Chronicling the high cost of our legal system
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Or are you just glad to sue me? “A New Jersey appeals court … overturned a $3.6 million whistleblower award to a Wachovia worker who claimed he was fired for revealing corporate fraud rather than for passing around revealing photographs.” [Michael Booth, New Jersey Law Journal]
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“A federal judge in Indiana ordered lawyers including the prominent firm of Motley Rice to pay ITT Educational Services almost $400,000 in legal fees for pursuing a ‘frivolous’ lawsuit the judge said was ‘based on a completely false story.’” In line with the reluctance of American judges to award Rule 11 sanctions, the judge awarded only a small fraction of the defendant’s actual outlay in attorney’s fees, which ran into many millions. Motley Rice is a chief beneficiary of the ongoing income stream of the tobacco litigation fees, which return $500 million a year to an assortment of plaintiff’s firms. [Dan Fisher, Forbes]
A fired Florida TV anchorman claims whistleblowing retaliation [Fort Myers News-Press]
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Imagine how puzzling it must be to be an employee of the city of Montreal: the city “has set up a whistleblower hotline to encourage you to expose wrongdoings by colleagues but has also created an explicit policy forbidding you to blow the whistle and is threatening severe penalties if you do.” [Montreal Gazette]
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Children inform on their parents. [Radley Balko]
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Because even if the government can’t maintain a paid informer on every street corner, it can at least try to maintain one in every family. [Connecticut Law Tribune]
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A new report in the WSJ quotes a retiring NHTSA official as saying higher-ups are refusing to release the results of the agency’s staff investigation into charges of Toyota sudden acceleration, because those findings are not unfavorable enough toward the automaker. I’ve got more detail in a new post at Cato at Liberty, and Ted covers the story at PoL.
Meanwhile, proponents of a sweeping expansion of federal auto safety law, one that would thrust Washington much more deeply into the operations of the automotive industry, are really in a hurry — a quick, urgent, must-do-now hurry — to pass it, even though many of its provisions have not had much airing in public debate. An editorial today in the New York Times — a newspaper that almost comically underplayed the revelations earlier this month about the NHTSA probe’s pro-Toyota results — flatly asserts that the Japanese automaker’s vehicles suffer “persistent problems of uncontrolled acceleration,” and demands that the sweeping new legislation “be passed into law without delay.” It’s almost as if they are afraid of what might happen if lawmakers pause to take a closer look.
Among the many other things the new legislation would do is greatly enhance the legal leverage of automaker or dealership employees who adopt the mantle of “whistleblowers”. But if the new revelations from a responsible career employee of NHTSA are ignored, we will have another confirmation that some types of whistleblowing are more welcome in America’s governing class than others. (& welcome Coyote, Gabriel Malor, Death by 1000 Papercuts, Mark Hemingway/D.C. Examiner (“the indispensable Overlawyered blog”), Allen McDuffee/Think Tanked readers).
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As I’ve been warning: under the new Dodd-Frank provisions, companies “should expect at least some of their employees to report to the government first rather than relying on internal disclosure mechanisms.” [NYT "DealBook", earlier here, here, etc.] More: various perspectives on FCPA whistleblower bounties [Koehler]
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I’m quoted in this report by Dunstan Prial of FoxBusiness.com and in this report by David Savage of the Los Angeles Times on the large-scale bounty incentives in the Dodd-Frank financial regulation bill, which bring us closer to an “informer model of law enforcement” that “encourages people to be disloyal to their friends and co-workers.” Earlier here and here. Other coverage of the whistleblowing provisions: Coyle/NLJ, Koehler/FCPA Professor, Baer/Prawfsblawg.
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There are lots of them tucked into the bill, and they will probably come at a significant cost for companies in the economy’s financial sector, as I explain in a new post at Cato at Liberty (earlier; more on qui tam and whistleblower matters more generally).
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During the long series of scandals that brought down former tort potentate Richard (“Dickie”) Scruggs, of tobacco-asbestos-Katrina-mass tort fame, no blogger achieved the status of “must” reading more consistently than David Rossmiller of Insurance Coverage Blog. Now Alan Lange of Mississippi site YallPolitics (and co-author of Kings of Tort, a book on the scandal) has posted a massive document dump of emails between the Scruggs camp and its public relations agency, as made public in later litigation (see also). It shows the principals:
* boasting of their success in manipulating major media outlets to inflict bad publicity on the targets of Scruggs’s suits;
* plotting ways of striking back against critics — in particular, Rossmiller — with tactics including going after him with legal process, as well as creating fake commenters and whole blogs to sow doubt about his reporting;
* wondering who they might pay to secure “Whistleblower of the Year” awards, or something similar, for their clients;
* apparently oblivious, just days before the fact, as to how the ceiling was going to cave in on them because of Judge Henry Lackey’s willingness to go to law enforcement to report a bribe attempt from the Scruggs camp.
The whole set of documents, along with Rossmiller’s summary and reaction, really must be seen to be believed. It will easily provide hours of eye-opening reading, both for those who followed the Scruggs affair in particular, and for everyone interested in how ambitious lawyers manipulate press coverage to their advantage — and how they can seek to use the law against their blogger critics. (& welcome readers from Forbes.com and Victoria Pynchon’s “On the Docket” column there).
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Individual liberty, free markets, and peace: the world's premier libertarian think tank. Publishes Cato at Liberty, where I blog on contemporary policy issues.
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