Updates – May 31

Updating a couple of stories recently covered here on Overlawyered:

  • First rule of damage control: when you’re in a hole, stop digging. A few weeks ago, we mentioned the West Virginia Attorney General Medicaid scandal (May 19) in which AG Darrell McGraw took it upon himself to spend state funds that he had recovered from Purdue Pharma after suing them for selling Oxycontin. This upset both the federal government, which argues that it has a legal right to some of these funds, and the state legislature, which felt that it should decide how to appropriate state funds. McGraw appears unapologetic and unworried about the federal investigation, but his office did promise the legislature that he would stop spending money. Now LegalNewsline reports that he’s going back on that promise:

    Despite promises and a federal investigation, West Virginia Attorney General Darrell McGraw on Wednesday handed out even more of the settlement funds gained in a 2004 agreement with Purdue Pharma.

    McGraw gave $75,000 to the Kanawha Valley Fellowship Home, which will use the money for its drug treatment and education program. He says the program will affect 20 counties.

    The real problem here is not that the state legislature is annoyed — that’s local politics. The real problem is that if the federal government decides that it is entitled to a share of this money, the state is going to have to come up with millions of dollars to give to the federal government — money that McGraw already spent.

  • Three weeks ago, we noted that a prominent anonymous medical blogger, “Flea,” was liveblogging his malpractice trial, and we discussed the ramifications for Flea’s case. A few hours after we posted about this, Flea stopped — presumably after his attorney had a fit. But apparently that was at least a few hours, or a few weeks, too late; Flea had left enough clues to enable the plaintiff’s lawyer to figure out that Flea is Robert Lindeman, and she questioned him about it on the stand:

    With the jury looking on in puzzlement, Lindeman admitted that he was, in fact, Flea.

    The next morning, on May 15, he agreed to pay what members of Boston’s tight-knit legal community describe as a substantial settlement — case closed.

    The Globe also quotes a trial lawyer as claiming that the plaintiff’s attorney “had telegraphed that she was ready to share Lindeman’s blog — containing his unvarnished views of lawyers, jurors, and the legal process — with the jury,” although it’s not clear to me how his views of lawyers, jurors, and the legal process would be relevant to a medical-malpractice case.

    Incidentally, Flea’s blog is apparently now totally kaput.

Video games used to cost a quarter

Jack Thompson makes a lot of headlines around here for his quixotic anti-video game legal jihad. This crusade wastes court time and imposes legal expenses on video game makers. But if there’s one mitigating factor — admittedly, a small one — in the whole mess, it’s that at least his own legal expenses are coming out of his own pocket. The same can’t be said for Illinois governor Rod Blagojevich, who is not only forcing video game makers to spend large sums of money, but his conducting his crusade against violent video games with other people’s money:

The governor has spent nearly $1 million in taxpayer money to appeal a 2005 federal court ruling that a state law banning the sale of violent or sexual-explicit video games to minors was unconstitutional.

You may be wondering where he got the money for this crusade. Well, so was the Illinois state legislature, since they never authorized these expenditures:

A House committee discovered the amount spent to pay lawyers this week.

[…]

The governor raided funds throughout state government to pay for the litigation. Some of the areas money was taken from included the public health department, the state’s welfare agency and even the economic development department.

“We had a strong suspicion that the governor was using funds appropriated by the General Assembly as his own personal piggy bank,” Rep. Jack Franks, D-Woodstock, chairman of the State Government committee, said.

Those suspicions were confirmed when the governor’s staff, testifying before the committee, admitted they just stuck state agencies that had available funds with the bills, he added.

But it’s For The Children™, don’t you know? (And the lawyers.)

Ted on the SEC and Stoneridge

Our own Ted Frank has an op-ed in today’s Wall Street Journal. Excerpt:

…The plaintiffs’ bar is heavily lobbying the SEC to intervene in a pending Supreme Court case, Stoneridge v. Scientific-Atlanta, on the side of a gigantic expansion of private litigation.

