This week the U.S. Supreme Court heard oral arguments in Halliburton Co. v. Erica P. John Fund. The issue in the case is the ongoing viability of fraud-on-the market theory as an underlying assumption in shareholder class actions.
This week the U.S. Supreme Court heard oral arguments in Halliburton Co. v. Erica P. John Fund. The issue in the case is the ongoing viability of fraud-on-the market theory as an underlying assumption in shareholder class actions.
Justin Fox | Harvard Business Review Blog Network
The Supreme Court is going to host a debate next week on the efficient market hypothesis. The battle lines may not be exactly what you’d expect: the U.S. Chamber of Commerce and Justice Samuel Alito have already argued that the EMH is, as Alito put it, “a faulty economic premise,” while Justice Ruth Bader Ginsburg and the Obama administration have backed the idea that, as a sextet of Justice Department lawyers put it, “markets process publicly available information about a company into the company’s stock price.”
A selection of the need-to-know civil justice news for the week of February 8-14, 2014.
Helena Bottemiller Evich | Politico
Lawyers are pitching state attorneys general in 16 states with a radical idea: make the food industry pay for soaring obesity-related health care costs.
It’s a move straight from the playbook of the Big Tobacco takedown of the 1990s, which ended in a $246 billion settlement with 46 states, a ban on cigarette marketing to young people and the Food and Drug Administration stepping in to regulate.
David Gialanella | New Jersey Law Journal
A renewed effort to chop New Jersey's legal malpractice statute of limitations down to two years from the current six is underway in the Legislature.
Lawyers debated the issue along familiar battle lines at a meeting of the Assembly Judiciary Committee on Monday, though no vote was taken.
The bill, A-1254, is the latest push in a legislative effort that began six years ago.
The change would put the legal malpractice time restriction in sync with that of medical malpractice and align New Jersey with other states where aggrieved clients have less time to sue.
Seth Augenstein | The Star-Ledger
The National Rifle Association is supporting a Sussex County man's lawsuit seeking a permit to carry his handgun outside of his house, the organization announced this week.
The national lobbying group said it was backing John Drake’s lawsuit with a forthcoming amicus brief, in support of Second-Amendment rights in New Jersey, the organization said. Drake, and other plaintiffs involved in the lawsuit, petitioned last month to have their case heard in the U.S. Supreme Court.
Debra McLoughlin | New Jersey Law Journal
In Pinto v. New Jersey Manufacturers Insurance Co., the N.J. Supreme Court enforced a commercial motor vehicle liability policy's "step-down" provision, which capped uninsured- or underinsured-motorist coverage (UM/UIM coverage) provided through an employer's commercial policy to employees and other qualifying insureds at the limits available through their personal automobile insurance coverage.
Two years later, N.J.S.A. 17:28-1.1(f) was enacted, prohibiting in motor vehicle liability policies issued to corporate or business entities the use of step-down provisions to provide less UM/UIM coverage for employees than is provided to the named insureds. Further, if the policy lists only the business entity as the named insured, employees are deemed eligible for maximum available coverage. This new legislation, signed into law on Sept. 10, 2007, specified that it was effective immediately.
This appeal involved the application of N.J.S.A. 17:28-1.1(f) to a policy that was in effect at the time the legislation became effective and contained a step-down provision. The court addressed the statute's retroactivity, that is whether the step-down provision is enforceable for a UIM claim by an employee concerning an accident that occurred prior to the adoption of N.J.S.A. 17:28-1.1(f).
Michael Barone | Washington Examiner
Disparate impact. That's a phrase you don't hear much in everyday conversation. But it's the shorthand description of a legal doctrine with important effects on everyday American life -- and more if Barack Obama and his political allies get their way.
Consider the Department of Justice and Department of Education policies on school discipline. In a “dear colleague” letter distributed last month, the departments noted that “students of certain racial or ethnic groups tend to be disciplined more than their peers.”
Sindhu Sundar | Law360
A bankruptcy judge recently allowed Garlock Sealing Technologies LLC to root out the type of evidence suppression defendants have long suspected of asbestos plaintiffs, handing companies ammunition to probe foul play by their adversaries and persuading other courts to allow the investigations.
For years, defendants have accused asbestos plaintiffs of withholding evidence about claims they've filed against other companies. By disingenuously claiming they only have claims against a single company, plaintiffs were able to maximize their recovery, defense attorneys have argued.
Opinion | Wall Street Journal
The worst public scandals are often those that travel in plain sight, and a prime example is the asbestos litigation racket. We've been writing about it for years, and now a judge in North Carolina has issued a remarkable opinion exposing just how rotten it is.
Ralph J. Lamparello | Star Ledger
Last month, in his State of the State address, Gov. Chris Christie apologized to the people of New Jersey for actions taken regarding lane closures on the George Washington Bridge.
The governor acknowledged that as the leader of the state, he is responsible for its achievements and its missteps. He uttered the phrase so many before him have said: “Mistakes were clearly made.”
While the governor was referring to the Bridgegate controversy, parallels can be drawn to his actions toward the judicial branch — our third, separate and co-equal branch of government.
The New Jersey Civil Justice Institute has been closely monitoring the FDA’s proposed rules that would allow generic drug manufacturers to make changes to their labels. NJCJI is concerned that such a rule would greatly increase the number of lawsuits filed against generic pharmaceutical manufacturers thus raising the cost of generic drugs and clogging up the court system.
The Federal Judiciary’s Civil Rules Advisory Committee (the “Rules Committee”) is currently accepting public comments on a package of proposed amendments to the Federal Rules of Civil Procedure. Some of the most important changes in the package are aimed at reducing the cost and burdens associated with discovery.
As former U.S. Senator Jon Kyl explained in a recent Wall Street Journal Editorial:
The three most important committee proposals are: (1) a clear national standard that says companies could be punished for discarding information only if they did so in bad faith to hamper litigation; (2) a narrower scope of discovery that focuses on the claims and defenses of each case rather than any information that might lead to admissible evidence; and (3) confirming judicial authority under Rule 26(c) of the Federal Rules of Civil Procedure to allocate the costs of discovery to the party requesting discovery rather than the party responding. A "requester-pays" system lets a party decide to pay and get certain information if it really needs it. It also eliminates the temptation to make overly broad requests to impose costs on the other side to coerce a settlement.
If approved, these changes would be a first step toward significantly reducing litigation costs and trial delays. As such, the New Jersey Civil Justice Institute is developing comments in support of the proposed changes, and will be submitting them to the Rules Committee for its consideration. We urge you to do the same. Most of the comments received thus far have been provided by the plaintiffs' bar, which is generally critical of the proposed amendments as favoring defendants and corporations.
