November 21 | November
3 | October 13 | October
4 | September 27
| September 19 | September
13 | September 7 |
August 31 | August
19 | June 30 |
May 23 | March
November 21, 2000
U.S. District Court Judge Gladys Kessler threw
out two out of the four claims in the federal governments
lawsuit against the tobacco industry. Specifically, the
government may not use the Medical Care Recovery Act or the
Federal Employees Health Benefits Act to recover Medicare expenses
related to ill smokers. However, claims based on the federal
racketeering laws may be used. The government sued the tobacco
companies last year in an attempt to recover $20 billion a year
spent by Medicare and other health plans.
- The Third Circuit Court of Appeals dismissed a lawsuit by 16
hospitals against the tobacco companies. The hospitals argued
that the companies conspired to manipulate the nicotine level
of cigarettes and deceived the public about the addiction and
health risks. As a result, the hospitals sought reimbursement
for treating poor patients with smoking-related illnesses. If
the hospitals had more accurate information, they could have better
effectively counseled patients to quit. The Third Circuit held
that the damages complained of were too speculative and the injuries
too remote. The Court also expressed concern that this would lead
to slippery slope where hospitals could sue other industries such
as the automotive industry. (Allegheny General Hospital v.
Philip Morris, 3d Cir., No. 99-4024)
J.V. Schwan has written a paper on The
Consumer Benefits of Civil Justice Reform on Texas. Citizens
for a Sound Economy had commissioned Dr. Raymond Perryman to
conduct a study of the bipartisan civil justice reforms passed
by the Texas legislature and signed by Governor George W. Bush.
The results of the study indicate several positive and direct
consumer benefits attributable to civil justice reform. Specifically,
Dr. Perryman found that the 1995 Texas tort reform laws created
nearly 200,000 new jobs in the state. The reforms also generated
savings to the typical Texas household of $1,078 through
lower prices and increased total personal income. To read the
report, see http://www.cse.org/informed/1142.html
Donald Lough has written a legal backgrounder
on No-Injury Class Actions: Bad for Consumers
and Business. The author demonstrates how the litigation
technique of no-injury class action lawsuits can
aggregate hundreds or thousands of injured and uninjured users
of a product alleged to be defective, and collect
damages for such things as the cost of future repairs, restitution,
or a recall. Such class actions not only empower lawyers with
a new tool to extort settlements from businesses, Lough
claims, but they also harm consumers who by participating in
the suit, give away any legal rights they may have if the targeted
product actually injures them in the future. See http://www.wlf.org
The October, 2000 issue of The American
Lawyer featured an article on ATLAs War Room,
detailing the activity of the Association of Trial Lawyers of
Americas 61 practice groups. A sampling of ATLAs
litigation groups, which are usually closed to outsiders, include:
AIDS, Bad Faith Insurance, Benzene/Leukemia, Birth Defect, Casino
Gambling, Chronic Villus Sampling (CVS), Computer Vending and
Ammunition, Funeral Services, Herbicide & Pesticide, Inadequate
Security and its subgroup Walmart Task Force, Lead Paint, Liquor
Liability, Nursing Homes, Parlodel, Stadol, Steroids, Tabloid
Outrage, Tap Water Burns, Tire Litigation, and Truck Underrride.
Newly approved groups include: Firefighter and EMS Hearing Loss,
Allercare and its subgroup of Herbicides and Pesticides, Laser
Eye Surgery Malpractice, Methyl Tertiary Butyl Ether (a gasoline
additive), Propulsid (a heartburn medication), and Rezulin (a
November 3, 2000
- In Vol. 28, No. 38 of BNAs Product Safety & Liability,
Mark Behrens and Donald Kochan of Crowell & Moring wrote an
article Let the Sunshine In: The Need for Open, Competitive
Bidding In Government Retention of Private Services. According
to Behrens & Kochan, in recent years, a new phenomenon has
taken holdregulation through litigationthat violates
the bedrock principle of separation of powers upon which our entire
system of government is based. Special interests and the
plaintiffs bar have discovered that the courts can serve
as a forum for the advancement of their own concentrated interests,
even if those interests are opposed by a majority of the public.
State and local governments have begun to sponsor such Big
Government suits in an effort to regulate entire industries,
and build the public coffers through tax increases that are imposed
outside the democratic process. The authors suggest that
too often, these partnerships between public officials and private
personal injury contingency fee lawyers are consummated behind
closed doors. Because there is no public oversight, the attorney
selection process can easily be abused for personal gain and political
patronage. The authors suggest that rules be adopted to require
open and competitive bidding and greater public oversight in government
retention of private legal services.
