Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘Supreme Court’

Letter to the editor

In the August 27 Legal Times:

To the editor:

I appreciated the chance to speak with reporter Tony Mauro about Stoneridge v. Scientific-Atlanta, an upcoming Supreme Court case that will be discussed at an AEI panel on Oct. 5. Unfortunately, a sentence in his Aug. 20 article [“High Court Head Count at Issue,” Page 1] incorrectly implied that I thought the decision by the U.S. Court of Appeals for the 8th Circuit in the case was an “anti-investor ruling,” when that characterization is solely Mauro’s.

On the contrary, as I have written in The Wall Street Journal and told Mauro, I believe that the 8th Circuit’s dismissal of the case redounds to the benefit of investors in general and that the best result for investors (if not for trial lawyers) would be affirmance by the Supreme Court. And I say that even though I am a putative class member in Stoneridge.

Theodore H. Frank
Resident Fellow
American Enterprise Institute for Public Policy Research
Washington, D.C.

Filed under: , , ,

Stoneridge order

The Supreme Court issued the following order today:

The motion of Former SEC Commissioners for leave to file a brief as amici curiae out of time is granted. The motion of John Conyers, Jr. and Barney Frank for leave to file a brief as amici curiae out of time is granted. The Chief Justice and Justice Breyer took no part in the consideration or decision of these motions.

Respondents had objected to the out-of-time filing by the Former SEC Commissioners. Separately, Tony Mauro speculates in the Legal Times whether Roberts or Breyer will “unrecuse” themselves. (Mauro quotes me and Professor Bainbridge (who gets all the good lines); the “anti-investor opinion” language is Mauro’s, however, and not mine: as I wrote in the Wall Street Journal and expressed to Mauro, the lower-court decision was decidedly pro-investor, if anti-trial lawyer.) As the order suggests, however, if Roberts and Breyer are going to divest themselves of Cisco stock so they can participate in the case, they have not done so yet. Earlier: Aug. 15; POL May 20.

Full disclosure: As an unnamed class member, I am a plaintiff in Stoneridge, and would be entitled to some small amount of class recovery. Also, I hate hate hate respondent Scientific-Atlanta with a deep burning passion, not least because Scientific-Atlanta attorneys subjected me to a harassing subpoena. Nevertheless, a victory for petitioners would be disastrous.

Filed under: , ,

Bipartisan group of SEC chairs, law professors, speak out against “scheme liability”

The trial bar’s efforts to broadly expand the securities laws through judicial fiat is challenged in an amicus brief filed in Stoneridge v. Scientific-Atlanta (earlier: Jul. 31, etc.), including former SEC chairs Roderick Hills, Harvey Pitt and Harold Williams; and law professors Richard Epstein, Joseph Grundfest, Stephen Bainbridge, and Larry Ribstein.

Update: Not only has the Department of Justice come out in favor of affirmance (despite extensive lobbying by the plaintiffs’ bar), but both major stock exchanges—who interests unquestionably parallel the interests of investors as a group—filed amicus briefs seeking affirmance. But watch the press portray this as “businesses versus investors” instead of “businesses and investors versus trial lawyers and government officials seeking donations from trial lawyers.”

Update: Oral argument is October 9. AEI will hold a panel discussing the case October 5.

Filed under: , , , ,

Stoneridge: Wherein I am a footnote

Reps. Barney Frank and John Conyers, Jr. spend taxpayer dollars to file a late amicus brief on behalf of plaintiffs’ lawyers and against investors in Stoneridge v. Scientific-Atlanta, taking issue with my Wall Street Journal op-ed on the case. (H/t L.R.) To wit, “A number of commentators have called for the Court to decide this case by reference to policy considerations nowhere found in the statute.” This is wrong: the op-ed explicitly noted that Congress had twice rejected precisely the sort of liability that petitioners were seeking in this case. It is also ironic: civil securities fraud liability was created by judicial fiat out of a statute that had no private right of action.

Filed under: , , , ,

Flashback: the tort system in action in the case of Curtis Campbell

In 1981, Curtis Campbell (Campbell) was driving with his wife, Inez Preece Campbell, in Cache County, Utah. He decided to pass six vans traveling ahead of them on a two-lane highway. Todd Ospital was driving a small car approaching from the opposite direction. To avoid a head-on collision with Campbell, who by then was driving on the wrong side of the highway and toward oncoming traffic, Ospital swerved onto the shoulder, lost control of his automobile, and collided with a vehicle driven by Robert G. Slusher. Ospital was killed, and Slusher was rendered permanently disabled. The Campbells escaped unscathed.

Guess quickly: which plaintiff in the resulting twenty years of litigation won the biggest jury verdict?

