Until that story [on the silicone breast implant episode], I’d always taken the liberal view of plaintiffs’ lawyers as avenging angels, righting wrongs and helping wrest compensation for people who had been harmed by greedy corporations. …
[Since then] I’ve seen mass torts where the actual plaintiffs get coupons while the lawyers reap millions. Mass torts where the connection between the product and the harm is illusory. Mass torts built on fraud (silicosis). Complex litigation settled for billions even when the government implies that consumers are responsible (Toyota sudden acceleration). I’ve also seen cases where some victims hit the jackpot with a giant jury verdict and other victims come up empty. Or where a corporation really has done harm but pays off the lawyers instead of the victims. Over the years, I’ve thought: There’s got to be a better way.
- The late John O’Quinn was an Overlawyered regular: “Ex-clients’ complaint vs silicosis lawyers is catalog of misconduct” [Alison Frankel, Reuters; Ted Frank, Point of Law] More: Houston Chronicle, SE Texas Record, ABA Journal, JD Journal.
- “How Lawsuits Killed an American Icon” [Rocky Flick, CEO, on closure of Blitz gas can plant in Oklahoma; U.S. Chamber’s Faces of Lawsuit Abuse, auto-plays video; earlier here, here, here]
- “Angelos seeks to revive more than 13,000 asbestos cases” [Baltimore Sun] Virginia is latest state to wrestle with asbestos causation standard [David Oliver] Asbestos forum-shopping alive and well in Madison County, Ill., with record-breaking 1,563 cases filed last year [Chamber-backed Madison County Record]
- More on why Toyota settled dubious acceleration case [Michael Krauss, earlier]
- Alabama rules brand-name drug manufacturer can be held liable for generic version’s lack of a warning [Weeks v. Wyeth; Meghan McCaffrey, Weil Gotshal Product Liability Monitor; Morrison Foerster client alert; Michael Krauss] Standards of causation in pharmaceutical cases haven’t been loosened as far as in asbestos [Beck, Drug & Device Law]
- From Judge Gladys Kessler, another sweeping ruling against tobacco companies [Brian Wolfman, CL&P]
- In the coming era of driverless cars, better to empower a robotic “intersection controller,” or rely on intelligence distributed among the individual vehicles? [Mickey Kaus, Jack Baruth/Truth About Cars, E.W. Niedermeyer first, second]
“Houston plaintiffs’ attorney Warren Todd Hoeffner, whose criminal case ended in a mistrial in October 2009, has struck a deal with federal prosecutors. Prosecutors agreed to defer a new trial for one year on the criminal charges against Hoeffner. Among other conditions, the agreement calls for Hoeffner to pay the government $2,485,000 and agree to a voluntary suspension of his Texas law license for two years.” Prosecutors said Hoeffner paid millions to insurance company claims department employees in the course of obtaining $34 million in silicosis payouts; his lawyers argued at trial that the employees extorted consideration as a condition of approving otherwise fair settlements. [Brenda Jeffreys, Texas Lawyer; earlier here and here]
For years the Lone Star State led the nation in the volume of asbestos litigation filed in its courts, much of it dubious, but that has changed drastically in recent years. A new report from the Texas Civil Justice League (PDF) says the state’s reforms have worked well:
The great bulk of asbestos litigation in Texas resulted from entrepreneurial activity by lawyers who filed lawsuits on behalf of tens of thousands of people suffering no discernable illness. Enterprising lawyers then decided to replicate the asbestos-litigation model with silica litigation, again filing cases on behalf of thousands of people suffering no injury. With the passage of S.B. 15 in 2005, the Texas Legislature took a leading role in the national effort to end the abusive aspects of asbestos and silica litigation.
Claims without significant impairment were moved to an “inactive docket”, while cases alleging malignancy — which make up most of the docket of what are regarded as stronger asbestos cases — were expedited in several ways, particularly for claimants who were alive during the process. At the same time, Texas law and judicial practice were developing in other ways so as to allow easier dismissal of unmeritorious silica claims, and to hold asbestos claimants to a standard of causation more similar to that of other toxic torts (Borg-Warner v. Flores). The study examines and defends these developments as well. More: Chamber-backed Legal NewsLine.
