The Sep. 21 issue of Forbes magazine, now on newsstands, has a lengthy profile by Dan Fisher of my founding of the Center for Class Action Fairness, complete with a photo of my ugly mug gracing the story.
Of interest is a new revelation in the infamous Toshiba class action:
After few consumers availed themselves of a $2 billion settlement over supposedly defective laptop computers in 2000, for example, Toshiba America handed $353 million to a Beaumont charity whose chairman was plaintiff attorney Wayne Reaud, the lawyer on the case. Six years later the charity was still sitting on $250 million and the Texas attorney general sued for breach of fiduciary duty, including paying its president, W. Frank Newton, $560,000 in 2004. Newton is the former president of the State Bar of Texas.
Texas lawyers are seeking discovery against hog-raising giant Smithfield Foods to determine whether a swine operation it partly owns in Mexico might have contributed to the death of a Harlingen woman in the H1N1 flu outbreak. “Mexican health officials have found no connection between the swine flu virus and the pig farm. Nevertheless, residents there have long blamed the farming operation for a variety of illnesses, UPI reported.” The lawsuit might seek $1 billion. [Brownsville Herald, May 12]
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.
On November 14, 1999, high-school dropout Rolando Domingo Montez, celebrating his 19th birthday, was arrested for public intoxication and trespass after the owner of the boat on which he and his friends were sitting complained. Police placed him in Cell No. 1 of the Port Isabel City Jail. The next morning, Montez was permitted to make some collect calls from his jail cell to seek bail money from his mother, Pearl Iris Garza. Mom, complaining that Montez was in jail again, refused. But she generously came to pick up Montez on the 16th when he was released on his own recognizance. Unfortunately, while Garza was waiting in the lobby, and while police were responding to a call for assistance regarding a suspicious vehicle, Montez hung himself with the 19-inch phone cord from the phone he had used to make the calls.
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We were curious what happened to the case of Rose Marie Munoz v. Ford, the $29 million verdict against an auto manufacturer when a 10-year-old recalled Firestone tire failed and a passenger who wasn’t wearing a seatbelt was ejected. Our original post had provoked a response from the plaintiffs’ lawyer, Roger S. Braugh, Jr.
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41-year-old South Texas personal injury solo practitioner Hermes Villarreal was admitted to a McAllen hospital on April 16, 2005, reporting that his heart was racing. The hospital put him on a 24-hour EKG. Villarreal reported being under stress, but refused a psychiatric consultation or the recommended medication. At 5 a.m. on April 19, 2005, the day of his scheduled discharge, “Villarreal summoned the nurse on duty and requested a razor, saying that he wanted to take a shower and shave his chest, because the EKG monitor leads attached to his chest were bothering him.” The nurse complied with his wishes, and Villarreal locked himself in the bathroom and committed suicide with the razor.
This was, said Villareal’s family, the hospital’s fault; since it’s South Texas, a Hildalgo County jury, after a three-week trial, awarded $9 million in March (which looks to be reduced at least to $1.64 million under Texas law capping damages). Ironically, the opening line of the Texas Lawyer story says “It was a suicide no one saw coming,” but doesn’t question the resulting jury verdict.
Somehow, the trial lawyer, Raymond L. Thomas, a close friend of Villarreal’s, interjected himself into the closing argument, telling an emotional story of a Rolex Villarreal had given him as a gift that left the jury in tears; the press coverage doesn’t acknowledge the blatant violation of ethical rules (see also Texas Rule 3.04(c)(3)), much less indicate whether he got away with it because of the failure of the defense to object or a judge’s failure to oversee her courtroom. (Jenny B. Davis, “Attorney, Interrupted: Seeking Meaning, Recovery for a Legal Life Lost,” May 5 via ABA Journal).
