Saturday, March 29, 2003
Removing the shackles of asbestos litigation
Sen. Don Nickles (R-Okla.) -- Op-Ed -- 3/26/03
For many years, Congress has relied on economic incentives and tax savings to encourage investment, create jobs and stimulate growth in the economy. Such measures will, appropriately, become the centerpiece of proposed legislation to revive our dormant economy.
But first, we must face the economic realities of 2003. While traditional stimulus solutions offer fertile ground for future growth, they are faced with a plethora of negative influences that tend to drive the economy in the opposite direction. That is why we must be prepared to go beyond merely finding effective stimuli for growth to eliminating those factors that obstruct economic recovery.
One major inhibitor of economic recovery is the phenomenon of ever-expanding asbestos litigation, which threatens to siphon away much of the impact of any stimulus measures Congress might pass. Spawned in our courtrooms, the explosion of asbestos litigation is rapidly becoming an out-of-control stampede of civil suits that threatens to bankrupt scores of companies, displace thousands of workers and erode away sizable chunks of employee retirement plans.
An estimated 8,400 companies have already been named as defendants in asbestos suits, many of which have never been involved in the production of asbestos. Over 200,000 asbestos claims are pending in federal and state courts, with estimates that it could reach as high as a million. Companies have already paid out over $54 billion in claims and costs, and future payments could easily reach over $200 billion. The increasing burden of litigation costs and settlement pay-outs has already pushed at least 60 companies into filing for Chapter 11 bankruptcy protection, with many more likely to follow.
But the costs of litigation and eventual bankruptcy do not begin to reflect the true impact on a business, its investors and its employees. Aside from direct costs associated with litigation and bankruptcy, defendant companies, not surprisingly, suffer from significant declines in stock value, shortages of capital necessary for growth, reductions in long-term revenue and, ultimately, loss of jobs.
It is estimated that almost 60,000 workers have lost their jobs as a direct result of asbestos litigation and resulting bankruptcies. A recently published study co-authored by Joseph Stiglitz, a 2001 Nobel Prize-winning economist, estimates that each displaced worker will lose, on average, $25,000 to $50,000 in lost wages.
Furthermore, affected employees, many of them union members, are often shareholders and participate in the company 401(k) plan. It is estimated that workers of companies declaring asbestos-related bankruptcy will, on average, lose 25 percent of their plan value.
What makes all these developments so offensive is the fact that a majority of the asbestos plaintiffs have no medical injury. In essence, the courts are becoming log-jammed with cases involving claims of prior asbestos exposure that “may” someday develop into the symptoms of a true disease. In some cases, even exposure to asbestos is doubtful.
What has become clear is that asbestos litigation has become extremely lucrative for trial lawyers. A typical legal strategy involves finding one or two plaintiffs who have developed an asbestos-related malignancy, then add hundreds of plaintiffs to the suit who may have no medical impairments. Faced with having to settle, or endure lengthy and even more costly litigation to sort out who is sick and who is not, defendant companies often settle, or consider bankruptcy.
Sadly, one group that may suffer the most from this tidal wave of suits are claimants who are actually afflicted with asbestos-related malignancies such as mesothelioma, which is often fatal within two years of diagnosis. As hundreds of thousands of non-injured claimants continue to file questionable claims, and more companies file for bankruptcy, there may soon not be sufficient funds for those who deserve and need compensation.
Though this problem sprang up through the courts, the solution must be found in Congress. The U.S. Supreme Court has already made several pleas for Congress to step in and resolve this problem. Chief Justice William Rehnquist wrote that the asbestos problem “cries out for a legislative solution.” And a growing number of trial lawyers have called for congressional reform — primarily those representing claimants with malignant diseases.
Congress cannot ignore this problem any longer. It must act and not let itself become mired in a time-consuming search for the “perfect” solution. Some form of relief — even if it is interim relief — must be passed this year. At a minimum, federal law must establish clear medical criteria and compliance standards to be used immediately by courts in determining whether a claimant actually has an “injury” and, thus, may file a civil suit.