- President Clinton signed into law November 1 the Transportation
Recall Enhancement Accountability and Documentations (TREAD) Act.
For more information on this act, see
October 6 on the Criminal Law Web Page.
October 13, 2000
- In the September 2000 issue of the Manhattan Institutes
Civil Justice Forum, Professor Richard Epstein argues that the
exposure of Managed Care Organizations (MCOs) to liability
for patient care will inevitably undermine consumer access to
health care and drive up health care costs. Epstein examines how
the argument for MCO liability rests on the flawed assumption
that markets and free contractual arrangements are inadequate
for the consistent provision of responsible medical care to patients.
To read the report, visit http://www.manhattan-institute.org/html/cjf_39.htm.
- A neurologist has filed an $800 million lawsuit against Motorola
and eight other cell phone companies. He alleges that the
cell phones caused his malignant brain tumor. The plaintiff,
Dr. Christopher Newman, filed suit in Baltimore City Circuit Court
and is seeking in excess of $100 million in compensatory damages
and in excess of $700 million in punitive damages.
- The Supreme Court agreed on October 10 to set the constitutional
bounds that lower courts may use to settle fights over the size
of punitive damages awarded in civil lawsuits. The case will provide
a framework for appeals courts to follow in deciding whether a
damage claim is excessive. Federal appeals courts around the country
have applied differing standards for settling that question. For
more information, see:
- In Howard v. Ford Motor Company, California judge Michael
Ballachey ordered Ford to recall and repair nearly two million
cars and trucks after concluding that the automaker knowingly
installed defective ignition systems in as many as 22 million
vehicles nationwide and concealed the defects from consumers and
regulators. This was the first recall imposed on an automaker
by a judge in United States history See: http://www.nytimes.com/2000/10/12/business/12AUTO.html.
October 4, 2000
September 27, 2000
- Regulatory Takings Victory
On September 15, the U.S. Court of Appeals
for the Fifth Circuit handed down an important regulatory takings
decision in United States Fidelity & Guar. Co. v. McKeithen,
No. 99-30475 (5th Cir. Sept. 15, 2000). At issue in the
case was 1995 amendments to Louisiana's Workers' Compensation
Second Injury Fund ("SIF") Assessment Statute.
The SIF is a state created fund designed to socialize among
all employers in the state the cost of "second injuries"
to previously injured workers (e.g., a worker who previously
blinded in one eye in an industrial accident who loses the other
eye and thus becomes totally disabled). Established in
1974, the fund assessed each employer in the state for a share
of the cost of all second injuries during a given year.
Because collecting from all employers was an inefficient method
of operating the fund, the 1974 law used workers' compensation
insurers as an intermediary in the collection of the assessment.
As originally enacted, the law assessed each insurer based on
the premiums written in a given policy year, and the insurer
was allowed to pass through the assessment to the employer in
its rate base.
In 1995, after numerous insurers had ceased
or substantially reduced underwriting in the state because of
high costs and bad experience, the State changed the methodology
for the assessment from a premium-based assessment to an assessment
on the basis of benefits paid in the current year. The
net effect of the change was to shift a substantial portion
of the costs of the SIF to insurers that had withdrawn from
the state. Insurers sued in federal district court in Baton
Rouge, but the district court upheld the statute. The
Fifth Circuit, in an opinion written by Judge Edith Jones, reversed
the district court and ordered that the statute be enjoined
as applied to the plaintiff insurers. Applying Eastern
Enterprises v. Apfel, the court held that the statute constituted
impermissible retroactive legislation in violation of the Takings
Clause. As applied to defendants' pre-enactment workers'
compensation policies, the legislation "retroactively imposes
a heavy economic burden on those who could not reasonably anticipate
Defendant insurers were represented by Mark
F. Horning and Shannen W. Coffin of Steptoe & Johnson LLP
(Co-Chair, Federalism & Sep Powers Practice Group).
