Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘legal extortion’

January 7: Vioxx Settlement panel at AEI

Please register for this event online at http://www.aei.org/event1626.

The AEI Legal Center for the Public Interest and the Federalist Society present:

The Vioxx Settlement

Monday, January 7, 2008, 12:00 p.m.–2:00 p.m.
Wohlstetter Conference Center, Twelfth Floor, AEI
1150 Seventeenth Street, N.W., Washington, D.C. 20036

In 2004, Merck withdrew its pain reliever Vioxx from the market because of new studies showing increased cardiovascular risk. Merck announced that it would not settle any of the tens of thousands of Vioxx lawsuits filed, and set aside over a billion dollars to litigate cases without reserving a penny for damages. After a $254 million verdict in the first Vioxx trial in 2005, some observers predicted over $25 billion in liability for the company. Fifteen trials later, Merck and the plaintiffs’ attorneys announced a settlement of the outstanding personal injury litigation—for under $5 billion. Merck stock rose after the announcement, and is now higher than before it withdrew Vioxx from the market. But some law professors are arguing that a new and unusual provision in the settlement raises ethical concerns.

Why did Merck settle? And why was the settlement for so much less than originally anticipated? Is the Merck settlement different from the Wyeth fen-phen settlement, which was originally announced as a $3.75 billion settlement, but has so far cost more than $20 billion? Will the settlement stand up under legal challenge, and what will remain of the Vioxx litigation if it does?

At this event cosponsored by AEI and the Federalist Society, a panel of experts will explore these and other questions. Speakers include Vanderbilt law professor Richard Nagareda, author of Mass Torts in a World of Settlement; Virginia legal ethics professor George Cohen; author and leading pharmaceutical mass torts defense attorney Mark Herrmann; Andy Birchfield, a member of the Vioxx Plaintiffs’ Steering Committee; and Ted Frank, director of the AEI Legal Center for the Public Interest. AEI resident scholar John E. Calfee will moderate.

11:45 a.m.
Registration and Lunch

12:00 p.m.
Panelists:
Andy Birchfield, Beasley Allen
George Cohen, University of Virginia School of Law
Ted Frank, AEI
Mark Herrmann, Jones Day
Richard Nagareda, Vanderbilt University Law School

Moderator:
John E. Calfee, AEI

2:00 p.m.
Adjournment

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Oops!

Perhaps one reason trial lawyers so frequently accuse reformers of manufacturing popular outrage is because such astroturfing is a common trial-lawyer tactic: Peter Lattman uncovers eight identical letters to the editor written at the behest of the Association of Trial Lawyers of America (now going by the AAJ misnomer), all on behalf of Bill Lerach’s bogus Enron suit and criticizing the Bush administration officials who dare to stand up to the attempted extortion. Similar astroturfing regularly goes on in the comments section of the Lattman blog.

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Some Pearson reactions

WSJ Law Blog has the (long) opinion and (short) judgment in the case. Professor Bainbridge notes the pertinence of the legal principle of “puffery”, under which Pearson was no more justified in demanding the literal enforcement of the Chungs’ “Satisfaction Guaranteed” sign than would other customers be justified in suing United Air Lines after a grumpy flight for not providing “friendly skies”, Exxon for not putting a genuine “tiger in your tank”, Fox News for being less than “fair and balanced”, and so forth. Amygdala observes, of the $12,000 settlement offer that Pearson spurned from the Chungs:

Which is to say, if you’re a lawyer, or just knowledgeable about legal phrasing and documents, and willing to spend a certain amount of time generating and mailing documents, you can wind up being offered $12,000 if you’re sufficiently obnoxious and persistent, no matter how feeble, frivolous, and meretricious your claim is.

That’s a well-known, old, story, to be sure, but still worthy of note now and again.

And the WSJ Law Blog has an earlier interview with the Chungs’ lawyer, Christopher Manning, including this pertinent excerpt:

How’d all the publicity start?

A local neighborhood newspaper first picked up the story. Then WJLA – the local ABC affiliate — picked up the story, with me holding the pants. After that, Marc Fisher’s [Washington Post] column ran in late April which really set it off. [The story has since been featured on Today, Nightline, Good Morning America, MSNBC, Fox News, CNN and a host of other networks.]

Gosh. You mean the pants suit didn’t become a big worldwide story, as some of our friends in the trial bar have hinted, just because those nefarious legal reformers were looking for a far-out case to publicize? Next you’ll be telling us that Stella Liebeck’s McDonald’s hot-coffee award became a huge story because it was something the press found newsworthy and the public wanted to talk about, rather than because reformers plotted deep into the night to hype it.

