Mass Tort Litigation Blog

The Law of the Banana

Los Angeles Superior Court Judge Victoria Chaney dismissed two tort cases against Dow Chemical and Dole as fraudulent.  The suits alleged that chemicals manufactured by the defendants and used on banana plantations caused sterility.  Law.com reports of the lawyers' misconduct (see the full article here) - the Edelman referenced below is the defendants' attorney:

They offered a $20,000 bounty in Nicaragua for information about witnesses, Edelman said, and saw to it that Dole investigators were subject to intimidation by police and other officials. The court testimony that led to Chaney's ruling detailed how a group of Nicaraguan lawyers, in apparent collusion with local officials, judges and lab technicians, rounded up 10,000 men whom they coached to claim sterility -- and to blame that sterility on Dole's chemicals. In fact, many of the men had never worked for Dole, and many weren't sterile. Some even had multiple children. "There [are] massive amounts of evidence demonstrating the recruiting and training of fraudulent plaintiffs to bring cases in both the Nicaraguan and U.S. courts," Chaney wrote.

The transcript of the hearing in which the judg excoriated the plaintiffs' lawyers can be found at this link.  She will hold a contempt hearing and potentially refer the lawyers to the bar disciplinary committee.

(H/T Legal Ethics Forum - Roy Simon gives this the cute title "Banana Lawyer Slips, Tort Cases Fall")

ADL

Katrina Litigation Moves Forward

The New York Times reports that a lawsuit by property owners against the US Army Corps of Engineers regarding the breaking of the levees during Hurricane Katrina begins today.  Click this link to get to the article.  The article notes that the plaintiffs overcame the immunity issue, but still need to prove that government negligence, not the sheer force of the hurricane, caused their damage.  In terms of significance of this litigation, here's what the article says:

The plaintiffs say they hope a victory in the case could open the door for a broader class action in which more than 400,000 claims have been filed against the government. An Army financial projection has concluded that there is a reasonable possibility that potential government losses could ultimately range from $10 billion to $100 billion.

ADL

Wall Street Journal on Provenge & the FDA

Editorial in today's Wall Street Journal on the delay in approving prostate-cancer drug Provenge by the FDA -- Prostate Cancer and FDA Politics: Their first priority should be to save patients.  Here's an excerpt:

The larger question is why Provenge wasn't made available sooner to the 30,000 American men who die each year from prostate cancer. The FDA regularly -- and pointlessly -- slow-walks potentially revolutionary therapies, relying on overly simplistic and unscientific statistical models that don't take into account the fact that some drugs may work better in certain subgroups than in others. Its regulatory blockade is especially cruel to terminally ill patients for whom drugs like Provenge may mean extra months or years of life.

Id.  One wonders if rather than an FDA-centric regulatory approach, a flexible negligence standard incorporating evolving industry custom for testing would better serve public policy by expeditiously moving safe and effective drugs to market.

BGS

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:

Complaints about foul-smelling Chinese-made drywall that first emerged in a few dozen homes in Florida in January have spread to hundreds of homes in several states, fueling controversy over the Chinese import.

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.

BGS

Second Wall Street Journal Editorial on Plaintiffs' Lawyers Hired for Contingency Fee by State of Pennsylvania

Following last week's editorial, the Wall Street Journal expanded its discussion in today's editorial.  Here's an excerpt:

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."

BGS

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:

A number of states have passed caps on non-economic and punitive damage awards in civil cases. The conventional wisdom is that the passage of these caps is driven by "out-of-control" jury awards that need to be reigned in. However, it could be the case that voters harboring anti-litigation, pro-tort reform sentiments are more likely to support the passage of caps even in the absence of an upsurge in awards. To examine the effect of jury awards on the passage of caps, we estimate semi-parametric hazard models of cap passage using data from the Jury Verdict Research Reporter.

ADL

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 article was prepared for a Clifford Symposium which challenged paper writers to imagine how our system of tort compensation might look in the year 2020. This paper responds to an aspect of the general challenge: to imagine a tort recovery system which would deal adequately with rare and catastrophic events. To get a handle on this problem, the paper looks closely at how the legal system compensated damages attendant on four recent events that might be considered “rare and catastrophic” – Three Mile Island, 9/11, Hurricane Katrina and the Exxon Valdez oil spill. In no case did the system of compensation meet all the desiderata of a well-functioning tort compensation scheme, but the two no-fault schemes which provided the bulk of the compensation to those injured in the Three Mile Island and 9/11 disasters seem to have done better than the “ordinary” tort system which provided the bulk of the individual compensation for the damages caused by Hurricane Katrina and the Exxon Valdez oil spill. The 9/11 compensation scheme may, however, have been sui generis since it appears to have reflected both a national coming together after an attack on the homeland and Congressional efforts to protect the airline industry, and the Price-Anderson compensation scheme, which worked well in Three Mile Island, might have failed utterly had the disaster been on the scale of Chernobyl. Ultimately, the article concludes, no imaginable compensation scheme is likely to adequately handle a large, unique and unexpected catastrophe, but some improvements in current law and practice are possible and ad hoc political solutions, as with 9/11, may help in some cases.