The opinion is available at http://www.ca5.uscourts.gov/opinions/pub/99/99-30475-cv0.HTM
- South Carolina Attorney General is prepared to sue the entertainment
industry on the theory that that violent movies, television shows
and video games are causing a public health threat that puts children
- Former Attorney General Dick Thornburgh comments on a recent
bill offered by Senator McCain that would make it a federal crime
to "knowingly and willfully
introduce a motor vehicle
or motor vehicle equipment into interstate commerce with a safety-related
defect" that harms or kills someone. Senator Specter has
offered a broader bill (S. 3014), making it a federal crime to
knowingly manufacture and sell any product "dangerous to
human life and limb beyond the reasonable and accepted risk with
such or similar products lacking such a flaw." To read General
Thornburghs New York Times editorial, visit: http://www.nytimes.com/2000/09/20/opinion/20THOR.html
- On September 15, a judge dismissed Chicago's lawsuit against
the gun industry, ruling the city failed to show that gun manufacturers,
distributors and dealers knowingly flood the city with handguns.
September 19, 2000
- Charge Conspiracy by Maker and Doctors'
Group to Expand Ritalin Use By BARRY MEIER
Lawyers involved in class-action lawsuits against the tobacco
industry, gun makers and health maintenance organizations filed
two lawsuits September 13 against another target, the widely used
drug Ritalin. The lawsuits, filed in federal courts in California
and New Jersey, say the Novartis Pharmaceuticals Corporation,
the drug's manufacturer, and the American Psychiatric Association,
a professional group, conspired to create a market for Ritalin
and expand its use See: http://www.nytimes.com/2000/09/14/science/14RITA.html
September 13, 2000
- Volume 32.4 of the Connecticut Law Review
(Summer 2000) features an article by Anne Giddings Kimball
and Sarah L. Olson titled, Municipal Firearm Litigation:
Ill Conceived from Any Angle. The article examines the number
of complaints filed by American cities and counties against firearms
manufacturers in an unprecedented governmental effort to
use civil litigation to achieve uniquely legislative ends.
- Sarah L. Olson and Anne Giddings Kimball also
have an article in the latest issue of the Loyola Consumer
Law Review, 12.3 (2000). Their article, The Limits on
the Use of Tort Law to Encourage Consumer Safety, The authors
state: By examining the history of tort-based claims against
firearm manufacturers over the last twenty-five years, one can
perceive the outline of principles which protect consumers in
individual cases but restrict the application of tort law to promote
more general societal goals. This article address these
I. A product must actually be
defective for tort liability to be imposed against its manufacturer
for injuries sustained during its use.
A. The risk-utility test for product
defect does not measure social utility generally.
B. A product is not defective based
solely on the fact that it can be used criminally, intentionally,
or accidentally to inflict injury.
II. Product warnings are intended to protect
those to whom dangers are not obvious. Where a danger inherent
in a product is open and obvious, no warning is required.
III. Tort liability cannot be imposed where
a manufacturer has no relationship with the injured part, the
injuring party, or the product that causes injury at the time
that an injury occurs.
IV. For tort liability to be imposed, the manufacturer
must control the risk at the time of injury.
September 7, 2000
- $3.75B Fen-Phen Settlement Approved
A federal judge has approved a proposed $3.75
billion national settlement of health claims stemming from the
diet drug combination fen-phen. Some of the settlement will be
used for medical monitoring, although some feel as
if the settlement does not go far enough to cover those who may
develop health problems later.
August 31, 2000
- Cert was granted in Circuit City Stores v. Adams,
in which the Ninth Circuit ruled, contrary to other circuits,
that the Federal Arbitration Act does not apply to contracts of
- The Second Circuit agreed to review the class action certification
granted by the lower court in the suit against Visa and MasterCard
brought by a group of large retailers. Plaintiffs, including such
giants as Wal-Mart and Sears, charge that the card companies used
their dominance in credit cards to dominate debit cards.
August 19, 2000
- 28 state attorneys general have filed suit against large record
companies, claiming the companies should pay back millions of
dollars in illegal profits collected by forcing discount stores
to raise CD prices in 1995.
- 'Protecting the Trail Lawyer Monopoly: The Assault on State
and Federal Binding Arbitration' By: James T. Riley Issue
Analysis 106, Citizens for a Sound Economy Foundation
In a world where individuals are a mouse-click away from virtually
limitless information, people are discovering that there are many
things they can do for themselves that they never would have dreamed
possible just a few short years ago. Arbitration has effectively
cut trial lawyers out of a big piece of action, leading them to
launch an assault upon this form of dispute resolution before
it grows even stronger. From California and Alabama to the U.S.
Congress, the trial lawyers have enlisted their allies to propose
anti-arbitration legislation in the guise of consumer protection.