How many of you say Ospital?

How many of you say Slusher?

You’re both wrong. The plaintiff with the biggest jury verdict was Curtis Campbell, whom a jury awarded an incredible $147.6 million.

Read On…

Filed under: , , , , , , ,

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.

Filed under: , , ,

Major SCOTUS punitive damages ruling

Some initial thoughts on Philip Morris v. Williams from Jim Copland at Point of Law. By a 5-4 vote, in an opinion by Justice Breyer, the Court held that a punitive damage award cannot be based in part or whole on a jury’s desire to punish harms committed against non-parties to the litigation, although (a fine distinction, if indeed a tenable one) such harms may be taken into account in determining the defendant’s degree of reprehensibility.

More: Ted comments and rounds up links, also at PoL. Roger Parloff (Feb. 20) calls the majority’s distinction “narrow” and “confusing”. And Eric Turkewitz offers one view from the plaintiff’s side (“hair-splitting”; majority’s “Clintonian parsing…was too much for four of the justices”).

Filed under: , , ,

Punitive damages and the Supreme Court

I have written a piece on the Philip Morris v. Williams case for the Business and Media Institute. For other views, see Anthony Sebok (Brooklyn Law), Alan Morrison (Public Citizen), and Adam Cohen (New York Times). Morrison argues that the federal courts have no role in reviewing state-court decisions, which makes one wonder what his position is on habeas corpus. Cohen’s op-ed misstates what happened in Andrade, which was a case of collateral (and thus limited) review, rather than a direct appeal, like Williams, where a civil defendant does not even have the option of collateral review.

Earlier on Point of Law (from which this was cross-posted): Oct. 12; May 30; Feb. 2.

Update: The American Constitution Society press briefing on Philip Morris v. Williams (in which I participated with Peter Rubin, Neil Vidmar, and Bill Schultz) is now online.

Filed under: , , , , ,

A License To Complain

Last Thursday, the Supreme Court ruled that a worker alleging retaliation for complaining about discrimination may sue even if she has not suffered a tangible loss, like a firing or denial of a promotion. In its decision in Burlington Northern v. White, the Supreme Court ruled that under Title VII of the Civil Rights Act, “retaliation” includes any act that “well might have dissuaded a reasonable worker” worker from complaining. The court upheld a $43,500 judgment in favor of an employee who was reassigned to different tasks and then suspended for a month before being reinstated with full backpay.

The court’s low bar for what constitutes retaliation turns many mistaken complaints of discrimination into future lawsuits. Under federal court rulings, even groundless complaints are often protected against retaliation. Complaints to an employer are protected as long as the complainant reasonably believes that discrimination or harassment occurred, even if it didn’t. And complaints to the EEOC are protected even if they are plainly unreasonable, intemperate, and false. So an employee who has never been discriminated against can sue over deteriorating relationships with co-workers whom the employee has falsely accused of discrimination, claiming that the bad relationships constitute a “hostile environment” in retaliation for claiming discrimination.

In an attempt to forestall some such suits, the Supreme Court added a caveat to its test. It declared that “snubbing by supervisors or co-workers” or “petty slights” in response to a claim of discrimination do not rise to the level of retaliation, since they would not be sufficiently “materially adverse” to dissuade someone from complaining of discrimination. Whether or not that caveat is consistent with the court’s general test, it is welcome from a First Amendment perspective. As Judge Kozinski observed in Brooks v. City of San Mateo, 229 F.3d 917 (9th Cir. 2000), banning all criticism or ostracism in response to a discrimination charge may well violate the First Amendment freedoms of speech and association.

But the Supreme Court’s caveat may not be enough to protect First Amendment rights. For example, in Bain v. City of Springfield, 678 N.E.2d 155 (Mass. 1997), a mayor publicly denounced as unfounded a sexual harassment complaint against him. It is easy to see how such a public denial might dissuade a publicity-shy complainant from bringing an accusation. But as the Massachusetts Supreme Court observed, defining his speech as unlawful retaliation would clash with the First Amendment. Retaliation prohibitions are “subject to constitutional guarantees of freedom of speech. The interest in remedying discrimination is weighty but not so weighty as to justify what amounts to a restriction on core political speech.” Since the Supreme Court has set the bar so low, the courts may need to exempt speech about the merits of discrimination claims to prevent censorship.

But some judges will probably refuse to do so. Judge Myron Thompson held an employer liable for retaliation for publicly criticizing a discrimination complaint, rejecting a First Amendment defense on the ground that since sexual harassment law supposedly trumps the First Amendment, so do laws against retaliation.

Filed under: , ,