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.

ADL

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:

Standard law and economics models imply that regulation and litigation serve as substitutes. We test this by looking at the incidence of insurance class actions as a function of measures of regulatory enforcement. We also look specifically at whether states with clear regulatory standards regarding the use of OEM parts experience less litigation over this issue. We find no evidence of substitution between regulation and litigation. We also examine the possibility that litigation is more frequent in states where regulators are more likely to be captured by industry interests, finding no support for this hypothesis either. Instead, litigation is more likely in states where similar litigation has been successful in the past, calling into question standard law and economics models in this area.

ADL

The "Hair Club for Men" Theory for Regulating Food Safety

Ian Ayers (Yale law) and Peter Siegelman (UConn Law) have posted a suggestion for regulating food safety: establish that the company CEO uses the product.  In other words, "I'm not only the president, I'm also a client."   See the idea developed more fully here at Freakonomics blog or here on Balkinization. 

Now for some civil procedure free association.  At the oral argument in the Iqbal v. Ashcroft case in the Supreme Court this term, Justice Breyer asked if a plaintiff finds a mouse in a can of cola, can he depose the CEO of a cola company?  If government regulations required the CEO to drink the cola, is the answer yes?  The answer it seems to me should be no, unless there is some demonstrable reason to depose the CEO (that is, deposing him or her will lead to the discovery of admissible evidence).  Just tasting the Cola is not such a reason, although "plausibly" alleging that the CEO had learned of the mice in cola and let the cola be distributed nevertheless or conspired to place mice in cola might be sufficient (at least, until Iqbal comes down). The majority of the members of the Court seemed to think that letting a CEO be deposed is pretty much the end of the world.  (Quite a turnaround from the Court's position that a civil suit against the President can proceed, including depositions.)  I wonder what they would make of forcing CEOs to eat the peanut butter their companies produce.

ADL

Wall Street Journal on Plaintiffs' Lawyers Hired for Contingency Fee by State of Pennsylvania

Editorial in the Wall Street Journal -- The State Lawsuit Racket: A case study in the politician-trial lawyer partnership.  Here's an excerpt:

State Attorneys General regularly hire private plaintiffs lawyers on a contingency-fee basis to prosecute cases. The trial bar returns the favor with campaign donations to state office holders. And despite the inherent conflicts of interest and questionable ethics of the practice, corporate defendants have rarely challenged such arrangements. Which is why a motion pending before the Pennsylvania Supreme Court is so remarkable -- and deserves more public attention.

Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson, is a defendant in a lawsuit filed by the state of Pennsylvania over Janssen's antipsychotic drug Risperdal. The state alleges that Janssen has improperly marketed the drug for off-label uses not approved by the Food and Drug Administration. Janssen denies the accusation, but the merits of the case -- which hasn't gone to trial yet -- are not what's at issue in the motion before the court.

Rather, what's at issue is the fact that the civil action against Janssen is being prosecuted on behalf of the state by Bailey, Perrin & Bailey, a Houston law firm. And it turns out that Pennsylvania Governor Ed Rendell's Office of General Counsel was negotiating this potentially lucrative no-bid contingency fee contract with Bailey Perrin at the same time that the firm's founding partner, F. Kenneth Bailey, was making repeated campaign contributions totaling more than $90,000 to the Democratic Governor's 2006 re-election bid.

BGS

Mark Lanier Expanding Plaintiffs' Tort Law Firm

Article by Alison Frankel in AmLaw Litigation Daily -- Texas Torts Firm Says Business Is Booming, Expands Houston Office.  The article has some interesting quotes from Mark Lanier about asbestos litigation.  Here's an excerpt from the article:

In asbestos, Lanier's firm handles only mesothelioma cases, which he said have not slowed even though it's been decades since asbestos has been widely used. We asked whether the complaints by tort reformers that Delaware has become a haven for asbestos litigation were true, and, somewhat to our surprise, Lanier said that indeed, Delaware had become a frequent forum. But not, he hastened to add, because it's particularly friendly to plaintiffs. "It's not a home run forum for us," Lanier said. "It's a one-stop shop. You have jurisdiction over most defendants there."

We couldn't let that comment pass without asking what were still home run jurisdictions for asbestos claimants. There aren't a lot, Lanier said: Baltimore; New York; some parts of California, though that's beginning to change; and West Virginia, if you can get jurisdiction there. Lanier told us he's hoping to revive Texas asbestos litigation and is making a new push to file cases in Boston.