In fact, the drive to eliminate arbitration and other forms of
alternative dispute resolution has nothing to do with consumer
and everything to do with self-interested motives of the trial
lawyers. See http://www.cse.org/informed/866.html
- 'This is Not Insurance Reform: An Update on National Efforts
to Codify Third-Party Bad Faith Liability' By:
James T. Riley, Esq., Issue Analysis 103, Citizens for a Sound
An overwhelming majority of Californians rejected Proposition
30, a proposal to restore third-party "bad faith" liability
claims against insurance companies as a cause of action in civil
lawsuits. This proposal, and others like it around the country,
would allow accident victims to sue the insurance companies of
the persons allegedly responsible for their injuries, not just
the person at fault. The crux of such a suit against an insurance
company has no relation to the underlying injury claim. Rather,
"bad faith" claims are based upon the actions of the
insurance company, whether real or perceived, after the accident
during the settlement process. In recent years, trial lawyers
across the country have spent untold amounts of money to get "bad
faith" legislation passed by building the perception that
insurance companies have a poor track record dealing with claimants
who are not their own policyholders. Of course, who would benefit
most from such legislation? One of the most powerful special interest
groups around the trial lawyers.
- 'The Economic Effects of the Liability System' By: Daniel
P. Kessler, Hoover Institution
The goals of the liability system are twofold to compensate
those who are injured in accidents and to deter negligent behavior.
Recent research, however, suggests that the current liability
system achieves neither of these objectives. The author demonstrates
that through his discussion of the liability system and its result
of encouraging doctors to practice "defensive medicine"
using treatments with minimal medical benefit out of fear
of legal liability. The author also discusses the various untested
reforms that are available. See: http://www.hoover.org
- 'Shooting Blanks Cincinnati Can't Sue Gunmakers for Damages,
Saying it did not want to open a ''Pandora's box'' for lawsuits
against other industries, an appeals court has upheld a judge's
decision to throw out a suit by the city of Cincinnati seeking
to recover millions of dollars from gun manufacturers. In its
unanimous decision Friday, the Ohio First District Court of Appeals
likened the city suit to the "absurdity'' of suing the makers
of matches because of losses from arson.
June 30, 2000
- EXPORTING TORT AWARDS
States often impose higher taxes on goods or services consumed
disproportionately by out-of-state residents, such as hotel
rooms in San Francisco or coal from Kentucky. Why? State politicians
try to "export" taxes because this benefits their
constituents while it harms citizens of other states who don't
Do state courts also engage in "tax exportation"?
In product liability cases, for example, do courts award larger
judgments when a manufacturer found liable is headquartered
in another state?
Economists Eric Helland (Claremont McKenna College) and Alex
Tabarrok (research director, The Independent Institute) find
that the answer is "yes" in research reported in "Exporting
Tort Awards" (REGULATION 23:2).
Among Helland and Tabarrok's findings:
* Awards against firms headquartered out-of-state are higher
in all states compared to awards against in-state firms.
* In states that select their judges using partisan elections,
courts are significantly biased against out-of-state defendants.
Average awards against out-of-state defendants are more than
$250 thousand dollars higher in states which select their
judges using partisan elections than in states which appoint
or elect their judges using non-partisan elections.
* Federal courts, where judges are appointed with life-tenure,
do not seem to show the same biases as state courts.
For "Exporting Tort Awards" by Eric Helland and Alex
Tabarrok (REGULATION 23:2), see http://www.independent.org/tii/lighthouse/LHLink2-24-5.html.
Also see Eric Helland and Alex Tabarrok's related Working Papers,
"The Effect of Electoral Institutions on Tort Awards"
and "Runaway Judges? Selection Effects and the Jury"
Copyright © 2000 The Independent Institute
100 Swan Way
Oakland, CA 94621-1428
(510) 632-1366 phone
(510) 568-6040 fax
- For more litigation updated information, click
May 23, 2000
- Class Action Updates
John Beisner of O'Melveny & Myers achieved a significant
victory for Ford Motor Company in a recent TX Supreme Court
decision, Ford Motor Company, et al v. Sheldon, et al http://www.supreme.courts.state.tx.us/opinions/980539o.htm.
In its opinion remanding the case to the trial court for decertification,
the Texas Supreme Court provided much needed guidance on factors
used to define a class. In reaching the "clearly ascertainable"
requirement, the court ruled that the class definition can not
be based on a determination of the merits, i.e., can not include
defect theory as an element of the class definition because
failure to prove the theory means that there was no class to
begin with, ergo the proposed members of the class could not
be bound by the judgment. The court also rejected the "state
of mind" aspect to the definition of the class ("allege
that the peeling or flaking was caused by a defective paint
process") since the trial court would of necessity have
to "inquire individually into each proposed class member's
state of mind to ascertain class membership", a requirement
that defeats the benefits of class certification. However, the
court did state that it "need not go so far as to hold
that a class definition may never require the trial court to
make a subjective inquiry into the claimants' thought processes."
