I was given the opportunity to be on a public-affairs-in-America program on Press TV, the English-language Iranian television network, yesterday. The majority of discussion was on economic issues, but I do get to comment on a number of counterproductive laws Congress seems intent on passing this term. The program is available on line.
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One can certainly see why ending tax deductions for punitive damages is a superficially appealing idea.
But the main effect will be to increase settlement pressure in cases where there are unjust punitive damages awards. Because settlements can be characterized as “compensatory” and tax-deductible while court-ordered judgments cannot, trial lawyers will be able to use the tax differential to discourage defendants from seeking appellate review. So one cannot expect very much tax revenue from this: “punitive damages” will drop precipitously, but money going to trial lawyers will go up. Moreover, appellate courts will have fewer opportunities to correct bad decisions by trial courts, creating more uncertainty in litigation, which raises litigation expenses because it will be harder to predict outcomes.
Note that taxpayers are not subsidizing punitive damages award deductions by businesses: the income “lost” because a defendant deducted the punitive damages award will be income realized by the plaintiff and his or her attorney. If the deduction is forbidden, the government will be, in effect, double-taxing the same money.
The Obama administration makes much of its claim of being pragmatic, rather than ideological, but this looks like an indirect giveaway to the trial bar rather than a source of government revenue. More: Walter at Point of Law; and my shining mug quoted at the Southeast Texas Record.
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If you’re not reading my other legal site, Point of Law, here’s some of what you’re missing:
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Scott Greenfield:
A buddy of mine who holds elected office has the “hat” theory. As soon as elected officials put on the “hat” of office, it squeezes their heads so tight that they can no longer think. They forget all they knew before, of the wrongs and the remedies, of why somebody decided to vote for them in the first place, and assume the position dictated by the hat. He says they can’t help themselves because it’s the hat.
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In 2007, the Texas Supreme Court unanimously decided Borg-Warner v. Flores, holding that a defendant in an asbestos case was not liable unless its product was a “substantial factor” in causing injury.
But there are now bills in the Texas House and Senate, SB 1123 (recently reported out of Senate committee) and HB 1811, that seek to undo this by defining “substantial factor” to merely mean that a product “contributed to the [plaintiff’s] cumulative exposure”—whether or not other defendants’ products were far more responsible for a plaintiff’s injury. The effect of this rollback would be to return Texas to the role of asbestos magnet, since it could conceivably create indiscriminate liability for hundreds of innocent businesses in any given case. The effect will be very similar to the infamous Lipke rule in Madison County, Illinois that extracted billions of dollars from the innocent this decade.
Texans for Lawsuit Reform has a fact-sheet, as does the Texas Civil Justice League.
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From the farther shores of political lawsuit-filing, from a farther-shores kinda guy: “On November 13, Alan Keyes and his vice-presidential running mate in California, Reverend Wiley Drake, and other members of the American Independent Party, filed a new lawsuit over Barack Obama’s eligibility to be president. … All the other cases have been dismissed because the plaintiffs were said to lack standing. This is the first case with a presidential candidate-plaintiff.” (”Alan Keyes Files Lawsuit Over Obama Eligibility”, Richard Winger Ballot Access News, Nov. 16; Keyes v. Bowen, PDF; Scott Moss, Concurring Opinions, Nov. 17).
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I’m not in the business of political forecasts, and I don’t think I’ve ever made
any claims for my skill in that department. Even so, I’m pleased to report that I was among the winners in National Journal’s “prediction poll of top political bloggers” for the 2008 elections. Mine were the most accurate predictions among participating bloggers in the “right” category; the winners for “left” and “center” respectively were Chris Bowers of OpenLeft and Joe Gandelman of The Moderate Voice. Earlier coverage here.
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The “light at the end of the tunnel for law firms”! Tons more regulation, no more attempts to limit lawsuits, a “boom” in financial disputes, new union contracts to negotiate all over the place! Let’s hope Larry Bodine is proved wrong (Legal Marketing Blog, Nov. 5)
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- Lots of coverage of litigation-reform angles of the election over at my other website, Point of Law (here, here, here, and here). For me the heartbreaker of the evening reform-wise was the surprise defeat of the very fine Chief Justice of the Michigan Supreme Court, Clifford Taylor. He will be sorely missed.
- Interesting perspective from Bill Marler, the Seattle plaintiff’s attorney who’s become well-known for virtually “owning” the issue of food poisoning in the press: “Obama may actually see tort reform as a way to show he is a moderate”. [Jane Genova, Law and More]
- Voters in California and elsewhere ignored the urgings of this site and wrote anti-same-sex-marriage provisions into their constitutions. There are many possible interpretations, but one is that the California Supreme Court will be Exhibit #2,971 toward the proposition that judicial activism does not always improve the well-being of its intended beneficiaries. Garrison Keillor titled one of his Lake Wobegon books We Are Still Married, and Eugene Volokh looks at the question of whether same-sex couples previously wed in California can say that (Nov. 5; more, Dale Carpenter, Jonathan Rauch). In other news, “Yesterday, 57 percent of Arkansas voters decided that the state’s 9,000 children in foster care are better off there than adopted by a gay couple.” [Radley Balko, Reason "Hit and Run"]
- As to Topic A, the presidential election, I’ve decided to retire to the countryside and raise heirloom eggplants. Just kidding! Actually, as one who sat the election out after Giuliani quit the race, I’m happy for my friends and colleagues who are happy, awestruck by the historic moment like everyone else, and hoping for the best (i.e., centrist governance) policy-wise.
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Various well-known bloggers talk about how the blogs did this year in stimulating discussion, challenging errors and omissions in the general press, and so forth. I contribute a quote about how “when you sit out an election without backing a candidate, you become painfully aware of how easy it is for blogs turn themselves into an echo chamber for their side’s talking points. Not attractive.” Some blogs I turned to this fall for politics coverage in part because I couldn’t always guess ahead of time what line they’d take: Steve Chapman, Megan McArdle, Marginal Revolution, Culture11’s Confabulum, Ann Althouse, Virginia Postrel, Mickey Kaus (not an exhaustive list by any means).
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