Attorney Peter M. Villari represents the family of one of the three Camden, N.J. youths who suffocated last month in the trunk of a car. Not surprisingly, Villari says he’s considering filing suit over the incident against the city of Camden, whose police department has been widely criticized for not thinking to check the trunk of the beat-up 1992 Camry after the boys went missing although it was parked steps from where they’d last been seen. Anyone else to sue? Yes, “possibly Toyota”. (“Boys Who Died Lived 17 Hours in Car Trunk, Lawyer Says”, New York Times, Jul. 19).
Posts Tagged ‘Toyota’
More on the $105 million Aramark verdict
We previously reported (Jan. 21) on Daniel Lanzaro’s drunk driving accident litigation; the little girl he paralyzed won a $105 million verdict against Aramark over beer sales at Giants Stadium because Lanzaro did some of his drinking there that day, in part by bribing a beer vendor to ignore Aramark’s two-beer-per-purchase rules. (Before the game, Lanzaro purchased a six-pack of Heineken; he did some drinking at two strip-clubs after the game, as well.) The New Jersey Law Journal has more on the case:
- The NFL defendants settled for $700,000, despite prevailing on a summary judgment motion;
- Judge Richard Donohue excluded evidence that Antonia Verni’s father might have prevented the injuries to his daughter had he put the two-year-old in a car seat rather than an adult seat-belt;
- Verni also sued Toyota; Verni’s Corolla didn’t fare well when Lanzaro’s pickup slammed into it head-on, and Toyota paid $190,000 to get out of the case;
- There’s collateral litigation to be had among plaintiffs’ family members and sets of lawyers over who gets the money. And, of course, there will be an appeal.
As previously reported, the judge also excluded evidence of Lanzaro’s two previous drunk-driving arrests. (Henry Gottlieb, “In Wake of Record $105M Verdict, Fee Fights and Coverage Contests Emerge”, Feb. 2; Wayne Coffey, “Wasted Innocence”, NY Daily News, Jan. 30; Kibret Markos, “Expert backs beer vendor”, The Record, Jan. 12). As famous sportswriter/treacle-author Mitch Albom notes, “Either your stadium goes dry, or people will leave drunk.”
A correction: we previously reported that the entire $135 million verdict was awarded against Aramark; in fact, $30 million of the verdict is damages against the drunk driver, Daniel Lanzaro, who had already settled for the limits of his insurance coverage. Aramark’s share is $30 million compensatory, $75 million punitive, and about $6-7 million in interest, with the interest continuing to accumulate. After he settled with the plaintiffs, Lanzaro changed his story to be more favorable to the Vernis’ case. (Ana M. Alaya, “Lawyer for Giants Stadium beer vendor loses bid for mistrial”, Newark Star-Ledger, Jan. 13).
An additional thought: A big argument for plaintiffs at trial was the claim that Aramark, which serves to the two million or so fans who attend football games at Giants stadium each year, had been averaging about seven complaints a year for selling beer to drunks, but only took disciplinary action a fraction of the time. The press hasn’t covered Aramark’s response to this assertion, but one wonders if fear of employment litigation stayed its hand. Earlier damned-if-you, damned-if-you-don’t files include Aug. 30.
Another point: A reader writes to note that Aramark was probably selling watered-down beer, which would be further evidence that post-game drinking was responsible for Lanzaro’s .266 blood-alcohol level, though, again, it shouldn’t matter: Aramark didn’t make the guy drive drunk.
Things your auto can’t do
In many vehicles nowadays, you can check your e-mail, view Web sites, even watch television, from the comfort of your driver’s seat.
You can, that is, if you live in Europe or in Japan….
Fear of legal action has also stopped Toyota from offering its Intelligent Parking Assist feature, which is now available on the hybrid gas-electric Prius model sold in Japan.
Executives say they “must worry about lawsuits” if potential dashboard distractions fall into the hands of Americans. A Toyota corporate sales manager says there are no plans to make the intelligent-parking feature available in the United States, either: “This is a very litigious society.” (Eric A. Taub, “Three Amazing Things Your Automobile Can’t Do”, New York Times, Oct. 27).