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Updates – June 20

Updating a few earlier stories we’ve discussed here…

  • Two weeks ago we noted that a new online attorney rating site, Avvo.com, was being threatened with a lawsuit by John Henry Browne, a disgruntled Seattle criminal defense attorney. (Jun. 10). Well, whatever the merits or weaknesses of Browne as an attorney, one thing you can say about him is that he doesn’t make idle threats; last week, he filed suit against Avvo. The suit, designated a class action, contends that Avvo’s ratings are flawed. From all accounts, that’s almost certainly true, but as I mentioned in my previous post, it’s not clear that this presents a valid cause of action; Avvo is entitled to rank lawyers differently than John Henry Browne wants them to. In an attempt to get around this problem, the complaint trots out various “consumer protection” arguments using notoriously vague and broad statutes that don’t require that the plaintiffs identify any consumers who have been harmed. (Illustrating perfectly the phenomenon Ted discussed on Jun. 18).

    Oh yes, and Browne also claims in the complaint that “at least two clients” of his fired him (in less than a week!) because of his “average” rating on Avvo. Let’s just say I’m rather skeptical of Mr. Browne’s ability to prove such a claim.

    The law firm handling this class action case? Overlawyered multiple repeat offender Hagens Berman. (Many links.)

  • Remember that lawsuit where Illinois Chief Justice Robert Thomas sued the Kane County Chronicle for defamation? (Apr. 2, Nov. 2006) Well, when last we heard, the libel award — originally an absurd $7 million — had been reduced to $4 million by the trial judge. Not surprisingly, the Chronicle still is unsatisfied, and does not feel it can get a fair shake from the very Illinois court system headed by Thomas; it has now filed a federal lawsuit claiming its constitutional rights have been violated. Named in the suit are Thomas, the trial judge who heard the case, and the rest of Thomas’s colleagues on the state Supreme Court.
  • Kellogg’s bows to threats of frivolous litigation coming from the Center for “Science” in the “Public Interest”; agrees to limit advertising of its cereals to children.

    Of course, this is portrayed as an issue of advertising, but as Michael Jacobson of CSPI admits, this litigation strategy is simply an attempt to drive products he disapproves of from the market. And now that Kellogg’s has capitulated, certain politicians are trying to force other companies to do the same.

    Originally: Jan. 2006.

  • We had previously reported (May 17) that the unfair competition lawsuit between Equal and Splenda had settled. Turns out that the two sides are still fighting, with each side accusing the other of reneging on the deal. (LI)

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Update: Kia Franklin and Roy Pearson and the $67 million pants

I’d like to make a correction. In my earlier post, I suggested that Milberg Weiss Justice Fellow Kia Franklin thought that Judge Roy Pearson’s $67 million lawsuit over a pair of pants was frivolous. I appear to have been mistaken in attributing such a common-sense view to her. Franklin has a lengthy post protesting that, while she thinks Pearson’s lawsuit is “ridiculous” and “crazy” (she has also called it “obscene”), she does not think it is “frivolous.” We regret the error.

But it is a useful illustration: when those who oppose civil justice reform say they don’t think frivolous litigation is a problem, it is because they define “frivolous litigation” so narrowly that even Roy Pearson’s lawsuit is not frivolous in their eyes. Well, that’s one way to make problems go away, by using doublespeak or narrow technical legal definitions to pretend they don’t exist instead of suggesting that there is a problem with the narrow technical legal definition.

Read On…

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The Litigation Lobby’s “frivolous” bait-and-switch: the Judge Roy Pearson pants-suit

Second Milberg Weiss Justice Fellow, same as the first? Bizarro-Overlawyered twists itself into contortions over the infamous $54 million Judge Pearson pants-suit. Cyrus Dugger’s replacement as Milberg Weiss Justice Fellow, Kia Franklin, recognizes that the anti-reform cause can’t be seen endorsing the patently-ridiculous lawsuit that is the laughingstock of the world. So, she dances over the issue: yes, this case is frivolous, but frivolous cases are rare, so there are no lessons to learn from the fact that a small business was forced to pay tens of thousands of dollars litigating an overbroad consumer-fraud claim, to the point that it was willing to pay $12,000 over a pair of pants to make the lawsuit go away and stop the financial bleeding.

