The Economist on “Why American firms cannot do deals without being sued”:
In 2005, 39% of M&A deals were challenged by lawsuits, one study found. By 2011 a hefty 96% of acquisitions worth more than $500m were attracting suits…
J. Travis Laster of Delaware’s Chancery Court [has] become an outspoken public critic of “worthless”, “sue-on-every-deal” lawsuits. In March he told one group of plaintiffs’ lawyers: “I don’t think for a moment that 90%—or based on recent numbers, 95%—of deals are the result of a breach of fiduciary duty.”
The baseline expectations in our legal system are such that when judges cast a skeptical eye on meritless cases — going so far as to be “almost” hostile toward them — it counts as newsworthy. I discuss in my new post at Cato at Liberty. More: Bainbridge. For more on the prosperous legal niche of filing lawsuits seeking to block corporate mergers, and then collecting fees when the target agrees to settle in order to get the deal done, see Dealbreaker (“Plaintiff’s Lawyer Tax on M&A”), Fox Business and WSJ.
The quota pressure in sports has been around for a while, but the idea of an enforcement push in hard academic disciplines may be getting extra encouragement from the very top:
Obama himself seems to have latched onto the idea. While praising Title IX’s impact on increasing women’s participation in athletics, he said, “If pursued with the necessary attention and enforcement, Title IX has the potential to make similar, striking advances in the opportunities that girls have in the science, technology, engineering, and mathematics (“STEM”) disciplines.” The nation’s university science, engineering, and mathematics departments may thus soon find themselves faced with the task of complying with a regulatory regime similar to the intercollegiate athletics three part test.
[Alison Somin, Federalist Society "Engage", PDF]
More: a John Stossel segment, and cutbacks in men’s sports at Delaware.
“Delaware Alcohol Enforcement Chief Resigns After DUI Arrest” [CBS Philly]
Senate candidate Christine O’Donnell, who’s been running even in polls leading up to tomorrow’s primary, demanded millions in a suit charging employment discrimination against her well-known conservative employer, The Intercollegiate Studies Institute. The details are worth a close look. [John McCormack, Weekly Standard] Even before the new revelations, Prof. Bainbridge was no fan.
“When forced to defend their conduct and leadership role, original plaintiffs’ counsel approached the concept of candor to the tribunal as if attempting to sell me a used car,” wrote Vice Chancellor Travis Laster, ordering the replacement of shareholder lawyers in a case against Revlon Inc. “The lawsuit was consolidated from several complaints brought by law firms that Laster describes as ‘frequent filers’ — firms which often file cases on behalf of shareholders, sometimes within in minutes of a deal being announced.” [Reuters] More: Dave Hoffman, Concurring Opinions.
Annals of zero tolerance: in Newark, Delaware, 6-year-old Zachary Christie took “a camping utensil that can serve as a knife, fork and spoon to school. He was so excited about recently joining the Cub Scouts that he wanted to use it at lunch. School officials concluded that he had violated their zero-tolerance policy on weapons, and Zachary was suspended and now faces 45 days in the district’s reform school.” In other Delaware cases, a school district “expelled a seventh-grade girl who had used a utility knife to cut windows out of a paper house for a class project,” and “a third-grade girl was expelled for a year because her grandmother had sent a birthday cake to school, along with a knife to cut it.” [New York Times]
The policies do have their defenders: “‘There is no parent who wants to get a phone call where they hear that their child no longer has two good seeing eyes because there was a scuffle and someone pulled out a knife,’ said George Evans, the president of the Christina district’s school board. …Charles P. Ewing, a professor of law and psychology at the University at Buffalo Law School who has written about school safety issues, said he favored a strict zero-tolerance approach.” Blog reactions (some via Memeorandum): Sullum/Reason “Hit and Run”, Q and O, BoingBoing, Kate Harding/Salon “Broadsheet”, Below the Beltway, Tom Freeland/North Mississippi Commenter, Lowering the Bar.
P.S. He’s on the Today Show (via Skenazy). Scott Greenfield wants to call it a knife. After worldwide press attention and a large show of local support, the school board reversed its policy and allowed Zachary back (h/t comments). And now: “A 17-year-old Eagle Scout in upstate New York has been barred from stepping foot on school grounds for 20 days — for keeping a 2-inch pocketknife locked in a survival kit in his car.” [Fox News]
A USA Today story delves deeply into how Biden’s done the bidding of the litigation lobby special interest group, particularly with respect to the bipartisan asbestos litigation reform bill.
The Delaware senator tapped as Obama’s running mate has just announced that he’s giving away to charity campaign contributions from participants in the Scruggs scandal, no doubt preparing for scrutiny of a set of connections that have already gotten considerable attention in the blogosphere [ABA Journal, NMC @ Folo, YallPolitics, Lattman @ WSJ law blog, Rossmiller, our own mention]. Lotus @ Folo wonders if the McCain camp will risk bringing up Scruggsiana given their own candidate’s former dealings with the disgraced lawyer.