Miss. governor: legal climate helped cost us auto plant
Mississippi Gov. Haley Barbour says the Magnolia State’s famously pro-plaintiff litigation climate may have played a role in Toyota’s decision last year to locate a new plant in Texas rather than northern Mississippi. Barbour “gave reporters and legislators copies of a letter written to him last week by Dennis C. Cuneo, a New York-based senior vice president of Toyota Motor North America Inc. …Cuneo said he led the site selection for the Japanese auto maker’s newest plants and was impressed by Texas Gov. Rick Perry’s commitment to changing that state’s civil justice system. Cuneo wrote Mississippi is ‘desirable’ for its infrastructure, pool of skilled labor, quality of life and proximity to other Toyota plants and suppliers. But he said ‘the litigation climate in Mississippi is unfavorable, and negatively impacts the state’s business climate.'” (Emily Wagster Pettus, “Barbour: Legal climate hurt state in push to get Toyota plant”, AP/Biloxi Sun-Herald, Apr. 26). Barbour was promptly assailed by lawmaker Ed Blackmon, himself a successful plaintiff’s lawyer, who heads a judiciary committee in the lower house of the Mississippi legislature where he has helped to bottle up liability reform. Blackmun said he “doesn’t believe tort reform played a role in Toyota’s decision and said he guesses ‘Maybe someone at Toyota owed (Barbour) a favor’ and wrote the letter.” (Geoff Pender, “House, Senate show little tort progress”, AP/Biloxi Sun-Herald, Apr. 27; Shelia Hardwell Byrd, “Barbour says House needs chance to vote on tort reform”, AP/Biloxi Sun-Herald, Apr. 29; “Letter shows state needs tort reform” (editorial), Natchez Democrat, Apr. 27; Julie Goodman, “Lawmaker accuses gov. of exploiting tort myth”, Jackson Clarion-Ledger, Apr. 29).
Sudden acceleration: litigation springs eternal
Fifteen years after the National Highway Traffic Safety Administration concluded that the explanation for supposed “sudden acceleration” in cars was that the drivers were mistakenly pressing the accelerator rather than the brake, trial lawyers continue to sue automakers, and now NHTSA has agreed to open an investigation into claims of unintended acceleration in Toyota and Lexus models. While an earlier wave of suits tended to blame cruise control malfunctions, the new favorite culprit is electronic throttle control systems. In lawsuits over the accidents, the car’s brakes, which can ordinarily bring a car to a stop even when its throttle is fully open, will typically be said to have mysteriously failed as the same time as the acceleration defect was manifesting itself, although nothing will be found physically wrong with the brakes afterward.
“For more than a decade, decisions usually favored car companies and blamed drivers in unintended acceleration cases, but some recent trials and court decisions reversed that. Ford Motor and General Motors each recently lost a high-profile case. … A Missouri jury last year ordered GM to pay Constance Peters and her husband $80 million for the crash of her 1993 Oldsmobile Cutlass, which accelerated 120 feet in reverse and into a tree while she was backing up. They blamed faulty cruise control. GM is appealing.” And: “The U.S. Circuit Court of Appeals in New York in 2002 reinstated a $1.1 million judgment against Ford in the crash of a 1991 Ford Aerostar. Jurors had found that the crash was caused partly by a ‘negligently designed’ cruise control system.” (Jayne O’Donnell and David Kiley, “Technology puts unintended acceleration back in spotlight”, USA Today/Detroit News, Apr. 13)(via Reason Hit and Run). For more on the issue, see Jun. 6, 2000.
Passenger hurt in drunk driving accident collects from automaker
As if to respond to our post on joint and several liability on Friday, a Nebraska jury found for a woman paralyzed in an accident when the driver drove off the road and rolled over their Chevy Blazer. Both GM and the driver (who was later charged with DUI) are held liable, but only one is actually going to pay the bulk of the award, if it is upheld. GM will effectively be paying insurance for the consequences of drunk driving–and of getting into a car with a drunk driver.