- Update from Germany: “Teacher Loses ‘Rabbit-Phobia’ Trial” [Spiegel, earlier]
- Farther shores of for-your-own-goodery: “Should Obese Kids Be Placed In Foster Care?” [Katz, CBS News]
- Just one problem with that $725 million AIG securities suit settlement [D&O Diary]
- After Texas passed bill requiring evidence of impairment, more than 99% of silicosis claimants dropped out [LNL, PoL]
- Lindsay Lohan disserved by lawyer who can’t keep a confidence [Turkewitz]
- Pearlstein’s the Washington Post’s anti-business business columnist [McArdle, Wood/ShopFloor]
- Lawyer shenanigans in Fosamax trial in New York [Walk, Drug & Device Law]
- Unwelcome surprise: health care bill turns out to tax many house sales [David Boaz, Cato at Liberty]
- Shameless: House leadership exempts NRA lest it sink bill to regulate political speech [John Samples, Cato]
- Employment law: “Arbitration Showdown Looms Between Congress, Supreme Court” [Coyle, NLJ]
- “Wake Up, Fellow Law Professors, to the Casualties of Our Enterprise” [Tamanaha, Balkinization]
- Move to allow international war crimes trials over “aggression,” a notoriously slippery term [Anderson, Brett Schaefer/NRO “Corner” via Ku]
- Litigation slush funds: “Cy pres bill in Ohio House” [Ted Frank, CCAF]
- “Recent Michigan Prosecutions for ‘Seducing an Unmarried Woman’” [Volokh]
- Scalia: “…least analytically rigorous and hence most subjective of law-school subjects, legal ethics” [LEF]
- Silicosis settlement scandal update: “As 2 Insurance Execs Admit Bribes, PI Lawyer Says He Can’t Be Retried” [Houston Chronicle via ABA Journal, earlier]
“Houston lawyer Warren Todd Hoeffner is accused of paying $3 million in cash, BMWs, trips, even spa treatments and ‘gentleman’s entertainment’” in a scheme to obtain $34 million in settlements in silicosis litigation. Things began to unravel when Hartford Insurance, which had cut settlements on behalf of a number of defendants, noticed the arrival of a check for $6,000 from Hoeffner to one of its former claims personnel. Hoeffner’s lawyers are arguing that the insurance company employees extorted money and goods from their client by threatening not to approve fair settlements otherwise. [Houston Chronicle, Southeast Texas Record]
In Mississippi Litigation Review blog, Philip Thomas argues that Kim Strassel’s article (which we discussed Sunday) overemphasizes the role played by U.S. Silica’s CEO. I think that’s more the doing of the WSJ headline writers (which do pitch the story of one guy standing alone against the plaintiffs’ bar) than Strassel; as Thomas himself acknowledges, Ulizio doesn’t try to take undue credit, and Strassel merely (and correctly) notes that lawyers alone couldn’t defeat the silica lawsuits without the support of the business community willing to stand up against the tort bar.
Thomas also objects to Ulizio’s characterization of the victory as “luck,” but luck definitely played a huge role. The scandal came to light solely because Judge Janis Jack held mass Daubert hearings at an abnormally early stage in the litigation. In fact (and I seem to be the only person who has ever made this point), Jack’s ruling was especially abnormal, because she made the Daubert ruling before she made a jurisdictional ruling—and her jurisdictional ruling found that 99% of the cases in front of her lacked complete diversity and needed to be remanded. In other words, Judge Jack’s famous condemnation of plaintiffs’ experts was largely an ultra vires advisory opinion (which is why her sanctions order was for only a couple of thousand dollars).
The luck of the MDL draw had everything to do with that result. Another judge might not have held Daubert hearings at such an early stage; another judge might not have actually applied Daubert even if she had held the hearings; another judge might have preferred to empty her docket immediately, rather than stalling on the eventual remand.
And these aren’t purely hypothetical musings: in the welding fumes MDL in Ohio, there has been plenty of evidence of mass tort fraud, yet the judge has refused to throw out cases, so they slowly continue to proceed to trial.