Comments must be submitted by 11:59 PM ET on February 15, 2014. Click here and then scroll to the bottom of the page for instructions on how to submit comments.
If approved by the Rules Committee, the proposed amendments will be submitted to the Judicial Conference with a recommendation for approval, who in turn submits the proposals to the Supreme Court. If approved by the Supreme Court, Congress has seven months to approve or reject the new rules.
Comments Submitted via Regulations.gov
The 2013 “Package” of Federal Discovery Rule Amendments: Thomas Y. Allman, Jan. 30, 2014. Mr. Allman is a former General Counsel and currently serves as an Adjunct Professor at the University of Cincinnati College Of Law. He is Chair Emeritus of the Sedona Conference WG 1 on E-Discovery and a former Chair of the E-Discovery Committee of Lawyers for Civil Justice.
A Rare Chance to Lower Litigation Costs (Opinion by Former Sen. Kyl): The Wall Street Journal, Jan. 20, 2014.
A selection of the need-to-know civil justice news for the week of January 25-31, 2014.
Jon Bramnick|The Record
As Americans, we believe in giving people a “second chance.” The proposed “Ban the Box” legislation is not the answer to the problem of a job applicant with a criminal history.
Imagine you are looking to hire someone to care for your elderly mother. That person will be alone with her and will have access to her home and her possessions.
After receiving applications for the job, you discover that one of the applicants has a criminal history of assault and theft. One would presumably be concerned about hiring that person to assist your mother.
You may not have a choice if “Ban the Box” legislation is enacted.
The latest report from the U.S. Chamber’s Institute for Legal Reform highlights litigation trends from across the country, and not surprisingly New Jersey is cast in an unfavorable light. New Jersey is noted as a hot spot for asbestos bankruptcy trust fraud and false claims act litigation. In addition, the report claims New Jersey is second only to California in the number of food related class action suits filed in the state, thanks largely to our state’s 6 year statute of limitations.
This event is postponed because of weather. It will be rescheduled.
The New Jersey Chapter of the Federalist Society is hosting Ted Frank, Founder and President of the Center for Class Action Fairness for an event titled The Class Action Settlement Problem on Wednesday, January 22.
“Since its founding in 2009, the Center for Class Action Fairness has revolutionized the law of class action settlements. At this event, the Center’s Founder and President, Ted Frank, will discuss why class action settlements are so prone to abuse, the tactics attorneys use to enrich themselves at the expense of the class, and why consumers are better off when class action abuse is curbed.”
The event will be held on Wednesday, January 22, 2014 from 6:30 p.m. – 8:30 p.m. at The Morris Museum in Morristown. 1 hour of CLE credit has been requested and appetizers will be served.
RSVP to: NJFedSoc@gmail.com
One of NJCJI’s top priorities for 2014 is advancing legislation that will bring transparency to bankruptcy trust litigation and discourage fraud so that settlement dollars are available to legitimately injured parties. The desperate need for this legislation was most recently illustrated by a ruling from U.S. Bankruptcy Court Judge George Hodges revealing the “tort system was infected by the manipulation of exposure evidence by plaintiffs and their lawyers.”
Bankruptcy Judge: Plaintiffs, Lawyers Covered Up Evidence In Garlock Mesothelioma Cases: LexisNexis, Jan. 13, 2014.
Judge Finds Fraud and Deceit by Plaintiffs’ Lawyers in Asbestos Cases: Bloomberg Business Week, Jan. 13, 2014.
The Asbestos Scam, Part 2 (opinion): The New York Times, Jan. 13, 2014.
The Judge Won’t Call Asbestos-Lawyer Shenanigans Fraud, But It Sure Smells Like It: Forbes, Jan. 11, 2014.
Embattled Gasket Maker Sues Asbestos Lawyers For Fraud: Forbes, Jan. 10, 2014.
Judge Slashes Asbestos Liability In Garlock Bankruptcy To $125 Million: Forbes, Jan. 10, 2014
While the asbestos trusts are currently the most well-known types of these trusts thanks to the relentless television ads by plaintiffs’ attorneys, they are not the only such trusts. Any company filing for bankruptcy that faces potential legal claims can set up a trust to streamline and resolve claims.
As a state with a strong manufacturing sector and a court system known for allowing questionable claims to move forward, New Jersey businesses stand to lose if double-dipping and fraud are not limited.
With movement on pension and education reform, legal reform and medical liability reform may rise on the Governor’s agenda. The need for legal reform has grown more apparent in recent months as studies confirmed that New Jersey will face a shortage of physicians by the end of the decade. The State Senate unanimously passed legislation authorizing DHSS to convene a summit to analyze the shortage’s implications for New Jersey residents; its Assembly counterpart, A-1828, awaits action by the Assembly Health and Senior Services Committee.
Statehouses across the country are grappling with budget deficits and declining revenue. We’ve all heard of successful programs meeting their demise due to an absence of funding. Crippling budgetary trade-offs being made to our educational system, law enforcement, and the like have become so commonplace that they barely raise eyebrows in disbelief.
What we’ve heard less about is the economic downturn’s impact on a key cornerstone in our democracy: justice.
Layoffs, furloughs, and unfilled judicial vacancies eventually leave their mark on our judicial system. The American Bar Association’s Task Force on Preservation of the Justice System found that civil cases have been the hardest hit by budget cuts. Typical civil cases include everything from child custody and divorce to employee compensation.
In the past few months, we’ve had a patron pursue a lawsuit against restaurant for injuries he sustained while driving his motorcycle drunk all the way up to the State Supreme Court; a lifeguard sue for age discrimination just before he retired; a patient who fell asleep while polishing a gun sue his doctor; and a woman who filed suit against ABC, claiming to be “severely damaged” after the station read the wrong winning lottery numbers.
These are the types of cases pushing back court dates for issues that matter. These are the types of cases being vetted when resources thin and demand for the court’s services grow. And yes, these all happened here in New Jersey.
“All of us must have and protect our right and our freedom to use courtrooms when we need to…That courtroom must be open to protect families…to validate and protect contracts for business...” said newly elected ABA President Wm. T. Robinson III at a symposium in Kentucky.
Spreading ever-thinning public funds around may be a new reality for the foreseeable future. But compromising access to justice is one sacrifice Americans shouldn’t have to make.
No matter what the trial lawyers tell you, filing a frivolous lawsuit isn’t a victimless crime.
Have you ever been asked “Can I have your ZIP code?” by a perky cashier?
It’s not something I have an issue with- after all, they’re just numbers that I happen to share with 25,000 other people.