Ruben Zamora lost control of his Ford Explorer after a tread-tire separation, causing a rollover; because he was not wearing his seatbelt, he was ejected from the vehicle and suffered brain injuries. (His four passengers suffered only minor injuries.) This is, a LaSalle County, Texas state court jury decided, 65% the fault of Ford, putting them on the hook for $6.5 million in damages. Ford denies responsibility and will appeal. (Margaret Cronin Fisk, “Ford Loses $6.5 Million Verdict in Explorer Rollover”, Bloomberg, Feb. 4; “Auto news headlines,” Detroit Free Press, Feb. 5; Nick Sullivan, “Brain-Injured Man Awarded $6.5M in Texas Rollover Case”, Andrews Publications, Feb. 11). Until a 2003 tort reform, Ford would not even have been allowed to introduce evidence that Zamora was not wearing his seat belt.
El Defenzor, a Corpus Christi paper of questionable credibility, claims to have uncovered e-mails among the plaintiffs’ bar in that town hand-picking judges for the bench at election time. Unfortunately, this germ of an interesting story is buried in bad punctuation and a deranged-sounding ungrammatical writing style that is consistent with what a commenter here calls “tinfoil hat-wearing.” But the quoted e-mails themselves have indicia of genuineness (including accurate e-mail addresses and corrections of typos in the title line in later iterations), and some of the other allegations in the story are consistent with stories that we have reported from the San Antonio Express-News and a newspaper-destruction scheme we documented in another Watts case. It’s also consistent with the reports filed with the Texas Ethics Commission; witness the disclosures by the front group “Good Government PAC,” which has the same address and office number as the Watts Law Firm.
Imagine what a credible journalist could do with this story! Sixty Minutes? Houston Press? Dallas Observer? Corpus Christi Caller-Times? Texas Monthly? Anyone out there?
In 1991 portions of Texas’s Rio Grande Valley saw an upsurge in babies born with neural-tube defects. Litigation resulted:
Residents and lawyers had blamed pollution, and General Motors and other U.S.-owned factories paid $17 million without admitting wrongdoing to settle a lawsuit accusing their border factories of poisoning the air.
The claimed linkage of cause and effect between the factory pollution and the birth defects was, to say the least, much controverted at the time, and is looking even less impressive in hindsight:
no chemical links to the disease were ever proven, and Texas health officials began suspecting fumonisin, a toxin in corn mold. Experts had noted a high concentration in the corn harvest just before the outbreak. Some Texas horses died from brain disease caused by the toxin.
Now, a study in the February issue of the journal Environmental Health Perspectives adds impetus to the corn-mold theory:
The study found that pregnant women who ate 300 to 400 tortillas a month during the first trimester had more than twice the risk of giving birth to babies with the defects than did women who ate fewer than 100 tortillas.
Blood samples indicated that the higher the level of fumonisin, the greater the risk of neural tube defects.
Tortillas are an inexpensive dietary staple along the Texas-Mexico border, and studies suggest that the average young Mexican-American woman along the border eats 110 a month.
(“Study: Bad corn caused birth defects”, AP/Seattle Post-Intelligencer, Feb. 8). See also Dallas Morning News, Mar. 4, 2001; AP, Jan. 2001; Nicole Foy, “Border birth defects are tied to poverty”, San Antonio Express-News, Apr. 9, 2004.
Among its other implications, the episode may suggest the safety gains to be had in the shift from a pre-modern food regime based on local farm and home production to the sort of industrially based food regime more familiar to most Americans. Even aside from the issue of folic acid fortification, a big-city tortilla factory run by a large company would probably have had a better likelihood of screening out moldy batches of corn.
The American Tort Reform Association today released its third annual Judicial Hellholes report — ATRA’s report on the worst court systems in the United States where “‘Equal Justice Under Law’ does not exist.”
Here is the press release from ATRA. The highlights, including the top nine worst areas (seven counties and two regions — all of West Virginia and all of South Florida) and a salute to Mississippi for its tremendous and far-reaching tort reforms are on this page. The full report is in PDF format here.
But there may yet be hope:
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