Posts Tagged ‘regulation through litigation’

“The increasing criminalization of corporate behavior in America…”

“…is bad for the rule of law and for capitalism,” opines The Economist, saying regulation-through prosecution has become “an extortion racket,” from hundreds of millions in Google drug-ad settlement money spread among Rhode Island police departments, to New York Gov. Andrew Cuomo’s muscling in to extract money from BNP Paribas in a settlement of legal offenses against U.S. foreign policy as distinct from New York consumers:

Who runs the world’s most lucrative shakedown operation? The Sicilian mafia? The People’s Liberation Army in China? The kleptocracy in the Kremlin? If you are a big business, all these are less grasping than America’s regulatory system. The formula is simple: find a large company that may (or may not) have done something wrong; threaten its managers with commercial ruin, preferably with criminal charges; force them to use their shareholders’ money to pay an enormous fine to drop the charges in a secret settlement (so nobody can check the details). Then repeat with another large company. …

Perhaps the most destructive part of it all is the secrecy and opacity. The public never finds out the full facts of the case, nor discovers which specific people—with souls and bodies—were to blame. Since the cases never go to court, precedent is not established, so it is unclear what exactly is illegal. That enables future shakedowns, but hurts the rule of law and imposes enormous costs.

“The plot to make Big Food pay”

“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. … So far none have agreed to sign on.” One hope: the theory popularized by former FDA chief David Kessler that bacon, brownies and buttered popcorn should be seen as “addictive.” Paul McDonald, a Chicago lawyer who is organizing the campaign, is described as a former “senior counsel at Kraft Foods.” [Helena Bottemiller Evich, Politico]

Mark Cuban (and Lyle Roberts) on the SEC

Having defied the Securities and Exchange Commission and beaten its inside trading allegations in court, the investor and team owner is not through giving them a piece of his mind: “I think they exemplify what type of organization you should expect when you have nothing but attorneys and in particular former prosecutors running the show. …There is a culture of trying to win, not trying to find justice.” In the absence of bright-line rules, notes Cuban, the commission resorts to “regulation through litigation,” trying to ram through doubtful legal interpretations by way of sheer vehemence of enforcement. [Kevin Funnell/Bank Lawyer’s Blog, Alexander Cohen/Business Rights Center, earlier] Attorney Lyle Roberts, who represented Cuban, will also be known to some of our readers for his blogging at The 10b-5 Daily.

Colorado school funding found constitutional

The Colorado Supreme Court, wisely resisting a national campaign of school funding litigation, has turned down a lawsuit arguing that the state is obliged under its constitution to step up school spending. [Denver Post, KDVR, opinion in State v. Lobato]

I’ve got a post up at Cato at Liberty about the Colorado decision, noting that although school finance litigators make a lot of noise about educational quality, they are actually on a mission of “control —specifically, transferring control over spending from voters and their representatives to litigators whose loyalty is to a mix of ideologues and interest groups sharing a wish for higher spending.” I quote from a section on school finance litigation that I wound up cutting from my book Schools for Misrule about the enormous impact such suits have had in other states:

Vast sums have been redistributed as a result. Lawmakers in Kentucky enacted more than a billion dollars in tax hikes. New Jersey adopted its first income tax. Kansas lawmakers levied an additional $755 million in taxes after the state’s high court in peremptory fashion ordered them to double their spending on schools.

The results have been at best mixed: while some states to come under court order have improved their educational performance, many others have stagnated or fallen into new crisis. Colorado is fortunate not to join their ranks. (& reprint: Complete Colorado)

P.S. From a Colorado Springs Gazette report, Jul. 31, 2011:

“Putting more money into a broken system won’t get a better results. There are improvements that could be made without money,” says Deputy Attorney General Geoffrey Blue. …

He points to a Cato Institute study that showed spending on education across the country has skyrocketed but test scores didn’t improve.

“That would mean that potentially every cent of the state budget would be shifted over to K-12 education,” says Blue, who heads the office’s legal policy and government affairs.

October 15 roundup

  • “Jury Says No to Libel Claim Over Truthful E-Mail” [NLJ, Ardia/Citizen Media Law; high-profile First Circuit Noonan v. Staples case, earlier here and here]
  • Transmission of folk music is getting tangled in copyright claims [BoingBoing]
  • Scientific shortcut? Veterans Department will presume Parkinson’s, common heart ailment are caused by Agent Orange for GIs who set foot in Vietnam [NY Times]
  • Federal hate crimes bill: yes, courts will consider speech and beliefs in assessing penalties [Sullum and more, Bader]
  • Texas trial lawyer Mark Lanier’s famed Christmas bash will feature Bon Jovi this year [ABA Journal, background here and here]
  • Let’s explain our Constitution to her: U.K. cabinet minister thinks Arnie can close private website because it’s based in California and he’s governor [Lund, Prawfsblawg]
  • Ten best Supreme Court decisions, from a libertarian point of view? [Somin, Volokh]
  • Cert petition on dismissal of suit against Beretta shows Brady Center still haven’t given up on undemocratic campaign to achieve gun control through liability litigation [Public Nuisance Wire interview with Jeff Dissell, NSSF]