Kerry Feder, a Verona, NJ resident, doesn’t see it that way. She was asked by a store employee for her ZIP code when making a purchase at Williams-Sonoma in Upper Montclair earlier this year. Instead of simply declining, Feder decided to file suit under New Jersey’s Truth in Consumer Contract, Warranty, and Notice Act (TCCWNA).
Fortunately, Feder v. Williams-Sonoma Stores Inc. was thrown out by a federal judge in Newark earlier this week. Judge William Walls found that Williams-Sonoma’s practice does not violate CCWNA because the “Can I have your ZIP code” request is not made under the provision of a written contract.
Unfortunately, however, a Morris County judge reached the opposite conclusion just a few weeks ago in a case against Harmon Stores. The New Jersey Law Journal reports that Superior Court Judge Stephan Hansbury rejected the notion that a ZIP code is “too broad an identifier to be the subject of a privacy violation.” (The same attorneys, by the way, represented the plaintiffs in both TCCWNA suits).
The reason why there is a sudden rush to try class action TCCWNA cases in New Jersey (even though this practice has been around for so long it’s rather routine) is likely due to a California Supreme Court ruling against Williams-Sonoma in February, which found that collecting ZIP codes violates their state’s consumer statutes. A plethora of similar cases have since been filed across California, and it seems that New Jersey is poised to be the second state in which the trial attorneys want to test the waters.
The courts’ conflicting rulings suggest that New Jersey might be in for more TCCWNA class action suits. Trial attorneys may see the dollar signs at the end of the road, but remember who pays the bill: consumers, who pay stores’ legal overhead in the form of higher prices; job-seekers, whose opportunities part-time and seasonal employment may be extinguished; and taxpayers, who are forced to subsidize these cases as they make their way through the court system.
So, you can stand up and be counted, and give your ZIP code if asked – (and if it means better advertising and coupons for me, I’m for it) – or you can decline. The choice should be yours – not the trial bar’s to make for you.
Admittedly, when I think of “trade secrets,” I tend to think of multiples of, well, Trade Secret.
Trade secrets aren’t the same as patents. For instance, you might patent a life-saving drug, but the New Jersey Trade Secrets Act might refer to the process behind its manufacture.
Under A-921/S-2456, a company or organization would be able to sue for damages or losses that result from someone taking proprietary information (a recipe, chemical formula, invention, intellectual property, etc.) and trying to profit from it by selling it or manufacturing it. If I take a secret recipe for a food item, sell it and make money from it, I would have to pay royalties to the company or person from whom I stole it.
A-921 passed the full Assembly in late 2010. Its Senate counterpart, however, was amended before being voted out of Committee, so the Assembly will need to vote on the amended version before it heads to the Governor’s desk.
New Jersey is, of course, among a minority of states which have not passed the Trade Secrets Act. More information about the Act can be found in the New Jersey Law Journal and on the Legislature’s homepage.
NJLRA hopes that everyone is safe, powered, and dry following Hurricane Irene. Kudos to all of those who helped others last weekend and during the ensuing floods.
As we look toward Labor Day weekend, here are some outrageous lawsuits to help lighten the mood. And, as always, beware of hot dogs:
Northfield, Ill.-based Kraft Foods and Downers Grove, Ill.-based Sara Lee have been embroiled in the litigation since 2009 over advertising claims that consumers prefer Kraft’s Oscar Mayer Jumbo Beef Hot Dogs over Sara Lee’s Ball Park and that Oscar Mayer is "100 percent pure beef."
For starters: she didn't send her son college care packages, or buy her daughter the homecoming dress she wanted. And their birthday cards? No cash or checks, just Hallmark sentiments.
The altercation allegedly happened July 25 during a daily sing-along, which was an ongoing protest of the state law curtailing collective bargaining rights for public workers.
“… why not offer legal protections to the ugly, as we do with racial, ethnic and religious minorities, women and handicapped individuals?”
Extending the Americans with Disabilities Act to protect the “ugly?” Seriously?!
Most of us are taught that beauty is in the eye of the beholder, not the ADA attorney.
Nevertheless, Professor Daniel S. Hamermesh at the University of Texas, Austin, argues that even affirmative-action programs for the ugly should be in order. Yes, he’s actually advocating to put ugliness-based lawsuits on the same platform of racial, ethnic, gender, and disability-based employment discrimination.
Oddly enough, he seems to acknowledge that money is the motivating – not supporting – factor in bringing potential lawsuits:
“There are other possible objections. ‘Ugliness’ is not a personal trait that many people choose to embrace; those whom we classify as protected might not be willing to admit that they are ugly. But with the chance of obtaining extra pay and promotions amounting to $230,000 in lost lifetime earnings, there’s a large enough incentive to do so. Bringing anti-discrimination lawsuits is also costly, and few potential plaintiffs could afford to do so. But many attorneys would be willing to organize classes of plaintiffs to overcome these costs, just as they do now in racial-discrimination and other lawsuits.”
Gee, there’s an idea. Let’s refrain from bathing and personal care and sue our way into cold hard cash. Exactly what our business community (and kempt colleagues) need to thrive during an economic downturn.
In case you missed it, Kimberley A. Strassel details trial lawyers’ attempts to use a controversial case to block mandatory arbitration clauses (The Senate’s Lawsuit Factory, The Wall Street Journal, 7/22/11). Some how-to highlights:
1) Identify a law or regulation that prevents trial lawyers from cashing in.
2) Identify a "victim" of this law or regulation.
3) Get congressional allies to turn said victim into a cause célèbre.
4) Use ensuing moral outrage to get the law or regulation changed.
5) Buy a yacht.
The 5- 4 decision handed down by the U.S. Supreme Court in Wal-Mart v. Dukes, et al. is likely to impact the size of class action lawsuits going forward.
The issues are real, but from the beginning, the case was a stretch: a class action lawsuit against Wal-Mart on behalf of its 1.6 million female employees in the United States since 1998. One-hundred twenty of these plaintiffs are named, many of whom give hard-to-dispute examples of gender based discrimination:
If you happen to be female and not discriminated against, however, it didn’t matter. You were included irrespective of your knowledge or consent. A class of 1.6 million against a major corporation is more attractive to plaintiffs’ attorneys than 120 individual lawsuits, after all.
And this was Dukes’ undoing. The demonstrable first-hand accounts became anecdotal, because plaintiffs’ attorneys now had to demonstrate that Wal-Mart had a companywide discriminatory policy. That’s 3,400 stores in all corners and subcultures of the United States.