Second, because some asbestos-related illnesses will not develop until decades after exposure, federal law must suspend the running of statutes of limitations until a person discovers an injury or should have discovered the illness. Temporarily suspending, or “tolling,” the statute of limitations eliminates the need for thousands of unimpaired claimants to file premature lawsuits but preserves their legal rights if an injury should develop later. Other corrective measures could include steps to limit abusive venue shopping.
If Congress is to play a meaningful role in restoring our economy, it must address the problem of out-of-control asbestos litigation. Merely identifying stimuli for economic growth is not enough. We must also begin to cleanse our economy of the gremlins that thwart such growth. A good place to begin is with asbestos litigation reform.
Sen. Don Nickles (R-Okla.) is chairman of the Budget Committee and recently introduced the Asbestos Claims Criteria and Compensation Act of 2003.
Thursday, March 27, 2003
A Glossary of Database Searhing Terms
Lynn Frances -- Law Technology News -- 03-27-2003
A useful little glossary of the important terminology.
IP Litigation a Growth Area
Renee Deger -- The Recorder -- 03-27-2003
Technology companies facing flat sales growth are increasingly using their patent portfolios to build market share by threatening competitors with costly legal fights.
Litigation Risk Analysis and Automated Document Coding
Robert Murrill -- Legal Times -- 03-27-2003
Innovative technologies are helping litigators assess the risks of going to trial versus settling, and automation is cutting expenses for collecting, sorting and analyzing documents.
Related: See Ellis Mirsky's article on using Monte Carlo method to model litigation scenarios and cases.
Manhattan Jury Awards $47 Million Asbestos Verdict
New York Lawyer -- March 27, 2003
A Manhattan jury Wednesday awarded $47.1 million to a man who was diagnosed with cancer after being exposed to asbestos, according to the man's attorneys at Weitz & Luxenberg.
The New York Law Journal reports that Robert Croteau, 54, alleged that he was exposed during work he did at Con Edison and Long Island Lighting Company power plants. He has settled with other defendants, said one of his attorneys, Michael P. Roberts.
Andrew J. Czerepak, who represented Con Edison, and John J. Fanning of Cullen & Dykman, who represented KeySpan, which purchased the assets of the Long Island company, could not be reached for comment. Chris Olert, a spokesman for Con Edison, said: "We do not believe the law or the evidence supports the preliminary verdict and consider the award to be grossly excessive."
The trial before Supreme Court Justice Diane A. Lebedeff lasted about five weeks.
Monday, March 24, 2003
Snell & Wilmer Receives Top Honors at 2003 Better Business Bureau's Business Ethics Awards
PHOENIX (March 14, 2003) - The Better Business Bureau (BBB) of Central/Northern Arizona awarded its 2003 BBB Business Ethics Awards at an event on Thursday, March 13, 2003, naming Snell & Wilmer Law Offices the Winner for Category Five; 100-999 employees. The firm was one of six category winners, from among 18 businesses recognized for demonstrating high standards of ethical conduct and practices, both internally and externally.
The law firm's Phoenix office, which was a BBB Business Ethics Awards Finalist in 2002, was judged on its ethical practices by an independent panel of community leaders according to criteria established by the Council of Better Business Bureaus' International Torch Award for Marketplace Ethics. Snell & Wilmer's award was based upon its commitment to ethical business practices, including enforcement of its policy on professional conduct; creating and implementing a credo, Attorney Policy and procedure manual and Code of Professionalism; being among the first major law firms in the country to create an independent ethics committee; providing Continuing Legal Education internally and to other lawyers; forming the Western Institute for Corporate Governance to educate executives on developing effective corporate governance programs; producing and distributing various newsletters to clients dealing with ethics and timely issues; and investing in establishing a new branding effort that highlights the firm's dedication to ethical business practices.
Each application was scored by three separate independent judges, which include some of the top business leaders in our community. Having earned this local recognition, Snell & Wilmer is now being considered for the National BBB Business Ethics Award.
Saturday, March 22, 2003
Law Firm Malpractice Premiums Rising and More for Larger Firms
Seems Corporate Practice is Now Risky
New York Law Journal, 3/24/03
from
Professional liability insurance rates for lawyers at large firms are on the rise, with premium increases in 2003 expected to range from 35 percent to 75 percent. The upsurge is attributed, in part, to the number of malpractice claims against lawyers in corporate scandals as well as to the decline in investment income that insurance companies derive from premium dollars since the stock market downturn. More modest increases, from 25 to 30 percent, are likely for smaller firms, reflecting their lower risk of [corporate scandal] litigation.
