2012

Since its creation in 2010, certain members of Congress have been desperate to thwart the Consumer Financial Protection Bureau (CFPB)  by repeatedly passing bills to limit the CFPB’s power.  Generally throwing a fit, these congressmen claim that the CFPB is a “run-away regulator unlike any other in American history.”

A case decided last week by the Ninth Circuit Court of Appeals, Gutierrez v. Wells Fargo Bank, shows why the CFPB is so important, how its predecessor (the Office of the Comptroller of the Currency) failed the American public, and why we should view anyone opposed to the CFPB with deep suspicion.

The Gutierrez case arises from a change Wells Fargo made to the processing of debit card transactions back in 2001. Wells Fargo claimed in its brochures that, when a consumer used a debit card, the money was “immediately” and “automatically” deducted from their accounts, and admonished customers — with the type of blatant hypocrisy only a true scoundrel can muster — “remember that whenever you use your debit-card, the money is immediately withdrawn from your checking account.  If you don’t have enough money in your account to cover the withdrawal, your purchase won’t be approved.”

In reality, Wells Fargo waited until the end of each day, when it would re-order the transactions to create as many overdrafts as theoretically possible, and then charge the customer a fee for each bank-manufactured overdraft. 
Continue Reading Rampant Bank Fraud Shows Why We Need The Consumer Financial Protection Bureau

[Update, April 25, 2016: And here’s an example of lawyers getting hit with a sanctions motion for the exact line of work recommended by Frank, i.e., class action objections. Like I said, if it was easy, everyone would be doing it.]

Over at Point of Law, Ted Frank, with whom I’ve disagreed before, tells lawyers to “stop complaining about the legal job market” because there’s plenty of work, if they want it:

Every month, I’m presented with class action settlements where class members have legitimate objections and want to object, but my attorneys don’t have the time because of other opportunities or commitments. Every month, I’m presented with still other class action settlements where class members would have legitimate objections, but no class member ever approaches me. … I don’t have a monopoly on class action objections or helping consumers and shareholders. At the risk of creating competition that cannibalizes my donors, go do what I do, maybe you’ll do it better.

He might be right that there’s money to be made in representing objectors to class action settlements, because there’s the potential for objectors’ attorneys to be awarded attorney’s fees for their efforts. It strikes me as a plausible line of work, although, like all contingent fee work, a risky one, and one where you’re always worrying about the origin of your next cases. I must also admit that the long-term economics are a bit concerning to me: while your potential for reward is sharply limited (because you’re unlikely to be awarded anything above a reasonable hourly rate for the time worked, and even that is only paid months or years after the work is performed), your potential for loss is not (because you can walk away from cases without recovering a dime for your work or your expenses).

But that discussion of the merits of the practice puts the cart before the horse: plaintiffs’ law firms don’t just discover viable legal claims somewhere in the world and file them, they only enter the picture after clients find and hire the lawyers. Marketing lawyers is hard work. If Frank has some suggestions for how lawyers can pick up a steady stream of strong class action objection cases then he could potentially create jobs by sharing those suggestions. Similarly, if he is indeed presented with multiple meritorious, potentially-profitable objections every year that he turns down for lack of time, then he could do what most plaintiff’s lawyers do when they don’t have the time or resources for a meritorious case: send them to other competent lawyers.

More to the point, class action settlement objections are a unique and limited market and the dangers (both to lawyers and to clients) of inexperienced lawyers trying to jump into that field aren’t great. If that’s all Frank wrote about, I’d just let it pass.
Continue Reading First Lesson For New Plaintiff’s Lawyers: If It Was Easy, Everyone Would Be Doing It

My workload has been heavy lately, as has life in general, so I figured it was time for a diversion. It’s the end of the year, and thus unfortunately almost time for more deceptive “most frivolous lawsuits” lists, so here’s a retrospective of the worst lawsuit defenses I recall from 2012, a retrospective on the evils of water-soluble chalk, the violent propensities of classic Kung Fu movie fans, and the layman’s understanding of how a penile implant should work.

