Back in a post of Aug. 31, 2003 we reported on the legal onslaught waged by Entrepreneur Media, publisher of Entrepreneur magazine, against Scott Smith, who had been so rash as to name his public relations shop Entrepreneur PR. Smith filed for bankruptcy after being told to pay a $1.4 million judgment, but the case has now taken a turn not so favorable for Entrepreneur Media. Last month a U.S. bankruptcy judge issued an order to show cause why he should not impose $10 million in sanctions on Entrepreneur Media and its lawyers, Latham & Watkins, over their conduct in the case, which included accusing Smith of hiding assets. “A hearing is set for next month.” (Kellie Schmitt, “Bankruptcy Judge Threatens $10M in Sanctions for Latham, Client”, The Recorder, Sept. 7).
Posts Tagged ‘bankruptcy’
Fact-checking the mainstream media (lawsuit division)
News clips reporting on large verdicts and settlements cross my desk regularly, and most do not seem on their surface to be worth blogging about. Most are terse summaries of a case’s outcome, and others do not present any indication (again, on the surface at least) that a case might have problematic aspects. The other day, however, I ran across a story in the Charleston (W.V.) Gazette describing a case in which a plaintiff had been terribly injured after a retailer sold what the reporter bluntly stated was a “defective mower.” This particular newspaper story was so one-sided that I thought there almost had to be more to it than was being reported — and I had no idea how right I was in that suspicion. This is a long post, but I hope worth readers’ while. It certainly makes me wonder how much I’m missing when I don’t go into the dockets to fact-check other seemingly run-of-the-mill cases.
Church abuse: suing the laity?
In Spokane, Wash., where the local Roman Catholic diocese has declared bankruptcy under the pressure of sex-abuse lawsuits, a recent ruling by a federal judge deemed individual church parishes “unincorporated associations” that could themselves potentially be sued. Now plaintiffs in the cases are talking about suing the local parishes “and might even explore the legal liability of individual churchgoers”. (John Stucke, “Abuse victims may sue parishes”, Spokane Spokesman-Review, Jul. 27). More: PoL May 5, etc.
Bounteous bankruptcies: Delta, Enron, cont’d
Peter Lattman (Jun. 6) notes a judge’s approval of $10.5 million in legal fees for 4 1/2 months’ work in the Delta Air Lines bankruptcy (see Apr. 1). “According to the AP, the overall fees and expenses for all advisors (lawyers, bankers, consultants) working on the case could reach $205.9 million if the bills continue at the same rate until Delta exits bankruptcy, which it expects to do by next summer.”
Also, back on Mar. 28, Tom Kirkendall noted the trimming of a fee request in the Enron bankruptcy (see Jul. 23, 2004).
More: Carolyn Elefant writes, “It’s cases like these, where the client is captive and using other people’s money, i.e., its creditors’, that drive rates up and perpetuate the billable hour….Why is a firm charging $420 an hour for kids just out of law school?” (Jun. 7).
Bounteous bankruptcies: Northwest, Delta
Carolyn Elefant (Mar. 26) wonders how one law firm managed to rack up a bill of more than $183,000 for legal research in the Northwest bankruptcy. “Complicated bankruptcy cases commonly generate big fees for lawyers — so it might not be surprising that, by the time the two airlines exit Chapter 11, the tab could be $276 million or more.” (Harry R. Weber and Joshua Freed, “Legal Fees Pile Up in Delta, Northwest Bankruptcies”, AP/Law.com, Mar. 28).
“Bankruptcy Rewrite Predicted to Bring a Flood of Appeals”
Bad drafting = much uncertainty as to what the law requires. Uncertainty as to what the law requires = grounds for lots of costly litigation. Congratulations, Congress (Justin Scheck, The Recorder/Law.com, Feb. 8).
Asbestos Trust-Fund Legislation Defeated
The Senate has apparently defeated the bill that would create a $140 billion trust fund to pay asbestos claims (Charles Hunt, “The Senate Defeats Asbestos Trust-fund Legislation” The Washington Times, Feb 15).
Whether this represents a final defeat of the measure is unclear, since there seem to be a number of procedural questions surrounding the bill. The Wall Street Journal ($) had an interesting editorial yesterday (2/14), which described the bill basically as deeply-flawed legislation to try to correct a deeply-flawed litigation situation.
You can see the vote count here, but, in a fairly unique outcome in these hyper-partisan times, both Democrats and Republicans were split on this one.
Update: Made a few changes to the links to try to better match Ted and Walter’s style
Ted has more on the bills prospects at Point of Law, as well as a whole archive of following the asbestos mess.
Rose Marie Munoz and the $29-million limp
(Post updated on Jan. 30 to reflect confirmation that Munoz was a passenger.)
Here’s a case that could almost serve as a “spot-the-issues” model question for a law-school exam on the need for litigation reform. Rose Marie Munoz wasn’t wearing her seatbelt in 2002 when the spare tire on the 1992 Mazda Navajo (a rebadged Ford Explorer) failed and driver Derek Saenz rolled over the SUV; the other three occupants of the vehicle were uninjured. Munoz was ejected and temporarily paralyzed, has lost use of her right hand, and now walks with a limp. A Nueces County, Texas jury held Ford 75% (and Mazda another 10%) responsible for $29 million in damages, on the grounds that Ford should have done more to warn consumers about the dangers of ten-year-old tires—even though the tires in question were the notorious Bridgestone/Firestone tires that had actually been recalled in 2000, but had been left on the SUV. Jurors said they were influenced by the fact that Ford has since added a warning in their owners’ manual about replacing tires more than six years old. Firestone settled the case, allowing the plaintiffs to focus blame on Ford at trial. Ford blames the accident on driver error, and will appeal. (Sean M. Wood, “Ford hit with big judgment in Nueces”, San Antonio Express-News, Jan. 28; Karen Lundegaard, “Texas Jury Slaps Ford With $29 Million Verdict”, Wall Street Journal, Jan. 27; AP, Jan. 27; plaintiffs’ lawyer press release).
Sample model answer to the spot-the-issues question after the jump. No press story mentions all of these factors, and many went unmentioned entirely.
(Update, Feb. 16: Plaintiffs’ attorney Roger Brough has an extensive discussion in the comments, to which I respond in detail. With one minor detail after the jump, I stand by my description of the case. It’s hard to follow the back-and-forth in the comments, but there is a post that combines his comments and my responses in direct point-counterpoint.)
Mass amnesia at bus trial
Hey, remember that ludicrous lawsuit about a bus crash we wrote about last month where the passengers collected $17.5 million from the bus manufacturer on a trumped-up design-defect theory after swearing that they hadn’t sued the bankrupt bus charter company (Dec. 1)? Turns out there may be some perjury involved, and a federal bankruptcy judge is none-too-pleased at the attempted double-dip. (Tommy Witherspoon, “Bankruptcy judge outraged over bus crash testimonies”, Waco Tribune-Herald, Jan. 14 (via Prince)).
Bountiful bankruptcies, cont’d: UAL
Kirkland & Ellis, counsel to bankrupt United Air Lines, has thus far run up a tab of $84,892,637.50 handling the matter. Ten other law firms are also in on the action; for example, Sonnenschein Nath & Rosenthal, which represents United’s unsecured creditors, has billed some $38 million in fees. (Eric Herman, “Lawyers fly high on United bankruptcy”, Chicago Sun-Times, Jan. 23). Lattman and Ribstein comment (both Jan. 23).