The case’s facts are straightforward: Charter Communications purchased set-top cable boxes but got back some of the money in the form of advertising bought by the vendors. Charter executives recorded the outgoing money as a “capital expenditure” (to be depreciated over several years) but the incoming money as revenue recorded within a single year, thus falsely inflating operating cash flow. Three Charter executives went to prison over the shenanigans. Plaintiffs’ attorneys sued Charter and the executives, of course, but named as codefendants two of the vendors, Motorola and Scientific-Atlanta.

The suit makes little sense. The vendors had no say in how Charter accounted for or reported its transactions. Worse is the precedent it represents: How can a business function if it is potentially liable for hundreds of millions because those whom they trade with misreport a day-to-day transaction?…

Indeed, a 1994 Supreme Court decision on its face cuts off such “secondary liability” claims, but hope of reviving them springs eternal in the plaintiff’s bar — one reason for the P.R. campaign aimed at putting pressure on officials like SEC Chairman Chris Cox. (Ted Frank, “‘Arbitrary and Unfair'”, Wall Street Journal, May 31)(sub-only)(cross-posted from Point of Law). Plus: here’s the free AEI version.

Tax-fee class action: claimants get $75K, lawyers $538K

H.A. Berkheimer Inc., a tax-collection agency that collects revenue for hundreds of school districts and municipalities, assessed collection fees against delinquent taxpayers in addition to interest and penalties. A class-action suit challenged the fees as improper and in the resulting proposed settlement Berkheimer is slated to pay $75,700 to aggrieved customers — most of whom did not file for the $48.50 refunds — while “lawyers with Bernard M. Gross of Philadelphia would be entitled to about $538,000”. Most of a previous $2 million settlement pot will revert to Berkheimer if a judge approves the deal, while 25 percent will go to two charities, Mercer Museum’s capital campaign and the Network of Victim Assistance of Bucks County. (Jenna Portnoy, “Deal would settle case for tax collection agency”, PhillyBurbs.com, May 23).

Things we didn’t want to know about dept.

Fort Lauderdale attorney William R. Cohen is asking $1 million in a suit against the Bushouse family of nearby Boca Raton, whose 2-year-old terrier Taz, he says, bit his left nipple. Readers keep directing our attention to the final clause in the list of recited damages, which list consists of “medical treatment, loss of income and for general damages for pain, suffering, physical disfigurement and ‘loss of sexual comfort and desire’.” (Chrystian Tejedor, “Nipped on nipple, man sues”, South Florida Sun-Sentinel, May 26).

Welcome Financial Week readers

Reporter Jay Miller quotes me and mentions this site in an article on ADA mass-filing operators; the piece should be available on a registration basis for a few more days before becoming subscriber-only (Jay Miller, “Flood of lawsuits filed under Disabilities Act”, Financial Week, May 28). This site has been covering ADA filing mills for years and years; see Apr. 15, Mar. 27, and many other entries on our disabled-rights page.

MacDermid v. Discover

Nina Kay MacDermid was bipolar and suffered from drug and alcohol problems. Discover Financial Services did not know this when she successfully obtained a card in her husband’s name and charged $15,000 worth of exotic cats and computer products and other shopping, despite her husband having forbidden her from having credit cards because of her previous manic spending sprees that sent her into personal bankruptcy. MacDermid also obtained cards from American Express and others, but it was checks from Discover that her husband intercepted and confronted her over on February 14, 2003. Ms. MacDermid overdosed on drugs, and was admitted to the hospital for five days that week, but later managed to commit suicide in June, which Mr. MacDermid claims in his lawsuit was a surprise. Mr. MacDermid complained to Discover in March that he had not authorized the card, but sued Discover, claiming that Discover’s resulting attempts to collect on Ms. MacDermid’s debts from the cancelled card was what actually drove her to suicide. (A psychiatrist conveniently submitted an affidavit that MacDermid would have been peachy keen if not for Discover’s actions, notwithstanding her substantial history of mental illness.) A magistrate judge dismissed the case under 12(b)(6), but the Sixth Circuit, in an opinion by Judge Boyce Martin, resuscitated it on a theory that Discover’s allegations of criminal violations may have been an intentional infliction of emotional distress. The opinion does not cite this month’s Twombly decision, which perhaps explains the wild save of the almost-surely doomed case, and Discover will now have to spend additional money defending it—which is why your credit-card interest rates are so high. (MacDermid v. Discover Financial Services (6th Cir. May 29, 2007) (via Bashman)). The opinion contains a variety of gratuitous slams at Discover for being a victim of MacDermid’s fraud.