Her evidence is a Public Citizen study—but she ignores our 2006 post noting that Public Citizen got its math wrong, and even distorts the distorted statistic beyond what Public Citizen claimed. (Public Citizen gerrymandered its claim to falsely say businesses were 69% more likely to be sanctioned for frivolousness than individual tort plaintiffs, but Franklin misreads that to say individuals, which is false even by Public Citizen’s numbers, which found by its own measure that individuals were sanctioned for frivolousness 86% more often than corporations. Note also the difference between the inaccurate “more likely” and “more often.”)

The really funny thing is that, under the Public Citizen narrow definition of “frivolous lawsuit” used in its study, Judge Pearson’s suit is not frivolous! When politicians speak of “frivolous” cases, they use it in the everyday English sense of “silly”: they mean the meritless cases, where, because of far-fetched legal theories, junk science, or overbroad liability rules, plaintiffs seek or realize recovery far beyond what makes good social policy—cases like Roy Pearson’s. Public Citizen’s study, however, in a typical litigation-lobby bait-and-switch (see, e.g., the Kerry/Edwards malpractice reform plan), defines “frivolous” with the narrow technical legal definition so that it can conclude (like Franklin) that frivolous litigation is “rare” and thus not a problem. (Amazing how many problems disappear when you assume them away.) The definition is so narrow that Pearson’s suit is outside of it: Pearson defeated motions to dismiss and for summary judgment, and received a $12,000 offer of judgment. (Pearson is apparently sufficiently emotionally troubled that he thinks he has a better shot seeking tens of millions from a couple of immigrant Korean dry cleaners than the thousands of dollars offered in settlement for a pair of pants, even though the judge who will be ruling on his case has given him plenty of hints that he has no hope of success.) The Pearson suit would have been excluded from Public Citizen’s count of frivolous suits for a second reason: Public Citizen ignored pro se lawsuits brought by attorneys like Pearson in its count of frivolous suits, as it had to to deflate the number of sanctions issued against individual tort plaintiffs and falsely claim that corporations are sanctioned more often.

We’re excited to see Franklin join the world of reformers and recognize that many more lawsuits are frivolous than what Public Citizen recognizes. We encourage her to read the data and arguments of those she mistakenly claims to oppose, and to scrutinize those she mistakenly thinks are her allies a bit more closely. Why is it alright for wealthy white trial lawyers to extort billions from big business using the same ad terrorem tactics (and even the same consumer-protection laws!) as a poor African-American pro se did to extort $12,000 from a small business? We encourage Franklin to examine the Association of Trial Lawyers of America’s racial double-standard.

And since Franklin agrees that the Pearson lawsuit is frivolous, we are eager to hear how she would define a frivolous lawsuit, and hope that she uses that definition consistently for both the Milberg Weisses of the world as well as African-American city employees.

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“Litigation is coercive”

Many commentators over the years have compared litigation to extortion. In Texas, it turns out that there’s at least some line between the two. Last week, San Antonio attorney Ted Roberts was convicted on three of five counts of theft for his role in a blackmail scheme. The scheme — previously discussed on Overlawyered in Jun. 2004 , Sep. 2005, and Feb. 2007 — involved having his wife, Mary, pick up married men on the internet, have sex with them, and then threaten to sue them (and reveal their sexual activities) for ruining his marriage unless they paid him big sums of money.

If you think that’s low, consider that Roberts falsely told his victims that the money they paid would go to a charity; he instead spent almost all of the money on a new $635,000 home. It was that fact that apparently convinced the jury, which didn’t have much sympathy for the adulterous men, to vote to convict.

It might sound unconscionable to normal people, but Roberts had found someone to defend him:

Support for the accused Ted H. Roberts and for his creative response to his wife Mary’s adultery came from an accomplished fellow attorney with more than 44 years’ experience, including a term as president of the State Bar of Texas.

Testifying for the defense, Broadus A. Spivey voiced no qualms about the way Roberts extracted $155,000 from four of his wife’s lovers by threatening to file litigation that would embarrass them and alert their wives and employers to their infidelities.

“Litigation is coercive,” Spivey explained to jurors. “That’s part of the nature of the beast.”

The seasoned lawyer offered a voice of experience, and the defense took care to note for jurors his multiple board certifications, awards and various distinctions.

Spivey might not quite be an impartial witness, though; he represents the Roberts duo in their civil lawsuit against the newspaper that first reported their scheme.

Still to come: the trial of Roberts’ wife on the same charges.