Plaintiff claimed that a $20 roof-strengthening would have prevented her injuries. GM denied this causation theory. (Butch Mabin, “Jury awards woman $19.5 million”, Lincoln Journal Star, Sep. 27) (via Bashman). But even if one accepts the plaintiff’s argument that the lack of an additional $20 is a sine qua non of her injuries, her lawsuit presents troubling public policy implications. GM isn’t faced with a single yes/no $20 safety decision when it designs a car–it faces hundreds, if not thousands, of them. And not all of them are binary. Twenty dollars of roof strengthening may have prevented these injuries, but once GM takes that step, there will still be other accidents where yet another twenty, or forty, or eighty dollars of metal in the roof would have prevented injuries. If too many $20 additions are made, some people will not buy the hypothetical Blazer and will instead buy a cheaper (and/or older) and less safe car. Adding $20 of roof-strengthening may decrease the likelihood that a particular accident will result in serious injury, but, by elevating the center of gravity, may increase the likelihood that the SUV is in a rollover accident in the first place and, by increasing the weight, increases the risk of an accident due to inadequate braking power. The SUV, as it is, may perform relatively poorly in rollovers as plaintiffs argue, but it performs much better (some would argue too well) in collisions with other vehicles. And we have not even begun to mention the societal cost that comes from reducing the gas mileage of the SUV by increasing its weight. (The one thing I have in common with Arianna Huffington is that I drive a Prius.)
A jury of laypeople seems to be poorly situated to make these holistic design decisions — especially when the rules of a product liability case often mean that a jury is considering a particular design question in isolation. Which is why plaintiffs’ attorneys are happy to characterize the scales as one of a quadriplegic against a heartless giant corporation that supposedly valued its $20 more than a mother’s ability to walk. It would take an exceptionally wise jury to accurately balance the visible and tangible costs of an after-the-fact gravely injured member of their community against the before-the-fact intangible benefits to society of the engineering design decision of different accidents prevented and of affordable new cars. The elites of the national media and our political and regulatory leaders have trouble articulating the subtleties of these issues. Why do we ask a jury of laypeople to grapple with them, often deliberately deprived by legal rules of a full complement of the tools they need to make a correct decision, when a decision on behalf of an automaker would require them to take the painful psychological step of looking in the eye a quadriplegic who has had her life irreversibly altered, and telling her she will recover nothing?
Disclaimer: I represented GM from 1995 to 1997.
Archived class action materials, pre-July 2003
Madison County, Ill., 2003: “To tame Madison County, pass the Class Action Fairness Act“, Jun. 12-15; “The intimidation tactics of Madison County“, Jun. 9; “‘Lawyers who won $10 bil. verdict had donated to judge’“, Apr. 30; “A bond too far“, Apr. 4-6; “Appeals bonds, again“, Apr. 2-3; “Mad County pays out again” (“light” cigarette class action), Mar. 24. 2002: “Malpractice-crisis latest: let ’em become CPAs“, Oct. 7-8; “Intel sued in notorious county“, Aug. 30-Sept. 2. 2000: “Update: Publishers’ Clearing House case“, Feb. 29. 1999: “Criticizing lawyers proves hazardous” (columnist Bill McClellan makes fun of class-action attorneys, they sue him for libel), Nov. 4 (& Nov. 30; Feb. 29, 2000)
Securities class actions, 2003: “Prospering despite reform“, May 5; “‘Lawyers find gold mine in Phila. pension cases’“, Mar. 21-23; “NYC challenges class action fees; taxpayers save $200 million“, Feb. 28-Mar. 2 (& Jun. 20, 2000). 2002: “Updates” (Ninth Circuit ruling), Oct. 1-2; “Second Circuit: we mean business about stopping frivolous securities suits“, Aug. 29-Sept. 2; “Financial scandals: legislate in haste“, Jul. 12-14; “‘How to stuff a wild Enron’“, Apr. 22; “Judge compares class action lawyers to ‘squeegee boys’“, Apr. 18. 2001: “Short-sellers had right to a drop in stock price“, Nov. 12; “Third Circuit cuts class action fees” (Cendant, CBS/ Westinghouse), Sept. 25-26 (& on Cendant, June 20, Sept. 4, 2000); “Dotcom wreckage: sue ’em all“, Aug. 7-8; “‘2d Circuit Upholds Sanctions Against Firms for Frivolous Securities Claims’” (Schoengold & Sporn), July 23; “Razorfish, Cisco, IPO suits“, May 22; “Securities law: time for loser-pays“, Mar. 2-4; “3Com prevails in shareholder suit“, Feb. 21-22; “$1,000/hour for shareholder class lawyers” (Aetna case), Feb. 14-15; “What they did for lead-plaintiff status?“, Jan. 18 (& see Feb. 21-22). 2000: “Did securities-law reform fail?“, Nov. 10-12; “Emulex fraud: gotta find a defendant“, Sept. 4; “Fortune on Lerach“, Aug. 16-17; “Lion’s share” (commodity brokerage case), May 5-7; “Fee shrinkage“, May 3; “Celera stockholders vent at Milberg Weiss“, Apr. 25-26. 1999: “Piggyback suit not entitled to piggybank contents” (Second Circuit rejects fees in Texaco action), Oct. 9-10; “Effects of shareholder-suit reform“, Sept. 22.