Another class action case decided the same day [Southwestern
Refining Company, Inc., Kerr-McGee Corporation , and Sherwood
v. Julia Bernal, et al addresses the inappropriateness of using
the class action device for personal injury actions because
class issues do not predominate over the individual issues--another
"Constitutional and Antitrust Violations of the Multistate
March 2, 2000
- Rucker v. Davis, 2000 U.S. App. LEXIS 1966 (9th Cir. 2000):
In a comprehensive opinion validating HUD's "One Strike and
You're Out" policy, the U.S. Court of Appeals for the Ninth
Circuit upheld the evictions of several public housing residents
whose relatives and invitees had engaged in illicit drug use without
their knowledge or consent. Rejecting the tenants' "innocent
owner" defense, the Court found that the statutory and regulatory
language clearly indicated that an innocent owner would be evicted
if they, members of their household, or their invitees committed
drug-related crimes. The Court rejected the tenants' claims that
enforcement of the statute and regulation violated their First
Amendment right to freedom of association, the Eighth Amendment
prohibition against excessive fines, and the Fourteenth
Amendment right to intimate association. In an interesting sidelight,
the Court also rejected the claim of one tenant that eviction
violated his rights under the Americans With Disabilities Act.
That tenant -- a paralyzed man whose care-giver used cocaine in
his apartment -- was given two notices of lease violations due
to the care-giver's cocaine use. After the third violation, the
Oakland Housing Authority evicted him. The Court found that the
housing authority accommodated the tenant's disability by giving
him three chances. The Court concluded: "Walker needs a care-giver;
he does not, however, need a drug-using care-giver."
- Nordby v. Anchor Hocking Packaging Co., 199 F.3d 390 (7th Cir.
1999): The Court of Appeals for the Seventh Circuit held that
a plaintiff who accepted defendant's Rule 68 Offer of Judgment
was not entitled to seek attorneys' fees when the Offer stated
that it was "one total sum as to all counts of the amended
complaint" and the amended complaint contained a count under
the Illinois Sales Representative Act which provided for counsel
fees. The Court affirmed its decision in Webb v. James, 147 F.3d
617, 623 (7th Cir. 1998) -- which held that ambiguities in a Rule
68 Offer of Judgment must be construed against the offeror --
but distinguished it because the offer in this case was unequivocal.
Significantly, the Seventh Circuit Court disapproved of the holding
of the Court of Appeals for the Ninth Circuit in Nusom v. Comh
Woodburn, Inc., 122 F.3d 830, 833-34 (9th Cir. 1997), which held
that the words "including attorneys' fees" were necessary.
Rejecting a "magic words" approach, the Seventh Circuit
Court approved of the approach adopted by the Court of Appeals
for the Eleventh Circuit in Arencibia v. Miami Shoes, Inc., 113
F.3d 1212 (11th Cir. 1997), which gave effect to an unambiguous
offer even if attorneys' fees are not mentioned explicitly.
- LeFever v. Hovnanian Enterprises, Inc., 160 N.J. 307 (1999):
In LeFever, the New Jersey Supreme Court extended New Jersey's
already broad "product line" exception to successor
liability to a manufacturer that purchased assets at a sale under
Section 363 of the Bankruptcy Code.
- James v. Bessemer Processing Co., Inc., 155 N.J. 279 (1998):
The New Jersey Supreme Court further relaxed the standard of proving
medical causation in toxic and environmental torts to require
that a plaintiff need only show (1) proof of "frequent, regular
and proximate exposure" to a product or substance, and (2)
medical and/or scientific proof of nexus between exposure and
plaintiff's condition. This relaxed standard had applied previously
only to asbestos cases.
- California Referendum On Insurer Bad Faith Liability To Third
Parties: Next month California residents will vote on a referendum
to resurrect third party bad faith liability for insurers and
risk management companies. In 1988 the California Supreme Court
struck down this "privity-deficient" cause of action,
which allows a third party to sue a tortfeasor's insurer for bad
faith after establishing the insured's liability and the carrier's
unreasonable refusal to settle the case. Although the California
Legislature passed legislation resurrecting third party liability,
it will not go into effect unless the referendum passes.
2003 The Federalist Society