Mass Tort Litigation Blog

Scruggs Indictment for Allegedly Attempting to Bribe a Judge in Katrina Insurance Litigation

Top plaintiffs' lawyer Dickie Scruggs, of tobacco and asbestos fame, has been indicted for alleged attempted bribing of a Mississippi state judge in connection with the distribution of fees from the Katrina insurance litigation.  As with the separate Milberg Weiss allegations about paying class representatives, the government appears to have much stronger evidence against a less-well known lawyer intermediary, who was allegedly working on behalf of the well-known plaintiffs' lawyer.  In the Katrina litigation, that intermediary is alleged to be Timothy Balducci, who was audiotaped offering the bribe and delivering the money, according to the government.  Scruggs denies the allegations.

The Wall Street Journal has details on the build up of the case in the article, How the Scruggs Case Came Together, by Ashby Jones and Peter Lattman.  In addition, an editorial in the Journal -- The Trial Bar on Trial -- celebrates the possible downfall of prominent tort lawyers who were indicted this year, including Bill Lerach, Dickie Scruggs, and others at Milberg Weiss including Melvyn Weiss. 

If true, all of these allegations suggest remarkable hubris in at least some of the top plaintiffs' lawyers.  One wonders about the effect of a lifestyle of private jets and multiple wins of multiple millions (or tens of millions) in fees.  One also wonders about the effect of high-risk, winner-take-all, contingency fee litigation.  Brash and aggressive personalities seem to thrive in such an environment -- but they too must keep in mind that lawyers ultimately serve the client (not the other way around) and that no one (especially not the lawyer) is above the law.

BGS

Rethinking Class Action Litigation in Britain

After a push toward class actions in Britain, the United Kingdom’s Office of Fair Trading has issued a report cautioning against American style litigation.  You can access Legal Week’s article here.  Currently, Britain permits only certain groups to bring aggregate litigation, including Which?, an organization promising to be independent source for information on consumer products.  Among other agenda items, it campaigns for safety in the cosmetic industry. 

Britain’s backlash surfaces against an increasing worldwide propensity for aggregate litigation.  Stanford and Oxford University are hosting a joint conference on the Globalization of Class Actions in Oxford from December 12-14.  Pending legislation and reports from roughly 35 countries can be found here. 

ECB

Welcome to New Blog Co-Editor Elizabeth Chamblee Burch

We extend a hearty welcome to our new blog co-editor, Professor Elizabeth Chamblee Burch of Cumberland School of Law, Samford University, in Birmingham, Alabama.  Welcome aboard!

BGS

Settlement Announced in Ford Explorer Rollover Class Actions

The Associated Press reports that Ford has agreed to settle class action suits covering plaintiffs in California, Connecticut, Illinois and Texas arising out of claims that Ford Explorer SUVs were prone to rolling over.  It is reported that plaintiffs will get transferable vouchers to buy new Explorers or other Ford or Lincoln Mercury cars.  This apparently settles all the suits against Ford arising out of the rollover accidents linked to Ford Explorers and Bridgestone/Firestone tires.  The Associated Press article can be accessed here.  Because the cases were brought in California State Court, the CAFA limitations on coupon settlements do not apply. 

ADL

Cato's James Dorn on Toxic Toys from China

James Dorn, a China specialist at the Cato Institute, has posted an op-ed article on the lead-paint problems with Chinese imports and possible Congressional response -- Toxic Toys: Congress Risks Making Things Worse.  Here's an excerpt:

The role of government is to safeguard private property rights and, thus, to protect people against fraud and violence. But an overzealous government that tries to keep all bad products off the market is likely to err by keeping too many good products off the market. It is increasingly costly for government to monitor every product. The only viable alternative is to allow private agencies to supplement government regulation to ensure the optimal amount of safety - that is, the amount that is worth what it costs.

