Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘antitrust’

Terrell Owens: And they say defensive medicine has no costs…

Philadelphia Eagles fans might be bigger supporters of tort reform now: a doctor has refused to clear star wide receiver Terrell Owens for play in Super Bowl XXXIX after an ankle sprain because of liability fears. (Mark Maske, “Hope Remains for Owens Comeback”, washingtonpost.com, Jan. 26).

Owens might have other reasons to seek tort reform. He’s being sued for $35 million by Formulated Sciences Inc. because he didn’t wear a t-shirt he supposedly agreed to wear in 1999. This might be because the non-FDA-regulated “nutritional supplements” he was supposed to endorse were banned by the NFL in 2001. Of course, perhaps Owens’ business representatives failed to account for such an eventuality in the endorsement agreement, in which case Owens may well be liable for a breach of contract, but alleging $35 million in damages for failing to wear a particular hat or t-shirt is ridiculous. The theory is apparently that there were millions of people clamoring to buy an ointment with Owens’ picture on it. If an athlete’s endorsement carried that kind of weight, athletes would be making much more money in endorsements. (Don Russell, “T.O. facing $35M suit from banned supplement company”, Philadelphia Daily News, Dec. 29). Formulated Sciences, which specializes in a weight-loss snake-oil with as much caffeine as a two-liter bottle of Coca-Cola, has also sued the NFL for supposed antitrust violations. The League has moved to dismiss the complaint. The lawsuit is meritless on its face, and, given the press releases, appears to be an attempt for FS to get free advertising for its products, but the NFL will likely spend at least tens of thousands of dollars defending itself.

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Fee in Visa/MC class action: $220 million

Poor dears dept.: “A federal appeals court in New York has upheld the largest antitrust class action settlement in history, along with an award of $220 million to the lawyers who brought the $3 billion case against Visa and MasterCard. … The class-action attorneys argued that the $220 million in legal fees allowed by the trial court was inadequate and the legal team should have been awarded more than $600 million, but the appeals court disagreed.” (see Aug. 22, 2003, Mar. 17, 2004). (Josh Gerstein, “Court Upholds ‘Only’ $220 Million For Lawyers in Visa, MasterCard Suit”, New York Sun, Jan. 18). More on the case: Jan. 29.

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Judge blinks at cosmetics settlement

Trouble for that no-blush, high-gloss, invisible-foundation antitrust class action (see Dec. 3 and links from there): at a two-hour hearing, federal judge Saundra Armstrong declined to approve the deal in its present form, saying “she agreed with the broad outlines of the settlement but was troubled by the details of how such a large volume of free [makeup and perfume] would be distributed”. Josh Gerstein of the New York Sun has a report (“Antitrust Suit Over Pricing of Cosmetics Hits a Snag”, Jan. 12). Update Mar. 14: judge approves settlement.

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Also at Point of Law

All sorts of other stuff is going on at our sister website:

* An all-new featured discussion on medical liability has just begun, proceeding from the publication of an important new empirical study by Stanford prof Daniel Kessler;

* Legal ethicist and law prof Lester Brickman has a commentary on a Manhattan judge’s questioning of legal fees in 9/11 cases;

* The Manhattan Institute is seeking applications for a research fellowship on legal issues;

* Law prof Michael DeBow, familiar to many readers for his guest postings here, is joining the Point of Law blog as a regular contributor, with comments already on flu vaccine, the dismissal of a charity hospital suit, FDA jurisdiction over tobacco, and a new antitrust blog;

* Ted Frank contributes items on malpractice by expert witnesses and on a new study suggesting that experts suffer from some of the same biases as lay observers in high-damage cases, on whether much “pro bono” litigation really helps the public, and on “Robin Hood” school-finance suits;

* Jim Copland welcomes a new and improved website, LegalReformNow;

* I’ve got posts on sanctions for wrongful litigation (did you know federal judges liked the sanctions in their old, stronger form?), collective business guilt, ski slope disclaimers, Sarbanes-Oxley, Judge Posner’s view that both Sherlock Holmes and law reviews are much overrated, liability’s burden on small businesses, and insurance broker scandals (posts in progress). Much more, too; bookmark the site today.