Statisticians pointed out that fewer women were promoted, and that as of as of 2006, women made up more than 70 percent of Wal-Mart’s hourly employees, but fewer than 1/3 held managerial positions. Justice Ruth Bader Ginsberg noted this in her dissenting opinion. But the question before the Court was whether the women “had suffered a single wrong that allowed them to sue Wal-Mart as a block.” This would be a hard sell, because many if not most of the company’s personnel procedures were decided locally and regionally, not at their corporate headquarters in the Midwest.
With a class of this size, determining why male-to-female ratio is so skewed is nearly impossible, let alone trying to defend against it. There are likely many reasons, and arguably some which might be independent of gender-based discrimination. And then there’s the irony of women who may not have experienced gender-based discrimination and are promoted at Wal-Mart, infrequent but in existence, who are included in the class nonetheless.
The Economist also pointed out the following:
More surprising than the ruling on this question was the 9-0 ruling on another procedural point. The plaintiffs sued under a rule designed to give an entire class “injunctive relief,” i.e., an order that the defendant stop bad behavior. They also asked for back pay under that rule, which they may do only if the back pay is “incidental.” All nine judges agreed that this rule, intended to strike down discriminatory policies, was inappropriate to determine more than a million different pay claims. They said that the women must instead try for class status under a more restrictive rule that requires the issues binding the class not just be common, but that their commonality predominate, alongside other restrictive conditions. The plaintiffs offered a “trial by formula” in which a selection of plaintiffs would have their cases heard, and the results applied to the class. The court ruled unanimously that this would deprive Wal-Mart of defenses in individual cases that it was entitled to.
As a result of the Court’s ruling, we’re likely to see fewer far-reaching class action lawsuits, with a judicial preference for smaller and more specific evidence-based claims. One size doesn’t fit all.
All the more reason for individuals – not the trial lawyers – to stand up and be counted.
A lot of tort reform –inspiring activity has been taking place across in New York these days.
First, there is judge-directed negotiation, an approach to resolving medical malpractice cases without the years of traditional legal overhead. As part of President Obama’s pledge to address skyrocketing medical malpractice litigation costs, New York City received a federal grant for a type of mediation between a trained judge and attorneys for each side. Its intent is to get judges involved earlier and actively encourage settlements, which prompts quicker resolution and fewer years in an expensive limbo for the parties involved. There are no appeals, and the settlements are often a shadow of what a plaintiff might receive in court. A positive consequence is that lawyers may become more hesitant to pursue a case that is marginal. A negative consequence, however, is that doctors may still feel pressured to settle, even when they haven’t been negligent.
Next, the New York State Assembly passed A-694, a complex piece of legislation supported by trial lawyers. It seeks to overturn the New York Court of Appeals’ decision in the case of Arons v. Jutkowitz. If enacted, opponents say, the cost of medical malpractice insurance will likely increase for New York’s physicians. More information about the legislation can be found here.
The last is sobering. New York City doled out an astounding $521 million in personal injury and property damage lawsuits in 2010. It’s sort of like a $57.88 lawsuit insurance policy for each of the city’s 9 million residents. And this figure is seven percent lower than it was in 2009!
Obese women aren’t always treated kindly by society. And now, some OB-GYNs in Florida say they simply can’t risk treating them – at all.
"People don't realize the risk we're taking by taking care of these patients," said Dr. Albert Triana. "There's more risk of something going wrong and more risk of getting sued."
The Sun-Sentinel polled 105 OB-GYNs in South Florida. Fifteen of them said they refuse otherwise healthy new patients over 200 pounds.
Doctors can decline patients for any reason. But when fourteen percent of OB-GYNs won’t see obese patients because the financial risk is too high, we could be seeing the dawn of a disturbing public health trend.
According to the Los Angeles Times, which also reported on the study, South Florida OB-GYNs have “long complained of high numbers of lawsuits after difficult births and high rates for medical malpractice insurance.” Obese women who were pregnant were somewhat routinely referred to specialists, but turning down obese women who are not pregnant is new. According to doctors interviewed, obese patients present an increased risk of complications – and are increasingly seen as potential lawsuit.
We have enough barriers between women and gynecological and prenatal care in the United States. It would be great if the trial lawyers, with their self-proclaimed concern for the average person, would stop adding to these barriers and support medical malpractice reform instead.
… more than 55,000 New Jersey residents are employed by one of our 24 pharmaceutical companies? Another 75,000 New Jerseyans are employed indirectly through service contracts. Collectively known as the nation’s “Medicine Chest,” New Jersey’s pharmaceutical companies are among the state’s most philanthropic entities. In 2010, they added a total of $29.5 billion to the economy through enterprise and charitable giving.
Chief Executive Magazine released its 2011 survey of the worst states for business. Unsurprisingly, Texas is ranked best, and New Jersey, New York, Illinois and California are the bottom four. New Jersey held steady at #47 for the third consecutive year.
It will also come as no surprise that many states in the top 10 continue to address civil justice reform issues (beneficial reforms are under legislative consideration in 5 of the top 10 states).
You can read Chief Executive Magazine’s full article and methodology here, or click on the map below for an interactive map of the best and worst states for business.
Last month, we underscored Governor Christie’s pitch to attract Illinois businesses in an op-ed. New Jersey’s “well-educated, diverse talent pool” and “innovative financing, incentive, and assistance programs” for new businesses is ideal for entrepreneurship – especially to a state which raised its corporate tax rate from 4.8 to 7 percent.
The CEO of one business, however, recently told Illinois Governor Pat Quinn that his business would stay – but that the state’s business climate needs to change.
Doug Oberhelman, CEO of Caterpillar Inc., which manufactures heavy equipment in the Peoria area, employs 23,000 people. Governor Quinn reportedly acknowledged that the state’s business image is in need of an overhaul.
Illinois ranked eighth in the region in job growth as a percentage of its population last year, according to Chicago Business. To the chagrin of Caterpillar’s overseas representatives, personal income tax also rose, from 3 percent to 5 percent. They expressed concern about the company’s ability to attract engineers, and reiterated that even if Governor Quinn’s call for a 30 percent reduction in businesses’ liability for workers compensation is enacted, Illinois would still have the 2nd highest rates in the nation. Illinois businesses also want to see a cap on civil liability.
Governor Quinn also told Oberhelman that he plans to invest in Illinois’s infrastructure and help manufacturing companies improve their ability to export. Let’s hope that that Illinois trial lawyers don’t take it as a green light to invest in workers compensation lawsuits in the meantime.
Excerpt: WASHINGTON — Can a class-action lawsuit be too sprawling to deliver old-fashioned justice?
Justice Antonin Scalia seems to think so, judging by his comments on Tuesday during the Supreme Court argument in the biggest employment discrimination class action in history.