Former FDA deputy commissioner Scott Gottlieb noted that "the FDA cannot be everywhere, every time a risk arises, especially as the supply chain for both food and drug products continues to grow more diverse and more global. Ultimately, (the) FDA needs to enable companies to be inspected by reputable private third parties that are certified by the agency."

The execution of Zheng Xiaoyu, former head of the Chinese State Food and Drug Administration, for taking bribes while approving deadly drugs and lead-tainted toys is a stark reminder that government oversight does not guarantee product safety. Even an advanced economy like the United States can fail to prevent hazardous products from entering the market.

Neither the government nor the market will lead to perfectly safe toys, pet food, toothpaste, seafood or drugs. Achieving 100% safety - zero risk - is not an option, and utopian solutions to socioeconomic problems have always proved to be disastrous.

The danger is that new legislation could be a veil for protectionism, as special interests try to gain advantage in the domestic market by restricting imports and also by handicapping smaller domestic firms by increasing their regulatory costs.

BGS

Liptak on Cy Pres

Adam Liptak as a column in today's New York Times about the use of cy pres distributions in class action settlements.   A cy pres distribution ordinarily occurs when the settlement funds have not been exhausted by payments to claimants and are redistributed to charities.  Sometimes these charities are related, sometimes not related, to the subject of the underlying litigation.  I think of cy pres as being a feature of consumer class actions only, but Liptak cites to a drug settlement that included cy pres distributions. He writes:

The Illinois Institute of Technology got $5 million from a settlement in a case involving a diabetes drug in Illinois, as did a Chicago hospital. A Hasidic Jewish group, Lubavitch Chabad of Illinois, picked up $2 million from the drug settlement.

As Sam Issacharoff (NYU) states in the article, the power to distribute such substantial funds has the potential to corrupt judges.  I wrote about these types of settlements in the consumer context in 2003 (the article is called Fundamental Principles for Class Action Governance, 37 Ind. L. Rev. 65 (2003)).  There I argue that the best medicine for the types of problems created by cy pres distributions is transparency.  I also note there another phenomenon, which is that defendants sometimes place restrictions on the types of organizations that can receive cy pres funds, excluding those that are likely to pursue more of the same type of consumer protective litigation.  The question of cy pres distributions raises a more fundamental question that plagues mass tort, consumer and all collective litigation: is the goal to deter wrongoing  (in which case all we ought to care about is that defendants pay out an optimal amount) or to compensate individuals wronged (in which case we should be deeply offended by the use of mechanisms such as cy pres distributions)?   Even if one thinks the answer is a little bit of both, there remains the difficult question of how that balance ought to be struck.

ADL

Federalist Society Publication Articles on Preemption, Learned Intermediary Rule, and Class Action Attorneys' Fees

The Federalist Society has posted the October 2007 issue of Engage.  Mass-tort related articles include the following: Catherine M. Sharkey, The Roberts Court Wades into Products Liability Preemption Waters: Riegel v. Medtronic, Inc.; James M. Beck & Theodore H. Frank, West Virginia Supreme Court Strikes Down Learned Intermediary Rule; and Jack Park, Attorneys' Fees in Class Actions: The Problem Remains.

BGS

   

FDA Questions Child Safety of Glaxo Asthma Drugs Serevent and Advair

Article in the Wall Street Journal -- Questions the Safety Of Asthma Drugs for Kids, by Jenifer Corbett Dooren and Anna Wilde Mathews.  Here's an excerpt:

Food and Drug Administration drug-safety reviewers questioned whether the GlaxoSmithKline PLC asthma drugs Serevent and Advair are appropriate for use in pediatric patients, and said the issue needs further review.

The asthma-drug findings came in documents posted Friday in advance of a meeting of the FDA's pediatric advisory committee. The session, which starts Tuesday, is expected to focus on the safety of a number of drugs, including the influenza medications Tamiflu, from Roche Holding AG, and Relenza, made by Glaxo.

Serevent and Advair, which both contain the active ingredient salmeterol, already carry a strong "black box" label warning about a risk of asthma-related death. The agency's reviewers said they hadn't identified side effects unique to children.