Fee review, 2003: “Vitamin class action: some questions for the lawyers“, May 28; “Sauce for the gander dept.“, May 19; “NYC challenges class action fees; taxpayers save $200 million“, Feb. 28-Mar. 2 (& Jun. 20, 2000). 2002: “FTC cracks down on excessive legal fees“, Oct. 1-2; “Smog fee case: ‘unreal world of greed’“, Jul. 24. 2001: “Court’s chutzpah-award nominee” (Wells Fargo), Oct. 17-18; “Third Circuit cuts class action fees” (Cendant, CBS/ Westinghouse), Sept. 25-26 (& on Cendant, June 20, Sept. 4, 2000); “Coupon settlement? Pay the lawyers in coupons“, Mar. 16-18. 2000: “Fee shrinkage“, May 3; “‘Accord tossed: Class members ‘got nothing’” (Equifax, 7th Circuit), Jan. 6. 1999: “Class action fee control: it’s not just a good idea, it’s the law” (Ninth Circuit on “separately negotiated” fees), Nov. 30; “Piggyback suit not entitled to piggybank contents” (2nd Circuit, Texaco), Oct. 9-10.
Milberg Weiss Bershad Hynes & Lerach, 2003: “Prospering despite reform“, May 5; “Milberg copyrights its complaints“, Jan. 3-6. 2002: “Updates” (Ninth Circuit ruling), Oct. 1-2; “Smog fee case: ‘unreal world of greed’“, Jul. 24 (& Dec. 5, 2000, Jun. 22-24, 2001); “Judge compares class action lawyers to ‘squeegee boys’“, Apr. 18; “Milberg faces second probe” (Phila. politics), Feb. 27-28; “‘Probe of Milberg Weiss has bar buzzing’“, Jan. 28-29; “‘In a class of his own’” (Melvyn Weiss profiled in The Economist), Jan. 21-22. 2001: “NFL satellite ticket class action“, June 5 (& update Aug. 20-21: court disallows settlement); “Update: cookie lawsuit crumbles“, May 9; “‘Lawyers to Get $4.7 Million in Suit Against Iomega’” (zip drive defect allegations), May 8; “California electricity linkfest” (representing San Francisco), March 26; “(Another) ‘Monster Fee Award for Tobacco Fighters’” (Calif. cities and counties), March 21-22; “3Com prevails in shareholder suit“, Feb. 21-22; “$1,000/hour for shareholder class lawyers” (Aetna case), Feb. 14-15; “What they did for lead-plaintiff status?“, Jan. 18 (& see Feb. 21-22). 2000: “Fortune on Lerach“, Aug. 16-17; “Fee shrinkage“, May 3; “Celera stockholders vent at Milberg Weiss“, Apr. 25-26; “Class-actioneers’ woes“, Mar. 1; “Pokemon litigation roundup“, Jan. 10 (& Oct. 1-3, Oct. 13, 1999).
Toshiba laptop settlement: see separate page on high-tech law.
Microsoft class actions: “Microsoft case and AG contributions“, Apr. 3-4, 2002; “Columnist-fest” (proposed settlement), Nov. 27, 2001; “Hiring talent from the opposing camp“, Feb. 28, 2000; “In race to sue Microsoft, some trip“, Dec. 23-26; “Microsoft roundup“, Dec. 3-5; “‘Actions without class’“, Dec. 2; “Class actions vs. high-tech“, Nov. 23; “Vice President gets an earful“, Nov. 22; “Microsoft roundup“, Nov. 17; “Fins circle in water“, Nov. 13-14; “Microsoft roundup“, Nov. 11; “Microsoft ruling: guest editorials“, Nov. 8; “Why doesn’t Windows cost more?“, Oct. 27; “Are you sure you want to delete ‘Microsoft’?“, Oct. 11.