“We must have a pretty bad judicial system,” he said, reflecting on what he had just heard from a lawyer for hundreds of thousands of women suing Wal-Mart over what they say was unfair treatment on pay and promotions. The lawyer had said that a trial judge could rely on statistical formulas rather than testimony and personnel records to decide how much money the company would have to pay each plaintiff if it lost.
“Is this really due process?” Justice Scalia asked.
In other words, does the impersonality of the suit threaten its ability to be fair to each plaintiff and to Wal-Mart, the country’s biggest private employer?
By Marcus Rayner | March 29, 2011
“From a college student suing a Chinese restaurant for soup she spilled on herself (Somerset County), to a drunken motorcyclist who drives into a parked car and sues a restaurant (Ocean County), lawsuit abuse has an economic impact on businesses in every corner of the state. Every dollar spent fighting nonsense lawsuits is a dollar not spent on innovation or job creation, and it doesn't need to be this way.”
Several hundred miles from here, Illinois business owners are learning about a place with an abundant supply of workplace talent and a high-quality lifestyle sure to make any entrepreneur envious. Weary from crippling tax hikes, a labor shortage and a shrinking consumer base, Illinois business owners can only dream about this land of milk and honey: New Jersey.
"Well-educated, diverse talent pool," reads the ad, placed by New Jersey Gov. Chris Christie. Want to start a business? "Innovative financing, incentive and assistance programs. Exceptional quality of life."
The catch? Here in New Jersey, businesses are vulnerable to lawsuit abuse. Everything the ad says about New Jersey is true. Christie's efforts to improve the business climate in New Jersey, combined with our state's existing assets make New Jersey fertile grounds for entrepreneurship. His outreach to the national business community is both constructive and sorely needed as we seek to reclaim our economic footing here in New Jersey. And business retention as well as recruitment will be critical to our economic growth over the next decade, a point that leaders in both political parties have made.
Can you imagine agreeing to a loan on which you would have to pay over 36 percent in interest?
Of course not, because it would be absurd unless you were really desperate.
Many states cap the interest rate a lender can charge its customers. In Indiana, for example, it’s capped at 36 percent – still a generous deal for the lender, but protects the borrower from being taken advantage of, and having to pay back much more than their loan is worth.
One group says a 36 percent interest rate is not high enough – and that they should be exempt from state lending laws. Meet the personal injury lawyers.
Some companies are in the business of advancing money to would-be plaintiffs involved in personal injury lawsuits. According to a New York Times report by Binyamin Appelbaum, there are about a dozen such companies nationwide, and several smaller companies. They collectively lend plaintiffs $100 million per year in increments of a few thousand dollars to cover their housing and medical expenses. Plaintiffs pay back their loans plus interest after lawyers win their case. If the lawyers lose, they owe nothing. The message seems to be that filing a frivolous lawsuit can be a pretty good investment.
Personal injury lawyers say that’s why they should be excluded from states’ loan caps: these aren’t loans – they’re investments. And they’re taking their show on the road to Legislatures across the country. Oasis Legal Finance in Illinois recently proposed exempting lawsuit lending companies from Indiana’s 36 percent cap on interest. Senator Randy Head said that Oasis’s advocacy first brought his attention to the issue, which resulted in his introduction of Senate bill 97. It included a modest restraint on lenders by preventing them from providing anything beyond money to plaintiffs, as well as assertions from the industry that they were attempting to self-regulate in the name of consumer protection. It was that portion that helped to carefully pitch it to the state Senate as a pseudo-reform bill and ultimately led to that chamber’s passage of it last month, with a vote of 36 – 14.
“Most of what they proposed is contained in the bill,” the sponsor acknowledged to the New York Times.
While “lawsuit lending” might help one who is truly besieged with medical bills and unable to work due to someone’s negligence as their case is being sorted out, it’s hard to deny that it also gives plaintiffs and their attorneys a hefty incentive to pursue the largest financial rewards possible.
The personal injury lawyers’ trade group is trying to carve themselves out of regulation through the legislative process in Alabama, Kentucky, and Maryland as well, and may be focusing on Arkansas and Nevada in the near future. The watchful eye of the chambers of commerce has kept efforts at bay in Kentucky, which have successfully blocked similar legislation from passing the state Senate. And since all of these bills were introduced in February 2011 or later, we may only have seen the tip of the iceberg in trial lawyer lobbying.
ABC’s Elizabeth Leamy reports on the spike in suspicious slip and fall claims. Some of what the camera catches is amazing – from a man who buys a hot dog, then places it in a store isle so his accomplice can intentionally slip, to a woman who fixes her hair before lying down in artificial distress.
The National Insurance Crime Bureau says that “suspicious claims” are up 24 percent from 2008.
Leem notes this number could be even higher, because many businesses quietly pay off these claims to make them go away. Even when fake falls are caught on tape, “fake slip and falls still have the effect of driving up prices for all of us,” she says.
Jim Quiggle of the Coalition Against Insurance Fraud says that indeed, “some people fake slip and falls for a living.”
Tort reformers in all three states had significant victories this week.
In North Carolina, S-33 would cap noneconomic awards in malpractice cases at $100,000. It was advancing to the full Senate for a vote as of Thursday.
A similar piece of legislation passed the full Senate in Oklahoma. S-863 would cap noneconomic damages at $250,000.
Meanwhile, in North Dakota, progress was made in the judicial branch. A group of thirteen out-of-state plaintiffs had filed a product liability suit in North Dakota, which has one of the longest statutes of limitation in the country. The state Supreme Court ruled in favor of the defendant in Vicknair v. Phelps Dodge. Several groups, including NFIB and the U.S. Chamber of Commerce, argued that the statute of limitations from the plaintiffs’ home states should be applied, not the more plaintiff-friendly statute of limitations in North Dakota.
NJLRA’s former chair, Taysen Van Itallie, underscores just how serious New Jersey’s “Sue Me” image has gotten in the New Jersey Law Journal.
New Jersey had 10,579 new civil cases in 2008 – more than twice as many filed in Illinois, a state with a larger population.
It begs the question: how exactly can we make our state more attractive to businesses without addressing the tort situation?
“Businesses of all sizes are sensitive to a state’s lawsuit climate. Let’s be sure we have a plan to improve ours,” writes Van Itallie.
You can read his entire op-ed in the New Jersey Law Journal here.
A new bipartisan issue caucus in Congress was announced today- the Congressional Civil Justice Caucus, which will focus on legal reform issues. NJLRA is excited, to say the least.
I applaud Congressmen Bob Goodlatte (R-VA) and Dan Boren (D-OK) for taking the lead on this issue at the Congressional level. It’s helpful to have a bipartisan caucus focus on advancing a civil justice system conducive to the United States’ global economic competitiveness.