BGS

FDA Recommends Child Neurological Warnings for Flu Drugs Tamiflu and Relenza

Article on cnn.com -- FDA wants behavior warning on flu drugs.  Here's an excerpt:

Government health regulators recommended adding label precautions about neurological problems seen in children who have taken flu drugs made by Roche and GlaxoSmithKline.

The Food and Drug Administration on Friday released its safety review of Roche's Tamiflu and Glaxo's (Charts) Relenza. Next week, an outside group of pediatric experts is scheduled to review the safety of several such drugs when used in children.

BGS

FDA Investigates Chantix Link to Suicidal Thoughts, Aggressive Behavior, and Drowsiness

The FDA is looking into possible links between Pfizer's anti-smoking drug Chantix and various mental or emotional effects.  In its announcement yesterday -- Early Communication About an Ongoing Safety Review: Varenicline (marketed as Chantix) -- the agency summarized the reports it has received about side effects of Chantix.  The FDA is working with Pfizer "to further evaluate the potential association between Chantix and suicidal thoughts, aggressive and erratic behavior, and impairment that affects one’s ability to drive or operate machinery," and will report its conclusions and recommendations as soon as it completes its analysis.  In the meantime, "The FDA urges both healthcare professionals and patients to report side effects from the use of Chantix to the FDA's MedWatch Adverse Event Reporting program."

Here's an excerpt from today's Wall Street Journal article:

The Food and Drug Administration has received reports of "suicidal thoughts and aggressive and erratic behavior" in people taking Chantix, the smoking-cessation drug sold by Pfizer Inc., but it is too soon to say whether the drug is clearly linked with such problems, the agency said yesterday.

Pfizer said yesterday that it had updated the drug's label to include "reports of depressed mood, agitation, changes in behavior, suicidal ideation, and suicide in patients attempting to quit smoking while taking Chantix."

... The agency said it is reviewing reports of drowsiness in some people taking the drug, and it recommended that patients taking Chantix be careful driving and operating machinery until they know how the drug affects them. Patients should tell their doctors if they have mood or behavior changes while taking the drug.

Pfizer denies proof of causation.  The WSJ article quotes a Pfizer medical director who emphasized that quitting smoking can cause nicotine-withdrawal symptoms regardless of whether an anti-smoking drug is used.  At Pharmalot, Ed Silverman wrote about this yesterday in Up in Smoke?  Pfizer's Chantix and Suicidal Thoughts, and reports Pfizer's reaction:

A Pfizer spokesman e-mailed us to say that Chantix labeling has been updated to reflect the various reports, but emphasized that “there is no scientific evidence establishing a causal relationship between Chantix and these reported events…In clinical trials involving more than 5,000 patients, adverse events related to changes in behavior or psychiatric symptoms, including suicidal ideation, were rare and occurred at a rate comparable to placebo-treated patients. There were no suicides in patients taking Chantix in our clinical trials.”

A post on Chantix on the Mass Tort Litigation Blog one year ago has generated 100 comments, mostly by Chantix users discussing side effects they have experienced.  To our surprise as blog editors, the comments page to that post has become something of a chat room for worried Chantix users.  Is this the first stages of the sort of mass tort networking about which Byron Stier has written?

I understand that neither Chantix users nor Pfizer looks at this from an academic perspective.  I also understand that, for them, this is not (or at least, one hopes, not primarily) about tort liability and litigation.  For users, this is about personal health, and for Pfizer, it's about both corporate responsibility and a product that is critical to the company's revenue. 