Employment class actions: see separate page on employment law.
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Overlawyered.com commentaries: “Texas’s giant legal reform“, Jun. 18-19, 2003. “To tame Madison County, pass the Class Action Fairness Act“, Jun. 12-15, 2003; “‘Reforming class action suits’” (Class Action Fairness Act), Apr. 25-27, 2003. “Judge kicks class-action lawyers off case” (H&R Block), May 15, 2003. “Class action lawyer takes $20 million from defendant’s side“, Mar. 15-16, 2003. “FBI probes Philadelphia’s hiring of class action firm“, Jan. 31-Feb. 2, 2003. “Ninth Circuit panel sniffs collusion in bias settlement fees“, Dec. 16-17, 2002. Auctions: “Third Circuit cuts class action fees“, Sept. 25-26, 2001; “Letter to the editor” (competitive bidding for class representation), Jun. 13, 2001 (& Oct. 1-2, 2002). “7,000 missing colors, many of them crisply green“, Aug. 29, 2002. “‘Junk-fax’ suit demands $2 trillion“, Aug. 26, 2002; “Junk-fax litigation: blood in the water“, July 24, 2001; “Junk-fax bonanza“, March 27, 2001; “Junk fax litigation, continued“, March 3-5, 2000; “In Houston, expensive menus” (unsolicited faxes), Oct. 22, 1999. “Penthouse sued on behalf of disappointed Kournikova-oglers“, Jun. 3-4, 2002. “The mystery of the transgenic corn“, May 14-15, 2002. “Editorial-fest“, Mar. 11, 2002; “Washington Post on class action reform” (good editorial), Aug. 29-30, 2001; “Actions without class” (Washington Post editorial), Dec. 2, 1999. “The thrill of it all: plaintiffs win 28 cent coupon“, Feb. 27-28, 2002. “‘Toyota buyers’ suit yields cash — for lawyers’“, Feb. 18-19, 2002; “Golf ball class action” (Acushnet Co.), Nov. 18-19, 1999; “Class action coupon clippers” (Washington Post on settlement abuses), Nov. 15, 1999. “‘Congress looks to change class action system’“, Feb. 11-12, 2002; “‘They’re making a federal case out of it … in state court’“, Nov. 7-8, 2001. “Selling out the class?” (allegations of collusive settlement in H&R Block case), April 5, 2001 (& see Dec. 3). “Swiss banks vindicated“, Nov. 1, 2001. Letter to the editor (lawyers’ own incremental billing disclosed?), Oct. 22, 2001 (& see Dec. 3). “Counterterrorism bill footnote” (forum shopping), Oct. 16, 2001; “Best little forum-shopping in Texas” (class actions make their way to Texarkana), August 27, 1999. “Employment class actions: EEOC to the rescue“, Sept. 10, 2001. “220 percent rate of farmer participation” (USDA black farmer settlement), July 25, 2001. “The rest of Justice O’Connor’s speech“, July 6-8, 2001. “Blockbuster Video class action“, June 11, 2001 (& see July 3-4 (Vince Carroll column)). “Letter to the editor” (First USA credit cards), June 13, 2001; “Bank error in your favor” (credit card holders), Sept. 27-28, 2000; & letter to the editor, Sept. 3, 2001. “Ghost blurber case“, June 12, 2001. “NFL satellite ticket class action“, June 5, 2001 (& update Aug. 20-21: court disallows settlement). “Insurance class settlement scuttled“, Feb. 26, 2001. “Florida lawyers’ day jobs, cont’d” (hotbed of class action filing), Dec. 11-12, 2000; “Florida’s legal talent, before the Chad War” (Florida Marlins ticketholders), Dec. 8-10, 2000. “Obese soldiers class action“, Nov. 10-12, 2000. “Sweepstakes, for sure” (American Family Publishers), Oct. 20-22, 2000; “Update: Publishers’ Clearing House case“, Feb. 29, 2000. “Courtroom crusade on drug prices?“, Oct. 19, 2000. “Class actions: are we all litigants yet?