Attorney Scott O’Connell Named To Federal Court Advisory Committee
Manchester, NH, March 17, 2003 … Attorney W. Scott O’Connell, a partner of Nixon Peabody LLP, Manchester, was named a member of the Federal Court Advisory Committee for a three-year term by Chief Judge Paul Barbadoro, United States District Court for the District of New Hampshire. The Federal Court Advisory Committee serves as a sounding board on court initiatives and ideas; initiates new ideas to improve court operations and procedures; considers, studies and recommends changes to local rules; and serves as liaison between federal practitioners and the court.
Mr. O’Connell serves as team leader for Nixon Peabody’s nationally-focused Financial Services and Securities Litigation Practice, where he manages 14 partners and several associates from throughout the firm. Mr. O’Connell represents banks, securities firms, insurance companies and regulated subsidiaries of non-financial companies in federal and state court litigation and before regulatory agencies. He has most recently published articles about federal privacy and anti-terrorism laws and the impact those laws have on the financial and securities industries.
Mr. O’Connell is well-known for his civic and professional involvement. He is vice-chairman of the Farnum Center for Substance Abuse, a state-wide alcohol and drug in-patient recovery program; volunteers for the New Hampshire Food Bank, a program of Catholic Charities; is past president of the New Hampshire Task Force to Prevent Child Abuse; and teaches a lunch-hour aerobics class at the Manchester YMCA. He also serves on the Steering Committee of the New Hampshire Bar Foundation’s Capital Campaign. This year, he was recognized among The Union Leader’s select group of those nominated for this year’s “40 Under Forty” program.
Wednesday, March 19, 2003
Asbestos Litigation Reform Efforts Gain Momentum
Lawmakers are closer on the issue
Marcia Coyle -- The National Law Journal -- 03-18-2003
The chances for asbestos litigation reform appear brighter than ever this year because of expanding agreement in favor of a federal solution, growing bipartisanship on the issue in the Senate and a split in the plaintiffs' bar. The challenge for business, labor and the bar is finding a politically feasible solution. Sen. Orrin Hatch has pressed the issue, saying he will make a move this week unless the groups show progress.
Related:
Supreme Court Gives Boost to Those Claiming Asbestos Injury
Tony Mauro -- American Lawyer Media -- 03-11-2003
Adding fuel to the debate over asbestos litigation, the U.S. Supreme Court on Monday ruled by a 5-4 vote that railway workers who suffer from asbestosis should also be able to recover damages for fear of asbestos-related cancer.
No End in Sight for Asbestos Suits, Says RAND Study
Claims predicted to double, bankrupting the industry
Bob Van Voris -- The National Law Journal -- 08-24-2001
Monday, March 17, 2003
Network's Corr Cronin to Defend Gun Manufacturer in D.C. Sniper Case
In a case drawing national attention, families of two of the victims of the D.C. Snipers have sued the alleged snipers, the Tacoma, WA gun shop and the manufacturer of the gun allegedly used in the attacks. The plaintiffs are represented by nationally-known Seattle attorney Paul Luvera and by The Brady Center to Prevent Gun Violence, Legal Action Project from Washington, D.C.
Corr Cronin has been retained to represent the gun manufacturer, Bushmaster Firearms, Inc.
Network's Morgenstein & Jubelirer to Defend Brobeck (Temporarily)
New York Lawyer -- March 17, 2003
By Brenda Sandburg -- The Recorder
Although defunct and indebted, Brobeck, Phleger & Harrison found a firm willing to represent it, at least temporarily, in litigation over its hiring of two lateral partners in 1995.
Morgenstein & Jubelirer filed a motion with Los Angeles Superior Court seeking to vacate or extend the April 8 trial date in the suit filed by the now-defunct Santa Monica firm Dickson, Carlson & Campillo against Brobeck and the two partners. The court will hear arguments on the motion Tuesday.
John Worden, a partner at Morgenstein & Jubelirer, said his firm had agreed to temporarily represent Brobeck to file for the extension. "How long we will [represent the firm] hasn't been decided," Worden said.
