Todd Zywicki is making a strong case for it over at Volokh Conspiracy, and promises more posts to come.
Posts Tagged ‘bankruptcy’
Courts slashes bankruptcy fees in retiree case
“The 11th U.S. Circuit Court of Appeals has upheld a lower court’s decision to slash White & Case’s legal fee in a bankruptcy-related case from $5.5 million to $1.8 million, criticizing the firm’s fees as excessive.” The prominent law firm “made the fee request in 1999 in connection with its representation of 25,000 retirees from the textile manufacturer St. Louis-based Monsanto, which later spun off into the company Solutia, also of St. Louis. Solutia subsequently filed for bankruptcy and sought to alter Monsanto retirees’ benefits.” White & Case was asking as much as $370 an hour for some of its lawyers’ time, although one of the nation’s most prominent plaintiff’s lawyers, Frederic Levin of Pensacola, Fla., was contenting himself with $250 an hour for his work in the same case. (Julie Kay, “White & Case to Get Less Than Half Its Bill for Bankruptcy Case”, Miami Daily Business Review, Jan. 10). More on bankruptcy fees: Sept. 22, 2004 and links from there.
Jurors gone wild
Shirley McClure wanted to open a chain of six residential homes for Alzheimer’s in Long Beach. She had “no experience in elder care,” “ignored a number of Department of Social Services requirements for such facilities,” and also disregarded a number of city ordinances. As a result, complaints were so widespread that the city eventually shut down the projects for failing to meet code and brought criminal charges, and McClure declared bankruptcy — and sued the City for “discriminating” against Alzheimer’s patients. She also blamed her lupus on the City’s actions. It’s bad enough that the case took twelve years to litigate, six months of trial time in federal court, and cost the cash-strapped city nearly $4 million in legal fees. Five months of juror deliberations (made more lengthy when the jurors lied to the court to get a day off to go to the racetrack) resulted in a $22.5 million verdict. The Long Beach Press-Telegram has a lengthy and jaw-dropping description of the jury deliberations worth reading. (Wendy Thomas Russell, “Judging the Jury”, Long Beach Press-Telegram, Nov. 15; Jason Gewirtz, “Nothing in 12-year-old case easy; Jurors tell of ordeal as experts say months-long deliberation may be state record”, Long Beach Press-Telegram, Aug. 6; David Rosenzweig, Aug. 6) (via Hit and Run).
Next: a Federal Tobacco Agency?
So what happens if the Bush Justice Department does manage to convince a federal judge (see Sept. 21, etc.) that the U.S. tobacco industry has constituted a “racketeering enterprise” for these many years and ought to pay the government $280 billion? Forbes traces some of the likely fiscal consequences: bankruptcy for even very large tobacco manufacturers; a de facto federal ownership stake in the industry through its role as chief creditor; and higher prices for smokers, who presumably count as an innocent party.
Oddly, the Forbes account has nothing to say about the consequences of a federal victory for the group that currently milks the most money out of the tobacco business, namely the state governments and plaintiff’s lawyers who yearly pocket vast sums from the 1998 multistate settlement (along with, in the former case, vast revenues from taxes distinct from the settlement). A good chunk of this expected future flow of settlement money has already been “securitized”, thus securing a short-term cash windfall for the states and lawyers, by selling it to bond investors; presumably the owners of these bonds are also at risk. Now, as asserted property interests go, the interest of these various parties in the future stream of ill-gotten income from the settlement heist has scant claim to be regarded as sacrosanct; still, it will hardly improve this nation’s reputation for security of property for this industry to be pillaged a second time through flimsy legal theories wielded by high authority. (Daniel Fisher, “Smoking dopes”, Forbes, Sept. 22).
IRS ordered to pay damages for taxpayer’s emotional distress
Now here’s a case you might think would really open the floodgates: Prof. Paul Caron of the University of Cincinnati reports at TaxProf (Sept. 17) that a court has ordered the Internal Revenue Service to pay a taxpayer $10,000 for the emotional distress occasioned by its overzealous collection techniques. The case arose in bankruptcy proceedings, however, and its relevance as precedent for solvent taxpayers is not clear. The $10,000 will be paid at the expense of other taxpayers who presumably will surrender their money in a way that involves no emotional distress for them.