Here in New Jersey - a state where consumers have neither an obligation to ask for a refund before taking a business to court, nor to have encountered actual fraud in order to sue under the state Consumer Fraud Act - the Caucus carries a special significance for us. It shows the hardworking men and women of our state that members of Congress are willing to carry our fight against lawsuit abuse to the highest levels of government. Knowing that we have support as we try to stop the hemorrhaging of our key industries is invaluable.
Most importantly, the Congressional Civil Justice Caucus gives us the opportunity to expose the target that the pharmaceutical industry has on its back in our state. In the last year New Jersey shed 7.6 percent of its pharmaceutical jobs, due in part to litigation tourism by the trial bar. Instead of the nation’s “Medicine Chest,” we are becoming a national leader in pharmaceutical job exportation.
Ninety-three percent (93%) of the mass tort plaintiffs in New Jersey suing our pharmaceutical companies are out-of-state residents seeking the use of our plaintiff-friendly laws. This is an unacceptable situation we must correct in order to achieve solid economic growth. I am hopeful that the Caucus will push for reforms similar to A-3333, sponsored by Assemblyman John McKeon (D-Essex) in states where the Consumer Fraud Act encourages abuse.
New Jersey is quickly losing ground to other states which have enacted common sense tort reform measures. I encourage all members of New Jersey’s congressional delegation to support the Civil Justice Caucus and participate in this bipartisan forum.
We’re paying for lawsuits. Lots of them.
The Louisiana Lawsuit Abuse Watch (LLAW) released a study which found that eight of the state’s municipalities spent a collective $52 million fighting lawsuits between 2006 and 2009. $37 million was spent in the form of judgments and settlements; $14.9 went to outside counsel.
That’s $52 million. In eight towns. In just three years!
You may recall a Lawsuit Reform Watch post from April 2010, in which the cash-strapped city of Irvington, New Jersey, faced the loss of 20 police officers and 10 firefighters to help close a $5 million budget shortfall. This announcement from Mayor Wayne Smith came days before an appellate court rejected the city’s attempt to have its insurance company cover a $5 million personal injury suit.
Melissa Landry, executive director of LLAW, acknowledged that some lawsuits are legitimate, but that some “are filed purely in search of enrichment from the lawsuit lottery. At a time when Louisiana, like most other states, are struggling, the public’s financial resources could have made an impact elsewhere: preserving the jobs of law enforcement personnel.
“It’s not like you eat it when you’re sober…”
Lewis Black’s satirical segment, “Back in Black,” takes on the class-action lawsuit filed against Taco Bell.
|The Daily Show With Jon Stewart||Mon - Thurs 11p / 10c|
|Back in Black - Meat Edition|
The Alabama law firm representing the plaintiffs says that Taco Bell’s meat is only 36 percent beef – short of the 40 percent beef requirement set by the USDA. Taco Bell counters that it’s actually 88 percent beef. Much thanks to Lewis Black & the Daily Show for casting light on this lawsuit!
President Obama’s State of the Union address touched on two areas of interest to NJLRA supporters: medical malpractice reform and a flaw in the healthcare reform bill which requires all businesses to track expenditures to all vendors.
Frivolous medical malpractice lawsuits affect the ever-increasing insurance premiums each doctor must carry, and these costs can vary significantly by specialty and by state. In New Jersey, the medical malpractice crisis has lead to a homegrown healthcare crisis of our own, in which we are seeing fewer doctors willing to practice specialized medicine within the jurisdictions of the Garden State.
Beginning January 1, 2012, all businesses would need to track expenditures over $600 with other vendors, and prepare a Form 1099. This requires tracking down the taxpayer ID for each vendor as well. This would be an especially difficult for small businesses, which lack the accounting resources of larger companies. Fortunately, President Obama acknowledged the onerous burden this portion of the healthcare bill would place on economic growth.
Excerpts from the President’s speech regarding medical malpractice and small business bookkeeping under the new healthcare law are quoted below:
“This means further reducing health care costs, including programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficit. Health insurance reform will slow these rising costs, which is part of why nonpartisan economists have said that repealing the health care law would add a quarter of a trillion dollars to our deficit. Still, I'm willing to look at other ideas to bring down costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits.”
Small business bookkeeping under the new healthcare law
“Now, I've heard rumors that a few of you have some concerns about the new health care law. So let me be the first to say that anything can be improved. If you have ideas about how to improve this law by making care better or more affordable, I am eager to work with you. We can start right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses.”
A teen intentionally drives her car into oncoming traffic, killing a pregnant mom and her 13-year-old son - and then sues the surviving family members for her 'mental anguish';
A drunk New Jersey man drives crashes his motorcycle into a car, and then sues the bar for his injuries;
A customer spills hot tea on herself and sues Starbucks;
A fast food restaurant manager sues McDonald's for making him fat.
Twenty-three counties lacked an E.R. doctor. Ten counties lacked an OB-GYN. No, this is not a third world country: it was Texas, prior to tort reform.
The Wall Street Journal calls the pre-reformed Texas a “holy place on the tort bar pilgrimage,” that has now morphed into a “Mecca for doctors.” Incentives didn’t hurt, either, and Texas now leads the country in job creation. Product liability, class-action certification, and noneconomic damage caps were reformed in 2003 and 2005. Now, according to the Journal, Texas Governor Rick Perry wants to extend his state’s tort reform successes – British style. It’s a thinly-veiled deterrent to filing frivolous lawsuits, which drive up business costs and drive down economic growth.
The “loser pays” concept isn’t a new one. The purest-form version of “loser pays” is that the losing party picks up the attorney’s tab. The proposed caveat would impose a penalty on the losing firm which files the case, forcing trial lawyers to think twice before filing questionable claims.
Governor Perry is also calling for “new legal channels” to expedite claims below $100,000, but details about this proposal aren’t readily available.
It sounds like Texas might be headed in the right direction. It begs the question: if Texas can entice doctors, why can’t New Jersey?
NJLRA will join with other tort reformers today at the American Tort Reform Association’s Annual Legislative Conference. This year’s conference is being held at The Hyatt Lodge in Oak Brook, Illinois. Speakers include Florida Attorney General Bill McCollum and the Honorable Mary-Dulany James of the Maryland House of Delegates, who will offer a legislative perspective about the False Claims Act.
I pulled some memorable Halloween-related lawsuits in honor of the holiday this weekend. While you’re dodging crazy goblins and ghouls, you might want to keep a watchful eye for crazy lawsuits, too.
The Haunted House was too scary. Yep, it was filed by an adult against a large company. The Plaintiff said that the Universal Studios attraction caused her “mental anguish” and “extreme fear.”