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Update: Indictments in Roberts sex/extortion case still pending

We first covered the case of Ted H. and Mary Schorlemer Roberts Jun. 13, 2004 and Sep. 3, 2005:

According to a story in the San Antonio Express-News, husband-and-wife legal partners Ted H. and Mary Schorlemer Roberts received money in a curious sequence of events. Mary, claiming to seek “no strings” discreet encounters, would seduce men over an Internet dating service. Ted would then write the men (in legal documents sometimes typed by Mary) and notify them that he planned to seek intrusive and public civil discovery to investigate whether the affair brought forward potential causes of action that were flimsy at best; the men would pay tens of thousands of dollars for a release and confidentiality agreement.

Now:

Two San Antonio, Texas, lawyers, married to each other, face a trial on theft charges based on allegations that the wife had sexual liaisons with four men whom the husband subsequently threatened with litigation unless they compensated him for his emotional distress.

You’ll never guess how the Roberts’ lawyer defends them:

[Michael] McCrum contends the state is trying to prosecute his clients for something that civil lawyers do all the time — send demand letters and present petitions they plan to file under Rule 202.

“By stretching statutory words to an unprecedented interpretation, the state seeks to criminalize as “theft the presentment and subsequent settlement of potential claims authorized under the Texas Rules of Civil Procedure,” Mary and Ted Roberts alleged in one of several motions to quash their indictments that Harle dismissed in October 2006. …

[Baker Botts attorney Rod] Phelan says there is “a kernel of truth” in the point that McCrum is making. “The line between extortion or blackmail and making a demand to settle a colorable claim is gray,” he says.

The prosecutor distinguishes the two by noting that Ted Roberts was acting pro se. (Mary Alice Robbins, “Married Lawyers Face Trial for Payment Demands After Wife’s Affairs”, Texas Lawyer, Feb. 6). Note that these are theft, rather than extortion charges, however; a stretch, to be sure, but the prosecutors decided that Texas law does permit extortion in these circumstances. (It does seem rather appalling under the prosecutors’ view that the only thing Roberts needed to accomplish his blackmail is to expand the conspiracy to a third person.) Unfortunately for the extortion victims, their identities were revealed by the indictment and the Texas Lawyer coverage. A job for ReputationDefender?

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October 10 round-up

  • David Lat has much more detail on the $46 meal-skipping criminal case; and the St. Petersburg Times reports Ralph Paul was acquitted because his defense attorney misrepresented to the jury the legal standard, and the prosecutor didn’t correct it. [Above the Law; St. Petersburg Times]
  • Amber Taylor isn’t impressed with Dahlia Lithwick’s proposal of new rules for Supreme Court clerkships. [Law. com; Prettier Than Napoleon]
  • Legalized extortion of banks over Enron scandal. [Point of Law]
  • Round-up of links of Sherwin-Williams’s suit against Ohio municipalities that are using contingent-fee plaintiffs’ lawyers against it. [Point of Law]
  • Possible settlement in the Million Little Pieces class action. [TortsProf]
  • California kennel works can’t sue dog owners for bites. [Bashman]
  • Defense prevails in first federal welding trial. See also POL Nov. 21 and Dec. 9. [Products Liability Prof]
  • David Bernstein on phony associations in epidemiological research. [Volokh]
  • Aleksey Vayner doesn’t just have an impressive video resume, he can send a bogus cease-and-desist letter with the best of them. [IvyGateBlog]

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Update: Calif. shakedowns

The New York Times “Small Business” section looks at how Garden Grove, Calif. liquor store owner Vinod Kapoor fought back when targeted by attorney Harpreet Brar, famed for his lawsuits demanding legal fees from small businesses over alleged regulatory infractions (see Aug. 20, 2002, Jul. 22, 2003, Nov. 1, 2004). Included are some updates:

In February, Judge Polos [Peter J. Polos of Orange County Superior Court] sent Mr. Brar to jail for two weeks for violating his order [not to name multiple businesses in one suit], calling him “an extortionist.”

Mr. Brar said his experience in jail was a “nightmare,” which he said included watching several inmates be beaten by guards. Mr. Brar said he planned to represent several of them.

On April 16, Mr. Brar was suspended from practicing law for 30 days and placed on probation for two years for filing a frivolous motion and appeal against the attorney general and for using the courts as a delaying tactic, according to Kristin Ritsema, one of several supervising trial counsels at the state bar.

“I think he is a huge threat to the public,” Ms. Ritsema said.

Another local liquor store owner, Herve Domange, who is from Paris, said: “You couldn’t do this in France. In France, these lawsuits would not be possible. But I don’t want to say too much. I’m afraid I might get sued.” (Regan Morris, “Picking the Wrong Mom and Pop to Sue”, New York Times, Jun. 1).

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