(5) Artist Drawing On Sidewalk With Chalk Deserved To Be Handcuffed, Arrested And Prosecuted For “Blocking Pedestrian Traffic”

One Saturday night down at 4th and South Street here in Philadelphia, artist Emily Hamilton Epstein was coloring the sidewalk with water-soluble chalk, the same harmless stuff my kids use that washes away with the rain. The complaint she eventually filed said:

[She] continued to draw for several hours, during which time she never blocked or obstructed public passage on the sidewalk. During that same period of time, many members of the public, including Philadelphia police officers, passed by and looked at her artwork — some commenting on the artistic quality of and the message communicated by her work — and no one ever advised the plaintiff that she was violating any law.

Isn’t it nice to see police officers walking around and encouraging civic participation like public art? For whatever reason, though, the chalk really, really bothered a particular Philadelphia Police Officer with a history of lawsuits against him. The officer allegedly demanded Epstein stop drawing, “grabbed and pushed” her, and then “applied handcuffs in an excessively tight manner,” after which he charged her with — drumroll, please — “obstructing the highway.”

The Philadelphia DA’s office took the case all the way to a non-jury trial, where the municipal judge brought sanity to the situation and found her not guilty. Epstein later sued — wouldn’t you? — and some poor fellow at the Philadelphia City Solicitor’s office had to come up with a defense. He settled on demanding “strict proof” that the chalk, which had long since washed away, was really water soluble:

[The] allegation regarding the type of chalk she was using is DENIED, because Answering Defendants do not have such knowledge.

The case settled three months later. 
Continue Reading The Worst Lawsuit Defenses of 2012

Pennsylvania law relating to product liability — i.e., whether the Second Restatement or Third Restatement of Torts applies — continues to be hotly disputed, an issue that came back up again with the Pennsylvania Supreme Court’s opinion in Reott v. Asia Trend. Reott involved a man who fell while trying to install a tree stand; in sum the Pennsylvania Supreme Court held that the burden is on a defendant in a products liability action to plead and prove as an affirmative defense that an injured party’s “highly reckless conduct” was the sole or superseding cause of the injuries.

As an article in The Legal Intelligencer explained, the case matters in situations beyond “highly reckless” plaintiffs because it was yet another example of that Court relying on the Second, rather than the Third, Restatement. It’s thus another confirmation of a point I made on this blog back in July while discussing the split in Pennsylvania strict liability law: “for decades the Pennsylvania Supreme Court has ruled that the Restatement (Second) of Torts applies. It has never held otherwise.”

Yet, although the Pennsylvania Supreme Court has never adopted the Third Restatement (and has turned down several opportunities to do so), the Third Circuit has oddly predicted that the Pennsylvania Supreme Court would do so. We’re thus stuck with the federal appellate court with jurisdiction over Pennsylvania commanding federal trial courts in Pennsylvania to apply a version of law that isn’t actually being applied in Pennsylvania.

All of that’s covered in my post from July, which was prompted by a Middle District of Pennsylvania opinion in Sikkelee v. Precision Airmotive Corp, a products liability case involving an airplane crash, which held that the Second Restatement still applied: in short, after the Third Circuit held in Covell that the Third Restatement was the law of Pennsylvania, the Pennsylvania Supreme Court again applied the Second Restatement (in Beard v. Johnson & Johnson, Inc., 41 A.3d 823 (Pa. 2012)). Sikkelee,  2012 U.S. Dist. LEXIS 91497 (M.D. Pa. 2012).

Then the already-strange situation became downright weird.Continue Reading The Third Circuit’s Curious, Non-Binding Dicta In The Sikkelee Product Liability Case

[Update, June 24, 2013. The Supreme Court ruled against Karen, holding, in essence, that generic drug companies have no responsibilities whatsoever to patients.]