Maryland lawsuit over Halloween fundraiser is a real scream. This is a recent case actually going before the courts in the Old Line State. Your Halloween fundraiser two hours from my Halloween fundraiser might scare patrons away. Time to call in the courts.
And my personal favorite, posted by Robert on the Insurance Blog: The Only Thing Scarier Than Halloween? A Trick-or-Treater's Liability Lawsuit
Robert talks about how to protect oneself from the “overzealous trick-or-treater” whose parent happens to be a personal injury lawyer.
“The academic literature tends to play down the role of medical liability laws in driving up health care costs. Doctors themselves, however, almost universally state that malpractice statutes lead to extraneous testing and treatment.”
– Peter Orszag
Former White House Office of Management and Budget director Peter Orszag discusses the impact of ignoring medical malpractice reform during the Health Care bill’s passage. His piece, “Malpractice Methodology,” ran in the New York Times on October 20th.
When we’re sick, we want the most effective care possible, right? But what if the most effective care possible hasn’t yet gone mainstream, to the point where every doctor is ordering it? If a doctor uses the best resources available anyway, he or she may be self-positioning for a lawsuit, since medical malpractice cases allege that a doctor has “deviated from accepted standards of care.”
Orszag talks about this point in detail:
“It is also conceivable that because such laws usually focus on ‘customary practice’ — that is, a doctor who has treated a patient the way most other doctors in the area would is considered safe from accusations of malpractice — they create a strong contagion effect among doctors. The laws, no matter how weak or stringent, may therefore explain why doctors in some parts of the country generally adopt much more intensive approaches than those in other areas do.
You can read Orszag’s full column here.
Yet, more than 400 lawsuits have been filed in the past two months in New Jersey, claiming that its manufacturer, Roche, failed to warn users of its side effects, which are said to include gastro-intestinal and cardiovascular complications. 5,000 lawsuits have been filed nationwide; nearly 1,600 cases are pending in New Jersey.
Why the flood of lawsuits here in New Jersey, as opposed to any other state? No, it’s not because New Jerseyans are more acne prone. Not all of the plaintiffs even live in New Jersey, in fact. News Inferno.com notes that “the spike in Accutane claims filed in New Jersey come on the heels of a court ruling there that found the statute of limitation for such lawsuit should be based on when plaintiffs discovered there could be a connection between Accutane and their bowel disorder.”
Essentially, the decision opened the floodgates for litigation – and in New Jersey, a lawsuit can yield a nice profit (see In Atlantic County, the trial bar hits the jackpot, and consumers pay – again, for a $25.1 million example).
Which is the best way to spend taxpayers’ money? Your choices are the following:
You may be tempted to say “none of the above,” but unfortunately, all of the above had their day in the Washington, D.C. legal system. The sixth-grader’s $100,000 lawsuit against the government resulted in a $7,500 settlement for her family, with undisclosed legal costs for the District. The Arizona tourist and psychiatric patient, however, received aforementioned settlements at taxpayer expense.
Washington, D.C.’s economy is stronger than many cities of comparable size and its crime rate is slowly declining, but it’s hard to deny that $8.5 million would help quench the District’s charities and nonprofits’ thirst for coveted public funding.
In an insightful piece in the Washington Post, Paul Schwartzman notes that the District paid out more than $50 million in legal settlements between 2007 and 2009. Part of the taxpayers’ high tab is due to the District’s reluctance to settle cases early. Another is derived in legitimacy, such as a tragic police mistake which cost two children their lives. But, finally, a big reason is that D.C. has an abundance of lawyers. As the District’s attorney general, Peter Nickles, puts it in Schwartzman’s piece, “There are more lawyers per capita in this city than any other city in the world. And what do lawyers like to do?”
Evidently, they like to sue themselves. All of the District’s residents underwrite these costs with their tax dollars and can appropriately cringe. But plaintiff’s attorneys can look toward lawsuits against the government with confidence, because unlike the majority of the District’s residents, they see a high ROI rather than a reduction in services. The lawsuit industry is indeed alive and well in our nation’s capital.
Can we see the weight-discrimination lawsuits flooding in?
The Star-Ledger’s Editorial board calls our attention to the riding policy on the Harry Potter and the Forbidden Journey ride at Universal Studios in Orlando. The ride reportedly has a safety-minded per-rider weight limit of approximately 265 lbs., and heavier patrons are being turned away.
All joking aside though, will we be surprised at the first civil suit filed by an adult seeking damages over his emotional scars?
Addicted Gamer Sues Game-Maker, Says He is ‘Unable to Function’
A federal judge is allowing a negligence lawsuit to proceed against the publisher of the online virtual-world game, Lineage II, amid allegations that a Hawaii man became so addicted he is “unable to function independently in usual daily activities such as getting up, getting dressed, bathing or communicating with family and friends.”
Craig Smallwood, the plaintiff, claims NCsoft of South Korea should pay unspecified monetary damages because of the addictive nature of the game. Smallwood claims to have played Lineage II for 20,000 hours between 2004 and 2009. Among other things, he alleges he would not have begun playing if he was aware “that he would become addicted to the game.” (David Kravets/ Wired, 8/19/10)
Philadelphia – A federal appeals court has decided not to predict whether the Delaware Supreme Court would recognize medical monitoring claims as valid, overturning a lower court decision that said it would.
The U.S. Court of Appeals for the Third Circuit said such a prediction "requires several 'leaps' from the current state of law" and also ruled that summary judgment was properly granted to A.I. DuPont Hospital for Children in Wilmington.
Medical monitoring requires defendants to pay medical costs even in the absence of a current injury. Cardiologists at the hospital implanted a covered stent that was not improved by the Food and Drug Administration while trying to repair a congenital heart defect. (John O’Brien/ Legal Newsline, 8/24/10)
As the nation- and especially New Jersey- seek to lower healthcare costs without diminishing access to care, here is one more study showing why we simply can’t continue to ignore the medical malpractice crisis.
The American Medical Association (AMA) recently released a study which showed that most doctors will have been sued at least once by the end of their career. And even in the most obvious instances of lawsuit abuse, the cost is high. The average nationwide cost for defense against a suit which is dropped is over $22,000. Going to trial can cost well over $100,000, arguably trending upward for physicians in the Northeast. And of course, this doesn’t account for the increase in insurance premiums or time away from a doctor’s practice. Patients feel these affects in the form of fewer doctors from which to access care and longer appointment wait times. In New Jersey, patients have the added consequence of the “medical brain drain,” in which UMDNJ graduates depart from the Garden State in search of sounder climates in which to practice medicine.
