Overlawyered: Chronicling The High Cost Of Our Legal System

The High Cost of Doing Little

Last week the Federal Trade Commission and the Justice Department’s Antitrust Division issued their annual report on the Hart-Scott-Rodino Act (HSR Act), which requires companies to pre-report mergers over a certain value to antitrust regulators so they can preemptively determine if a deal is “likely to have an anticompetitive impact.” (It’s amazing that people with such amazing economic forecasting abilities are employed as mere government lawyers.)

Despite the occasional high-profile merger challenge, like the FTC’s recent lawsuit to stop Whole Foods from acquiring Wild Oats, very few deals face antitrust roadblocks. In the fiscal year 2006, the FTC and DOJ issued second requests for information—the first step towards a formal challenge—in only 2.6% of reported mergers. This is slightly below the ten-year average of 3.01%.

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Fugitives responsible for risks of pursuit, cont’d

On Thursday we posted a story about a jury’s holding a Missouri fugitive responsible for the crash of a police car which was headed (at a great distance) toward his manhunt. Now similar issues might come up following a more spectacular catastrophe, yesterday’s crash of two news helicopters over central Phoenix while covering a live police pursuit, with the death of all four persons aboard. Phoenix police chief Jack Harris, per the coverage, “said he believes the man [fleeing police] will be held responsible for the deaths of the four TV station employees.” (“2 News Helicopters Collide; 4 Dead”, KPHO News 5, Jul. 27).

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Fighting Collusion with Collusion

Last week a Connecticut jury acquitted Stora Enso North America Corp. of criminal “price fixing” charges. The Justice Department indicted Stoa Enso last December for allegedly selling coated magazine paper at “anticompetitive” prices. It’s rare for any company to go to trial on criminal (or even civil) antitrust charges, and an outright not-guilty verdict is even rarer: In the last ten years, the Antitrust Division’s criminal won-loss record is a robust 454-11.

The Antitrust Division’s success in convicting price fixing defendants can be attributed to the Corporate Leniency Policy, an invention of Division lawyers that allows one company in a purported “cartel” to escape all criminal prosecution in exchange for providing evidence against other firms. It’s a terrific bargain. A company can inflict maximum damage on its competitors—who face large criminal fines and treble damages in subsequent civil lawsuits—while prosecutors are generally ensured of quick plea bargains from their remaining targets.

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Yet another McDonald’s coffee style lawsuit

You will recall that defenders of the absurd McDonald’s coffee lawsuit insist that the suit was justified because only McDonald’s sold beverages capable of third-degree burns. We’ve repeatedly shown that that claim is fictional, but add one more example: a New Jersey man is suing Starbucks for selling “unsafe” hot tea that caused third degree burns on his hand when he spilled it on himself (though at least, unlike Stella Liebeck, he is claiming that the spill is the store’s fault for failing to attach the lid properly). Because Starbucks does not comment on litigation, they surrender the entire article to the plaintiffs’ attorney for Antonio Couso to use as a platform when the reporter does not bother double-checking any of the lawyer’s claims. (John Petrick, “Starbucks sued over spilled tea”, The Record, Jul. 27).

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July 27 roundup

  • Grand jury declines to indict Dr. Anna Pou in Katrina hospital deaths, despite heavy breathing from Louisiana AG Charles Foti and TV’s Nancy Grace [Times-Picayune, more; 2005 CNN transcript; Health Care Blog, GruntDoc, Vatul.net]

  • Protection from lawsuits for “John Doe” security informants is back in anti-terror legislation moving through Congress, despite back-door effort to eliminate it earlier [Fox News, Malkin; earlier] Addendum: but it’s in altered, much-weakened form, says commenter Bob Smith;

  • U.K.: Top law firm Freshfields earns millions advising clients on employment compliance, yet “omitted to check that changes to its own pension scheme were legal” [Times Online]

  • Thinking of doing some guestblogging, for us or another site? Some good advice here [Darren Rowse via Kevin O’Keefe]

  • Even Conrad Black can have trouble affording lawyers, at least with feds freezing his accounts [PoL on Steyn]

  • Shouldn’t have let us become parents again: Florida jury awards $21 million in “wrongful birth” case [Fox News]

  • Possibility of gigantic reparations claims adds intensity to big lobbying fight in Washington over whether Turkey’s slaughter of Armenians in 1915 amounted to genocide [Crowley, New Republic]

  • Updating colorful coverage case (Jun. 22, 2005): dentist wins $750K verdict on insurer’s duty to defend him for taking gag photos of sedated employee with boar tusks in mouth [Seattle Times, more; dissent in PDF; Althouse]

  • Giuliani might use federalism to defuse culture wars [Brownstein, L.A. Times; disclaimer]

  • Virginia’s enactment of harsh traffic fines (Jul. 6) follows tryouts of the idea in Michigan and New Jersey, where effects included rise in unlicensed driving [Washington Post]

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When is a court decision “pro-business”?

Common journalistic practice says that a court decision is pro-business when it favors a corporate defendant over a plaintiff. Conservatives are also said to be pro-business while liberals are pro-plaintiff or pro-consumer. This is how the press frames most discussions of tort and regulatory litigation.

In the last Supreme Court term, a 5-4 decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc. was hailed and condemned (depending on who you ask) as a pro-business decision. The conservative majority, led by Justice Kennedy, overruled a 1911 precedent that condemned “resale price maintenance” (RPM)—contracts where a manufacturer conditions sales to distributors on setting a specific retail price—as an automatic violation of the Sherman Act. Most antitrust challenges are subject to the rule of reason, and after years of complaints from mainstream economists, the Leegin majority acquiesced in ending RPM’s special status under the “per se” rule.

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Jury: distant fugitive to blame for trooper’s death

Missouri Highway Patrol Trooper Ralph Tatoian fell victim to a fatal car crash while en route to the area — 40 miles away — where fugitive Massigh Stallman, on foot, was being sought in a manhunt. Now a jury has convicted Stallman of responsbility for Tatoian’s death (“Jury Convicts Suspect In Highway Patrolman’s Death”, KSDK, Missouri, Jul. 20). More: possibly similar case arises in Phoenix after crash of two news helicopters during police pursuit (Jul. 28).

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“Suit Charges ‘Inhumane’ Questions at Deposition Caused Emotional Distress”

A medical-malpractice plaintiffs’ lawyer has brought a second suit, this one against the attorney for the defendant, arguing that the questions asked at a deposition inflicted emotional distress on his client. (Lisa Brennan, NJ Law Journal, Jul. 25 (via Scheuerman)).

This suit may well fall into the “Be careful what you ask for” category. If a defense attorney can be liable for exploring whether a plaintiff has responsibility for a decedent’s fatal head injury, why can’t a defendant doctor sue a plaintiffs’ attorney when accused of the same thing? (Note the plaintiffs’-attorney commenter who told one doctor to suck it up.) Odds are the whole matter gets dismissed on grounds of the litigation privilege, the idea that immunity is appropriate lest attorneys be deterred from litigating on behalf of their clients. One only wishes that the same principle would be applied to other situations, such as doctors being deterred from practicing medicine. Earlier: POL Jun. 20, 2006.

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