- Lester Brickman, others testify before House subcommittee on proposed asbestos-reform FACT Act [Chamber-backed Legal NewsLine]
- “B.C. student-turned-dominatrix awarded $1.5M after car accident left her with new personality” [National Post]
- Here, have some shredded fairness: New Jersey lawmakers advance False Claims Act bill with retroactive provisions [NJLRA] Maryland False Claims Act, which I warned about last year, reintroduced as leading priority of new attorney general Brian Frosh [Maryland Reporter; my coverage here, here, etc.]
- Oregon: a “man badly burned when he poured gasoline on a fire is suing Walmart, claiming the gas can he bought there was defective.” [KOIN]
- Minnesota jury is latest to buy sudden-acceleration case, awards $11 million against Toyota [Reuters]
- Insurers, trial lawyers gear up for Texas legislative fight over hailstorm litigation [Bloomberg/Insurance Journal]
- Breaks ankle in “watch this” stunt, files negligence claim, but some spoilsport posted the footage to YouTube [U.K.: City of London police]
On this coming Monday, May 19, the Cato Institute is hosting a lunch on the subject of “Mugged by the State: When Regulators and Prosecutors Bully Citizens,” featuring Kevin Gates, Vice President, Powhatan Energy Fund; William Hurwitz, M.D., Pain Treatment Specialist; Lawrence Lewis, Engineer and Building Manager; and William Yeatman, Senior Fellow, Competitive Enterprise Institute; moderated by Tim Lynch, Director, Project on Criminal Justice, Cato Institute. You can watch live online at http://www.cato.org/live.
More: Cato podcast, brothers’ website, Philly.com (with an additional story of a man resisting the Delaware insurance commission after it took over his nightclub insurer). And: WSJ via John Cochrane on another FERC case.
The Bloomberg View columnist discusses the new ruling by a California state judge that companies that once made lead paint, and their successors, owe a billion dollars plus to California counties and cities over marketing of lead paint as long ago as the 1920s and earlier. I’m quoted:
As Walter Olson of the Cato Institute noted to me in an e-mail, “Many of the key business decisions being sued over took place closer to Abraham Lincoln’s time than to our own, and if the companies had gone to twenty leading lawyers of the day and asked, `could this ever lead to nuisance liability under such-and-such facts’ would have been told `of course not.'” Can you really sue a company for doing something that was well within the law? Or, as in one case, a company that bought a company that did something that was well within the law? As Olson points out, “when ConAgra bought Beatrice Foods, most business observers never even realized there was the tiny sliver of a paint company in there among the household food brands, but that one little sliver of successor liability could far exceed the then-value of all the rest.”
More from @Popehat on Twitter: “My wrongful death suit against Mongolia for Genghis Khan’s crimes against my ancestors moves forward!”
With a widely watched case filed by California local governments reaching trial, the plaintiffs’ claims are in the news. “Even with quotes cherry-picked to make paint manufacturers sound awful, however, [Mother Jones’s] case seems weak.” The columnist quotes my book The Rule of Lawyers on the enormous cumulative changes in the American liability regime, which have made it thinkable (at least to some governments and lawyers) to impose retroactive liability today for business decisions in the 1920s that were clearly lawful at the time. [Bloomberg; more on the history of lead paint use from the defense side).
Things you’re missing if you aren’t checking out my other site:
- Iowa federal judge hits EEOC with $4.5 million attorney fee award over “sue first, ask questions later” litigation strategy;
- Jim Copland continues his weeklong blogging of Trial Lawyers Inc.: K Street with posts on the plaintiff’s bar’s Washington, D.C. presence (with discussion of CPSIA, employment litigation, qui tam, and arbitration, among other topics); state lobbying; and public relations, including legal academics, the media, and consumer groups;
- Hmm: House committee conveniently subpoenas Toyota defense documents that plaintiffs had been seeking to unseal (and more on Toyota);
- Obama administration plans crackdown to make more employers reclassify independent contractors as employees;
- Trial bar stirs pot in Florida politics;
- Feds swoop down on 2003 settlement to demand that parties reimburse Medicare as provided by retroactive law.
In some ways the most distinctive costs of the Consumer Product Safety Improvement Act are the human-scale kind that are hard to measure — the handicrafters’ livelihoods blasted, the families unable to find sturdy winter clothes at the Goodwill, the kids who can’t get their dirtbikes serviced, the threats to vintage children’s books and to small-run items for special-needs kids. But there are also a number of measurable, tangible economic costs that might capture lawmakers’ attention, and which affect larger, more sophisticated actors as well as the small producers, dealers and families that have found it so difficult to make their voice heard in Washington.