I’ve written before about the United Supreme Court’s dismal PLIVA v. Mensing opinion. Although Justice Scalia recently co-wrote a book on legal interpretation that admitted that a basic principle of federalism is that “a federal statute is presumed to supplement rather than displace state law,” he had no trouble joining Justice Thomas’ opinion finding “implied” pre-emption of all state tort lawsuits that alleged  generic drug manufacturers failed to adequately warn about their product’s risks.

Nevermind that Congress had never passed any statute restricting state torts against generic drug manufacturers; the FDA itself had no problem with the state tort lawsuits, and indeed filed a brief in favor of the injured plaintiff; that the American Medical Association and 42 States supported the plaintiff. The case was, to put it mildly, “result-driven.”

That’s old news (Professor Bernabe’s Torts Blog has been following the fallout), but PLIVA v. Mensing is back in the spotlight: the Supreme Court has granted certiorari in Bartlett v. Mutual Pharm. Co., Inc., a First Circuit Court of Appeals opinion in a generic drug case from earlier this year that was one of the very few bright spots in the darkness created by PLIVA v. Mensing. Pharmaceutical defense lawyers have written endlessly in the abstract about Bartlett (like here and here and here), claiming that it conflicts with PLIVA and that the Supreme Court would reverse. I, of course, don’t agree with PLIVA and so, of course, don’t think Bartlett’s claim should be pre-empted; whether the Court in Bartlett mis-applied PLIVA is another matter.

But before we get there, I frankly think that no discussion of the case is complete without talking about the extraordinary facts of the case. Cases aren’t just names on a page, they’re real people, often with real injuries. 
Continue Reading Will The Supreme Court Cheat The Woman Living In “Hell On Earth”?

[Update, March 2013: I originally wrote this post in December 2012. Three months later, the FDA announced it “is evaluating unpublished new findings by a group of academic researchers that suggest an increased risk of pancreatitis, or inflammation of the pancreas, and pre-cancerous cellular changes called pancreatic duct metaplasia in patients with type 2 diabetes treated with a class of drugs called incretin mimetics.” Several news agencies ran with the news, including AP and Bloomberg, as did some pharma industry bloggers. The JAMA Internal Medicine medical journal ran a column urging more research into the link between the drugs and pancreatic cancer, an article with a concerning, but perhaps harmless, revision after it was published. We think the latest attention and research makes the case against these drugs even stronger, and we’re moving forward in our own litigation.]

Diabetes is a global epidemic, affecting over 25 million Americans and ten times that worldwide. That also makes it an economic opportunity: the diabetes control medication market is worth more than $40 billion in the United States alone. There are thirteen types of approved Type 2 Diabetes medications on the market today (comprising over two dozens drugs), with another seven therapies in various stages of research and development. There’s big money to be made, if you’re a pharmaceutical company — hence the recent advertising push for Januvia, Byetta, and Victoza (the one Paula Deen endorses), relatively new entries to the overcrowded diabetes control market.

I’ve discussed before on this blog how one of the biggest public health problems in America is the pharmaceutical industry’s reliance on the “blockbuster” drugs that exceed $1 billion in annual sales. The whole industry, from research, to clinical trials, to physician education, is oriented around creating and promoting drugs that will become household names — to the exclusion of other useful medicines and to the detriment of patient safety. A year ago, I wrote about why Merck still didn’t admit Propecia caused persistent erectile dysfunction more than eight years after competent research showed the problem. The reason is quite simple: Propecia / Proscar was routinely bringing in more than half a billion dollars a year for Merck, and they wanted to keep it going for as long as possible.

Which brings us to Januvia, a drug that stock market analysts call a “real success story” for Merck. The Type 2 Diabetes market is huge, and Januvia (marketed as “Janumet” when mixed with metformin) has captured 75% of the dipeptidyl peptidase 4 (DPP-4) inhibitor market — for $4.6 billion in revenue in 2011 and likely topping $5 billion this year. It’s not hard to see why Januvia and other DPP-4 drugs have been successful and their sales are growing. They’re a one-a-day pill, not a shot, they haven’t been shown to cause weight gain, and they have a lower incidence of the nausea, abdominal pain, and digestive problems that characterize most diabetes treatments.