But for those of us who try to understand the development of mass tort litigation, it's fascinating to watch the seeds of potential litigation at a point when we know that some litigation is inevitable but do not know whether the lawsuits will flourish and replicate.  Four million U.S. patients took Chantix.  There are plaintiffs' attorneys advertising for Chantix clients.  But it's very early.  Beck and Herrmann, in their Anatomy of a Mass Tort (which I think was right on target), described how mass torts begin:

A mass tort does need a trigger. We'll bet the mortgage that one of these five events started the avalanche: (1) bad press -- Connie Chung or Mike Wallace said something nasty, (2) regulatory action -- the FDA added a black box warning to a drug or the National Highway Traffic Safety Administration recalled a car, (3) a voluntary recall -- although no government agency demanded it, a manufacturer took its product off the market, (4) a big jury verdict -- nothing catches the eye of the plaintiff's' bar like money, or (5) a critical article in the scientific literature -- historically, we didn't see this trigger too often, but it's becoming increasingly common.

Even as we watch a potential endgame in Vioxx with Merck's settlement offer, and follow asbestos litigation in its over-mature stage, it's interesting to look at yesterday's FDA announcement when we don't yet know whether that announcement will turn out to be a mass tort trigger, and to look at the informal networks developing among Chantix users when we don't yet know whether the chat room will become a litigation plaintiff network.

HME

Medtronic Feels Financial Effect of Recall of Sprint Fidelis Heart Leads, Mentions Ready for Litigation

An article in the Wall Street Journal -- Medtronic Net Slips on Recall, by Thomas M. Burton and Jon Kamp -- discusses the significant negative financial impact on Medtronic from its recent recall of Sprint Fidelis heart leads and mentions possible related litigation against Medtronic.  Here's an excerpt:

Regarding the potential for litigation linked to the recall, [Medtronic chief executive] Mr. Hawkins said it is too soon to say what the impact may be. "We're well-prepared financially and legally for any legal actions that come our way," he said.

***

Defibrillators are designed to correct potentially lethal racing heartbeats by dispatching a powerful jolt to the heart. A lead fracture can mean the electrical therapy doesn't get sent to the heart, and the patient can die. In the case of Sprint Fidelis, it has also meant that unnecessary shocks are sent to some patients' hearts. The company has said this phenomenon was at work in some of the five patient deaths that may have resulted from the fractured leads.

BGS

Sebok and Zipursky on Vioxx Settlement Ethics

Excellent FindLaw column today by Tony Sebok and Ben Zipursky -- Getting With the Program: The Vioxx Settlement Agreement.  One of their central points is that Vioxx plaintiffs need advice to decide whether to accept the Merck settlement offer, but it is hard for clients to trust their lawyers' advice when the lawyers have already agreed to recommend the settlement to every client.

HME

Perspectives on Asbestos Litigation Symposium at Southwestern Law School

On Friday, January 18, 2008, Southwestern Law School will present a symposium entitled, Perspectives on Asbestos Litigation.  Scheduled speakers and moderators include Judge Barbara Jacobs Rothstein (Federal Judicial Center, Director); Justice Helen Freedman (N.Y. Supreme Court); Deans Bryant Garth (Southwestern) and Gregory Keating (USC); Professors Ronald Aronovsky (Southwestern), Anita Bernstein (Brooklyn), Alan Calnan (Southwestern), Howard Erichson (Fordham (Visiting) & Seton Hall), James Fischer (Southwestern), Mark Geistfeld (NYU),  Michael Green (Wake Forest), Deborah Hensler (Stanford), Keith Hylton (Boston U.), Francis McGovern (Duke), Linda Mullenix (Texas), Richard Nagareda (Vanderbilt), David Owen (South Carolina), Joseph Sanders (Houston), Judy Sloan (Southwestern), and Neil Vidmar (Duke); and distinguished practitioners Marh Behrens (Shook, Hardy) and Steven Kazan (Kazan, McClain).

Professor Alan Calnan and I are serving as co-chairs for the conference, and I will also moderate a panel on Public and Private Law Perspectives.  The Southwestern University Law Review will subsequently publish an issue based on the symposium.  Hope you can join us for what promises to be an interesting and informative day.