The study found that general surgeons and OBGYNs are the most likely of all physicians to be sued, compounding efforts to recruit in those areas. In total, 42.2% of all physicians surveyed had been sued, and of those aged 55 and over, 61% had been sued.
And it’s not doctor performance which created this situation: 95 percent of malpractice lawsuits never even make it to trial. Of the five percent which do, the doctors win 90 percent of the time, according to the AMA. Physicians who have an “ownership interest” in a practice (and conceivably, greater assets) are more likely to be sued than physicians without an ownership interest in their practice. It’s hard to deny that this correlation appears strategic – not coincidental.
New Jersey’s weak Consumer Fraud Act almost helped make attorneys $9.4 million richer. Thanks to U.S. Magistrate Judge Patty Shwartz’s diligence and attention to detail, however, consumers were spared having to absorb this expense.
Here are the facts. As reported in the New Jersey Law Journal, some Volkswagen owners complained that their 1997 – 2005 Passat, Jetta, New Beetle, Golf, and Touareg models leaked in heavy rain. In some cases it damaged the car’s interior, or its contents, varying in severity. A nationwide class action lawsuit was filed in Newark, under New Jersey’s Consumer Fraud Act. They were also accused of breaching express and implied warranty and the “duty of good faith and fair dealing.”
In Del Guercio v. Volkswagen of America Inc., two firms represented the 5.5 million class members, representing 3 million vehicles. The lawyers estimated a settlement of $142 million earlier this summer, and sought $22.5 million (15.8 percent) for themselves in fees. Eventually, both sides agreed to $90 million instead.
And then the judge scratched beneath the surface. The plaintiffs’ expert estimate called for $28 million in “preventative maintenance,” including the cost of future labor, parts, towing, and loaner cars. But the judge reduced this amount by more than half – to $13.1 million, because towing and loaner cars are already covered by the dealer, making the inclusion of these fees in the settlement redundant and without benefit to the consumer. Further, the Court would be double counting if it agreed to damages for both avoiding future repairs and the declining car value if it has water damage.
“While the two components address different consequences of the avoided water damage,” said Judge Shwartz, “one of the two will never come about because the maintenance avoids it.”
Shwartz also recognized that it was improbable that 100 percent of eligible class members would claim their award, and further reduced the settlement. $69 million, with thirteen percent of it reaching the trial lawyers instead of fifteen percent, was what the Judge ultimately decided was appropriate. In what could be a warning to other litigators, she noted that the two years spent on recovery and three year period from the time the complaints were filed was untimely, and that the settlement didn’t “represent a particularly speedy resolution.”
The New Jersey Law Journal reports that the Court received over 200 objections to the settlement. Many class members felt that that the settlement did not adequately compensate them, and that the attorney fees were still too high.
In the end, Volkswagen owners will probably have to pay some of their repair costs out-of-pocket with cash. But, thanks to the Judge, the trial bar will have less cash to line their pockets with, too.
No “California Girls vs. California Gurls” lawsuit
MTV is reporting that, despite the New York Post’s suggestion, The Beach Boys will not be suing singer Katy Perry over her song “California Gurls,” which, they warned, is reminiscent of their 1965 song “California Girls.”
And now, of ACTUAL importance...
U.S Magistrate Judge Patty Shwartz uses thoughtful rationale in cutting attorneys’ fees for a multi-million dollar class action verdict against Volkswagen. Check back here next week for more in-depth analysis.
You knew this was going to happen eventually. You might remember that a lawsuit was filed against McDonald’s last month, because the toys in Happy Meals target children, (which in turn forced their parents to buy them high-calorie Happy Meals, which, in turn, made such children fat). A Canadian cell phone carrier, Rogers Wireless, Inc., was sued when a cheating spouse was outed after her husband saw a combined wireless statement. Starbucks was sued, again, this time because a customer’s drink wasn’t put in a sleeve for her, which forced her to drop it on her infant. I could go on.
Now, the iPad. Three users say that if you leave the iPad exposed in direct sunlight long enough beyond the recommended 95 degree maximum, it will overheat and shut down. It’s a safety measure typical of most electronics, like iPod and iPhone, so you don’t damage your device.
However, this means it’s not truly an e-reader, these users say. Contrary to what Apple says about the e-reader being “just like” a book, a real book wouldn’t overheat.
As a result, they are seeking class-action status in federal court in California. According to CNN, the attorneys are “asking for an injunction against Apple's "false" promises as well as "real" and punitive damages.”
Of all the silly class action certifications out there, this one would be particularly troubling. I LIKE that electronics simply shut down when they overheat, especially when permanent damage is the alternative. I think that anyone who’s melted a cassette recorder or walkman back in the day might understand where I’m coming from.
Nevertheless, Apple will have to defend itself against charges of: fraud; negligent misrepresentation; deceptive advertising; unfair business practices; breach of express or implied warranty; intentional misrepresentation; and unjust enrichment.
The American Association for Justice (a.k.a, the trial bar) recently told its members to expect a tax break in upcoming rules & regulations from the U.S. Department of Treasury. According to a report from John O’Brien of Legal Newsline, the AAJ’s director of Federal Relations, John Bowman, said that he is expecting an administrative rule from the Treasury, giving its members a tax break on contingency fee lawsuits.
Senator Arlen Specter had introduced a bill very similar to the anticipated rule last year, but it failed to gain traction. It would have allowed attorneys to deduct fees and expenses upfront for filing contingency fee lawsuits. An analysis by the Washington Legal Foundation estimates that such a deduction could amount to 40 percent of litigation costs in some cases.
Tort liability costs a lot, and it can be particularly expensive to small businesses.
The U.S. Chamber of Commerce recently released the results of a startling study: small businesses bore 81 percent of business tort liability costs in 2008, despite only taking in 22 percent of the revenue. As a nation, small businesses (defined as having less than $10 million in annual revenue) spent $105.4 billion in tort liability costs in 2008. And more than 1/3 of that was post-insurance, out-of-pocket expenses.
When including small medical practices, the total amount of small businesses’ expenditures on tort liability is pushed to $133.4 billion for 2008.
NERA Economic Consulting, which conducted the study, expects that tort liability costs will continue to increase. They expect tort costs for small businesses, both medical and non-medical, to reach $152 billion annually by 2011. I’m sure you can guess likely reasons: frivolous litigation and the possibility of excessive awards increase the pressure to settle; weak evidentiary rules; an overzealous trial bar.
Spending money on tort liability is not parallel to making products or consumers safer. It’s unfortunate that the $105.4 billion in tort liability costs – particularly the $35.6 billion of which is spent out-of-pocket by businesses – is spent on legal fees instead of being reinvested toward product development and innovation. That would be quite a sorely-needed private-sector stimulus into our economy.