But there’s a big problem brewing.
Continue Reading Do The Drugs Januvia, Byetta and Victoza Cause Pancreatic Cancer?

On Monday, the ABA Journal released its 6th annual “Blawg 100,” this time including your’s truly’s little home on the Internet. It is, to use the term I used two-and-a-half years ago to describe the benefits of writing a legal blog, “more pie,” and I’m always happy to receive more pie. If you’ve found my blog useful in your practice in the past, or just an interesting read, I’d be much obliged if you stopped over there and voted for me in the “Trial Practice” category. (As an aside, Pennsylvania lawyers cleaned up in the Trial Practice and Torts categories — four honorees combined, more than any other state.)

I’ve been blogging here for over five years, and this is my 880th post. I consider this blog to be a success: I was able to impress my mom, I’ve been invited to speak on panels, I was asked to write a practice guide for lawyers, and a reader once recognized me by my name tag at a party hosted by a law firm. Hundreds of thousands of strangers have read my work, and a couple dozen of them have taken the time to carefully explain to me how wrong I am about everything.

So, as a self-described “successful” blogger, here are some thoughts on blogging itself. 
Continue Reading Doing The Best You Can As A Writer (Thoughts On The ABA Journal’s Blawg 100)

Via Howard Bashman, last week a three-judge panel of the First Circuit Court of Appeals issued a per curiam opinion in Rodriguez-Machado v. Shinseki, affirming a District Court’s grant of summary judgment in an Age Discrimination in Employment Act case. It was a routine case that had been dismissed by the District Court for three commonplace reasons: the plaintiff, who worked at the Veterans Administration, (1) had not been injured enough in their workplace to have suffered an “adverse employment action”; (2) had not shown the hostility she suffered at work rose to the “level of severity or pervasiveness” required to state an ADEA claim; and (3) couldn’t show the adverse employment action she allegedly suffered was in retaliation for her filing a claim with the Equal Employment Opportunity Commission (EEOC).

More than 23,000 age discrimination charges were filed with the EEOC last year (EEOC / ADEA statistics here), and a significant number of those charges go on to be filed as lawsuits. There’s thus no dearth of these cases in the federal courts, which have decided more than one thousand ADEA cases over the past year, hundreds of them on similar grounds as Rodriguez-Machado v. Shinseki. It was, by and large, a routine case dismissed on routine grounds, on appeal for routine reasons, and the First Circuit could have just as easily looked at the District Court’s opinion, the briefs, and then affirmed dismissal of the discrimination claim, as federal appellate courts do every day.

But the First Circuit didn’t even reach the merits of the case. Instead, it blasted the plaintiff’s lawyer:

This case provides an important reminder to lawyers  and  litigants alike:  substantial  noncompliance” with important  appellate  rules,  in  and  of  itself,  constitutes sufficient  cause  to  dismiss  an  appeal. …

Unfortunately, plaintiff’s briefs are textbook examples of how not to litigate a case on appeal, infracting some important procedural rules. Again, claims of age discrimination, retaliation, and hostile work environment are often, as here, factually complicated and legally intricate. Yet plaintiff’s opening brief offers no specific record cites to support her version of the facts, which, again, she alleges are in dispute. Essentially, she is asking us to do one of two things: accept what she says as gospel or mine the record ourselves to confirm the truth of her story – and there is no reason for us to do either. Shockingly still, plaintiff’s principal brief provides neither the necessary caselaw nor reasoned analysis to support her theories:  She mentions a few ADEA cases, but only in the context of setting out the accepted summary judgment standard – amazingly, she spends no time describing the legal contours of an ADEA claim. …

To wrap up: Plaintiff’s lackluster way offends some major appellate procedural rules and controlling caselaw. Being human, lawyers of course will not always dot every “i” and cross every “t” in trying to live up to their obligations under the rules. And occasional mistakes – minor infringements of the rules that neither create unfairness to one’s adversary nor impair the court’s ability to comprehend and scrutinize a party’s papers – typically will not warrant Draconian consequences. But major breaches call for severe decrees, and the violations here are certainly major, given that they cripple any attempt to review the issues intelligently.