- A survey by the Toy Industries of America says the law has already cost toy businesses more than $2 billion [Playthings, Toy News]. As readers will recall, the minibike/powersports industry projects that the ban on its youth products will cost $1 billion by year’s end. That’s $3 billion right there, representing only two of the many industries hit by the act; it doesn’t include (for example) apparel, resale (two apparel-making groups report $700 million in stranded inventory, costs to Goodwill and Salvation Army may exceed $270 million), books, school and party supplies, sporting goods, furniture, and so forth.
- The stock price of well-known kids’-apparel retailer Gymboree slid by 40 percent overnight early this month “on news that it took massive inventory write-offs in the most recent quarter and suffered sharp margin declines and sales losses, all as a result of the CPSIA”. At a conference call with investors, Gymboree chairman/CEO Matt McCauley noted that phthalates are found “in many screenprints”, which makes their ban an important issue for apparel. Remember the court’s last-minute ruling that the phthalates ban would have to be retroactive to existing inventory, even though the CPSC had given guidance to manufacturers that only post-Feb. 10 production would be affected? Attorney Aaron Colangelo of the Natural Resources Defense Council, who had litigated that case successfully, was quite dismissive about the difficulties of compliance at the time. Well, according to McCauley, that one decision rendered 1.7 million units of inventory at his chain unsalable. “As many of you know, we operate on a nine to 12-month product cycle,” he told the investors. But of course few on Capitol Hill seem to have thought it amiss for new rules to be imposed within a period of a few months, or, as with the court reversal, a few days.
- Auction Bytes: “On March 14, 2009, Amazon.com will remove approximately 2,500 products from the Toys and Baby categories in order to comply with the Consumer Product Safety Improvement Act of 2008 (CPSIA). The company said it had not received certification of CPSIA compliance from the manufacturers of those products. Amazon will cancel all seller offers against the ASINs, and their detail pages will be removed from the site.” (company’s statement). For readers who are new to the subject, that does not imply that any of the 2,500 items pose any serious risk, nor does it imply that any particular item would fail to pass the new thresholds with flying colors. In many instances it indicates only that the makers have not gotten their ducks in a row to obtain GCCs, possibly because they’re unfamiliar with the process, or can’t afford the tests, or plan to get out of the business soon.
- Note that as in the Amazon case, the much-publicized stay of CPSC enforcement for a year applying to most newly manufactured goods doesn’t in practice protect small makers from seeing their product lines squeezed out of major channels of commerce if they fail to launch a compliance program (no matter how unlikely it is that their knitted booties or wooden puzzles contain lead). To cover themselves from legal attack, deep-pocket retailers demand GCCs (general certificates of compliance). Last month, apparel-maker mentor Kathleen Fasanella wrote: “Most (okay, all) of the retailers I’ve spoken to, are still requiring GCCs [despite the stay]. Furthermore, they are enforcing the August standard of 300ppm.”
- Plum Privy has been compiling estimated costs of the law from news reports, with the tally already exceeding $4 billion. Persons in affected lines of work may want to check in at that site to offer additional information or refinements.
- Understatement of the year? Writing in Apparel mag, lawyers with Mintz Levin call the law “extremely burdensome and bewildering“.
As anyone reading Walter Olson’s posts and Forbes coverage knows, CPSIA is a bad law, with disastrous effects on retailers and small manufacturers.
It certainly seems unfair that Congress can wipe out thousands of businesses with the stroke of pen. It’s certainly bad public policy: as I have written elsewhere, when legislatures act to retroactively disrupt settled expectations, the effects redound far beyond the targeted industries to create uncertainty throughout the economy.
It’s a jump, however, from “bad public policy” to “unconstitutional,” and I am concerned that I see many lay blogs asserting otherwise. Starting in the 1930s, the Supreme Court has given free rein to Congress and legislatures to engage in economic regulation, even when that regulation has dramatic effects on individuals. In cases such as Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 202 (2002), and Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470 (1987), the Supreme Court signed off on the constitutionality of far-reaching regulations, despite the large economic effect on property owners affected by the laws. While conservative justices and scholars have argued that such “regulatory takings” without compensation violate the Fifth Amendment, their respect for the rule of law and the actual text of the Constitution are pooh-poohed by Democrats as following an esoteric (and fictional) “Constitution in Exile” movement. There are, at most, four justices on today’s Supreme Court that would recognize the doctrine of regulatory takings; that number is not going to grow under President Obama (who has explicitly disclaimed any need to appoint judges who merely “follow the law”) and a Democratic Senate.