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Calif. anti-Microsoft lawyers to get $112M, not $270M

Townsend and Townsend and Crew and its cohorts are getting only a vast pile of money, not a super-extra-vast pile, for purporting to represent a huge class of California consumers in what Judge Paul Alvarado acknowledged was the not-particularly-risky Golden State car in the Microsoft litigation train. (Brenda Sandburg, “Judge Slashes Fees in Microsoft Class Action”, The Recorder, Sept. 14). For our earlier coverage, see Mar. 31 and May 12 (California cases) and Jan. 11, Jul. 9 and Jul. 25 (fees in MS antitrust suits generally).

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CD price fixing settlement, cont’d

Ted Frank reported Aug. 23 on the Compact Disc Antitrust Litigation Settlement, in which music distributors and retailers agreed to donate 5.5 million CDs to libraries, valued at 20% below retail, as part of the rationalization for a multi-million-dollar payment of fees to plaintiff’s counsel. Now the Washington Post has more details about how the musical selections — by and large, unpopular stuff that had been sitting unsaleable in warehouses — were stuffed randomly into boxes for shipping, so that libraries wound up getting large multiples of CD titles they would not have greatly coveted in the first place (Karin Brulliard, “An Influx of Outmoded CDs”, Washington Post, Sept. 6). Alex Tabarrok also comments (Sept. 6). Coming up next: will Newsday and other newspapers plagued by circulation scandals agree to make it up by shipping libraries bundles of week-old papers?

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From the “damned if you do, damned if you don’t” files

In three separate cases in 1997, nurses at Presbyterian Hospital of Dallas’s cardiac catherterization lab expressed concerns about Dr. Lawrence R. Poliner’s care of patients. When the director of the lab, Dr. John Levin, alleged to the hospital’s chief of cardiology, Dr. John Harper, that Poliner had also recently performed an emergency angioplasty on the wrong artery, the chair of department of internal medicine, Dr. James Knochel, confronted Poliner, and told him to voluntarily stop performing cardiac catheterizations while his privileges were reviewed or face termination. A six-doctor peer review committee met the next month, decided that Dr. Poliner had given substandard care in 29 out of 44 cases, and voted unanimously to suspend Dr. Poliner’s privileges at the lab.

So far, so good, right? After all, we’re told by the plaintiffs’ bar that the medical malpractice crisis would go away magically if the medical profession would just police its own, and that’s exactly what happened here. Can you imagine what a trial lawyer would do with the peer review committee’s conclusions if the hospital did nothing and had been sued for Poliner’s work afterwards?

Dr. Poliner eventually got his privileges reinstated a few months later in a hearing held before a different peer review committee of doctors after a number of prominent cardiologists spoke on his behalf; another appellate committee at the hospital found no wrongdoing by the initial peer review committee, who Poliner accused of seeking to eliminate him as “competition.” Not satisfied with exoneration, Poliner sought retribution. He, with the help of medical malpractice attorney Charla Aldous, sued the hospital, Knochel, Harper, Levin, and the six doctors on the peer review committee for supposed antitrust and “consumer fraud” violations, breach of contract, defamation, interference with contractual relations, and intentional infliction of emotional distress. The antitrust and consumer fraud claims were thrown out (BNA, “Antitrust Claims Are Eliminated From Physician Suspension Case”, Antitrust & Trade Reg. Rep., Nov. 7). So were the claims against the six peer review committee doctors, who had immunity under Texas Peer Review Immunity Statutes, which the state trial lawyers’ association had fought hard against in the legislature.

But the case against the other three doctors and the hospital proceeded. A jury found in favor of Dr. Poliner’s conspiracy theory that competitive malice motivated the entire affair. The jury’s proposed payday for six months’ missed work by the 60-year-old? $366 million: “$141 million to be paid by Dr. Knochel, $32 million each from Dr. Harper and Dr. Levin and $161 million from Presbyterian.” The hospital announced that it would appeal: “From time to time, hospitals and members of the medical staff leadership must make decisions relating to patient care and safety, and these decisions sometimes affect an individual doctor’s privileges at that hospital.” (Terry Maxon, “Dallas doctor awarded $366 million in damages”, Dallas Morning News, Aug. 28).