Keker & Van Nest had represented Brobeck, Pole and Fitzgerald, but on March 4 the court granted the firm's motion to withdraw as their counsel. Keker said a conflict had arisen as a result of Brobeck's dissolution last month. The firm also noted in court papers that Brobeck owes it slightly more than $300,000.
Getting Jurors to Like You
New York Lawyer -- March 17, 2003
By Thomas F. Liotti -- New York Law Journal
This:
"I was born in Brooklyn and grew up on Long Island. My parents settled here after World War II in a home built for them by Bill Levitt, in a community for many other G.I.'s. I attended public and parochial schools. I have three children. Before I can ask you to 'speak the truth' (voir dire), I thought that I would speak the truth to you. I thought you should know that about me since I will be asking you so many personal questions. It is only fair. * * *"
and more.
Friday, March 14, 2003
House Passes Bill to Limit Medical Malpractice Awards
Janelle Carter -- The Associated Press -- 03-14-2003
Responding to doctors' complaints about soaring insurance costs, Republicans pushed through legislation to limit jury awards in malpractice cases. By a 229-196 vote, the House of Representatives passed a bill Thursday that would cap noneconomic damages, such as compensation for loss of a limb or sight, at $250,000. The bill faces an uncertain future in the Senate.
N.Y. State Senators Continue Push for Tort Reform
John Caher -- New York Law Journal -- 03-12-2003
Texas Amendment May Open Door for Caps in Civil Actions
Mary Alice Robbins -- Texas Lawyer -- 02-28-2003
Wednesday, March 12, 2003
Class-Action Lawyer's Fee Under Scrutiny
Alex Berenson -- New York Times -- 3/12/03
Joseph F. Rice, a leading class-action lawyer, has agreed to accept a $20 million fee from the parent of a company that he is suing in addition to the fees that he will collect from his clients for settling their claims against that very company.
Legal ethicists said the payment raised serious ethical concerns because he was in effect being paid by both sides in the dispute, and several class-action lawyers criticized the payment.
Mr. Rice said he did not believe that the fee was a conflict of interest, and a lawyer for ABB, the Swiss company that will pay the fee, said it was justified and fair.The fee is part of a proposed settlement for the bankruptcy of Combustion Engineering, a United States company owned by ABB that faces 220,000 claims from people who say they were injured by asbestos in its boilers. Mr. Rice is being paid for helping to broker a settlement with other lawyers handling asbestos claims against the company.
Under the settlement, people who develop asbestos-related disease because of their exposure to the boilers will receive a fixed payout from a trust being created by the companies. They will not be allowed to sue ABB or Combustion Engineering.
If the trust is overwhelmed with claims, as expected, people badly injured by asbestos — representing a small fraction of the claimants — may receive less money than if they could pursue their cases in court, lawyers for those plaintiffs say. But the trust will pay lightly injured plaintiffs quickly, producing a windfall for a handful of lawyers who represent thousands of those claimants.
Some lawyers who represent seriously injured plaintiffs are protesting the creation of the trust, and similar structures that other companies, including Honeywell and Halliburton, are trying to create.
The disclosure of Mr. Rice's fee in a letter discussing the bankruptcy has further provoked those lawyers, as well as legal ethicists, who say Mr. Rice should not be paid by the company he is suing. The fee creates a conflict of interest for Mr. Rice and his firm, said Susan P. Koniak, a Boston University law professor and expert on legal ethics.
"They're representing people who were ostensibly allegedly injured by products produced by these companies," she said. "And they're taking money from the other side to get a deal through that the other side wants too? What does one need to say?"
George Kuhlman, ethics counsel for the American Bar Association, said the group did not have absolute rules that bar lawyers from being paid by both sides in a case. "We have very complex rules on lawyers and conflicts of interest," Mr. Kuhlman said. "There are things that you are supposed to avoid, but it does not boil down to that you are supposed to avoid a fee from someone you are otherwise suing."
He said he would have to do much more research to determine whether this case passed muster.
Mr. Rice, whose South Carolina firm, Ness Motley, rose to prominence because of his work suing tobacco companies, said the arrangement had been favorable for his clients.
He does not see a conflict because his $20 million fee, a portion of which he said he had already received, was coming from ABB, which owns all of Combustion Engineering, rather than Combustion Engineering itself.