BGS

Wall Street Journal Editorial on Silicosis Fraud Follow-Up

Here's an excerpt from the Journal's editorial, The Silicosis Abdication: A scam that deserves as much scrutiny as Lerach and Scruggs:

It is going on four years since a Texas judge blew the whistle on widespread silicosis fraud, exposing a ring of doctors and lawyers who ginned up phony litigation to reap jackpot payouts. So where's the enforcement follow-up?

That's an especially apt question given news that New York's State Board for Professional Medical Conduct has finally revoked the license of Dr. Ray Harron. He was among the doctors who Texas Judge Janis Graham Jack showed had fraudulently diagnosed thousands of plaintiffs with silicosis, a rare lung disease. These doctors were later called to testify in Congress, where many, including Dr. Harron, took the Fifth Amendment.

Dr. Harron has since lost his medical licenses in California, New Mexico, Texas, Florida, North Carolina and Mississippi. This is progress, though hardly sufficient. Among the questions Congress asked state departments of health during the silicosis hearings were why those bodies hadn't moved to shut down these doctors and their mobile X-ray vans at the time they were committing medical malpractice.

BGS

Sheila Scheuerman on Statutory Damages and Class Actions

Professor Sheila Scheuerman (Charleston; picture, left) has posted on SSRN her article, Due Process Forgotten: The Problem of Statutory Damages and Class Actions, Mo. L. Rev. (forthcoming 2009).  Here's the abstract:

This article analyzes the due process problem that arises when two litigation mechanisms converge: statutory damages and class actions. Individually, the class action device and statutory damages serve a similar function: encouraging litigation by offsetting disincentives to suit where the alleged wrongdoing involves nominal financial harm. When combined, however, they create the potential for unintended bet-the-company liability. Courts have struggled with how to address these statutory damages class actions because the prevailing legal framework is jurisprudentially flawed and ignores the realities of modern class action litigation. This article assesses the current due process jurisprudence in this area, and proposes an analytical framework drawn from the Supreme Court's punitive damages jurisprudence. Indeed, the article shows that the modern due process standard for punitive damages - known as the BMW guideposts - in fact evolved from a test developed in early Supreme Court precedent analyzing the constitutional limits on statutory damages. Thus, the article argues that the BMW guideposts should apply to aggregate statutory damages awards, and furthermore should be considered before, not after, class certification.

BGS

5th Circuit Permits "Learned Intermediary" Defense in Zyprexa

Alison Frankel, of the American Lawyer, reports that the Fifth Circuit has given the green light to the "learned intermediary defense" in the Zyprexa product liability suits.  The defense is based on the doctor (the learned intermediary) warning the patient of prescription drug side effects.  Here's a link to the Fifth Circuit opinion and an excerpt of the article:

The facts in the Zyprexa case are heartbreaking. The victim, Philip Ebel, suffered from crushing headaches, for which he tried no fewer than 47 different treatments. His doctor in Texas, in consultation with a neurologist from a headache clinic in Michigan, finally prescribed Zyprexa -- an anti-psychotic prescribed off-label for headaches. Ebel took Zyprexa for four months before killing himself in 2002.

His doctor testified at a deposition that he was aware of Zyprexa's side effects, including an increased risk of suicide, and that he told Ebel about them. The 5th Circuit, in agreement with the lower court, ruled that because Ebel and his doctor were aware of the risks, Lilly's alleged failure to warn could not be "a producing cause" of Ebel's death.

Ebel's lawyer, Andy Vickery of Houston's Vickery, Waldner & Mallia, told the Litigation Daily that the 5th Circuit is behind the times when it comes to the learned intermediary defense. He said that courts in West Virginia, Oregon and New Mexico have all recently rejected it. "It's a travesty of justice when we cede the case to prescribing physicians who inevitably have an agenda of their own," said Vickery, who is also the plaintiffs lawyer in the Paxil case recently decided by the 5th Circuit. "Their rulings are a complete anachronism, a complete miscarriage of justice."

ECB

"A Practical Solution to the Reference Class Problem"

An article by Edward Cheng (Brooklyn Law) called "A Practical Solution to the Reference Class Problem" has just been posted on SSRN. 

The "reference class problem" is a key issue in mass tort cases.  For example, say a judge wants to hold a series of "bellwether" trials -- that is, a series of sample trials -- in order to determine what compensation is due to a group of plaintiffs.  To do so, judge will have to decide what criteria to rely on in determining the sample.  In other words, the judge must determine the appropriate reference class. The problem is that if the group is heterogeneous the judge will have to pick and choose among criteria, and it is hard to determine which criteria are relevant.  This is the reference class problem and is a central barrier to certification of mass torts class actions because it renders them unmanageable.  Cheng proposes a solution in his paper, and I haven't read it yet to be able to evaluate whether this solves the problem.  It certainly presents food for thought and is an important issue!

ADL