Consequently, for the reasons batted around above, we dismiss plaintiff’s appeal with prejudice, as the caselaw permits in situations like this.

(Citations and quotations omitted.) And that was that: plaintiff’s case was dismissed, with no effort to review the merits.

Here are the offending briefs from the plaintiff, as well as the defendants’ responsive briefs. The plaintiff’s brief certainly isn’t a model of written argument (and it does, as the defendants pointed out, mistakenly claim an “abuse of discretion” standard for the appeal of a summary judgment, rather than a de novo standard), but did it really “cripple any attempt to review the issues intelligently,” as the First Circuit concluded? The defendant had no trouble comprehending the arguments and responding. Was it really “amazing,” as the First Circuit claimed, that the plaintiff didn’t reiterate “the legal contours of an ADEA claim” when the plaintiff’s brief states right at the onset that they’re not challenging the legal standard used by the District Court, but rather the District Court’s review of the evidence? 
Continue Reading Poor Brief Writing Skills Prompt Dismissal By Appellate Court

Read more about sexual abuse lawsuits.

My children are young enough that Elmo’s voice still carries considerable weight in our home, and so I was disheartened to hear last week’s allegations that Kevin Clash, Elmo’s creator and voice, had a sexual relationship with a teenager. The alleged victim recanted — perhaps in exchange for a settlement, the reports I’ve seen have been unclear — but the issue resurfaced yesterday with the filing of a lawsuit against Kevin Clash in New York by a second alleged victim. The New York Times has a copy of the complaint; the new alleged victim, now 24 years old, claims Clash trolled sex chat lines for teenagers, found the victim, and then engaged in a sexual relationship with him while he was only 15 years old.

I, of course, don’t know if the allegations are true or not, but I do know that the case has a big problem in terms of whether it’s likely to succeed: the statute of limitations in New York has already expired for all of the usual claims alleged in sexual abuse cases. Apparently in recognition of that, his lawyers have not raised any of the typical state tort law sexual abuse claims — for example, assault and intentional infliction of emotional distress — but have instead filed for damages under a federal criminal statute most commonly used for child pornography victims. More on that in a moment.

As I discussed back when Jerry Sandusky was indicted, it is common — and understandable — for childhood sexual abuse victims to only be able to come forward many years after the abuse occurred, and thus often after the statute of limitations has run. In most states, including New York, the statute of limitations for tort claims is “tolled” (i.e., the clock doesn’t start running) until the victim turns 18 years old, but thereafter the victim only has a few years in which to file their civil claim. Few people turn 18 and suddenly come to terms with a traumatic event — the first few years in adulthood often isn’t enough time for a victim to process what has happened, and many victims repress memories about the assaults until their 30s, sometimes even later — and thus many victims never really have a chance to prove their case in court.

New York’s general statute of limitations for personal injury cases is three years, and New York law has not been kind to sexual abuse victims who failed to file a lawsuit within three years of their 18th birthday. In Zumpano v. Quinn, 6 N.Y.3d 666 (2006), former parishioners of two Catholic dioceses claimed they were sexually abused by priests but didn’t file a lawsuit until more than 20 years after they reached adulthood. The New York Court of Appeals ruled that the abuse was sufficient to trigger the statute of limitations for claims against both the priests and the dioceses that employed them, and so the statute ran three years after they turned 18 years old.

That’s the rule in the majority of states: the statute of limitations for childhood sexual abuse cases begins running right when the victim turns 18 years old. There are some exceptions — like the discovery rule, or tolling for fraudulent concealment — but they’re usually quite limited, and they’re often only applicable to the claims against the abuser’s employer. Earlier this year, for example, in the Poly Prep School Abuse case, a federal judge in New York allowed plaintiffs to move forward on their negligence and other claims related to abuse, on the theory that the school had allegedly “fraudulently concealed” their awareness of the abuser’s danger to the children. (Here’s the court order, which is a must-read for anyone interested in statute of limitations issues in sexual abuse cases, and here’s a New York Times story on the order.)