May 30 roundup

  • Both sides agree to drop litigation in Islamic Society of Boston mosque-building controversy (Herald, Globe; earlier here, etc.)

  • Australia’s Slater & Gordon becomes world’s first law firm to list itself on stock exchange (SMH, Ribstein; Regan/MacEwen/Ribstein; more)

  • Colo. bar-restitution fund strained after lawyer who “hoped to save the world” plunders $5 million from clients to fuel strip-club-enhanced lifestyle (Rocky Mountain News)

  • A trend? Another restaurant sues over negative review (Delmonico Grill in Port St. Lucie, Fla. against Scripps Treasure Coast Newspapers and reviewer Patricia Smith; Hometown News)(earlier)

  • Ontario appeals court deems bite of West Nile-infected mosquito to be “accident” triggering insurance coverage [Harikari]

  • Nanny may I? Chicago bans actors on stage from smoking as part of theatrical performance (Lambert); Vancouver condo owner faces suit for smoking on her own patio (AHN, Vancouver Sun); Montgomery County, Md. becomes first county to vote to ban trans fats (Gillespie)

  • Nevada bench colleagues intervene with Judge Elizabeth Halverson: it’s just not done to call your clerk “The Antichrist” or ask court staff to give you foot rubs (Morrison, LVRJ). More: Above the Law;

  • Midwifery in crisis: one D.C. birthing center’s struggle to keep its doors open (WaPo)

  • Some advice: if you’re claiming disability benefit, you might not want to enter and win a strongman competition in which you lift the front end of a car (Telegraph, U.K.)

  • Judge rejects Utah lawyer’s claim that CBS should pay him $5,000 for exposing him to Janet Jackson’s Super Bowl wardrobe malfunction (three years ago on Overlawyered)

Trial lawyers shut down customer service

One of the more subtle tricks in the plaintiffs’ bar’s arsenal is the use of the class action to shut down the customer relations of a consumer products company. A company acknowledges a problem, tries to work with its customers to resolve the problem—and lawyers whose only previous role in the case was to read newspaper headlines about the problem swoop in, file a class action, and demand that the defendant stop contacting “their clients,” nearly all of whom had no role in selecting the attorney. Later, the litigation lobby points to the role that the class action had in resolving the problem in defense of litigation as a solution, and no one remembers that the class action was what prevented the problem from being solved to consumers’ satisfaction in the first place.

A notice on the Menu Foods website posted May 24 suggests that precisely that has happened in their pet-food recall case, and Menu Foods, a victim of mislabeled food from a supplier, will not be able to compensate their customers without paying a gigantic commission to parasitic trial lawyers first.

Update: USA Today has a one-sided account reflecting a judge parroting the plaintiffs’ attorneys’ characterizations of the contacts. Without a full listing of the facts, we cannot tell whether the Menu Foods example is a good one; unfortunately, USA Today did not see fit to tell the whole story.

The $33 million window

Secretary Caryl Dontfraid claims that her disability requires her to have a desk by a window at her New York law firm (Binder & Binder, which specializes in social security disability claims), rather than one three feet away from a window; when she didn’t get her preferred seating assignment, and refused to try the desk she was assigned, she was fired. “She wanted to work closer to a window with good light,” her attorney, Robert Campos-Marquetti told the New York Daily News. “This is a request that could have been easily accommodated.” The damages claim is $33 million, or about half of a pair of pants. (Mike Jaccarino, “No window desk? That’ll cost you $33M, she says in suit”, May 26 (via Kevin MD)).