“Suing Cold Medication Manufacturers Because Drug Dealers Make Drugs out of the Medication”

If it seems like a far-out idea — suing legitimate makers of cold and allergy medications containing ephedrine and pseudoephedrine because underground labs use them to make meth — be aware that it’s actually been tried, by public officials in the Midwest, often working closely with ambitious private contingency-fee lawyers. The Eighth Circuit has just rejected one such case in Ashley County v. Pfizer; Eugene Volokh and commenters discuss.

“Is Big Caffeine the Next Target?”

Tim Sandefur asks this only half-facetiously as he reviews mass torts. Of course, as a must-read comment letter to FASB (via the indispensable Beck/Herrmann) submitted by six pharmaceutical companies notes, “A mass tort occurs when the plaintiffs’ bar decides to invest in it.”

Thomas Geoghegan: “See You in Court”

The Texas Review of Law & Politics has published my review of Thomas Geoghegan’s book. I differ from the favorable reviews of Adam Liptak and others:

Many books and writers have documented the problems caused by the tremendous expansion of liability in the last half century. In response, several writers on the political left have written defenses of unfettered liability or indictments of the tort reform movement, sometimes even rationalizing such infamous outliers as the McDonald’s coffee case as legitimate uses of the tort system.

The latest arrival in this genre comes from much-celebrated labor lawyer and author Thomas Geoghegan: See You in Court: How the Right Made America a Lawsuit Nation. Unlike many on his political side of the aisle, Geoghegan acknowledges that the litigation explosion has harmed America, but blames it on right-wing policies. Deregulation, deunionization, and the right’s putative dismantling of the legal system and Rule of Law, Geoghegan argues, have driven Americans to the courts by cutting off alternative routes to social justice. Geoghegan effectively demonstrates that the left should view skeptically the claims of the litigation lobby, a skepticism sadly disappearing from the political discourse as the Democratic Party more and more reflexively adopts the positions of trial-lawyer benefactors at the expense of its other constituents. But Geoghegan’s attempt to blame conservatives for the increased role of litigation in society suffers from non sequiturs, self-contradictory arguments, and a general failure to engage his opponents’ arguments fairly.

Thanks to those at Overlawyered who commented on an earlier draft and helped make the paper better by reminding me that political contributions were a revealed preference.

May 12 roundup

  • Canada free speech: Islamic group files complaint against Halifax newspaper over cartoon of burka-wearing terror fan; two more libel suits aimed at online conservative voices; growing furor over complaint against Steyn/Macleans [National Post]
  • More than 5,000 students committed crimes last year in Philadelphia schools, but none were expelled — consent decrees tying system’s hands are one reason [Inquirer]
  • U.K.: Man threatened with legal action for flying pirate flag as part of daughter’s birthday party [Guardian]
  • Bankruptcy judge doesn’t plan to accept at face value Countrywide’s claim that it generated false escrow documents by mistake in foreclosure [WSJ, WSJ law blog]
  • Amid bipartisan calls to step down, Ohio AG Marc Dann [Apr. 19, May 6] hires an opposition researcher [Adler @ Volokh] on top of Washington lobbyist [Legal NewsLine], after being rebuked by judge for political suit [Dispatch]. And where’s that ethics form on the Chesley flight? [Dayton Daily News]
  • Missouri med-mal claims fall sharply after legislated damages curb [Springfield News-Leader]
  • More on Dartmouth prof Priya Venkatesan, the one who wants to sue her students — as suspected, she’s a devotee of deconstructionist Science Studies [Allen/MtC; earlier]
  • Covert plan to sabotage Chinese economy? [Wilson Center event]
  • What, never? Well, hardly ever: Docs continue to assail notion that various complications such as patient delirium, clostridium difficile infection, iatrogenic pneumothorax, etc. — not to mention falls — are “never events” [KevinMD various posts; earlier]
  • Mich. high court agrees anti-gay-marriage amendment bars municipal health benefits for domestic partners, just what key proponents had claimed it wouldn’t do [Rauch @ IGF, Carpenter @ Volokh, earlier]
  • Private service rates the safety of charter air providers — but can it afford the cost of being sued after giving a bad rating? [Three years ago on Overlawyered]

April 24 roundup