“, Aug. 23-24, 2000. Coke: “Class-action lawyers to Coke clients: you’re fired“, July 21-23, 2000; “‘Coke plaintiff eavesdrops on lawyers; case unravels’” (what do lawyers tell each other after they think their clients have hung up on the conference call?), July 19-20; “‘Ad deal links Coke, lawyer in suit’” (Willie Gary, suing Coke, cuts lucrative ad deal with it), May 11, 2000. “Target Detroit” (lawyers countersue DaimlerChrysler and exec personally), July 19-20, 2000; “Turning the tables” (DaimlerChrysler sues class action lawyers), Nov. 12, 1999. “Class-action assault on eBay“, July 13, 2000. “AOL ‘pop-up’ class action” (ads said to be unfair), June 27, 2000. “Rise, fall, and rise of class actions” (enormous increase in filing rates in past decade), Mar. 10-12, 2000. “Criticizing lawyers proves hazardous” (columnist Bill McClellan makes fun of class-action attorneys, they sue him for libel), Nov. 4, 1999 (update Nov. 30: he criticizes them again, though suit is still pending); “Update: Publishers’ Clearing House case” (judge approves settlement including legal fee request; agreement reached to end libel suit), Feb. 29, 2000. “Secrets of class action defense“, Feb. 25, 2000; “Mobile Register probes class action biz” (BancBoston and other mortgage escrow cases), Feb. 7, 2000. “AOL upgrade’s sharp elbows“, Feb. 12-13, 2000. “Weekend reading: columnist-fest” (Laura Pulfer on suit against Ralph Lauren outlet stores; Alex Cockburn on Swiss banks), Feb. 5-6, 2000. “From our mail sack: unclear on the concept“, Jan. 28, 2000. “Santa came late” (suit against Toys-R-Us for missing Christmas delivery), Jan. 19, 2000. “Pokemon litigation roundup“, Jan. 10, 2000; “Pokemon cards update“, Oct. 13, 1999; “Pokemon-card class actions“, Oct. 1-3, 1999 “Expert witnesses and their ghostwriters” (life insurance class actions), Jan. 4, 2000. “Lawyers for famine and wilderness-busting?” (anti-biotech), Jan. 3, 1999. “Class action toy story” (antitrust), Dec. 29-30, 1999. “‘In race to sue Microsoft, some trip’” (lawyers inadvertently copy details of pleadings in earlier cases), Dec. 23-26, 1999. “Rolling the dice, cont’d” (suits over online gambling), Dec. 7, 1999 (earlier report, Aug. 26). “Beware of market crashes” (class action sought against E*Trade for alleged computer-related trading losses), Nov. 26-28, 1999. “Are they kidding, or not-kidding?” (proposals for suits against makers of fattening foods, losing sports teams), Nov. 15, 1999. “Public by 2-1 margin disapproves of tobacco suits” (if class actions are filed on behalf of the public, why don’t they reflect public opinion?), Nov. 5-7, 1999. “Demolition derby for consumer budgets” (class action against State Farm over generic crash parts), Oct. 8, 1999. “Power attracts power” (Boies joins anti-HMO effort), Sept. 30, 1999; “Impending assault on HMOs“, Sept. 30. “$49 million lawyers’ fee okayed in case where clients got nothing” (secondhand smoke action), Sept. 28, 1999; “Personal responsibility takes a vacation in Miami” (tobacco class-action verdict), Jul. 8, 1999. “Judge throws out four WWII reparations lawsuits“, Sept. 20, 1999. “Tainted cycle” (Milwaukee taxpayers sue themselves), Sept. 2, 1999. “Three insurers sued for $100 million” (how the press covers class action announcements), Aug. 20, 1999. Resources on class actions are found at many different places on Overlawyered.com. For example, most of the massive lawsuits filed against individual industries over personal injury to classes of consumers are covered on pages specific to the subject matter of the cases, such as the pages on firearms litigation, tobacco litigation, managed-care litigation, breast implant litigation, product liability, and so forth. This page assembles resources on class actions as a procedural device and as an institution. Among topics covered are the unique role in this area of an “entrepreneurial” plaintiff’s bar that decides on its own behalf who and how to sue and lines up clients as needed; the history of the device and the reasons why it is either sharply limited or virtually unknown in the courts of other industrial democracies; the distinctive ethical problems that arise because of the extreme difficulty of policing lawyers’ faithfulness to the interests of the absent class; and the operations of the class action “industry” in the areas in which it has been a familiar part of the American legal landscape for decades, namely shareholder litigation and class actions over consumer and antitrust grievances aggregating large numbers of (usually smallish) claims. Background — procedural history, ethical