But I don’t see how Clash’s alleged victim could apply any of that court’s reasoning, which rests on the theory that the victim may not have had access to evidence showing the liability of the abuser’s employer, to his case; indeed, it seems his lawyers already concluded that his state tort claims were long gone, and so didn’t even attempt to allege any of the normal claims relating to sexual abuse. Instead, the alleged victim raises one and only one claim: “coercion and enticement to sexual activity in violation of 18 U.S.C. § 2422.”
Continue Reading The Unique Federal Sexual Abuse Claim In The Kevin Clash (Elmo’s Voice) Lawsuit

Last week, I wrote about a commonplace problem in product liability lawsuits: when courts forbid plaintiffs’ lawyers from sharing relevant discovery evidence amongst themselves, they inadvertently enable the defendants to engage in discovery fraud by cherry-picking which evidence they produce in each case. A new article by the federal judge (and the special masters he appointed) who oversaw the 9/11 Responders litigation reveals another critical component of a successful and fair resolution of high-stakes litigation: the cases need to move.

The article, Managerial Judging: The 9/11 Responders’ Tort Litigation (via TortsProf), is one-part guidance for future courts in similar situations and one-part a defense of Judge Hellerstein’s unorthodox methods in the case, which included his rejection of the initial proposed settlement — an exercise of judicial power that, while common in class actions, is unheard of in individual personal injury cases. (Judge Hellerstein himself notes in the article that his power was disputed, and says, “if I was right in asserting supervisory control of the litigation and rejecting the initial settlement, then those powers should be clearly set forth” by future statutes and rules.)

On the one hand, the 9/11 Responders litigation was indeed “unprecedented,” but, then again, so are most mass torts. Pharmaceutical liability mass torts are somewhat routine these days, but, for example, the consolidated asbestos litigation presented many of the same problems of scientific causation and varied individual exposure as the 9/11 Responders cases. Each case presents new and unique challenges.

In many ways, the most unique aspect of the 9/11 First Responders was the defendants’ interest in settling — the biggest defendant was the “Captive” billion-dollar insurance fund created by the government for the purpose of settling the claims.  That certainly didn’t make the case easy, but it added an element missing from most mass torts: some willingness among the defendants to settle for a reasonable amount. Usually, defendants want to tell people to take their cancer, their uncontrollable hemorrhaging, their heart attacks, and go home penniless.  

The part I found encouraging was the authors’ recognition of the reality of mass torts litigation as a war of attrition in which the defendant usually has far more money and far more time, than the plaintiffs:

Defendants exert leverage by pressuring the plaintiffs’ contingent fee structure. Defendants’ counsel are paid on a current and hourly basis and staff liberally. The result is extensive discovery, numerous motions, and a general prolongation of proceedings. It becomes expensive for plaintiffs’ counsel to fund the litigation, and a practice has grown of financing mass tort actions at high compound interest rates with repayment deferred until a settlement or recovery is accomplished.

As the article notes, the Responders’ lawyers, from the plaintiffs’ firms Napoli Bern Ripka Shkolnik and Worby Groner Edelman, “borrowed by 2010 more than thirty million dollars to help finance over seven years of litigation,” in loans personally guaranteed by the partners of the firm, with interest rates ranging from 6% to 18%, ultimately resulting in approximately $11 million dollars in interest fees alone. Carrying tens of millions of dollars in debt around your neck for years, without receiving a penny of income meanwhile, unsurprisingly has an effect on how you pursue the cases, and your evaluation of the cases’ settlement value. As Judge Strine in Delaware rightly recognized, the “real risk” in litigation grows the longer the case is in suit.
Continue Reading How Judges Can Settle Mass Torts Cases (A Lesson From The 9/11 Responders Litigation)