BGS

Pfizer Wins Daubert Motion in Celebrex Litigation

Pfizer has won a Daubert motion in the Celebrex litigation that may significantly reduce the size of the litigation.  Here's an excerpt from the Wall Street Journal article, Pfizer Legal Win Might Block Some Lawsuits Over Celebrex, by Nathan Koppel and Heather Won Tesoriero:

Pfizer Inc. scored a victory yesterday through a federal ruling that might wipe out some lawsuits alleging that the drug maker's painkiller Celebrex caused heart attacks and strokes.

U.S. District Judge Charles R. Breyer of San Francisco ruled that plaintiffs in the litigation haven't presented scientifically reliable evidence that Celebrex caused heart attacks or strokes when taken at a daily dosage of 200 milligrams. That is the most common dosage, according to Pfizer.

Celebrex is the last drug in the COX-2 inhibitor class that is sold in the U.S. Merck & Co.'s Vioxx and Pfizer's other COX-2 painkiller, Bextra, were withdrawn from the market amid safety concerns.

There are more than 3,000 Celebrex plaintiffs, according to the ruling, but it isn't clear how many the ruling will affect. Paul Sizemore, a plaintiffs' attorney with Girardi & Keese in Los Angeles, estimates that about 900 Celebrex cases involve plaintiffs who were prescribed the 200-milligram dose. However, he says, many of the plaintiffs took the drug twice a day.

BGS

Poncebo on Regulation and Litigation in the EU

Not quite mass tort scholarship, but perhaps heralding the precursor to mass tort litigation in the EU, is an article recently posted on SSRN by Christina Poncibo (European University Institute) entitled Regulation and Private Litigation: A Debate Over the European Perspective.  Here is a portion of the abstract:

The aim of this paper is to present and to discuss the interaction of regulation and private litigation in the European-single-market. The arguments ground both on the regulatory failures and on the fact that shareholders and consumers' actions are mushrooming in the Member States and various nations, including the Netherlands and the United Kingdom, have enacted or are enacting laws allowing aggregation methods to make mass litigation more efficient. The trend toward mass lawsuits, combined with emerging consumer friendly substantive laws and the availability of U.S.-style practices, will probably create a new litigation landscape in Europe over the next few years.

ADL

Senate Report Criticizes Glaxo's Treatment of Physician Raising Avandia Concerns

Article in the Wall Street Journal -- Glaxo's Handling of Physician Criticized, by Jeanne Whalen.  Here's an excerpt:

Over a period of several years, drug maker GlaxoSmithKline PLC was so concerned about a prominent physician's negative views of its diabetes drug that it engaged in a concerted effort to intimidate him and stifle his opinion, a report by the U.S. Senate Finance Committee found.

The report offers a window into the rarely acknowledged practice among drug companies of monitoring and seeking to influence the opinions of leading physicians, who can make or break a drug's sales. The report alleges that Glaxo Chief Executive Jean-Pierre Garnier and former research chief Tachi Yamada were involved in the intimidation.

The Senate Finance Committee released the report Thursday, after researching Glaxo's relationship with John Buse, a diabetes expert and professor of medicine at the University of North Carolina in Chapel Hill. In 1999, Dr. Buse began expressing concerns about the cardiovascular risks of Avandia, one of Glaxo's top selling drugs.

BGS

Concern Over Plaintiff Counsel Ethics in Vioxx Settlement

Article in the Wall Street Journal -- Vioxx Plaintiffs' Choice: Settle or Lose Their Lawyer, by Nathan Koppel.  Here's an excerpt:

Plaintiffs in litigation over the painkiller Vioxx are supposed to be able to decide whether to enroll in the übersettlement announced last week or take their cases to court. But due in part to what lawyers say is an unusual provision in the settlement agreement, many plaintiffs in effect may have little choice but to accept the deal.