Bounteous bankruptcies, cont’d: PG&E
A judge’s OK for fees in the insolvency of the giant California utility “puts the final tally for more than three years’ worth of work at about $450 million to $475 million, according to an accounting by the Office of the U.S. Trustee. Of the total, about $100 million goes to law firms representing the utility in different capacities. ” Milbank Tweed originally agreed to charge $595 per hour but now wants that figure revised upward. (Jeff Chorney, “Calif. Bankruptcy Judge OKs About $450 Million in PG&E Fees”, The Recorder, Sept. 16). See Jul. 23, Dec. 6, Nov. 26.
New at Point of Law
Dozens of new posts at our sister site, including: plagiarism on the Harvard Law faculty; bill to revive Rule 11 sanctions for meritless litigation moving through House; more coverage of a lawyer’s attempt to collect “referral fee” of more than $140,000 from Illinois widow; Steve Bainbridge on attorney campaign donations and scoundrel Joe Kennedy; a sonnet on scientific evidence; class action fees in the InfoSpace and Ameritech cases, plus a paper on coupon settlements and an in-production Madison County movie; in praise of the Michigan Supreme Court; big fees in the really old days; public environmental suits, including the one on global warming; and Home Depot co-founder Bernard Marcus urges philanthropists to support legal reform.
For employment-law buffs, there are new posts on legal protection for messages on employee T-shirts, California and federal overtime regulations, and the Wal-Mart class action. For those who follow product liability there’s coverage of fen-phen fraud arrests, firearms liability and asbestos bankruptcies. Plus election-year politics, including Jim Copland, Ted Frank and more. Shouldn’t you bookmark it today?
Bad lawyer files: Fourth yacht’s the charm
Or, “Not only loose lips sink ships.”
Bloggers Grace and Wallace point us to the tale of the infamous (and now suspended) attorney Rex DeGeorge, which has important lessons how the plaintiffs’ bar has made insurance more expensive for all of us: because insurers who suspect fraud risk substantial liability for “bad faith” denial of coverage (e.g., May 5, where an insurer who merely investigated an $8,000 chiropractor’s bill was hit with a $150,000 judgment), insurance scamsters can manipulate the system by threatening a suit. For an individual case, simply defending the non-payment may be more expensive than making the payment; even on a systematic basis, the risk of losing a case and facing punitive damages can put insurers in a bind. This is lengthy, but worth it.
“Recovered memory” doubter sued
Prof. Elizabeth Loftus, the psychologist whose writings and expert testimony have been highly influential in casting doubt on the reliability of buried and then putatively recovered memories of abuse (see Mar. 22 and links from there), is the defendant in a lawsuit filed by a “Jane Doe” abuse complainant whose allegations Loftus critically examined in a 2002 article for Skeptical Inquirer (the valuable magazine of CSICOP, the Committee for the Scientific Investigation of Claims for the Paranormal). Trial is expected soon: “If she loses, not only will academic freedom have arguably suffered a grievous blow, but on a personal level, Loftus herself could face bankruptcy.” “Jane Doe” also “filed an ethics complaint against Loftus with the University of Washington. Though the university eventually cleared Loftus of breaking research protocols — after seizing all of her files on the case and preventing her from publishing her work for almost two years — its support was so lukewarm, and its unwillingness to stand by its controversial psychologist during the current lawsuit so clear, that Loftus was only too happy to accept an offer from Irvine.” (Sasha Abramsky, “Memory and Manipulation”, L.A. Weekly, Aug. 20-26) (via Brian Doherty, Reason “Hit and Run”, Aug. 24). Update: see Jun. 26, 2005 (L.A. Times covers case).
Beach blanket bankruptcies
The meter in the Enron bankruptcy just hit $700 million (Brendan I. Koerner, “Explainer: Who Pays Enron’s Legal Bills?”, Slate, Jul. 15)(see Dec. 6 and links from there). And it’s not as if the execs in the Pacific Gas & Electric bankruptcy are doing too shabbily for themselves either (David Lazarus, “Bankruptcy has its rewards for PG&E execs”, San Francisco Chronicle, Jul. 23).