issues: Overlawyered.com‘s editor wrote about class actions (as well as “champerty and maintenance”, the “invisible-fist theory”, and other topics) in Chapter 3 of his book The Litigation Explosion; an excerpt is online. Chapter 5 (“The New Town Meeting”) of Peter Huber’s book Liability: The Legal Revolution and Its Consequences contains a valuable discussion of the class action format, particularly as it applies to the so-called toxic tort; it is unfortunately not online. Lawrence Schonbrun, a Northern California attorney who has developed a specialty in filing challenges to excessive class action attorneys’ fee requests, wrote a prescient article in 1996 on “coupon deals”, “separately negotiated” fees from defendants, and other innovative ways the class action bar was finding to escape scrutiny of its remuneration. (“Class Actions: The New Ethical Frontier“) Shareholder litigation: A starting point for research on this topic is Stanford Law School’s comprehensive Securities Class Action Clearinghouse. See also the commentaries on this site. In Felzen v. Andreas (1998), Judge Frank Easterbrook of the Seventh Circuit wrote that “Many thoughtful students of the subject conclude, with empirical support, that derivative actions do little to promote sound management and often hurt the firm by diverting the managers’ time from running the business while diverting the firm’s resources to the plaintiffs’ lawyers without providing a corresponding benefit.” He cited a long list of scholarly articles including Janet Cooper Alexander, Do the Merits Matter? A Study of Settlements in Securities Class Actions, 43 Stanford L. Rev. 497 (1991), which found that the “structural characteristics common to securities class actions . . . combine to produce outcomes that are not a function of the substantive merits of the case.” and Roberta Romano, The Shareholder Suit: Litigation without Foundation?, 7 J. L. Econ. & Organization 55 (1991), which examined 39 shareholder suits filed between the late 1960s and 1987 and concluded that “shareholder litigation is a weak, if not ineffective, instrument of corporate governance.” In 1995 Congress passed the Private Securities Litigation Reform Act, which aimed to rectify some of the worst abuses in the field. This client memo from Fried, Frank describes the wider powers institutional investors obtained under the act to influence litigation going on purportedly in the name of investors such as themselves. In Polar International Brokerage v. Reeve, a New York federal judge rejected a proposed class action settlement and request for $200,000 in attorneys’ fees, saying it offered shareholders “nothing of real value”. (Deborah Pines, National Law Journal, May 24, 1999). Although the securities bar frequently alleges that well-known companies in Silicon Valley and elsewhere are run by crooked managements that fleece their shareholders, they ironically turn out to keep a lot of their (very substantial) stock holdings invested in the very same companies. (Paul Elias, San Francisco Recorder, June 8, 1999). Among the reasons is that in many cases they have accepted stock as payment for dropping earlier legal actions. Other class action resources: The Federalist Society publishes a Class Action Watch newsletter. The first issue is in conventional web-page format. The second issue is a PDF document (Adobe Acrobat needed to view; get it here). Among the better-known law firms representing class action plaintiffs are Milberg Weiss Bershad Hynes & Lerach LLP, Lieff, Cabraser, Heimann & Bernstein LLP, Cohen Milstein, Hausfeld & Toll, Krause & Kalfayan, and Barrack, Rodos & Bacine. Actuary Jack Patterson has written an account for a plaintiff’s lawyer readership of class actions against life insurance companies, one of the big practice areas of the 1990s. The class action bar also files many antitrust suits on behalf of large groups of consumers or business purchasers. The Antitrust Policy web site collects many worthwhile resources on antitrust law. |