"I'm not taking the fee from anybody that I'm suing," he said in a phone interview yesterday. "I did a business transaction." In addition, Mr. Rice said he and his firm did not advise any clients on whether to vote in favor of the agreement, which was approved by outside experts including lawyers representing future claimants against Combustion Engineering.
"The agreement was good for both sides," Mr. Rice said. ABB "had its independent problems that needed to get solved, and in solving their problems my asbestos clients came out ahead of the game."
Lawyers representing the states in the global tobacco settlement were paid by the tobacco companies rather than by the states. Those fees, however, were negotiated before any settlement and took the place of fees from the states.
Claimants typically pay a contingency fee to lawyers like Mr. Rice, a fee that generally ranges from 25 to 40 percent of the total. In addition, Mr. Rice has consulting arrangements with other law firms under which he receives a portion of the fees that they bill their clients in exchange for his work on their cases.
David Bernick, outside counsel for ABB, said he considered Mr. Rice's fee for brokering the settlement reasonable. Mr. Rice worked hard to negotiate the deal, which was completed in a matter of months last fall, with ABB and Combustion Engineering on the verge of bankruptcy.Mr. Rice played a crucial role in explaining the agreement to other plaintiffs' lawyers and winning them over, Mr. Bernick said.
Beauty Contests for New Antitrust Work
New York Lawyer -- March 12, 2003
By Jenna Greene and Siobhan Roth -- Legal Times
The world's major automakers have been holding beauty contests to select counsel for a potentially massive antitrust class action. Since mid-February, more than a dozen cases have been filed in federal and state courts around the country by plaintiffs firms including Milberg Weiss Bershad Hynes & Lerach and Berman DeValerio Pease Tabacco Burt & Pucillo.
The cases charge carmakers with violating the Sherman Antitrust Act by conspiring to eliminate the import of lower-priced new cars from Canada into the United States. In Canada, cars cost 10 percent to 30 percent less, plaintiffs allege, but to stop U.S. consumers from buying them, automakers refuse to honor warranties and penalize Canadian dealers for selling to Americans.
So far, DaimlerChrysler has retained an antitrust team led by Steven Newborn from the D.C. office of Clifford Chance; the Toyota Motor Corp. has hired Cleary, Gottlieb, Steen & Hamilton's D.C. antitrust group; the General Motors Corp. has tapped Kirkland & Ellis; Daniel Goldberg of Boston's Bingham McCutchen has BMW; and Robert Van Nest of San Francisco's Keker & Van Nest is representing Honda America.
Says one D.C. lawyer following the case: "This will be a major, major antitrust suit."
Saturday, March 08, 2003
Medical Monitoring Suitable For Class Action Treatment
Lockheed Martin Corp., et al. v. The Superior Court of San Bernardino County [Roslyn Carrillo]
Mealey Publications -- SACRAMENTO, Calif. -- March 4, 2003
In a ruling of first impression, the California Supreme Court said that medical monitoring is suitable for class action treatment. “[N]o per se or categorical bar exists to a court’s finding medical monitoring claims appropriate for class treatment, so long as any individual issues the claims present are manageable,” the court said.
Note: Mealey's Emerging Toxic Torts focuses on chemical sensitivity, indoor air quality, groundwater, soil and air contamination, radiation, workplace exposure, pesticide, solvent, PCBs, gloves, EMF, endocrine disruptors, and other emerging toxic tort litigation.
Courts increase intervention in arbitrations
Palm Beach Daily Business Review -- March 7, 2003
A New York appellate court ruling that reversed a $25 million punitive damages award is part of a trend of greater judicial scrutiny of arbitration awards, according to many experts. The experts disagree as to the causes of the trend.
Thursday, March 06, 2003
Abestos Legislation Possible
Judiciary Committee struggles with asbestos legislation - Seattle Post Intelligencer
Senate's Hatch Sees Asbestos Suit Bill Soon - ABC News
Tuesday, March 04, 2003
Law firms try new management model
Boston's BusinessToday.com "At the Bar" by Maggie Mulvihill, 3/4/03
The days of one managing law partner running the show are fading as more and more [large] firms transform into . . . businesses.
