement

An article by Anita Lee in yesterday's Sun Herald (Mississippi) -- Insurance Showdown: Here's the Inside Story of How Legal Titans Reached Settlement -- sheds light on the process by which settlement class actions are negotiated.  In litigation over Hurricane Katrina insurance coverage, Sheila Birnbaum (who heads the Complex Mass Tort and Insurance Group at Skadden Arps) represents State Farm, and Richard Scruggs (Mississippi mass tort plaintiffs' lawyer who played a central role in the tobacco state attorney general settlement) represents numerous Gulf Coast policyholders.  The reporter describes a phone call from Birnbaum to Scruggs in September 2006:

In a telephone interview, Birnbaum said she called Scruggs because he had put out feelers, passed on by local attorneys, that he wanted to talk.

Scruggs recalled in an interview last week: "She said, 'We need to talk. I'm representing State Farm. We'll meet you any time, anywhere and see if we can't find common ground.' That's the way things usually unfold like this on a large scale."

Eventually, they negotiated a settlement on a class action basis, in coordination with a deal between Attorney General Jim Hood and State Farm that ended the state's criminal investigation.  They presented it to the federal court last Tuesday:

State Farm and the Scruggs team reached an accord for Scruggs' clients and crafted a class-action settlement for policyholders who have not hired a lawyer - about 8,000 by Hood's estimate. Those who choose to opt out of the settlement could do so.

Hood's negotiations with State Farm were aimed at keeping the company's questionable claims practices out of negotiations with policyholders who take part in the class-action settlement. He said he also pushed to get them the best deal possible, while State Farm pushed back.

Finally, they inked a deal. Hood ended his criminal investigation, but plans to forward evidence to Congress. He also dismissed a civil lawsuit against State Farm in Hinds County Chancery Court that sought full coverage for policyholders. He'll continue to press that suit against other major insurers.

Once Hood and State Farm reached an accord, that airplane finally took off for the Coast, where the proposed settlement between State Farm and the Scruggs group was delivered to the federal courthouse in Gulfport on Jan. 23.

On Friday, Judge L.T. Senter, Jr. rejected the proposed settlement without prejudice.  The parties hope to revise the deal to address the court's concerns.

HME

Ninth Circuit Reduces Exxon Valdez Punitive Damages to $2.5 Billion

Article in the New York Times -- Court Cuts Valdez Judgment Against Exxon, by the Associated Press:

A federal appeals court on Friday cut in half a $5 billion jury award for punitive damages against Exxon Mobil Corp. in the 1989 Valdez oil spill that smeared black goo across roughly 1,500 miles of Alaskan coastline.

The case, one of the nation's longest-running, non-criminal legal disputes, stems from a 1994 decision by an Anchorage jury to award the punitive damages to 34,000 fishermen and other Alaskans. Their property and livelihoods were harmed when the Valdez oil tanker struck a charted reef, spilled 11 million gallons of crude oil.

It's the third time the 9th U.S. Circuit Court of Appeals court ordered the Anchorage court to reduce the $5 billion award, the nation's largest at the time, saying it was unconstitutionally excessive considering U.S. Supreme Court precedent.

This time, in its 2-1 decision, the court ordered a specific amount in damages, while its previous rulings demanded a lower court to come up with its own figures.

BGS

Nuclear Power Workers Afraid to Raise Safety Concerns

Article in the New York Times -- NRC: Nuclear Workers Fear Retribution, by the Associated Press:

Some workers at a nuclear power plant complex just north of New York City are reluctant to raise safety concerns because they fear retribution, the Nuclear Regulatory Commission said Thursday.

During an inspection of the Indian Point complex in September, ''We found out that there were workers who perceived that they would be treated negatively by management for raising issues and consequently some of the workers expressed reluctance to raise issues under certain circumstances,'' said NRC spokesman Neil Sheehan.

BGS

NYC Plane Crash Victims Get New Memorial

Article in today's New York Times -- NYC Plane Crash Victims Get New Memorial, by the Associated Press:

Bells tolled in a beachfront neighborhood Sunday as families clutching red roses and photographs gathered to read the names of loved ones killed five years ago in the crash of American Airlines Flight 587.

Mayor Michael Bloomberg gathered with relatives of the 260 people killed aboard the airliner and the five killed on the ground, in the nation's second deadliest air accident, to dedicate a memorial wall bearing the victims' names.

''It is a place to which we can always return to read the names of those we lost five years ago, to share our sorrow and our memories, and to contemplate the eternal beauty and grandeur of the skies and the seas,'' Bloomberg said Sunday.

A firefighter and a police officer rang bells at 9:16 a.m., the time the plane crashed just minutes after it took off from Kennedy Airport for a flight to the Dominican Republic.

BGS

Brazil air crash lawsuit

Article today on Findlaw by Vivian Sequera (AP) -- U.S. lawyers for Brazil plane crash victims hope for multimillion dollar settlement -- concerning litigation in E.D.N.Y. over the September 29 collision of a Gol Airlines jet with an ExcelAire business jet.  All 154 people aboard the Gol Airlines plane (a Boeing 737) died in the crash.  The ExcelAire plane (an Embraer Legacy) sustained damage but landed with its passengers and crew unharmed.

American attorneys representing families of victims in Brazil's worst air disaster said Tuesday they hoped to reach a multimillion-dollar settlement with ExcelAire Service Inc. and Honeywell International Inc., which they accuse of negligence leading to the accident that killed 154 people.

On Monday, the lawyers filed a suit in the Eastern District federal court in Brooklyn, New York, alleging that ExcelAire's pilots were flying at the wrong altitude when they collided with Gol Airlines Flight 1907 on Sept. 29.

...

Honeywell, which made the plane's transponder was also named in the suit. Transponders send out signals alerting air traffic controllers and other aircraft about the location of a plane.

[Robert] Lieff [of Lieff Cabraser Heimann & Bernstein] told a news conference that said he hoped the two companies would settle with the victims' families and that he expected the settlement to reach "several million dollars."

...

The lawyers said they were not suing Gol, Embraer and Boeing because they don't have evidence yet to implicate them.

HME