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CD Price Fixing settlement

Attorneys’ fees for the Compact Disc Antitrust Litigation Settlement were based in part on the idea that there would be $75.7 million in “non-cash consideration”–charitable donations of 5.5 million CDs, valued at 20% below “suggested retail price.” The CDs have started to arrive at local libraries, and SiliconValley.com, compiling local news reports, is finding that the $75.7 million figure is generous, given the nature of the CDs being distributed, which include such titles as “Martha Stewart Living: Spooky Scary Sounds for Halloween”, “Music from the HBO Original Movie BoyCott”, and “John Lithgow Singin’ In The Bathtub.” North Carolina libraries got 1,300 copies of country-rocker Clay Davidson’s “Unconditional”; a Washington state school district reportedly got a similar number of Whitney Houston singles of “The Star Spangled Banner.” Michigan finds that the only Elvis available is not Presley or Costello, but Crespo. “There’s nothing here you would want to buy even for $1.99,” a Virginia librarian complained. (John Paczkowski, Aug. 4 (sixth item) (via Postrel); Tonya Shipley, “Library looks to positive side of free CDs”, Zanesville Times Recorder, Aug. 3; Sam Hodges, “Libraries: CD deal more headache than hit”, Charlotte Observer, Jul. 30; Robert Snell, “Martha? Yanni?”, Flint Journal, Aug. 22; AP, Aug. 2; Fred Carroll, “Lots of CDs, but who’ll listen?”, Hampton Roads Daily Press, Aug. 19; dozens of other local articles). The only reason for this fiction was to rationalize a multi-million-dollar payment to the plaintiffs’ lawyers, a payment that may well exceed the actual (as opposed to settlement-named) value of the free CDs.

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Update: Microsoft fee-ing frenzy

“A group of national law firms that failed to recover significant damages in federal antitrust suits against Microsoft is demanding a cut of the $15.5 million in fees awarded to plaintiffs lawyers in a Florida class action suit against the software giant.” Cohen, Milstein, Hausfeld & Toll and thirty other firms that prosecuted a mostly unsuccessful federal class action say the lawyers in the Florida case used information they developed and, although they never signed an agreement to share fees, should cough up a quantum meruit. “The federal lawyers were spectacularly unsuccessful and only got one small class certified,” said Daryl Libow of Sullivan & Cromwell, who represents Microsoft. “They weren’t satisfied with the fees, so they started roaming the country to see if they could get more.” (Laurie Cunningham, “Lawyers in U.S. Microsoft Case Want Cut of Fees in Miami Suit”, Miami Daily Business Review, Jul. 23). More on Microsoft cases: Jul. 9, Mar. 31 and links from there.

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State AGs on drugs

Those who follow the activities of state attorneys general know of their interest in the pharmaceutical industry. Last week, Vermont AG William Sorrell was named president of the National Association of Attorneys General (NAAG) for 2004-05. In his presidential address, Sorell announced that “the issue of drug pricing” would be NAAG’s “particular focus” during his tenure. Sorrell raised the following questions:

“What drives our high drug prices? Is it true that the pharmaceutical industry is the most profitable industry in this country? Is it true that our national spending on prescription drugs more than tripled from 1990 to 2001? Do research and development costs explain the prices we pay? What are the effects of advertising and other forms of marketing on demand for prescription drugs and the amounts we pay for them? If it is true that industry direct-to-consumer advertising expenditures increased seven times between 1995 and 2001, why has this been so and how are prices affected by these increases?

“What about conduct by companies that have violated state and federal antitrust, consumer protection and other laws? Is this another cost driver? And how transparent is the prescription drug marketing and distribution system? Why are cheaper generic equivalents neither prescribed by more doctors nor desired by more patients?”

There is a NAAG meeting scheduled for Chicago in January on this subject.

For more on this subject, go to this post on Point of Law.

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