In that sense, Ulizio is absolutely right: “When you have an entire system that condones these lawsuits, that does nothing to police its own, where there are no consequences, right or wrong has nothing to do with it. It’s a coin flip.” The lawyers who brought these fraudulent cases are still practicing law; thousands of fraudulent mass tort lawsuits continue to be brought since Judge Jack’s ruling without consequence to the unethical lawyers who bring them.
“The first time we ever lost a case in trial, it was 2001. We tried it in Beaumont, Texas, and lost $7.5 million. . . . The judge sat there through the trial reading a newspaper. At one point an objection was made, the bailiff taps him on the shoulder and says ‘judge, objection is being made.’ He looks at our lawyer and says ‘overruled.’ The plaintiffs’ lawyer raises his hand and says ‘no, judge, it was me.’ He says ‘sustained’ and goes back to reading the paper.” …
[U.S. Silica CEO John A.] Ulizio shares a memo that plaintiffs’ lawyer Joe Gibson sent to silica defendants in 2004 with a blunt offer: Settle our 9,000 cases for $900 million, or pay $1.5 billion in pretrial discovery alone, plus an even bigger verdict. “That’s the genius of the economics of litigation from the plaintiffs’ perspective. Sue a lot of people, sue on behalf of a lot of plaintiffs, get into an adverse jurisdiction, and then don’t make too big of a demand, so you can settle it for a relatively small percentage of the cost of defending the case,” Mr. Ulizio says.
Kim Strassel has a must-read account of how U.S. Silica beat a mass-tort fraud attempting to steal its solvency—and did so almost entirely by the luck of the MDL draw, as a different judge might have refused to conduct the hearings that exposed the wrongdoing. (See also Michael Krauss at Point of Law.)
Note that that $900 million proposal for 9000 bogus cases works out to $100,000/case—which is exactly what the Vioxx litigation settled for.
Lester Brickman has a new must-read paper on an under-reported problem:
Lawyers obtain the “mass” for some mass tort litigations by conducting screenings to sign-up potential litigants en masse. These “litigation screenings” have no intended medical benefit. Screenings are mostly held in motels, shopping center parking lots, local union offices and lawyers’ offices. There, an occupational history is taken by persons with no medical training, a doctor may do a cursory physical exam, and medical technicians administer tests, including X-rays, pulmonary function tests, echocardiograms and blood tests. The sole purpose of screenings is to generate “medical” evidence of the existence of an injury to be attributed to exposure to or ingestion of defendants’ products. Usually a handful of doctors (“litigation doctors”) provide the vast majority of the thousands and tens of thousands of medical reports prepared for that litigation.
By my count, approximately 1,500,000 potential litigants have been screened in the asbestos, silica, fen-phen (diet drugs), silicone breast implant, and welding fume litigations. Litigation doctors found that approximately 1,000,000 of those screened had the requisite condition that could qualify for compensation, such as asbestosis, silicosis, moderate mitral or mild aortic value regurgitation or a neurological disorder. I further estimate that lawyers have spent at least $500 million and as much as $1 billion to conduct these litigation screenings, paying litigation doctors and screening companies well in excess of $250 million, and obtaining contingency fees well in excess of $13 billion.
On the basis of the evidence I review in this article, I conclude that approximately 900,000 of the 1,000,000 claims generated were based on “diagnoses” of the type that U.S. District Court Judge Janis Jack, in the silica MDL, found were “manufactured for money.”
Despite the considerable evidence I review that most of the “medical” evidence produced by litigation screenings is at least specious, I find that there is no effective mechanism in the civil justice system for reliably detecting or deterring this claim generation process. Indeed, I demonstrate how the civil justice system erects significant impediments to even exposing the specious claim generation methods used in litigation screenings. Furthermore, I present evidence that bankruptcy courts adjudicating asbestos related bankruptcies have effectively legitimized the use of these litigation screenings. I also present evidence that the criminal justice system has conferred immunity on the litigation doctors and the lawyers that hire them, granting them a special dispensation to advance specious claims.
Finally, I discuss various strategies that need to be adopted to counter this assault on the integrity of the civil justice system.