The provision, agreed to by Merck & Co. and the lead lawyers in the case, requires that if one client of an attorney enrolls in the settlement, then the attorney must recommend the deal to all other clients. If a client decides not to take part in the settlement, then the lawyer, according to the deal, must take "all necessary steps" to withdraw from representing that client. It is relatively rare for a settlement to require lawyers to cut ties with clients, but it appears to be happening more often, lawyers say.

Some find the development problematic. The provision improperly "stacks the choice for the client," says Deborah Rhode, an ethics professor at Stanford Law School. "If the price of exercising what should be their right to reject the settlement means they have to forfeit their representation from the lawyer actually familiar with the case, it's not exactly an uncoerced choice."

Merck pulled the widely used painkiller Vioxx from the market in September 2004 because it was tied to a higher risk of heart attack and stroke. Thousands of lawsuits ensued, and after three years, Merck and the lead plaintiffs lawyers negotiated a $4.85 billion settlement, announced Friday.

BGS

Professor Kelly Strader on the Milberg Weiss Prosecutions

Professor Kelly Strader of Southwestern Law School has published his article, White Collar Crime and Punishment: Reflections on Michael, Martha, and Milberg Weiss, 15 George Mason L. Rev. 45 (2007).  The article discusses allegations that certain Milberg partners paid class representatives.  Here's the abstract from the SSRN post of the article:

We are deeply conflicted about white collar crime and punishment. This conflict is largely born of the government's use of novel, “gray-area” legal theories in many high profile white collar prosecutions. Such prosecutions, which seek to expand the scope of existing crimes, tend to undermine the integrity and expressive function of our system of white collar criminalization. These prosecutions also may violate the defendants' right to fair notice of the possible crimes with which they may be charged. We need a new approach. First, in such “gray-area” cases, we should rely upon civil and administrative remedies except in extraordinary circumstances. Second, we should assess whether extraordinary circumstances exist by examining whether the defendant's alleged acts caused substantial, identifiable harm. To test this approach, I examine three of the most significant economic fraud investigations and prosecutions of the last 20 years – those of Michael Milken, Martha Stewart, and the Milberg Weiss law firm. I conclude that none of the cases warranted criminal prosecution on “gray-area” economic fraud theories, and that assertion of those theories actually served to undermine our confidence in white collar criminalization and punishment.

BGS

DBCP Verdict in Los Angeles

Torts Prof has a post on a recent verdict in California in the DBCP litigation, with links to news accounts.  Dow Chemical Co. and Dole Food Co. were held liable for $3 million in compensatory damages to six plaintiffs.  The jury decided against six other plaintiffs, finding no causation.  The trial then moved to a punitive damages phase.  DBCP (dibromochloropropane) is a pesticide that was used in the 1970s on banana plantations around the globe, and was discontinued when studies linked it to infertility.  The DBCP litigation has been going on for some time; I worked on a piece of it in the early 1990s as an outside lawyer for Del Monte.

HME

Conference on Vioxx Settlement

That was fast.  Mealey's is hosting a conference on the Vioxx settlement at the Ritz-Carlton in New Orleans on Dec. 10-11, 2007.  Plaintiffs' lawyers only.  According to the Mealey's marketing e-mail, the speakers include a number of the plaintiff-side negotiators and other key players, including Andy Birchfield, Edward Blizzard, Thomas Girardi, Mark Lanier, Arnold Levin, and Chris Seeger.

You can bet plaintiffs' lawyers deciding whether to recommend the Merck settlement to their clients will ask a lot of questions about claimant eligibility and compensation, as well as about their own legal fees.  I hope that some of them push hard, as well, on the professional responsibility issues raised by the deal, such as how to provide clients with enough information to obtain informed consent as required by the aggregate settlement rule, and whether it would be ethical to abandon any client at this point in the litigation if the client chooses -- as is each client's absolute right -- to decline the settlement offer.  Comments on legal ethics issues raised by the deal may be found in my earlier post on implications of the Vioxx settlement, as well as at the WSJ Law Blog, Pharmalot, and Point of Law.

HME