There exist public-interest law firms like the Institute for Justice that engage in litigation over economic constitutional rights–and, while they take donations, they do so without charging their clients money. I think litigation would be fruitless with the makeup of the current judiciary, but I acknowledge that IJ does do a good job of putting forward its principles, and often leveraging its litigation into political success.
But it concerns me even more to see a website recruiting victims of CPSIA to send money to a lawyer to bring a lawsuit. The attorney, involved, Michael Kushner, is a run-of-the-mill plaintiffs’ attorney without any demonstrated expertise in Fifth Amendment law, but has offered to take the case for a $25,000 retainer–which is certainly not enough to fully litigate this to the Supreme Court. There is questionable ethics, if not outright fraud, in asking parties to what is most appropriately filed as a Rule 23(b)(2) class action to “file forms” and send money to join–the whole point of a class action is that a representative of a class is named who will act on behalf of parties that haven’t signed up. Moreover, the Equal Access to Justice Act permits attorneys who have won constitutional litigation when the government’s position was not “substantially justified” to collect attorney’s fees. And note that at no point in Kushner’s website or the related blog recruiting members does he spell out a theory of legal victory.
Sending money to a lawyer to litigate the CPSIA is throwing good money after bad. That a law is unsound does not make it unconstitutional and vice versa. The road to solving the problem of the CPSIA is through Congress, either by making Democratic legislators see common sense, or electing legislators who aren’t so willing to sign off on bills constructed by trial lawyers to benefit themselves at the expense of society at large. Spending resources on doomed litigation diverts from the pressure needed to get Congress to change its mind.
- “The accusatory legal document begins with several remarks defaming the skills, education, ability, integrity, and honesty of the physician being charged.” [Donald May, State Policy Blog] But hey, don’t take it personally, lawyers say [Mark Crane, Medical Economics] Good luck with that [Chiaramonte/Examiner, KevinMD, more]
- Law throwing open Florida doctors’ peer review to lawyers was bad enough, but now state high court has applied it retroactively to records created before law was enacted [KevinMD guest post; background at PoL here, here, and here]
- Even the New York Times hails as “sensible” laws encouraging medical apologies by making them inadmissible as evidence of wrongdoing [editorial]; but see counterexample to the usual reportage [Berlin/Am. Journal of Roentgenology via Buckeye Surgeon]
- A med-mal defense attorney says plaintiffs would win more often in proposed “health courts” than they do in the cases he handles [Medical Economics, more, and similarly]
- More evidence, this time from study of orthopedists, that docs rated as cold or callous attract far more than their proportionate share of suits [Orthopedics Today]
- EMTALA, the law forcing emergency rooms to take all comers, “has created the very conditions it sought to avoid” [Edwin Leap, M.D.O.D.] Watch for “free-standing” ERs that dodge mandate by refusing federal dollars [Scalpel or Sword?, Health Care BS] Semi-defense of law [Over My Med Body]
- Besieged state of dispersed emergency rooms and specialists is one reason for use of those risky helicopters that fly patients to the big city [Williams/Health Business Blog, M.D.O.D.]
- Docs should stand up to family members demanding futile or inappropriate end-of-life care [Musings of a Dinosaur] Relatedly, daughter on dying father: “if you give him any more morphine, I will sue you.” [Fat Doctor]
(Most links via the highly recommended one-stop shop for medical blogging, KevinMD, e.g. this post and this one on EMTALA.)
My latest Liability Outlook examines the problems of retroactive lawmaking and litigation, especially reviver statutes, and even Obama fans will find something to like:
The controversy over whether and how to seat the Michigan and Florida delegations at the Democratic National Convention shows the danger of changing rules midstream and upsetting settled expectations. Reviver statutes not only obviate statutes of limitations, which are a critical aid to justice, by “reviving” claims that have expired or never existed, but they can also pose the danger of undoing the benefits of future prospective legislation. In evaluating laws, the issue is not merely one of retroactivity, but of the importance of promoting legal certainty. For example, the FISA Amendments Act, S. 2248, while ostensibly acting retroactively to grant immunity to telecommunications companies that cooperated with the Bush administration’s antiterror surveillance program, works to protect settled expectations.
Among matters discussed: litigation against the Catholic church over child abuse by priests and the Michigan legislature’s proposed retroactive repeal of pharmaceutical tort reform in H.R. 4045. Walter has previously discussed the subject.