In 2005, Sen. Biden praised “bottom-feeders” (his term) in the legal profession, saying it was worth it to let them collect big fees “to stop bad guys from doing bad things”. In another account, the Senator “began pounding the table in opposition to the bill [Class Action Fairness Act] as he praised plaintiffs attorneys”. On Sen. Biden’s overall alignment with the general trial lawyer cause, see our earlier links here, here, and here.
Members of Biden’s family, including brother Jim Biden and son Joseph (“Beau”) Biden III, who serves as Delaware attorney general, have figured in many news stories about the senator’s connections with the practicing law world. The state of Delaware, renowned for the high caliber of its legal system, has lately attracted an influx of asbestos lawsuits filed on behalf of residents of other states, a trend criticized by guestblogger Steven Hantler (of the Chrysler Corporation) last year. Credit-card companies are a mainstay of the Delaware economy, and Marc Ambinder notes Biden’s having “pushed the bankruptcy bill that Dems now hate”.
Orin Kerr @ Volokh, who is from Delaware himself, likes the Senator.
More: Carter Wood @ PoL on the Senator’s rating of “zero” on legal reform as judged by NAM. See also Ted’s further post. Open Secrets covers the Senator’s campaign finance. And now, as Lotus @ Folo notes, the AP’s Pete Yost and Holbrook Mohr have jumped on the Mississippi connection.
Just as I was about to say I needed to revise my top-ten blog list to include the excellent anony-blogger Patent Troll-Tracker, I learned from today’s Recorder and WSJ that he has revealed himself as Rick Frenkel, Cisco IP attorney.
When I started the blog, I did so mainly out of frustration. I was shocked to learn that a huge portion of the tech industry’s patent disputes were with companies that were shells, with little cash and assets other than patents and a desire to litigate, and did not make and had never made any products. Yet when I would search the Internet for information about these putative licensors, I could find nothing. I was frustrated by the lack of information, and also by the vast array of anti-patent-reform bloggers out there, without a voice supporting what I did believe and still believe is meaningful reform.
(For the record, I liked the blog even before they praised me.) Plaintiffs’ attorney Ray Niro had put a bounty on the identity of the Troll Tracker, who had been critical of Niro’s tactics (as have Walter and I). Frenkel is considering shutting down his blog now that he is out of the closet; one hopes someone else picks up the torch, because he was performing a valuable service, to the extent that I had limited my blogging about it because he had the subject-area covered so well.
I missed the debate in November among Dennis Crouch, Michael Smith, and Frenkel on whether the Eastern District of Texas is “waning” as a magnet jurisdiction for patent plaintiffs (May 2006, Dec. 2005, Jan. 2005), or I might have made reference to it in my latest Liability Outlook on patent reform. Frenkel seems to have the best of that debate, and follows up:
Let’s highlight one really outstanding statistic from November: The number of defendants sued in the Eastern District of Texas in November 2007: 244. The number of defendants sued in Los Angeles, San Francisco/Silicon Valley, New York City, Chicago, Delaware, and New Jersey combined in November 2007: 162.
Patent lawyers often seem to be of a different stripe than other lawyers, and there is a similar patent-law-blogging community largely separate from the other law-bloggers. The commenters go mad at Crouch’s blog over the Frenkel revelation because Cisco is a strong patent reform supporter. Elsewhere: IPBiz; TechDailyDose; NetworkWorld; 271Blog; Mises Blog; and the anti-reform Patent Prospector.
Why have some of the trial bar’s heaviest hitters in asbestos litigation infested Delaware – firms like including Simmons Cooper, Baron and Budd, and the Lanier law firm?
Why did the American Tort Reform Association (ATRA) place Delaware – which has always had a business-friendly reputation – on its “watch list” in the 2005 and 2006 editions of its “Judicial Hellholes” report?
One thing’s for sure – the trial bar’s legal talent isn’t circling Delaware because they love the state’s beautiful beaches.
The problem arises from a series of Delaware Supreme Court decisions that gave trial lawyers the green light to file hundreds of toxic tort cases. Out-of-state law firms are now busy turning Delaware into Ground Zero of the asbestos-litigation morass, but the overwhelming majority of plaintiffs have no connection to Delaware whatsoever. Approximately 80% of the plaintiffs in asbestos cases have never set foot in Delaware.
The numbers are startling. According to ATRA, in the year following May 2004 only 61 asbestos claims were filed in Delaware. But over the next 16 months, 272 asbestos cases were filed – a 345% increase. That number has now increased to 525 asbestos cases filed since May 1, 2005.
Due to this flood of lawsuits, the Delaware Superior Court has scheduled trials in as many as 85 cases to begin on a single day. The Court has also ordered defendants to try multiple cases in multiple courtrooms at the same time.
There are other warning signs. Delaware allows joint and several liability and has no limits on punitive damages. And newly-elected Attorney General Beau Biden is a former plaintiff’s asbestos lawyer.
Other states – such as Texas and Mississippi – have countered the flood of out-of-state lawsuits by enacting venue reforms – a measure that could help prevent the trial bar from turning Delaware into a “judicial hellhole.”